Gruber Slams Apple, Tech Stocks In Freefall, Vibecoding & OpenAI's Agents
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The fallout from Apple's AI fiasco continues as top Apple watcher John Gruber slams the company's credibility, or lack thereof. Meanwhile, the S&P 500 is in correction territory as tech stocks get slammed. Will it mean the end of AI funding? And OpenAI opens up its agents API, plus plenty more AI news. That's coming up right after this. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and

and nuanced format. Rajan Roy is off today.

And joining us is the returning champ, Reid Al-Waghadi, the technology editor at Semaphore for a fascinating week of news. And we are just going to go right through it from Gruber slamming Apple to the tech stock disaster, along with the rest of the market, actually. And then a ton of AI news at the end, including OpenAI opening up an agent's API. Reid, great to see you again. Welcome to the show. Thanks for having me on. I was not aware I was the champ of something. You're definitely the champ. I'm excited.

We always love having you on. I feel like we always have you on in the middle of like a chaos news week. And this week is no different.

Last week, we were talking at the beginning of the show just about how Siri has become an embarrassment for Apple and the narrative is starting to shift around that company. Now, John Gruber was partially part of that, and we definitely cited his reporting last week, but he stepped ahead of this Apple backlash in a big way this week. And so we're going to get to the rest of the AI news in a moment and the rest of the tech news in a moment, but we would be remiss if we didn't start

the show with Gruber's scathing take on what's happening at Apple. So he has a post, it's called Something is Rotten in the State of Cupertino. By the way, play on R, Something is Rotten at Apple last week. But anyway, I'll let him take the credit. Apple puns. We got him. We got him going. Let's get to the core of this issue. Yeah, I think we should just slice it, you know, carve it up. I don't want to cede any of the answers before I read the question.

Gruber says, in the two decades I've been in this racket, I've never been angrier at myself for missing a story than I am at about Apple's announcement on Friday that the more personalized Siri features of Apple intelligence scheduled to appear between now and WWDC would be delayed until the coming year. I should have my head examined.

Gruber says the personalized features shown at WWDC were vaporware. They were features that Apple said existed, which they claimed would be shipping in the next year, and which they portrayed to great effect in the signature Siri, where's my mom's flight landing segment of the WWDC keynote itself. Apple was unwilling or unable to demonstrate those features in action back in June, even with Apple product marketing reps performing the demos from a prepared script.

This shouldn't have just raised concern in my head. It should have set off blinding red flashing lights and deafening klaxon alarms. What Apple showed regarding this upcoming personalized series at WWDC was not a demo. It was a concept video. Concept videos are bullshit, a sign of a company in disarray, if not crisis. Let's just put it out there. Gruber has never talked this way about Apple before, to my recollection. So to continue on our topic,

on our line of question here is this is apple intelligence just one bad apple or is it indicative like gruber is saying of a company in disarray and not crisis and then what do you make of the magnitude of i would say the number one apple watcher and perhaps fan coming out against the company yeah he's really picking on the apple

I think it's, I think it's, it is really remarkable because I mean, Gruber has been, you know, the ultimate Apple fan boy over the years and, and Apple loves him. I mean, I think, you know, him doing this, it's almost, it almost seems to me like a, like a spell has been lifted. He sounds like somebody who's been under a spell before.

I think probably for many, many years and is now sort of waking up to reality because it's not like this is something brand new. It's not like this is a huge turn of events, right? This has been a gradual thing that's been going on for many years as the company has sort of scaled back on innovation, really leaned on the fact that it's walled garden. Some might call it a monopoly. And it really, I think, used...

that marketing power, that goodwill that it's had since the days of Steve Jobs here to kind of show that, hey, we're not actually behind on AI. And of course, they are behind on AI. And that's just the reality. And I think when you come out and you make all these promises, I mean, it's bound to come back and bite you. And I think that was obvious to anyone who was not under the Apple spell, I think, immediately when they did that big marketing show a year ago. So

you know, it's just fascinating to see the world's biggest Apple fanboy turn on the company.

