ChatGPT’s Image Generator Goes Viral & Tesla Unfazed by Tariffs?

Summary

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

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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]).

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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]).

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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]).

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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]).

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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]).

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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]).

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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]).

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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.

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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]).

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

Transcript

[Neal Freyman]

Good morning, Brew Daily Show. I'm Neal Freyman.

[Toby Howell]

And I'm Toby Howell.

[Neal Freyman]

Today is the biggest AI IPO of all time. Going to be a flop, then ChatGPT's.

[Toby Howell]

New image generator is making everyone look like they're the main character in totoro. It's Friday, March 28th. Let's ride.

[Neal Freyman]

It was a roller coaster day for my University of Maryland Terrapins. Yes, last night, the men's basketball team got thumped by Florida in the Sweet 16, ending our march Madness run. But earlier in the day, some better news. The school announced that world famous amphibian Kermit the Frog will deliver the commencement address to Maryland's graduates in May. In many ways, this is a homecoming for Kermit because his creator, Jim Henson, is an alum of Maryland, and both Kermit and Henson have bronze statues right outside the student union on campus. Toby doesn't totally make up for the loss, but Kermit as a commencement speaker isn't a bad consolation prize.

[Toby Howell]

I'm taking a very pessimistic view of this. Can you imagine being a parent? You likely contributed to your child's education, Sacrifice a lot of time and money to see your kid graduate, and then a freaking muppet gets up there. I learned that graduations are as much, if not more so for the parents than they are for the students. And once his croaky voice kind of rings out, talking about the challenges he had to overcome from to get to the top of the Frog keep, as he calls it, it would push me over the edge.

[Neal Freyman]

No, that's. That's the wrong take. Maryland by commencement speaker was Ripken, who is a Baltimore legend, but he got up there and was just not exciting at all. And we were all hungover and we were just like, please end this. This is not. This is not fun. We want a little spice, a little pizzazz, and Kermit will bring that. Doesn't matter what he says, but you just want something to perk you up a little bit. I'm not really thinking about the parents. I don't know why you are. I'm thinking about those kids that are graduating and they want a final send off that is worthy. I think Kermit will deliver.

[Toby Howell]

I had John Krasinski, so I think I wouldn't win. Win everything. A word from our sponsor, Sophos. Neal, what happens when one team has a weak spot?

[Neal Freyman]

That's when the other team attacks every time. For instance, if I saw you in a wreck basketball league, Toby, I would take it to the rack every time. We matched up.

[Toby Howell]

First of all, I know you can't go left. Secondly, you're right about the weak spots. Cyber attackers look for gaps in your business's defense. Understaffed teams, outdated tools, anything they can exploit.

[Neal Freyman]

And most businesses don't have the time or people to cover everything.

[Toby Howell]

That's where SOFO steps in. It plugs the weak spots, it fills the gaps and offers complete connected protection.

[Neal Freyman]

You get enterprise grade tech powered by evolving AI, a global team of 500 plus threat analysts watching 24,7 and Sophos Central where you manage it all integrated with over 300 tools you're probably already using.

[Toby Howell]

So even if you're short on staff or time, Sophos has your back every hour, every day. No excuses, no vulnerabilities. By the way, we are totally playing one one on one after this and.

[Neal Freyman]

We'Ll livestream it for everyone. But not before you all head to sophos.com that's SOP H. Do you believe that AI demand will keep going up and to the right? Investors will stare that question right in the face today when Core Weave goes public on the nasdaq. This IPO is the most anticipated end years because Core Weave is the first pure play AI company to hit the stock market and as such it is considered a bellwether for the AI revolution more broadly. While no one had heard of this New Jersey company a few years ago, it's become a massive business by hoovering up Nvidia GPUs and renting them out to AI companies to train and run their models. So if you are confident that AI giants like Microsoft will keep spending tens of billions on cloud computing, then Core Weave would be a great way to put your money where your mouth is. Others are far more skeptical about Core Weave growth prospects, saying that it's sitting on a ticking time bomb of mounting debt, stagnating demand for data centers and old hardware that is depreciating rapidly. Those concerns may have factored into Core Weaves price pricing. Ahead of its IPO, it raised $1.5 billion, far below its initial target of 3 billion at a valuation of $23 billion. At one point it was aiming for a valuation of 35 billion. Toby Corey's IPO was supposed to be a landmark moment for AI, but the vibes are off.

