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Big Technology Podcast
Leopold Blows Up, OpenAI Drastically Cuts Prices, Microsoft’s Best Day
01:04:06
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- [00:00]
Alex Kantrowitz
Leopold Aschenbrenner's situational awareness hedge fund blows up and sells off its stock portfolio. OpenAI has cut prices on its latest models by as much as 80%, and big tech earnings leave Satya Nadella a very happy man. That's coming up with Reed Albergatti from Semaphore right after this. In the face of ongoing disruption and opportunity, TMT leaders need to deliver tangible results, not just ideas. When pace and performance matter most. PwC combines market insights and deep sector experience with AI, cloud and emerging tech to accelerate your transformation and drive measurable ROI. From strategy to execution, PwC can help you anticipate what's next, outpace disruption and compete. For more information, visit pwc.com Insurance isn't
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- [01:43]
Alex Kantrowitz
welcome to Big Technology Podcast, a show for cool headed and nuanced conversation of the tech world and beyond. We have a great show for you today. We're going to talk all about the implosion, but it's still kicking of Leopold Aschenbrenner Situational Awareness Hedge Fund Too much fund, too little hedge seems like to be the problem there. We'll also talk about OpenAI cutting prices on its latest models, some of them by as much as 80%. What does it say about the AI price war? And of course it's Big Tech earnings week, so we'll just go through the big takeaways from what we saw from Big Tech, especially as it relates to the AI trade. So joining us today is Reid Albergatti, returning champion from Semaphore. Reid, great to see you. Welcome back.
- [02:26]
Reed Albergatti
It's awesome to be here. Glad to be introduced as returning champion, but I didn't know this was a contest. So it is, it is. What are the KPIs? How do I win? How do I stay on top?
- [02:38]
Alex Kantrowitz
I think just have a good time, do what you do. There's no worries on this one. So Reid, I don't know if you've been following the blow up of situational awareness, which has been this, this headphone, this headphone, this head hedge fund from Leopold Aschenbrenner, who's a former OpenAI employee, a former FTX employee. It was sort of the highest performing hedge fund in the world, I think. I mean it had, it went from millions of dollars in funds to $20 billion in assets under management and then it effectively, you know, I think Blow up is maybe a little too strong, but it effectively blew up this week and it had to sell it's a large part of its stock portfolio or all of its stock portfolio to Citadel run by Ken Griffin. I was like, I was thinking, is this too niche to start the show? But it's just one of those stories that I'm just too fascinated by to let wait until the second half. So curious what your perspective is on what's happened here. Obviously he'll still continue with the percentage of his assets that he's kept, including a large stake in Anthropic, but I'm sure there's some big lessons to draw here and I'm curious which ones you've drawn.
- [03:51]
Reed Albergatti
Yeah, in a way, like if you just look at what happened on its face, it is just not a technology story at all. Right. It's a guy who got over levered, you know, with his, with his, you know, market bets and had to sell his position because, you know, he couldn't, he couldn't cover the short term losses. Right. He's probably actually, the fund was actually doing well if you look at like his bets. Right. Like, but you know, you can't, you can't, you can't handle these short term dips if you're, if you're over levered. So it's like, oh, who cares? Like why is this important for technology? What, what. But what I think is so fascinating about it is that it's, it you watch the reaction to this and like, of course there's a lot of schadenfreude. You know, this guy was like the golden boy. You know, the Wall Street Journal was profiling him and you know, he's this like, you know, ea effective altruist person. And I think like people sort of, I think there's some joy in him going Down. But what it, what it. It like from some people, but what it gets at is like there is such a divide in the tech industry right now between, I think there are the sort of more traditional tech people who, you know, some might call themselves accelerationists. They just want to see, you know, this new technology being built and then this kind of like, I don't even call it ea, because first of all, like, since FTX blew up, like, I don't even hear ea. Like, people don't describe themselves that way anymore. But there is this sort of remnants of the culture of ea, of these people who are just not like your traditional tech people. And if you, even if you just step back and think about it, like, no one in tech would, would brag, like, no one in Silicon Valley. I don't know about you, I've never had anyone brag to me about their public market stock trading. Like, that is like not what people value in Silicon Valley. They value building. And so in a way, it's like this, to me, it just highlights this, this sort of new cultural divide which I'm fascinated by. Like, I just, I don't know where, where it's going to go. It could disappear or, you know, it could turn into an even bigger rift. And there's like two, there's two tech industries, essentially. Okay, so maybe I'm taking that too far.
- [05:59]
Alex Kantrowitz
You know, I don't think you are. And this is a very interesting thread to pull, and I think we should like, talk about it for a moment and then talk a little bit about what Leopold was actually holding, because that's pretty interesting in and of its own. Right, but the EA thing is interesting because there's a couple things that sort of characterize effective altruism, and I'm not going to do it justice here, but one of the things that characterizes the movement is sort of you try to make as much money as you can and then do as much good as you can. And so whereas like, previous altruists might have just been like, I'm going to go, you know, volunteer for people in need, effective altruists might say, I'll take the most capitalist job I could find and then eventually donate. And that's associated with like, movements like give directly, where like, they give no, basically no strings attached, donations to. And I think that's a great program, by the way, you know, to places all over the world. So the, the other side of it, I'll just say this other, one other thing because it's very interesting how it combines. Is there's a big belief in this sort of formula that's called expected value. And I don't think it's unique to them, but it's effectively like, you know, you, you want. Just to give one example, this is kind of like the canonical example, right? If you could flip a coin and you know, 49% is you blow up the world and 51% is, you know, you create utopia, they would flip the coin every time because the expected value of utopia is higher than the expected value of annihilation, right? It's like, oh well, if you add 51 and 49 up and divide by two or whatever, that's still 50, 50, you know what I'm saying? The math makes sense that the, the better value is going to be on the utopia bet. And so this is the second time in, in, in, in recent history where someone who comes from that sort of background and, and the other one being Sam Bankman Fried seems to have made, you know, big enough bets that make you think, is this, is this a pretty disastrous way to, to think if you're running a business? Now? No fraud here as far as we know. He's not even negative, but you know, not a parallel blow up, but it's, it rhymes in a way.
- [08:11]
Reed Albergatti
Yeah, Sam Bankman Fried wasn't negative either. In the long run.
