No Mercy / No Malice: A New AI World
The Prof G Pod with Scott Galloway
Release Date: February 8, 2025
Scott Galloway delves deep into the transformative landscape of artificial intelligence (AI) in this episode of No Mercy / No Malice. Titled "A New AI World," Galloway explores the seismic shifts AI is causing in the global economy, the emerging competition between the U.S. and China, and the broader implications for society and shareholder value.
1. The AI Revolution and Its Economic Implications
Galloway opens the discussion by addressing the rapid advancements in AI technology and its profound impact on market dynamics. He references the emergence of Deepseek, an AI chatbot developed by the Chinese hedge fund High Flyer, which has garnered significant attention by rivaling offerings like OpenAI's ChatGPT.
Scott Galloway [02:10]: "If it is in fact true that AI models are much cheaper to build and even run than we thought before, people who are on the right side of this trade is everyone."
He emphasizes that the decreasing costs of building and operating AI models democratize access, potentially shifting value from large corporations to consumers. This shift hints at a more competitive AI industry where consumer benefits might outweigh corporate profits.
2. Stakeholders vs. Shareholders: A Paradigm Shift
Drawing parallels with historical technological innovations, Galloway argues that AI mirrors the transformative effects of GPS, the internet, and vaccines, where benefits are widely dispersed across society rather than concentrated among a few corporations.
Robert Armstrong [02:33]: "AI is likely as transformative a technology as the aforementioned, and it's already setting records for consumer and enterprise adoption. So the question is which organizations will capture and sustain trillions in shareholder value? The answer may be no."
Galloway contends that AI will follow a similar trajectory, benefiting a broad range of stakeholders rather than being monopolized by select companies. This perspective challenges the traditional focus on shareholder value, suggesting a more inclusive distribution of AI's advantages.
3. The U.S.-China AI Race
A significant portion of the episode is dedicated to the burgeoning AI competition between the U.S. and China. Galloway highlights the strategic moves by both nations to dominate the AI sector, underscored by China's development of Deepseek as a testament to its technological prowess.
Scott Galloway [08:45]: "China knocked off an expensive US product at a lower cost. This isn't just about competition; it's about redefining global technological leadership."
He points out that Deepseek's ability to rival ChatGPT without relying on expensive Nvidia chips—due to U.S. export restrictions—illustrates China's capacity to innovate independently and disrupt established markets.
4. Nvidia's Market Turbulence
The episode delves into Nvidia's significant market downturn following the revelation of Deepseek. Galloway examines the broader implications for the tech industry and investor sentiment.
Scott Galloway [10:15]: "Nvidia shed over half a trillion dollars in market cap in one day. This could signal the beginning of a tech market correction many have been anticipating for years."
He debates whether this incident is a temporary setback or indicative of a more profound transformation in how AI technology is valued and monetized.
5. Valuation Discrepancies and Investment Risks
Galloway critiques the soaring valuations of AI companies like OpenAI, questioning the sustainability and underlying value propositions driving such numbers.
Scott Galloway [11:30]: "OpenAI is being valued at 92x revenues versus ByteDance at 2.3x. This kind of disparity raises red flags about the true value being placed on AI enterprises."
He warns investors to exercise caution, drawing parallels to past tech bubbles and the volatile nature of AI as an investment sector.
6. Public Good vs. Corporate Profit
A recurring theme is the tension between public benefits and corporate profits. Galloway advocates for AI developments that prioritize societal gains over shareholder enrichment, echoing his earlier points about stakeholder value.
Scott Galloway [12:45]: "What looks like it may be very bad for business has the potential to be wonderful for the rest of us. Not just for the public, but also for the tech industry."
He underscores the importance of ensuring that AI advancements contribute positively to society, rather than merely inflating corporate valuations.
7. Ironies and Future Outlook
Galloway concludes by reflecting on the ironies inherent in the AI revolution, such as AI potentially undermining its own development by automating jobs within the industry. He muses on the broader implications for global trade policies and the future landscape of technology.
Scott Galloway [13:50]: "The US's attempt to keep American-made chips out of China may turn out to be a powerful argument in favor of free trade."
He envisions a future where AI serves as a public good, benefiting a wide array of stakeholders and fostering a more equitable distribution of technological advancements.
Conclusion
In "A New AI World," Scott Galloway provides a thought-provoking analysis of AI's disruptive potential and its far-reaching consequences for the global economy and society. By challenging conventional notions of shareholder value and highlighting the competitive dynamics between the U.S. and China, Galloway offers listeners a comprehensive understanding of the stakes involved in the AI revolution. This episode serves as a crucial guide for navigating the complexities of AI advancements and their implications for the future.
For more insights and in-depth analysis, subscribe to The Prof G Pod on your preferred podcast platform.