[Toby Howell]

Yeah, there's two ways to look at this. One, the optimistic take is that this is ushering in a new Neo cloud category to the stock market. A lot of people have calling it the pure pure Play that is a little bit of a tongue twister, a IPO of the year. And so if you are wanting to, you know, buy into the AI hype, then Core Weave is a great bull case for that. But then a lot of people also see it as maybe a highly levered, you know, debt ridden way for Microsoft, which is one of their biggest customers, to offload some of its less desirable workload to this company or for Nvidia, who has an investment in Core Weave, to turn that investment into a very large customer. Corve buys a lot of their GPUs. So this structure totally works too, as long as AI demand continues to go up. But if cracks start to form, then Corvette starts to become a little bit of an ugly duckling.

[Neal Freyman]

And most of you probably have never had a heard of Core Weave. And that's very understandable. It started in 2017 as an Etherium cryptocurrency miner as a side project of two traders and they were buying all of this computing power. And then when, you know, crypto hit the scene, skids in 2021 and 2022, they pivoted to AI. And it's been extremely lucrative. Revenue surged 700% last year alone to hit nearly $2 billion. And that doesn't include a deal they just signed with OpenAI with a contract value of $12 billion through 10-20-30. So they've been riding this AI wave really well to, you know, immense financial success. However, there are, there does appear to be cracks forming of Corey's business model. Is that a lot of the Nvidia GPUs that they have, which are 250,000 of these are Nvidia's H100 chip, which is dated to 2022. This, this industry moves so fast. Nvidia already has a new generation of chips called Blackwell, and they're rolling out an even another another new family of chips next year. And prices on renting out the old one H100 are depreciating rapidly. Renting one for an hour used to cost anywhere from $4 to $8. Now it costs as little as $1.

[Toby Howell]

And then also another kind of crack forming is that in a separate report this week, this analyst TD Cowan said that Microsoft is cancelling new data center projects left and right due to an oversupply issue. And so if you are again a company like Corey that rents out AI Compute and you see one of your biggest customers canceling data center contracts, that's not exactly a bullish signal either. So this is going to be a polarizing debut. It could, I mean I'm just going to give every option. It could swing either way here depending, but it looks like right now you said the vibes are off and it looks like the bears are maybe the ones that are more prevalent right now Ahead of its debut if your timeline has recently looked like a cross between Spirited Away and every meme ever made, you're not hallucinating. You're just witnessing the magic of chat CBT's latest upgrade earlier this week, OpenAI dropped a major upgrade to its GPT4O model. You can now natively create and edit images within the Chat CBT app and browser, meaning it added an image crafting sous chef next to the textual line cook you're used to interacting with. It's also a whole lot better than OpenAI's previous image gen software. Dall E GPT4O doesn't spit out things that are clearly AI anymore. It takes a bit longer to think then deliver images that are quite honestly scarily accurate. You can it can even manage hands now beyond just generation. It can also add, remove and modify stuff in existing images. So if you wanted to cook up a mock up image for your pickleball shoe brand in the style of a Don Draper ad, it can do that. Text and all the Internet quickly got fixated on one particular use case though. Studio Ghibli memes thousands of AI generated images started popping up in the style of my neighbor Totoro and Spirited Away, but depicting popular Internet moments like the Hawk to a girl. Even Open Air CEO Sam Altman joined the party, changing his profile picture on X to a giblified version of himself. Meanwhile, back at Open Air hq, the max giblification effort was putting some serious strain on its tech. It's been fun seeing people love images in chat CBT, Altman posted. But our GPUs are melting. Demand got so intense they had to temporarily rate limit image generation. All in all, there's been this outburst of shock, awe and in some cases disgust Neil at the abilities of this new technology.