- [08:15]
Alex Kantrowitz
He was the best investor of all time. I mean if they didn't make him
- [08:19]
Reed Albergatti
sell, this is the, this is like the other part of this is like a lot of these people go work at like Jane Street Capital and they, they look at the world and the markets as this like. Oh, it's like child's play. Like it's just algorithm that you can just crack and like, you know, it's sort of like this unemotional view of, and it's like a simplistic view of the world and then it blows up in their faces. Because if you look at this stuff in this very simplistic way, it's like, well you know, the, the, it's, it's like you're sitting in your college dorm room talking about philosophy, you know. Well, I mean everyone wants AI and of course like, you know, these things, these, these products will have to be purchased to build these AI data centers. Therefore you could just put all your money in those stocks and you're going to be fine without like, you know, really paying attention to how like there's, there's fluctuations in the market that have nothing to do with like the actual, you know, long term value of these, of these things. And you Know, I mean that this is sort of what happened to ftx. And yeah, I just think, I think that's like, it's almost like this hubris and I think that's like a real turn off to people. Right. And it's not. And the other thing is like a lot of these people went into AI because they were like, well, this is where I can do the most good because this is a dangerous technology. And so I have to go into this to kind of help steer it and make sure that it's, you know, that is properly stewarded, which is also like a kind of hubristic way of looking at it. And it's not a Silicon Valley way of looking at it. Right. That's not like the traditional way of thinking about technology. Right. Technology is this good thing. Of course there's always downsides, but you know, it's exciting and you go and you build it because it's fascinating and you're part of the future. And it's just this to me, the mindset divide there is what this story is really about. Because if it wasn't for that, Alex, would we be talking about, we would not be talking about this. Right. Like there's, there's been bigger blow ups recently, you know, on Wall street of people who've done crazier things and lost more money. Right. And we don't talk about that on tech shows. Right. So to me that's why it's important.
- [10:29]
Alex Kantrowitz
Yeah. Okay, I'm going to disagree with you slightly on that. I do think we would still be talking about it, although I think this adds, I think the reason why the story is irresistible are the undertones that you bring up. But, but, but you. I, I think it's impossible to disassociate it with the tech story because, and this is going back to that hubris example, situational awareness was or is TBD like the most pure bet on AI taking off and taking off very soon and effectively, like if you could give a one sentence description of like what he's doing, it would basically. Or what he was attempting to do is basically, you know, profit off the singularity effectively. Like the, the belief was we're in the singularity now, nothing's going back to the way it was and if you make the right bets now, you can, you know, go exponential. And, and he really did. But this is why I think it's important to talk about, you know, what his biggest holdings were. So it's. His biggest holdings were Nebus group, right. And NeoCloud, SanDisk and Micron, which is like the RAM and the, and the memory and core weave another NEO cloud. So basically like his, his law, his long holdings were effectively the bottleneck bro type of long holdings, which is like demand for AI is going to increase so substantially that these companies are going to be, you know, worth multiples of what they were. And for a long time this year it actually seemed like that was right. So he was that, that on the long side that, the short side, to take his thesis even further, was software. Reportedly some of the shorts were software companies like Adobe, right? So this, this is basically like if you were to ask how do you put like AGI in one hedge fund? It would be this. But like I said at the top, the job of the hedge fund is you gotta hedge a little bit. And this was an unhedged hedge fund.
- [12:27]
Reed Albergatti
It was unhedged, right? I mean it's just dumb finance. This is why, this is why tech companies don't they wait so long to go public because they don't, because the public markets are insane. Like I, I don't even. And first of all, like it. A lot of times there aren't even humans trading, you know, in these stocks, right? It's just algorithmic trading. And second of all, like, I don't actually, I've written about this a lot. Like I don't actually think Wall street understands technology or AI. Like, I don't. I think they're just, you know, it's like meme, it's like memes are driving this, you know, these trades up and down, right? But he's, I mean, look, you have to give him credit. Like he was one of the first people to really like put his money down on memory and see that there was this memory shortage, right? And long term, again, he's right. Like this stuff is, you know, these are good bets. Like what smart people are doing now is they're just buying these stocks at a discount, right? They're, they're on sale right now. And so you buy them and it's like, you know, that's what. And they're in all of our 4 1ks etc. Like I don't trade individual stocks just to be, just to be clear. But like, you know, it's a, it's a long term, like people are going to be buying this stuff. It's valuable technology. And you know, you like hedge funds. Of course if you're doing short term trading, like, yeah, you have to hedge. Like you can't, you know, you can't put yourself in this position. But you know, he had no experience in this space, right? It's, this is like 101.
- [13:49]
Alex Kantrowitz
We're here with Reed Albergatti, the technology editor at Semaphore. We did hear from Leopold, at least in a note to his, to his counterparts or his investors. So, so what he basically tells investors is the investors in his fund is he sold only to the point where effectively he covered his shorts. So, so he said, this is his direct words. The fund was not shut down, liquidated, or transformed into a private only fund. We are continuing to operate as a hybrid public private fund as before. However, we will manage our public book only as a paid on, on a paid for basis while we draw the lessons from these developments. Most importantly, we took steps that were necessary that to fight another day. Okay. This is important. So not only did he make this bet, you know, like we said, an unhedged bet on AGI, he, he did it with leverage, right? So there was, there was, you know, at some point the reporting is that he was like 4x leveraged on this bet. Which means, like, you know, if, if memory continues to go up, then, then his number goes up a lot more. But if it doesn't, which it didn't, then that, that sort of leads to the cascading effect here.
- [14:57]
Reed Albergatti
I mean, I learned about this in like grade school, right? I mean, this is like not, this is not a new concept, right? I mean, this is like the 1929 stock market crash. It's like, it's very basic stuff. I don't know.
- [15:10]
Alex Kantrowitz
All right. Leopold continues. He says as an interim update, our current unaudited estimate of net month to date performance is 67% and of net year to date performance is plus, plus 80%. So negative 67 on the month, plus 80 on the year, I guess. And he says final figures will follow through our normal reporting process. I guess you'll take it if you're plus 80 on the year. I don't know.
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Reed Albergatti
Sounds pretty good to me.
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Alex Kantrowitz
It's better than my 401k this year. So basically, this guy might still, like, it's not the end of Leopold. He still has billions of dollars that he's managing. But certainly a humbling moment for him.
- [15:49]
Reed Albergatti
It's definitely humbling. Yeah. And he'll go on. He'll be fine. That's why it's like, I'm like, this is not like it's this cultural significance that to me is interesting. Not the actual trade. Life goes on. I mean, I don't know about you, but I Don't see these stocks having issues in the long run. There's a whole meme right now about this stuff being expensive. I know, talk about that later. But you know, it's like ultimately I just don't see this, this thing reversing or slowing down. Like it's, it's moving forward. How do you, I mean, do you, do you agree?
- [16:27]
Alex Kantrowitz
No, I, I think compute. There will still be a large demand for compute, at least for the next important number of years, I think so. It's like this was sort of the, the whole thing, by the way, and this is going to be a theme on this show for the next couple of weeks is duration mismatch.
- [16:41]
Reed Albergatti
Right.
- [16:41]
Alex Kantrowitz
You can be right on the general thesis. You could be wrong on the timing. And when you're wrong on the timing, that could be devastating. That goes for Leopold, but it also goes for all these investors in, you know, the big data centers. Right. Like the idea is I build the big computer for you and then you within, you know, X number of years turn that into profit. We know that the big computer money is being laid out. We don't know if that's going to be turned into profit eventually. Are these AI companies going to make money by developing these AI models? Probably, although it's sort of debate about how that happens now. But the pressure will be to do it on a timeline that lines up with when the money comes due.
