Morning Brew Daily: Episode Summary

Title: ChatGPT’s Image Generator Goes Viral & Tesla Unfazed by Tariffs
Hosts: Neal Freyman and Toby Howell
Release Date: March 28, 2025

1. University of Maryland’s Commencement Surprise

The episode opens with Neal Freyman sharing mixed emotions surrounding the University of Maryland Terrapins. The men's basketball team suffered a significant loss to Florida in the Sweet 16, ending their March Madness journey. However, a heartwarming announcement followed: Kermit the Frog, the iconic amphibian created by Maryland alum Jim Henson, is set to deliver the commencement address in May. Neal reflects on the symbolic homecoming for Kermit, noting, “[...] both Kermit and Henson have bronze statues right outside the student union on campus” ([00:23]).

Toby Howell offers a contrasting perspective, expressing skepticism about Kermit as a commencement speaker. He emphasizes the importance of meaningful speeches for parents and graduates alike, stating, “once his croaky voice kind of rings out, talking about the challenges he had to overcome [...] it would push me over the edge” ([01:01]). Neal counters by recalling a previous less engaging commencement speaker, highlighting Kermit’s potential to bring excitement and a memorable send-off for graduates ([01:28]).

2. Core Weave’s High-Stakes IPO in the AI Market

The discussion shifts to the financial sector with Core Weave’s anticipated IPO, described as the “most anticipated IPO of the end years” ([03:02]). Core Weave, a New Jersey-based company specializing in renting Nvidia GPUs to AI firms, represents the first pure-play AI company entering the stock market. This move is seen as a bellwether for the broader AI revolution. Neal details Core Weave’s rapid growth, noting a “700% revenue surge last year alone to hit nearly $2 billion” and a substantial contract with OpenAI valued at $12 billion ([05:19]).

However, concerns loom over Core Weave’s sustainability. Toby Howell highlights potential risks such as mounting debt and the rapid depreciation of their existing GPU assets, particularly the Nvidia H100 chips, which are being outpaced by newer models like Blackwell. Neal adds, “prices on renting out the old H100 are depreciating rapidly. Renting one for an hour used to cost anywhere from $4 to $8. Now it costs as little as $1” ([05:19]). This raises questions about Core Weave’s long-term viability, especially if major clients like Microsoft begin canceling data center projects due to oversupply issues ([06:44]).

3. ChatGPT’s Image Generation Upgrade Sparks Viral Trends

A significant portion of the episode delves into OpenAI’s latest upgrade to its GPT-4 model, which now includes native image creation and editing capabilities. Neal describes the enhancement as “an image crafting sous chef next to the textual line cook” ([06:44]). The upgraded feature surpasses its predecessor, DALL·E, by producing more accurate and realistic images, including correctly rendered human features like hands.

This advancement led to a surge in creativity on the internet, particularly with Studio Ghibli-inspired memes. Users began generating thousands of images styled after popular Ghibli films like My Neighbor Totoro and Spirited Away, depicting viral internet moments. Even OpenAI CEO Sam Altman participated by changing his profile picture to a Ghibli-style version of himself ([07:44]).

However, this viral trend put immense strain on OpenAI’s infrastructure. Neal reports, “Our GPUs are melting. Demand got so intense they had to temporarily rate limit image generation” ([08:15]). The episode also touches on the ethical and legal implications of AI-generated art, citing Hayao Miyazaki’s strong disapproval of AI’s ability to mimic his distinctive animation style. Miyazaki declared in 2016, “I am utterly disgusted. [...] I strongly feel that this is an insult to life itself” ([09:07]).

Furthermore, OpenAI faces legal challenges over copyright infringement, as the technology is trained on millions of existing works. Neal summarizes, “OpenAI does not appear to be breaking the law, but you have a bunch of other companies like the New York Times suing it” ([11:03]).

4. Stock of the Week: Tesla Thrives Amid New Tariffs

Neal and Toby shift focus to the stock market, spotlighting Tesla as the "Stock of the Week." In response to newly imposed 25% tariffs on imported cars by the U.S. government, Tesla's stock surged over 16% for the week. Analysts, including a Bernstein analyst, pointed out that Tesla stands to benefit as it manufactures all its vehicles domestically in California and Texas, unlike Detroit’s big three automakers who rely heavily on factories in Canada and Mexico. Neal states, “Tesla is up more than 16% for the week after analysts pointed out it would emerge as a winner from the new tariffs” ([11:03]).

Toby adds that Tesla’s strategic manufacturing locations shield it better than competitors, whose cars are significantly affected by the tariffs. Specifically, the Tesla Model Y, a midsize crossover, will see fewer tariffs applied, allowing Tesla to maintain pricing without needing to increase prices like its rivals ([13:53]). Additionally, Rivian2, another electric vehicle manufacturer with domestic production, experienced a 7% stock jump, reinforcing Tesla’s favorable position amid the tariff changes ([14:23]).