[Neal Freyman]

Let's talk about that disgust because the creator of Studio Ghibli, the mastermind behind it, Hayao Miyazaki, who created this animation style that is so beloved all over the world and was the subject of all of these memes. What does he think about AI? Well in 2016 he was shown an AI animation demo and he said, quote I am utterly disgusted. If you really want to make creepy stuff, you can go ahead and do it. I would never wish to incorporate this technology into my work at all and Then he added, I strongly feel that this is an insult to life itself. And, you know, that is the pushback to what we've been seeing over the past few days to swarm everybody's social media feed. There's a lot of questions about how this blurs the line between reality and make made up stuff. And also it reminds you that what is created has been trained on millions, perhaps of copyrighted works all over the Internet.

[Toby Howell]

It, it really is. I can't stress enough to how big of a step forward this was for the image generation capabilities, because when this was rolling out, they did it kind of in stages and I still had the previous model and when I was trying to recreate the images people were putting out there, it was just night and day how much worse Dolly was than this. This is truly the first time where, you know, it is depicting things correctly. It's putting the correct number of fingers on the hands. Remember, AIs always struggled with that. It's, it's so easy to change people into different animation styles. I mean, Neil, I was putting your face through it and I made you look like Wallace and Gromit made you look like South Park. And it is truly remarkable how good it is at capturing the essence. So there was definitely this shock and awe period where everyone's like, whoa, this is definitely a step forward. But there was also soon after this big pushback because, you know, these are artistic styles that were developed by people over time and you don't necessarily want to see a program trained on that data spitting out what was the result of a lot of human hours of effort.

[Neal Freyman]

Right. And so OpenAI is now facing certain legal questions, which it has for years now, over whether it was infringing on people's copyright. Right now it does look like capturing a particular style or copying that style is in a legal gray area because you, its style is not explicitly protected by copyright. So OpenAI does not appear to be breaking the law, but you have a bunch of other companies like the New York Times suing it and, and this or this week on Thursday, a judge allowed that lawsuit to proceed. So Open Air is the best of times, it was the worst of times. Welcome to Stock of the Week. Dog of the Week, the segment where Toby and I pick one stock that has all their weekend plans lined up and another that's going to text all their friends. So is anyone doing anything tonight? I won the pre show game of tag. You're it. So I get to go first and my stock is Tesla, which might sound a bit odd after All. President Trump just slapped 25% tariffs on cars made outside the US which sent most of the auto world plunging yesterday. But not Tesla. Tesla is up more than 16% for the week after analysts pointed out it would emerge as a winner from the new tariffs. Well, at least compared to its rivals who are getting walloped. As one Bernstein analyst put it, tesla wins, Detroit bleeds. And that's because, unlike Detroit automakers, Tesla makes all of its cars for the U.S. market in the U.S. at plants in California and Texas. Detroit's big three sprinkled factories in Canada and Mexico. And bringing those into the US Will now cost them. CEO Elon Musk was quick to point out that Tesla isn't completely insulated from the tariffs, since they apply not just to finished cars, but car parts. And Tesla doesn't get all of its parts from the US between 60% and 75% of the components Tesla uses are manufactured in America, depending on the model, which is why Elon wrote that the tariff impact on Tesla is still significant. As for Elon's relationship with Trump and how that may have impacted the car tariffs, the President said Elon did not advise on the plan due to conflicts of interest.

[Toby Howell]

Yeah, I mean, Tesla has made a debut in this category a lot for us, usually in the doggly category because it's kind of been on a downward spiral since the election. This was a bout of positive news because of the fact that it is more insulated. Again, it's not completely protected from these tariffs because a lot of parts go into categories. The bat into cars, motors, batteries, raw materials. These still need to be imported from other countries. But compared to its competitors, it's going to fare a lot better. I mean, if you look at some of the North American competitors that have been maybe stealing some market share from Tesla over the last year, companies like gm, who makes the Chevy Equinox, Ford who makes the Mach E. A lot of those vehicles are far more exposed than Tesla is, which is why you saw comparatively its stock do better than those legacy automakers this week.

[Neal Freyman]

And one particular model to pay attention to when it comes to tariffs is the Tesla Model Y competes in the midsize crossover segment. That category will now see close to half of its vehicles hit with tariffs. Meanwhile, the Model Y probably won't have to raise prices, whereas its competitors do so in that mid sized crossover. That's just like one area where you see Tesla emerging as a clear winner because it builds everything here. And that was a long term plan that Elon Musk executed and it's paying off right now.