- [17:24]
Reed Albergatti
Yeah, I mean, I think the difference though here is like you can look at past tech build outs and there have been these boom and bust cycles. You had the dark fiber back in the day. I'm sure you've talked about that a lot on the show. I mean, this is getting used today. There's high demand for it. So when you see people make these bets on Compute, like Meta or SpaceX AI and they're off on the timing or maybe off totally, depending on your opinion, they can then turn around and sell that compute because there's so much demand. So I think these bottlenecks that he's invested, Leopold invested in and others, like there are other bottlenecks too. I think those actually prevent. They're like, I mean, other people have made this point too. I'm not the first person to say this, but like those actually, you know, kind of prevent this thing from going off the rails. It's like a, it's like a bubble, you know, prevention mechanism. The bottlenecks.
- [18:25]
Alex Kantrowitz
Yeah, well, that, that is, that is so, so let's actually, so let us, let's run that idea next to A headline from this week and see if, and see, you know, if it's totally locked tight because you know, we've been talking a lot on the show recently about how models are, are starting to reach not necessarily parity, but maybe close to it, right? The Kimi K3 situation that we just saw was another model that sort of, you know, it's not equivalent to like let's say the Fables and the GPT 5.6 souls, but close to the latest series of models. And when you have not one or two leaders, but a bunch of leaders, the prices will inevitably come down because how else do you compete? CNBC has a story for us on this. OpenAI cuts prices for two of its GPT 5.6 AI models as companies grow sensitive to costs. Here's the story. OpenAI on Thursday announced it is slashing the price of two of its latest artificial intelligence models, GPT 5.6 Tera and GPT 5.6 Luna. Roughly three weeks after the public release, the company is facing pressure to cater to more cost sensitive to a more cost sensitive customer base base where enterprises have been less inclined to deploy expensive models without a clear picture on the return on their investments. So terra gets cut 20% and Luna, which I believe is the light, most lightweight model that they have, is cut by 80% on the price. Now OpenAI says they've, they've found some efficiencies in these models and I don't doubt it. But Reid, going back to your, your point earlier, when you see these price cuts, right, the demand has always been basically that the companies that want to snatch up these data centers believe that they can sort of take the gpu, use it, you know, run a model through it and then mark up the tokens that they get out on the other end. But if the markup is lower and lower, do we see that sort of unlimited demand can, you know, persist?
- [20:28]
Reed Albergatti
Well, I think there's two or three, there's actually two or three sort of different things going on there, right? One is who's actually selling the equipment for the data centers, right, The GPU providers. Then you've also you got the model providers, right, who are creating the software, the application layer, the frontier models that run on these things. And then you're actually talking about the data center services providers, right? Just having a data center and being a dumb essentially rack provider is not actually a great long term business. It's pretty good now. But that's why these companies like coreweave, they want to offer services on top of the Data center. Right. So there's actually like three things going on. One, the, the chip makers and the people who make the memory and all this stuff. Like they're selling this no matter what. Cause like someone's just gonna use it. So they're okay. Right. And then I think the model providers, it's a different question, right, which you're asking, which is like can you actually spend billions of dollars training these models and then you know, and then you know, charge a premium for them while some Chinese company can essentially like distill from that model and offer it for free? Of course, you know those Chinese models still have to run on really expensive GPUs. So like doesn't change the game for, for Nvidia. But the model providers also like they're, yeah, some companies aren't going to use them. They're going to try to fine tune, they're going to build on premise data centers, they're going to do all sorts of stuff. Right. But this is like the total addressable market is so, so large that I think there will always be companies and businesses that are going to, you know, they're going to use anthropic and OpenAI models which by the way, you know, they, all these companies offer like a whole suite of models from like really cheap efficient ones to the frontier. And those models run more efficiently and better on the harnesses, like essentially the software that OpenAI and Anthropic build and there's a data flywheel there. Right. So the more people use them, the better they get, the more efficient they get. So there's, I think we saw the same thing with cloud adoption, right. Like you know people, it was, cloud was more expensive, like why would I do that? I'll just build my own data set. Eventually they went to the cloud because it was just, it was just more predictable. In the long run it's cheaper, you know, it's, it's something you don't have to worry about. So I think you can kind of, you can make these arguments. I think there are definitely risks to these frontier companies. I, I don't really think the Chinese open source, the free models are the most important risk. I think that means, I don't think these companies by any means the frontier model companies are going to take over the world and become these huge companies that control 90% of the global economy. That is not going to happen. But they're still good businesses. That's how I look at it. We tend to have this zero sum thinking around this stuff which is what I Try to get away from.
- [23:36]
Alex Kantrowitz
Yeah, no, it's. By the way, we love talking through nuance on this show. In fact, I think that like, you know, it depends on the week. You know, there'll be one week where folks will say, hey, this show is in the can for AI and then there'll be a next week when we cover something else where it'll be like the show is a doomer show. And it's like we're trying to just consider the full range of, of potential outcomes and pressure test them. And so on this note, I think you're right. It might not be China. Right. But it seems like first of all the labs are lowering prices on their models and it's not just them. You know, this is from that CNBC story. Microsoft CEO Satya Nadella repeatedly highlighted his company's cost effective models during its quarterly earnings call with investors on Wednesday. Google also debuted three new models this month that aim to undercut competitors on cost. So, so just to go back to this point, right, Because I, I'm not saying it's. Well, you know what I'm gonna, I won't necessarily rule out that it's a zero potential zero situation here and just going to throw it to you and hear your perspective on it. Basically the point is like what's driving this build out of the data centers? Yes, it's of course demand to use AI. So maybe it is just like the hyperscalers that end up winning in the end. But a lot of the, the push is coming from OpenAI and anthropic who believe that if they, that they will compete on compute and, and looking at it, if the prices come down for OpenAI, the prices come down for Anthropic, the prices come down for Google, the prices come down for Microsoft. You know, are those investments in all those data centers than worthwhile? You see what I'm saying?
- [25:22]
Reed Albergatti
Yeah, I see what you're saying. I mean, and also like let's, let's like also differentiate the hyperscalers from like the chip makers, right. And the people who make all the equipment. Like, you know, I think Nvidia is just sitting pretty like they're just selling this stuff no matter what happens, right? I think the hyperscalers, you know, yeah, I think they'll make money but they also have to sell services. They can't just, they can't just be like GPU providers. Like they have to, but there are a lot of services to be sold. Like this stuff doesn't really work that well unless you, this has been the story of the year. Right. Like, these models were super powerful. We had the reasoning models, but they weren't really doing all that much until people figured out how to put them into these harnesses, connect them to tools, run them in loops. You know, all this stuff and all that stuff just requires more gpu, just requires more tokens. Right. And so I think like, yeah, I mean, in the end, sure. Like these things come down in price they get. But then, you know, you have Javon's paradox. People just use more of it. Right. And it's. So I don't know about you when you use this stuff. I use it personally because I want to try to understand the technology. I find it very fun and very, and actually useful. Like I've, you know, but then I'm also talking to people about it all the time and I see how people, you know, there's a lot of people who are using it in obviously way more advanced ways than I am. And, and you're like, this is useful technology. Like, this isn't the kind of thing, it's not a fad, right. This isn't like, I don't know those, you know, pedal counting watches or something that people like are like, oh, this is cool, I should put all my money into, you know, into step counting watches. Like, this is actually like, you know, really useful technology for individuals and for businesses. So the market is so large that I just don't see, I don't, I can't see this being a zero sum game only because the world will not tolerate like one winner in a, in a product that everyone in the world has to use. That would, that, that, that company, that winner would be way too powerful. It just doesn't, it just does not work that way. Does that make sense?