5. Dog of the Week: Automakers Struggle Under Tariff Pressure

Contrasting Tesla’s success, the hosts designate traditional automakers, particularly Detroit’s big three—GM, Ford, and Stellantis—as the “Dog of the Week.” These companies faced significant stock declines due to their dependency on foreign manufacturing. Neal explains, “If you are someone who likes [...] German premium cars [...] the buyers of Ferrari will probably be able to weather that 10% hike” ([17:38]).

The tariffs have adversely impacted both domestic and foreign car manufacturers. For instance, GM now faces higher costs as approximately 30% of its U.S. sales are assembled in Canada and Mexico ([16:10]). Foreign brands like BMW and Porsche are also affected, with BMW’s 3 Series and Audi’s Q5 subject to hefty tariffs, prompting anticipated price increases exceeding $10,000 for some models ([17:38]). Toby emphasizes that even luxury brands like Ferrari are contemplating significant price hikes (up to 10%) to mitigate tariff impacts, though their affluent customer base may absorb these increases more easily than mass-market consumers ([18:26]).

6. JP Morgan’s Quantum Computing Breakthrough

The conversation transitions to a technological milestone achieved by JP Morgan. The bank announced the development of truly random number generation using quantum computing, a first in the financial sector. Neal remarks, “If you run [random number generators] enough times, eventually they follow predetermined sequences” ([19:20]). By partnering with Honeywell and government labs, JP Morgan aims to leverage this breakthrough for applications like near bulletproof encryption, advanced trading algorithms, and fairer online gambling systems.

Toby highlights the significance of true randomness in various sectors:

• Cryptography: Enhances encryption security, safeguarding data from potential cyber threats.
• Financial Modeling: Improves simulations and risk assessments by providing more reliable random data.
• Online Gambling: Ensures fairness in game outcomes, increasing user trust ([20:32]).

Neal adds that while the breakthrough is promising, JP Morgan must now explore practical applications to fully capitalize on this technology, potentially revolutionizing areas like portfolio optimization and derivative pricing ([21:12]).

7. Closing Highlights: Robinhood Banking and GameStop’s Bitcoin Gamble

In the final segments, the hosts touch on notable financial industry movements:

• Robinhood’s Expansion into Banking: Robinhood announced "Robinhood Banking," an online platform offering checking and savings accounts, same-day cash delivery, and exclusive perks such as potential Masters and Met Gala tickets. Toby notes, “They are going after deep pocketed consumers with a more exclusive feeling banking experience” ([23:21]).

• GameStop’s Bitcoin Acquisition Strategy: GameStop’s board approved a plan to invest corporate cash into Bitcoin, mirroring strategies employed by MicroStrategy. Initially, the stock climbed as investors welcomed the move, but it quickly plummeted after revealing the fund would be supported by issuing $1.3 billion in debt. Analysts express skepticism about the sustainability and effectiveness of this strategy, considering GameStop’s already high valuation relative to its cash reserves ([24:08]).

• Surge in Dystopian Literature Sales: The episode concludes with the resounding success of Suzanne Collins’ latest Hunger Games novel, "Sunrise on the Reaping," which sold over 1.5 million copies globally in its first week—the highest opening in the series’ history. Additionally, Rebecca Yarros’ "Wing" series continues to break records with 2.7 million copies sold in its debut week, indicating a robust market for the Romantasy genre ([26:27]).

Conclusion

This episode of Morning Brew Daily provided an insightful overview of significant developments in AI, the automotive industry, financial markets, and literature. From Core Weave’s ambitious IPO and OpenAI’s groundbreaking image generator to Tesla’s resilience amidst new tariffs and JP Morgan’s quantum computing strides, Neal Freyman and Toby Howell delivered a comprehensive analysis of the latest trends shaping various sectors. The hosts effectively balanced optimistic advancements with cautionary tales, offering listeners a nuanced understanding of the current business landscape.

Notable Quotes:

• Toby Howell on Kermit as a commencement speaker: “once his croaky voice kind of rings out [...] it would push me over the edge” ([01:01]).
• Neal Freyman on Core Weave’s depreciating GPU costs: “Renting one for an hour used to cost anywhere from $4 to $8. Now it costs as little as $1” ([05:19]).
• Hayao Miyazaki’s stance on AI-generated art: “I am utterly disgusted. [...] I strongly feel that this is an insult to life itself” ([09:07]).
• Elon Musk on Tesla and tariffs: “the tariff impact on Tesla is still significant” ([13:04]).
• Neal Freyman on Tesla’s strategic advantage: “Model Y probably won't have to raise prices, whereas its competitors do so” ([13:53]).

This summary encapsulates the key discussions and insights from the episode, providing a comprehensive overview for those who haven't listened.