[Toby Howell]

And then one final if Tesla is our 1A winner of the week, our 1B winner of the week is Rivian2, which is another EV maker who does manufacture all of its vehicles in the US as well. So you saw its stock jump about 7% yesterday as well for many of the same reasons that Tesla's did. Up next, we got our Dog of the Week. If you're trying to elevate your style, it's all about tailoring. And Theory's Motion Wool takes tailoring to a new level with premium, expertly engineered Italian wool.

[Neal Freyman]

Theory is known for creating collections with exceptional fit, innovative fabrics and enduring styles. Now they're doing it again with Motion Wool.

[Toby Howell]

Motion Wool's one of a kind. Fabrication is where form meets function. It's breathable, wrinkle resistant and machine washable. So you can head from the office to happy hour to date night.

[Neal Freyman]

Whether you've got a long day of meetings or you're packing for a long haul flight, Motion Wool is made to move with you. It's also designed to keep its shape over time so you can keep arriving in style.

[Toby Howell]

Step up your wardrobe with Motion wool. Head to theory.commorning brew to get started. That's theory.com/morning brew taking your business international can feel like sailing through a sea of red tape. Regulations and unpredictability is attracting global business worth the global hassle.

[Neal Freyman]

Wise Business can help. Your Wise account has everything you need to operate your global business. With Wise Business, you can process payments, get paid, and manage your money internationally.

[Toby Howell]

WISE offers 24. 7 live support and transaction notifications so you can track your payments in real time. With full visibility of your finances, you can stay in control and with no hidden fees, no markups on the exchange rate and no ongoing subscription costs, you'll be able to save as you scale your business globally.

[Neal Freyman]

Setting up your account is super easy, and it takes just a few seconds to make payments in over 40 different currencies.

[Toby Howell]

To learn more about how you can use Wise Business to save time, money and stress, visit wise.com/business. That's W I S e.com/business my dog of the week is pretty much every auto company not named Tesla. All big three Detroit carmakers gm, Ford and Stellantis finished in the red yesterday, especially gm, who has the highest exposure to these foreign tariffs. Roughly 30% of GM vehicles sold in the US during the first three quarters of 2024 were assembled in Canada and Mexico. And it's not just domestic carmakers that are feeling the Pinch. Foreign car companies are also sweating. For many foreign automakers, the US isn't just a market, it's the market. Nearly one in three Porsches and one in six BMWs end up stateside, along with $8 billion worth of German car parts each year. For instance, the BMW 3 Series was once the world's best selling premium cars. But under the new rules, it's the subject of a 27 and a half percent tariff, potentially adding more than $10,000 to its sticker price. Even Ferrari isn't speedy enough to outrun these levies. The super luxury carmaker warned consumers that it plans to hike prices by 10% on select models to cushion the blow from tariffs. Neal let's just say that it was really easy to find dogs of the week by sniffing around at the auto industry.

[Neal Freyman]

If you are someone who likes, you know, German premium cars driving around, what is the ultimate driving machine? Bm then then the cars you like will probably face a price hike from these tariffs. You mentioned the BMW 3 series. Another something in car in this general category is the Audi Q5. SUV that's made at Audi is a, is a VW brand that's made at their factory in Mexico. It's Audi's top selling US model. So that is just another, another vehicle in this category of, you know, more premium European cars where they don't have a huge factory footprint in the United States, they make some cars in Europe, they make some cars in Mexico, they make a few cars in the United States as well. But if you enjoy those cars, you might have to pay up for them.

[Toby Howell]

And if you have, you know, finer taste in life. I want to talk about Ferrari a little bit because Ferrari price hikes are always kind of wild to think about because on the one hand the dollar amounts themselves are huge. For one SUV that starts at at $430,000, that 10% hike amounts to $43,000. But for a limited edition F80, that sticker price starts at 3.5 million. So that increase adds $350,000 to it. On the other hand though, Ferrari customers are obviously a little bit more price resistant than normal folks. So Ferrari stock actually ended the day up because they can weather that 10% price hike more than, you know, a normal person, everyday person buying a car. So but it is crazy though, like should just tack another 350,000 on there. It doesn't matter to me.