- [27:37]
Alex Kantrowitz
Yeah, yeah, totally. Yeah, I, I guess, like, know I shouldn't say that they're going to zero, but to me it's like you need to have companies that are going to make money on top of those gpus for that buildup to continue. And so I'm looking at these prices coming down and I'm like, well, where, where's that going to happen? But, but I think you, you've answered the question in terms of where you think it will happen and I, I disagree with you. They're willing to pay for it and the usage is just going to increase as these things become more useful.
- [28:07]
Reed Albergatti
Yeah, I mean, I, this is the other thing that's crazy to me. Like people are paying like $20 a month for chatbot, like consumers, you know, or pay. Like, they're. It's crazy. Like, I can't. I'm surprised how much people are actually willing to pay because the. At the adage when I got out here covering tech was like, no one will ever pay for this stuff. Like, you could not charge for Google. You could not charge for Facebook. That's insane. How many blue check marks do you see on X now? That's crazy. Those are people paying money. Like, if you. If you put, like, people will pay $10 or whatever, $20 a month for Twitter on my bingo card in, like, you know, 2013, I would have been like, you are insane. Like, no one will pay for Twitter. And they are now. And I think that's a whole change that is, like, underappreciated. Like, people actually pay for this stuff.
- [29:00]
Alex Kantrowitz
Yeah. I did this experiment in a couple of events that I was at where I was like, all right, if. Let's say you're using ChatGPT and OpenAI doubled the price for you, would you pay double? And like, all the hands went up. Triple. More hands went up. And I don't know, I feel like I shouldn't say this out loud, but it's become so useful to me that if it became $100 a month at the base, in terms of what I'm getting now, I'm on the $20 plan, I would do it.
- [29:26]
Reed Albergatti
Yeah. And I think they know that, but they're also like, these companies are in growth mode, right? They're willing to lose a ton of money to gain market share. Like, that's the game. So just because somebody lowers prices, this is not like, oh, okay, now it's like, in the discount bin and who care? You know, this isn't fashion products. Right. This is like, they're trying to go out and take over the market. And. That's.
- [29:49]
Alex Kantrowitz
Right. But price wars are a real thing. Right? Like, you could eventually write your opportunity as my margin just kind of compete away all the profit in a commodity.
- [29:59]
Reed Albergatti
You could. I mean, but that's not typically how it works in, like, growth tech businesses. Right. Like, you. You go out and you. And you win the market, and then you worry about the money later. Of course these companies are trying to go public. I don't know. Like, this is the thing. Like, do you really. I mean, maybe the mark. Maybe these IPOs get delayed. Like, I don't know. But that is. That is actually beyond my. Like, I haven't thought that much about it, but, like, there is an argument, I think, to be made. Like, they should wait a Little bit to. To ipo.
- [30:28]
Alex Kantrowitz
I mean, what's the. What would your argument be for that?
- [30:31]
Reed Albergatti
Well, it's just if you have, like, if you're still in this, like, insane growth mode, like, is that going to make sense to investors? Like you said, investors do look at this like, well, you should. If you're selling a product, like, you should be charging more than it costs you to, you know, for that product. Right. And, like, ultimately. But, you know, on the other hand, I don't know, Amazon lost tons of money in the public markets for years before they finally, you know, turned a profit. So maybe it's fine, but, like, you have to be a certain type of company, a certain type of CEO to, like, gain the trust of retail investors. Right. Like, you know, Elon Musk is that type of person, is Dario Sam. I don't know. Even then, it can be tough. They have ups and downs.
- [31:18]
Alex Kantrowitz
Yep. All right, so let's continue on this theme of it's going to be all right when we talk about vendor financing. So you had a story this week about Safe Superintelligence, which is run by Ilya Sutskever, the former Chief Scientist of OpenAI, where I kind of out of nowhere, Elya's like, all right, we have a breakthrough. Now it's time to put a lot of compute behind it. I think he was like, time to build the business bigger computer, which is one of his favorite lines.
- [31:43]
Ad Voiceover
Yeah.
- [31:44]
Alex Kantrowitz
And Nvidia decided to make a big strategic investment in them. $5 billion for a company that doesn't have a product. I think before. I think before a year and a half ago, that would have been the largest venture raise in history by some margin. And now it's kind of like, whatever. So. But your. Your perspective on it, when you wrote in semaphore was basically like, it's all good. So talk through what happened and why you feel that way.
- [32:12]
Reed Albergatti
Yeah, it's all good. No, I mean, I think there's this, like. It's like this circular investing. Right. That's the big concern. It's like, well, if you're a company, you're, you know, if you're Nvidia, you're essentially buying a customer. That's not a good thing. Like, you know, that's not a real customer if I'm just paying you to buy my product. But in the end, it's like, I guess it's a bet on safe superintelligence. Ilya Sutskever is a proven commodity. I personally think there's reasons to be skeptical because they're so secretive and you haven't seen in the history of AI development, big breakthroughs happen in secret. These usually these papers come out, they ping pong around everybody, it cross pollinates and then people come up with ideas around the same time. So but maybe there isn't maybe that, maybe they've figured something out, like working in secret, right? So Nvidia sees that and they go, we want to bet on that. Like, you know, they've, they've got the next big thing. Okay, that's one thing. But let's say they fail, let's say safe superintelligence, like doesn't get it done. They've built this big computer now and everybody wants big computers, right? So they're going to be able, they'll either sell it or they'll rent out their, their, their big computer to other people, like SpaceX AI did, or Meta did. So if you're Nvidia, you're like, there's not actually that much risk here. It's not in the end, that much risk. And one thing these people are all good at, like Ilia, which is really underappreciated, is making these big computers work really well. That is actually probably the most valuable skill of an AI researcher at this point, right? It's like figuring out how to efficiently string these GPUs together, make them work all at the same time. It's really hard to do. So like you're basically, if you're Nvidia, you're like, well, if Ilya doesn't have this major breakthrough in AI algorithms, he's probably one of the best hyperscaler providers around. So it's really just not like to me, it's not a crazy bet if you're, if you're Jensen, there's a lot of hedging in that one, I would say.