Yeah, like I think Gruber has been willing to be critical of Apple in spots, appropriately so. He came on the show last year to do an Apple super episode. I think it was really fascinating to hear his perspective about the good times and the bad within Apple. And, you know, I think that it wasn't just him that brought this Apple intelligence message. It was the market as well. They sent Apple stock up significantly on the belief that there would be a super cycle based on the iPhone 16 market.

But the thing I think that is particularly different here with Gruber is that,

He's, that Apple has lost trust, lost his trust. He says, the fiasco here is not that Apple is late on AI. It's also not that they had to announce an embarrassing delay on a product featured last week. Those are problems, not fiascos, and problems happen. They're inevitable. The fiasco is that Apple pitched a story that wasn't true, one that some people within the company surely understood wasn't true, and they set a course based on that. I think that Apple, the Apple sheen, right,

right, has been a big part of this company for a long time. What they said was taken as gospel. They rarely failed in public. When they did, it was non-consequential like Apple Maps. I mean, Apple Maps is nothing compared to Apple Intelligence.

Now they're failing in public and they're losing credibility. And I think that double whammy, right, picking up to, you know, why we think Apple's Siri embarrassment is more than just a product. I think Gruber captures that pretty well. Well, I would just add that it's not that Apple intelligence isn't as good as they said it was going to be or that, you know, it's the fact that other people are innovating.

And that's what it's being compared to, right? We can see the rest of the market. We can see advances in AI.

These other companies now can't even keep up with demand for their AI products. And meanwhile, Apple's is terrible. And I think that's the problem. Because before what would happen is Apple would... I don't think this is the first time they've done this, right? I mean, they make all sorts of claims and promises that are not true. They've done that over the years, but their customers are really locked in. And they prevent innovation, right? So...

It's not like there was some other app store. You had the Google Play Store, but essentially the app store for Apple is its own market, right? And there's not another app store on there. So it's not like you could really... There was nothing to compare it to, and now there's something to compare it to. And that's sort of the problem, I think. Yeah.

And I think that that's totally right. And what really forced the issue here, and we talked about it a little bit last week, was the Amazon product reveal with its voice assistant, whose name I won't say because mine is not muted right now. But we are expecting that AI assistant plus to come out this month.

And, uh, if it does, it's going to really make, and it works, it's really going to make, uh, Apple look even worse. And I mean, I'll just tell you, I was, uh, speaking with some Apple watchers after that, uh, Alexa, should I said it plus reveal and they were just completely shaking their heads being like, you know, why, why can't they do that? And,

Last week, we ventured a guess on the show that it was culture. And I think that Gruber just gets to it in his post in a way that's extremely salient. He cites a 2011 fortune story talking about Jobs and his intolerance for failures. Steve Jobs doesn't tolerate duds. Shortly after this MobileMe launch event, he summoned the team, gathering them in a town hall auditorium in a building on Apple's campus.

According to a participant in the meeting, Jobs walked in clad in his trademark black mock turtleneck and blue jeans, clasped his hands together and asked a simple question. Can anyone tell me what mobile me is supposed to do? Having received a satisfactory answer, he continued. So why the fuck doesn't it do that? And.

then basically jobs berates the group for the next half hour you've tarnished apple's reputa represent uh reputation you should hate each other for letting each other down and gruber cites this and now he returns to cook he says tim cook should have already held a meeting like that to address and rectify the syrian apple intelligence debacle if such a meeting hasn't yet occurred or doesn't happen soon then i fear that's all she wrote the

The ride is over. Where mediocrity, excuses, and bullshit take root, they take over. A culture of excellence, accountability, and integrity cannot abide the acceptance of any of those things and will quickly collapse upon itself with the acceptance of all three. What do you read from that read?