[Neal Freyman]

For the second time in this podcast, I'm going back to the University of Maryland. I'm remembering Econ101, the concept of price elasticity. And the buyers of Ferrari will probably be able to weather that 10% hike.

[Toby Howell]

It might be us. One day now, one day when our ship comes in. Think of a number in your head between 1 and 10. Then do that about a trillion billion more times, and you too can match the output of a new quantum breakthrough courtesy of JP Morgan. In a first of its kind discovery, the bank announced it had produced truly random numbers using quantum computing. But wait, can't you just roll a dice or heck, use a random number generator online to achieve such a thing? Well, don't tell your buddies when picking your fantasy football draft order, but those programs are not really random. And if you run them enough times, eventually they follow predetermined sequences. So JP Morgan is saying its breakthrough means it's the first institution to generate, rate, and mathematically certify truly random numbers using a quantum computer. Partnering with Honeywell in a squad of government labs, JP Morgan's discovery paves the way for near bulletproof encryption, smarter trading algorithms, and more simple things like fairer online poker. It's also a major flex for the bank to be the one to make this step forward in quantum computing, which is a field that has long been heavy on hype and light on real world use cases. Neil, look at the finance pros go, making quantum breakthroughs in their little vests.

[Neal Freyman]

They're making quantum breakthroughs. I'm not sure they know exactly what to do with it. I mean, here is the head of global technology applied research at JP Morgan. He told Bloomberg, it's a breakthrough result. The next step will be to understand where we can apply it. So they've done this cool thing by creating a random, an actual random number generator, which is very important. Now they need to figure out how to apply it to their business. They say they could do things like, like solve complex problems, portfolio optimization, derivative pricing, things like that. That will obviously help them make more money. So there are certain applications, especially in the cybersecurity world. We'll see how J.P. morgan, you know, tries to randomize this.

[Toby Howell]

Yeah, financial modeling in simulations are a big part that financial analysts use to. They use these random numbers to simulate thousands of possible future outcomes for everything from, you know, risk exposure to stock prices. So the more randomness, the better insight you get. But you're right, with cryptography and cybersecurity, random numbers are the backbone of encryption. Everything from securing, you know, your WhatsApp messages to financial transactions. If the numbers aren't truly random, a hacker with a powerful enough computer can start predicting patterns, and that's game over for data privacy. The third reason that I mentioned, too, is online gambling and gaming, because slots, poker, random number generators are deciding the outcome. So you do want confidence that the things you're wagering on are truly random and not, you know, the result of some of these repeating algorithms.

[Neal Freyman]

Now, if you are, you know, if your ears are perking up and you're. This is interesting to you. I recommend going deep into the world of random numbers because there is a long history of scientists and regular people trying to figure out how to generate random numbers because it is hard to do with a computer. So they've looked to external factors to try to translate, you know, the random things that happen in our world to actual randomness in computers that can be used in daily life. So people over history have looked at things like raindrop falling on glasses or bubbles in a fish tank or the unpredictable behavior of a kitten to try to capture that randomness and translate it to. To ones and zeros and data. But there is a very rich history of the search for randomness and relying on external factors or things that happen in nature and using that in real life.

[Toby Howell]

Can I tell you my favorite way to generate randomness? It comes from Cloudflare, which is an Internet security company. They have in their San Francisco office what they call the Wall of Entropy. What's the wall of entropy? It's a bunch of lava lamps lined up, and they have a camera looking at it. And wherever the blobs are going, that kind of translates to pixels, which translates to random numbers. So if you ever want to know why your web pages are secure, there's a wall happening in San Francisco. A very groovy wall, I might add, of lava lamps, you know, creating that entropy that is needed.

[Neal Freyman]

Okay, I don't want to move on from that story, but we have to. Let's sprint to the finish this Friday with some final headlines. Knock, knock, it's Robinhood. I've got your cash you ordered right here. That situation could soon be a reality after Robinhood announced it would start an online banking platform that will include perks like doordashing cash to your house when you request it. Called Robinhood Banking, the service is the next step in Robinhood's evolution from a disruptive trading platform to an all in one app for your financial life.

[Toby Howell]

Life.