- [34:26]
Alex Kantrowitz
Yeah, no, I was going to say basically like, if you're, if that's the case, why even sell your GPUs and why not just give GPUs away for a stake of anybody of a company, of anybody who wants them. And in fact, that is what Nvidia is doing, right? They have this new approach with startups where they're like, all right, if you want GPUs, we'll take a chunk of your company and we'll deliver the hardware.
- [34:47]
Reed Albergatti
Yeah, but they're still not, but they're not like we're going to just be that we're just going to do everything right. That's not correct. You know, they're not like, we're gonna just go build a data center. I mean, they do more of it because now they're selling it in entire racks as opposed to, like. I don't think you can really just buy one of these GPUs now. You've gotta buy the whole rack, which is probably a smart. A smart move. But, yeah, I mean, to me, it, Like, I have not heard an argument. Maybe you can. Maybe you can steel man it. But like, I haven't heard an argument that. Against that. Really. It's just like. It's more like, well, this thing could all be a bubble and then Nvidia is left holding the bag or, you know, something like that. But like, they're the. Like, my colleague lives, Liz Hoffman, compared them to aig, right, in the financial crisis, which I think is a cool headline. Like, that's, that's, like, exciting. It's like, kind of scary, you know, like. Like horror movies are scary. But I also think it's like, I don't. I don't. I think there's so. There's so many differences between that situation and this one.
- [35:51]
Alex Kantrowitz
Okay. I actually want you to, if you're willing to, or you want to. To steal man, because you're, you know. Yes, yes, there's an argument, a good argument to be made for why this continues. But where could you see it unraveling if it does?
- [36:08]
Reed Albergatti
Look, it's a great question. I think. I think that probably the biggest risk is that there's some algorithmic breakthrough that actually means you don't need powerful computers anymore, right? Like someone figures out, oh, actually, I don't know, the human brain is a very efficient computer, right? It runs on whatever, 20 watts or something. It doesn't require a big data center. There are actually companies to come to think of it, that are growing human brains and want to use them as computers, like actual brain tissue. So. So, you know, this isn't total sci fi. And they're like, well, you know, we actually can do AGI on a. You know, on a thumb drive or something, right? It's like we don't need these big data centers anymore. Then maybe the whole thing collapses, right? It's like all of a sudden you just, you can, you know, there's. There's this. The data centers become dark fiber because, you know, all of a sudden, like, you could. You could run everything you need on one tiny sliver of the, you know, the massive data center that OpenAI is building in Texas. I don't know. That's one, like, I think that's a real possibility. But, like, of course, I don't know, like, who's developing that? Like, I think, you know, maybe it's the many brain tissue computer people. I don't know.
- [37:28]
Alex Kantrowitz
Right. And if that happens, then civilization definitely changes.
- [37:31]
Reed Albergatti
Yeah. I mean, it won't be bad for civilization. Like, that would be a good thing for civilization. It'd be a bad thing. It'd be a bad thing if you're Nvidia be a bad thing if you're building these data centers. Right. Bad thing for OpenAI and Anthropic, they get totally superseded. But humanity has this access to cheap intelligence. We don't have to build all these new power plants. Sounds dope. Yeah. And some of these investors, some of these investors in the Gulf lose some money and know we all move on.
- [38:05]
Alex Kantrowitz
Yeah. All right, before we go to break, I want to talk to you a little bit about what Sam Altman has been up to this week. He's actually been in Washington, D.C. talking to government officials about what's to come for OpenAI. Let me read to you a little bit from the Washington Post, and you can share with me whether you think this is actually new or it's the stuff they've been doing already for a while. So the story says in the briefings. Altman described an upcoming product that would enable multiple AI assistants, known as agents, to work simultaneously in the background, dividing tasks and collaborating with each other. He also described how the system could answer math problems that have never been solved before. He described how the new agents could transform the American economy, allowing workers to do tasks that typically would have been outsourced to other professionals. He described how a software engineer could use the agents to help with human resources, or a writer could use them to enable graphic design. One of the people said, what do you think? Same stuff or new stuff?
- [39:02]
Reed Albergatti
Sounds like the same stuff to me.
- [39:04]
Alex Kantrowitz
Right.
- [39:04]
Reed Albergatti
I mean, that's how I.
- [39:05]
Alex Kantrowitz
That was my reaction when I read that. Yeah.
- [39:07]
Reed Albergatti
Are you. I mean, when I use Codex, you know, their, their desktop, they're pro, I guess now it's just chat GPT, the desktop app on Mac. I'm always asking these, these agents to spawn sub agents. Like, it's. It's like, I don't think I'm really that great at it, but, like, that is what they're doing, Right. They're coordinating. I'm like, you be the. You be the product manager, and then I want you to spawn sub agents to do the tasks, and then I can talk to you so you're not busy.
- [39:37]
Alex Kantrowitz
Like, you see that I don't. I've been just. I've been being a silly human and asking to the agents to do everything that I want them directly.
- [39:48]
Reed Albergatti
Well, I think probably they're going to automatically do that now. Right? That's. I think that's the new thing that he's taught. Talking about, talking about, like, just. But it's just. I think there's just better orchestration of these things. Like, it's, It's. How do you make them. How do you get them to do their job with less human involvement? Like, I do a lot of checking in. I don't know about you, but, like, I'm, you know, you, you get the blue dot on. If you're using the ChatGPT, you get the blue dot and then you gotta check in. Like, it would be great if you could just be like, look, here's. Here's my goal. Figure out how to. The best way to get to that goal, and I'll check back with you in a week or something. You know, like, I'd be.
- [40:25]
Alex Kantrowitz
What sort of project do you use it for?
- [40:28]
Reed Albergatti
I mean, I just use it for everything. But I mean, last, like, the most recent one last week was. It was not a work project. It was just personal. Like, we were in my neighborhood, we have like, flooding and we needed to collect data for, for the county so that they can get data on flooding. They have no, there's no county, like, California doesn't have, like, a data collection project for flooding. So I made the data collection project, but it took me two days. And, you know, I just checked in every once in a while. But now our neighborhood has a data collection portal and, you know, a database and a back end and we can send data to the county with photos and videos. It's basically a web app. But that's just the most recent one that I did last week. And, you know, it isn't that much work and people are like, wow, how did you do this? And like, I didn't do it.
- [41:20]
Alex Kantrowitz
Codex did.
- [41:21]
Reed Albergatti
Yeah, right. I mean, but it'd be great if you could just. One shot that, like, there's a lot of checking in. There's a lot of trial and error. It could be great if you, like, after two days, you just get a product and it's done. I mean, that would be new, I feel.
- [41:35]
Alex Kantrowitz
I think it'll happen. Yep. All right.
- [41:38]
Reed Albergatti
I think it'll definitely happen.
- [41:39]
Alex Kantrowitz
Okay, let's go to break and come back and talk a little bit about why Microsoft might have had its best week ever. And then a little bit more on big tech earnings. That's coming up right after this. This episode is brought to you by DeepL. When I sat down with DeepL's founder Jarak Kutliovsky on YouTube recently, we got into the case for specialized AI. DeepL Voice is what it looks like when the stakes are real time conversation. And honestly, it's something I wish I'd had for my own cross border interviews. Turning a language barrier into a non issue DeepL voice delivers live translation in over 40 languages for virtual virtual meetings and in person conversations, helping people speak in their preferred language without losing flow or nuance. Whether you're meeting with a customer, negotiating with a supplier, or collaborating with global colleagues, it keeps pace with you in real time, easily handling the technical terms, acronyms and product names specific to your business. So what you actually mean never gets lost in translation. And for the builders listening, Deep Bell's Voice API lets you embed real quick, real time speech, transcription and translation directly into your products. So go check it out for yourself. You can try DeepL Voice for free at DeepL.com tryvoice that's DeepL.com tryvoice Today's executives are more threatened, more exposed, and more vulnerable than ever before. Corporations spend billions on workplace security. But what happens when a threat finds your executives outside the office? 70% of attacks on executives happen at home or away from the office, and Ironwall understands a terrifying reality. If someone has a grievance against your company, the first place they turn to is Google. It takes them about five minutes to find one of your executive's home addresses online. And if their personal information is sitting on the open web, they're far too easy to find. The team at Ironwall knows this better than anyone. They've protected some of the most targeted executives and individuals on the planet for almost two decades. Protect your people with continuous personal data removed, proactive prevention tools, and emergency support. So when someone goes looking for your executives, Ironwall ensures they hit a dead end. Go to ironwall.com bigtechnology Fill in the quick form and request your free risk assessment. The team will show you just how exposed your executives are and how to lock it down before a threat reaches their front door. That's ironwall.com bigtechnology stop online threats before they become real world attacks. And we're back here on Big Technology Podcast Friday Edition with Reed Albergatti, the technology editor at semaphore. Go to semare.com in the technology section. You drop your email address there. All Right on the left hand side. And you can get Reed's terrific newsletter. That's, that's free and it's free. Right. So. Well, anyway, I won't, I won't discourage.
- [44:16]
Reed Albergatti
Do you think there's a semaphore bubble? Is there a bubble? Is that what you're. Because we're sl. We're slashing prices and offering it.
- [44:24]
Alex Kantrowitz
You are free. I, I think, yeah. Your GPU providers are gonna start to sweat a little bit. You might get, you might get. Leopold Margin called man, he's gonna short us.
- [44:32]
Reed Albergatti
Darn.
- [44:35]
Alex Kantrowitz
By the way, now you said it on. In public. It will go on the YouTube and LMS will train on it and the LMS will start to believe this stuff and then people will believe it. That's how information works these days.
- [44:46]
Reed Albergatti
Oh, man. Well, in that case, I am an amazing athlete and my children are geniuses.
- [44:52]
Alex Kantrowitz
Okay, Go on.
- [44:53]
Ad Voiceover
All right.
- [44:54]
Alex Kantrowitz
Keep that in mind. All right, let's talk about Microsoft. They had the biggest one day market cap gain for any US company in history. That's according to the Wall Street Journal. The company stock surged 16% after its earnings quelled concerns that investments on data centers, chips and more would outpace the company's ability to generate cash. It's kind of going exactly to the conversation that we've had. It's a 450 billion dollar one day gain. And, and that's the largest market cap gain by any company in history, ever. The core parts of this earnings report was that Azure, Microsoft's cloud grew 43% in, in the quarter they report on. And, and they, they promised that it would, that they would not go negative free cash flow next year. They also have a lot less debt than their peers. Reed, let me just give you my big question on Microsoft. I don't fully understand what they're doing. I'll admit it, their approach to AI has been kind of weird. Back, back open AI criticize OpenAI be all about like, you know, sort of your solution to the problems of the foundational labs, even as OpenAI has made this $250 billion commitment to buy compute from them, which I think is largely what's propelling their cloud growth. And the market loved it. So help me understand what's going on with Microsoft.
- [46:20]
Reed Albergatti
But you said it yourself, I mean, the market wants an efficiency story right now, right? That's what they're buying. And Microsoft's been selling that. I mean, you've interviewed Mustafa. I interviewed Mustafa. I went down to Microsoft AI not too long ago and talked to him. About their models and their, they're building these, these frontier. Well, eventually they want to build these frontier models, but they're focusing on efficiency and building them from scratch, you know, and they have a massive install base. Right. Like they, they like the. I think the big question though is like can they to getting their strategies like can they actually transition through this AI phase and turn all of their products into, you know, intelligent, you know, basically hold on to that enterprise business? And the market clearly thinks right now they've got a great path toward, you know, in that direction. Right. They super efficient models. They have all these businesses which are. The meme right now is like they all want to save money. They're spending too much on tokens. And so if Microsoft is positioning themselves to be the answer to that question, like they're going to do fine. They're going to keep, they're going to hold on to the. That's how I read it. Unless I'm missing something that's kind of, it's a simple. I mean it's crazy that it's the record one day gain. I actually didn't even realize that until you said it. The market's just, it's just mind blowing to me because I'm like, this is not, there's nothing new here. This has been their strategy for a while now and they've been telegraphing it. But I guess the market's just got the memo.
- [47:56]
Alex Kantrowitz
Yeah, the market has really been, I mean Microsoft was like the worst performing hyperscaler or big tech company this year, I guess up until yesterday or yesterday. Right. And the market has sort of been of two opinions about it. It's like if you're, if you're against Microsoft, you're just like the, the OpenAI bet is going to spiral out of control while that technology disrupts your enterprise business to, to thread the needle, it has to be the opposite. It has to be OpenAI is going to crush it. And you know, I will continue to go apace and all, all, you know, along the way you will continue to be able to, to grow your enterprise business. And it's interesting to see the market, you know, vacillate one to the other. And it sort of goes back to our, our Leopold discussion. Is that the, the way the market has seen AI shifts seemingly week to week. One week you're the, the king and one week you're, you know, you're the joke. And this volatility is just gonna be the nature of the beast for a while until this settles out.
- [49:02]
Reed Albergatti
I totally, I Agree with that assessment completely. It's volatile because it's based. The market is not. There's no like fundamentals that they can really look at. It's based a lot on vibes, like week to week vibes. Like who's up, who's down. Sati is a great CEO. I think he's done a great job of seeing AI making this OpenAI bet really like pulling themselves right into this, into the thick of this race and then like not getting over his skis, like not over investing. So now they have this better, this better debt to you know, the debt ratio essentially. And like I just think. But he's gotta be sitting there going like, this is great. Like I love this. One day gain, my record, one day gain. But like this too shall pass, right? Like he know, like they all know, like they're up now, they'll be down later and when they're down they'll, you know, they know they'll be back up. And you know, Google I think has, is a bit, they're a bit down now. But like, you know, I think they're all like Sundar is threading that same needle. They're all, they're all threading that needle of like disruption on one side, you know, like big, big like hasty bet mistakes on the other side. Holding on to that old business while understanding that it's not forever and they have to be, you know, they're all like, what was it Satya said? I'm going to make making Google dance. Like they're all dancing, right?