[Neal Freyman]

If you pay for a gold subscription, $50 per year, you will have access to checking and saving accounts, same day cash delivery, and even luxury perks like potential masters and Met Gala tickets. Not sure how that will work. But either way it shows Robinhood is going after deep pocketed consumers with a more exclusive feeling banking experience.

[Toby Howell]

Yeah, they're definitely leaning into the exclusivity aspect. They also said that they would give access to private plane travel, personal chauffeurs, that. So they did not really elaborate on where these perks are actually coming from or how they would work for members. But they're also, you're seeing the evolution of Robinhood as a platform. It's growing up as a, as a banking platform. They're saying they're going to launch a wealth management aspect as well where you can invest in this mix of ETFs in stocks. They would have a little bit of a management fee on top of that. Basically you're seeing it just start to mirror some of the other features that you would expect of traditional bank banks with, you know, its own robbery Robin Hood ification flair, like the fact that it can deliver cash to your doorstep faster than these legacy banks is something that separates it even as it is trying to compete and, you know, kind of catch up to them as well. GameStop is getting into the Bitcoin game, but the way it's going about it has investors scratching their heads. The roller coaster of a mean stop climbed higher earlier this week as investors cheered the board's unanimous approval of a plan to buy Bitcoin using corporate cash, copying a move made famous by MicroStrategy. However, the excitement quickly turned to trepidation when it was revealed that GameStop plan to fund its shopping spree by issuing $1.3 billion in debt, leading to a 22% plunge in its stock yesterday. Plus, GameStop's foray into Bitcoin might not be as successful since the stock is already valued at more than twice its cash balance. So analysts are skeptical it can boost that value using the same scheme that the more modestly valued MicroStrategy popularized. In other words, don't copy other people's homework. If you are GameStop, this feels like.

[Neal Freyman]

A stand up comedian on stage who's kind of bombing and then they just go immediately to crowd work to try to save their set. I mean, GameStop is, you know, a declining actual business. So this reeks of desperation that it would start buying Bitcoin like MicroStrategy has successfully done. The thing is, GameStop is doing a pretty good job of making its business more efficient and approaching profitability. It closed 1,000 stores last year, plans on closing a ton more this year. It only has a loss of less than $10 million over the past two years, so it's eking towards profitability, but it's doing stunts like this to stay relevant in the meme stock world. And at least this one did not pay out for them.

[Toby Howell]

Finally, it turns out that the Hunger Games still has its fastball as a franchise. Sunrise on the Reaping, the latest Hunger Games novel from Suzanne Collins. Collins is selling like hotcakes and moved more than 1.5 million copies worldwide during its first week, which is the biggest opening ever for a book in the illustrious series. Its sales in the US over that period have more than doubled that of its predecessor, the Ballad of Songbirds and Snakes, and more than triple the number for Mockingjay, which came out in 2010 and is the last book that I thought existed in the series. But clearly the dystopian world of Panem still has a stranglehold on the literary community.

[Neal Freyman]

It does, and the film community as well. This franchise has made over 3 billion doll dollars at the box office. They already optioned this book for for another movie coming out in 2026. So Suzanne Collins, I mean what an absolute juggernaut.

[Toby Howell]

I also though had to look at Onyx Storm, which is Rebecca Yarros book in the fourth Wing series. It sold 2.7 million copies in its first week. So it looks like the new age of Romantasy is surpassing, you know, the old guard of Hunger Games. Even though Hunger Games, you know, still has some juice left in it, I think.

[Neal Freyman]

So let's wrap it up there. Thanks for starting your morning with us and have a wonderful Friday. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Olivia Graham and Olivia Lake are our associate producers. Uchenowa Ogu is our technical director. Scoop Starter is on audio Hair Makeup volunteers as tribute. Devin Emery is our Chief Content Office Officer and our show is a production of Morning Brew.

[Toby Howell]

Great show today, Neil. I wish you all well.

[C]

This episode is brought to you by Universal Pictures. Today's the Day. From Universal Pictures and Blumhouse come a storm of terror. From the director of the Shallows, the Woman in the Yard. Don't let her in. Where does she come from? What does she want? When will she leave? The Woman in the Yard in theaters now.