- [50:33]
Alex Kantrowitz
And I, but I think that's all dancing.
- [50:35]
Reed Albergatti
Yeah, I think that's great that they're all dancing. Like, I love that they're taking these cash piles that they were sitting on forever and they're spending that money. And I think that's awesome. They should be spending that money. That was like the saddest thing that like the biggest tech companies in the world, the most valuable companies world, couldn't figure out what to do with all that cash, you know, and now they're spending it on dancing, right?
- [50:59]
Alex Kantrowitz
But they're also going negative now, right? That their free cash flow is evaporating. You're like, great, spend it. Take the debt, take the risk.
- [51:06]
Reed Albergatti
It's great. We should all be celebrating it, right? Like this is awesome. This is what you want. Like this is how innovation happens. Like that, you know, we shouldn't be like, oh no. Like these companies are, you know, they're, they're spending a bunch of money on this new innovative technology. It's like, no, we're all going to win. Like just, everybody needs to just chill out, like move. You know, they're, they're startups again. They have to reinvent themselves, they have to move forward. They're facing competitive pressure, pressure from startups and innovators, which we haven't even really seen yet. Right. Like the AI stuff is so new that like there, there isn't really even like this, this like creative destruction application layer yet. So like it's, it's fine, like just, it's all going to work itself out.
- [51:56]
Alex Kantrowitz
All right? Someone else who might think it's fine today is Andy Jassy. Amazon turned in 37% growth at us. They were like hovering around 17, 18% for years. Now they're double that and more. They're up 15% today. Same story.
- [52:14]
Reed Albergatti
Yeah, I mean, I think, look, we were talking about this earlier. Like they, they are building these massive data centers that are going to be incredibly valuable in this, in this AI era. And like it's not just the data center. Like they're also building all these services. Like so much of this is going to run on these, on whatever AWS is building on top of those GPUs. So they're, you know, they're also, it's a lot, these are long term things. They will be up, they will be down. But like in the end, unless somebody builds that tiny little 20 watt brain computer thing that we were talking about earlier.
- [52:50]
Alex Kantrowitz
Right.
- [52:51]
Reed Albergatti
Or something else comes out of left field, like it's all kind of, they're all kind of winning in my mind.
- [52:57]
Alex Kantrowitz
Yep. All right, Google, interesting story here. Last week they, they grew cloud revenue by 82% but said they were going to spend a little bit more. To which I was like, if you're growing your cloud revenue at 82% and you're saying the spending is fundamental to growing that cloud revenue and you say you're going to spend more and you now have not only search, but a chance to be in league with Amazon and Microsoft on web services. Why not do it? The market punished them right afterwards and the, the notion was that they had grown, the market had grown wary of all this AI spending. However, today I can report that Google's made up all of that loss and more. They're now above where they were before the stock got hit post earnings.
- [53:43]
Reed Albergatti
Why is that?
- [53:45]
Alex Kantrowitz
I think the market saw Microsoft, they saw Amazon and they just sort of put a heuristic on and they said, well, if it's, if they can do it, Google can do it too. And we're going to. It's almost up in lockstep with the other two.
- [54:00]
Reed Albergatti
Or there's a bunch of algorithmic trading happening and it's all just computers just making random bets. But the ghost of leave. Yeah, I mean, you could be right. When Google took that hit for all those investments, I thought. My thinking was this is also meme based. Right. It's like it's disconnected from the actual fundamentals of their cloud revenue. And it's really about the fact that like, there's this sort of view out there that Google, you know, they were behind. The chatgpt moment happened, they caught up, they were on top and now, you know, the harness thing happened. Everybody's, everybody's loving Claude and Google's kind of like not as much in that conversation. And so they're viewed as being a little behind, which, I mean on coding they admittedly are. They're like six months behind on coding. So I think the market's like, yeah, like, you know, if you were on top with the models, then we would be cool with this spending, but you're not really on top with the models. So we're not. It's like, which is just to me, like, it's. None of it makes any sense. It's like totally illogical. It's like, who cares? Like, these are cloud services. Actually more and more people are using Google Cloud. Like, it's actually pretty good in the, in the AI era. Like they off. I don't know, for whatever reason, people seem to like it. Like, I hear, I just hear. I don't have like a, this isn't a statistic, but just more like a zeitgeist thing. Like people are using Google Cloud in a way that they weren't before. Like, I didn't hear. It was all AWS before. So. But that's like they're serving other models. Like, that's not like their models that's doing that. It's just actually like a, it's a pretty good product for what people are building in the AI agentic era. It's a good place to host all your apps and etc.
- [55:51]
Alex Kantrowitz
It's like, and they're starting to sell chips. TPU.
- [55:54]
Reed Albergatti
Right, right. The TPU business is great. Like, you know, that's also another fascinating one. Right? Like they're, they're like making these, these partnership deals with people because they don't want to spend, they want to offload some of the capital it takes to like build these data centers. So they're, you know, they're doing that? I don't know. It's, it's. But it's like none of that matter. Like, that's so disconnected from like who has the best models. So why is in, in that sense? It's, it's just like aws. But AWS doesn't have the best models. So why is the market cool with AWS but they're not cool with Google? Like, it's all so irrational is my point.
- [56:33]
Alex Kantrowitz
Yep. All right, maybe this one is more irrational. Meta drops 10% as the AI costs increase now I know, okay, you're going to tell us, build, big computer, it's going to be fine in the end.
- [56:46]
Reed Albergatti
But Wall Street, I'm not that. You're not? No, you haven't predicted me on that. I don't get a thing.
- [56:52]
Alex Kantrowitz
I'm not going to, I'm not going to get in your way here.
- [56:54]
Reed Albergatti
Go, go. I haven't figured out the meta thing. I'm like, you guys want to be a hyperscaler or something? Like, I see Meta is the thing where I think, like, I don't know what's going to happen with social media in this, in this whole era. Like, I just, like, they haven't, to me, meta hasn't really shown a way through. Like, how do they. Like, their business is sort of getting disrupted or at least like they don't have like big new ideas. They're just like, we're building the big computer too and we don't really have a use for it, so we're going to rent it out too. Like, like Space Xai. But like, Mark Zuckerberg is not Elon Musk. Right. And they don't have rockets and they aren't building humanoid robots. They don't have the biggest fleet of autonomous vehicles on the road. Like, they're not. So it's like, what are they? Like, I just don't. To me, the meta one is the, is the big. That's like the biggest question mark of all the ones that we've talked about. I don't know how you feel about that.
- [57:55]
Alex Kantrowitz
Yeah, I mean, you know, basically on the call, the analysts, I don't want to say they were begging Mark Zuckerberg, but they were basically begging him to turn that excess compute into like a hyperscaler. And Zuckerberg goes, I think it would be foolish to basically just sell all the compute and take a short term profit and the market is just like, sell. But with meta. With meta, I don't know if this is right. I have nothing to sort of say that this is the thinking inside there. But I can't help but wonder if they're just waiting to see if it's possible to build an AI companion. Uh, and to date, it hasn't been possible yet. But to build an AI companion that, like, won't, like, destroy people's lives if it gets an update or. And won't tell people to, like, break up with their partners or potentially harm themselves. Right. That has been the issue with. That's kind of why I think we're not seeing the proliferation of the love bots, you know, opening. I was supposed to do Dirty mode, but never released that. It's because it's too dangerous right now. But if a company can figure out how to, like, build an AI companion, which I think is going to be even stickier than Reels or TikTok, because, come on, it's just like, you've. You've built a digital friend that's always there for you. I'm not saying this is a good thing. I'm just saying that, like, potentially Meta is waiting for that opening and then is just going to go hard on that. On that route, maybe.
- [59:18]
Reed Albergatti
But I don't think that's a very good business, though. Like, that is where I might tell you why, how much are. You Will, like, ask your audience, like, when you ask them to raise their hands, whether they would pay triple the chat GPD costs. Like, ask them how much they would pay for an AI companion. Like, I don't think it's that much.
- [59:38]
Alex Kantrowitz
Well, the Meta business will be ads and referrals now. It won't be like, your lover is going to be like, you know, why don't we pause this deep, sensual conversation for to hear from our sponsor Kayak. Exactly. But, like, maybe you'll tell it one day. I really do do need a flight to, you know, somewhere. And it will be like, all right, I bought it for you. And then, you know, Madagascar Air, you know, gives a kickback or something.
- [60:02]
Reed Albergatti
Okay, fine. Like, there's an. There's a market for someone could build an AI companion. There are other companies doing that, by the way, and they can make some money off of it. Like, it's nothing. It's a drop in the bucket, I think, compared to what Facebook is and Instagram, like, their, their core businesses and, and whatever. WhatsApp, you know, fits into that. But I just think it's not like, yeah, they could do it, but it's like, not that hard of a problem. It's like, not that interesting of a problem. And I Don't think it really makes that much money in the end. Like enough money to. To really matter.
- [60:39]
Alex Kantrowitz
Agree to disagree on this one. I. This is good. Reid, you and I, we typically agree on so much.
- [60:43]
Reed Albergatti
That's true.
- [60:43]
Alex Kantrowitz
But we've been at odds the whole show today. Yeah.
- [60:46]
Reed Albergatti
Never going to have me on. I'm. I'm not the champion anymore. You're going to be like, I'm done with this guy.
- [60:50]
Alex Kantrowitz
No, no, actually contrasting beliefs is great. Like that's. I feel like that's the way I learned. So it's nice. Let's do one more. Let's do Apple. So Apple, like you would imagine, just delivers like crazy earnings, but the overhang is the bottleneck bros. Basically Apple neck Apple saying, look, we are supply constraint. We need memory for our stuff to work. And the guys building the big computer are taking all the memory and they've already raised prices on, on, on, you know, MacBooks and, and, and, you know, big, big computers. And soon, soon it's going to be your. Your phone and that will impact sales. And so Apple, you know, fessed up to the market about that this week and, and they're getting hit.
- [61:40]
Reed Albergatti
Yeah, well, you know, psa, like you can just buy a super cheap phone instead of an expensive iPhone. Download ChatGPT, you know, and talk to your. Talk to your codex agent and have it recreate all of your iPhone apps and you know, just have it do stuff for you like you don't really need. You know, if you want to save some cash, you don't want to buy the really expensive, you know, iPhone. That's. That's how you do it. I still use an iPhone. Just. Just for the record.
- [62:08]
Alex Kantrowitz
I know, I just. I mean, this is. I, I don't. Look, take this for what it's worth because it's not based on anything. But folks, if. If you're thinking about upgrading to a new iPhone, this might be the window to do it. Where the 17, which is a great phone I've got it, is sitting there. It's going to be the cheapest new model that you'll probably ever see. This would be the window, I would
- [62:32]
Reed Albergatti
say the last iPhone. Get a screen protector for it. Get a case, don't break it.
- [62:36]
Alex Kantrowitz
Do not drop that shit.
- [62:38]
Reed Albergatti
This is your last phone. No, it's a tough. I think Apple's just in a tough position. I'm not a big believer in the long term in Apple long term because as much as they make great hardware, they make great products, I buy them, I use them like all this stuff, I just think that because I see it in my own life already as a bit of a early adopter on all this stuff, the phone becomes less and less important. It just becomes a device that you look at and talk to. And that's not how Apple makes its money. It makes its money because you have customer lock in. You have customer iphoto sharing with your family. You got your, you don't want to be a green bubble and blow up the group chats that you're in and all that stuff. And like ultimately that becomes less important. I think walled gardens or like customer lock in is not as important. Unless, unless like, you know, maybe I get locked in, maybe you end up getting locked into OpenAI or something. Right? But it's like, and Apple, I think Apple has a long way to go before they, they have the AI lock in. So that's their, that's their finish line for them. Like they need to get that. Like they need to build the most powerful AI assistant that works across platform and they need to do it like now. And I, and I don't think Siri is that. I don't think the new Siri is going to be that. So I'm just like not a believer in Apple long term for that reason.
- [64:22]
Alex Kantrowitz
The website is semaphore.com Reed Albergatti is the technology editor there. Sign up for his newsletter. Reid, it's really always a pleasure to speak with you. Thanks again for coming on the show.
- [64:31]
Reed Albergatti
Super fun to be here. Thanks, Alex.
- [64:33]
Alex Kantrowitz
All right, thanks everybody for watching and listening. On Wednesday, Dave Kahn, partner at Sequoia, will come on today, talk about what AI needs to do to make the bet pay off. And then we're going to go company by company and talk about the strategy in terms of resource allocation that each is pursuing. It's one of my favorite conversations of the year. And MG Sigler will be with us next Friday to break down the week's news. Thanks again and we'll see you next time on Big Technology Podcast. I cashed out my entire 401k thinking someone stole my identity. A fake email cost me my dream home. After I sent my personal information to
- [65:11]
Reed Albergatti
a scammer, my AI agent wired thousands to an account I'd never seen.
- [65:16]
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- [65:35]
Alex Kantrowitz
my entire 401k thinking someone stole my identity. A fake email cost me my dream home. After I sent my personal information to
- [65:42]
Reed Albergatti
a scammer, my AI agent wired thousands to an account I'd never seen.
- [65:46]
Ad Voiceover
When billions of people feel unsafe, that's no longer a security problem, it's an economic one. At Gen, we're building the trust layer for a more fearless planet with products and technologies from our global brands Norton, Lifelock, Avast, and Money Lion. See it in action@gendigital.com.