Yeah, again, I just think that's been true for a long time. And you can ride the wave for a very long time when you have essentially a monopoly, right? So I think for people who've really watched the company closely, it's like, you sort of know this, but...

you know, it just takes a really long time for this stuff to kind of play out. And we're just, we're just seeing decisions that happened, you know, a decade ago, start to start to really manifest itself. And I don't think Apple's going anywhere. I mean, I think, you know, they'll have, they'll have many more years and probably good years in the future, but, um, it's just not, it's not going to be looked at the same. Um, I also think if you look at these companies like

All the other big tech companies are kind of like doing everything now, right? They're like, you know, Meta is doing their own AI chip and spending billions of dollars to roll out these data centers. Sure, Apple is going to do that too, but I think it's not the same thing. And I mean, look at Amazon with AWS. They all have these multiple lines of business. Google, you know, they're leading quantum computing. And Apple, it's just an iPhone company. And I think it's...

It's just, that's a really narrow thing in today's world where, you know, there's this explosion of this new technology. And also, you know, another BS thing that Apple pitched, which is this privacy thing, which honestly, like, I cannot believe how much mileage they got out of that. They kind of just painted themselves into a corner because, you know, all these other companies that Apple has been trashing for all these years, you know, they're not going to be able to get out of that.

They've been collecting this data and growing their ML expertise for many years. And now that becomes this very valuable technology. And Apple's just not doing it because they, you know, I think because of really another BS marketing tactic, honestly.

Yeah, and look, I think what you said about Apple's not going bankrupt, neither of us believe Apple's going to zero, I don't think. I mean, they are the one big tech company that stayed above $3 trillion. They're down 12% this week, and we're going to talk about the stock implications here. But it's not like they're going to fall apart. The iPhone is still strong. Service is ascendant. But they also have had declining iPhone sales. Like their iPhone sales in Q1 this year were, I think, 3.5% less than they were two years ago.

that's not good. You actually want that number to go up if you want a higher install base. And so you basically are going to become a company that is milking your asset, which is Apple installs with things like App Store fees and Apple TV Plus fees and storage fees and not a company that's going to be selling the things that people love and selling your inventions. And I think that there's one thing that I would add to Gruber, which is that I think they still are

a company that knows how to build excellent products. I love the latest gen iPhone that I have and the MacBook, for instance. But it's a very specific type of excellence. It's an excellence that makes products work very well with their custom silicon and the fact that their operating system is closed and they control it. That's a great innovation and it works well with their operating system.

But that type of excellence is not a type of excellence that transfers well to AI, which is inherently messier, more open-ended, like you said, requires more data, requires more collaboration. A large language model is unlike most other programs in that it's totally probabilistic. Like it's not a deterministic program, which means that when you release it, you don't control it.

And I think that's tough for Apple and their culture of excellence in one area just is very difficult to transfuse onto this area. Totally. I think in the tech industry, you have to constantly be disrupting yourself. And, you know, if you want to survive in the long run and

you know, a walled garden is, is a way to just sort of, you know, be insular and sort of, you know, ride what you have. And I mean, even their company headquarters, you know, it is kind of like a walled garden, you know, it's like a metaphor for the company. And it's like, it's not, again, I don't even think this is so much about Apple. Apple is just the same. They're doing the same thing. It's the same company. It's just eventually, you

eventually new technology comes along, right? And you just don't know when that's going to happen. Like nobody saw chat GPT happening. But you knew something like that would happen eventually, right? It's totally unpredictable. And now it's happened. It's actually a great lesson about antitrust too, because there were all these antitrust cases against Apple. And I always thought it was like,

I mean, yeah, they are this monopoly. And a lot of those cases cited stories that I wrote when I was at the Washington Post. But I'm like, and I had this thought at the time, this is never going to disrupt Apple. What's going to disrupt them is new technology. That's how you create sort of creative disruption. And it's sort of why, to bring it to what's going on today in Washington, it's like why...

When, you know, you start defunding basic research, that's the stuff that ultimately, those are the seeds, to use the Apple metaphor, that eventually lead to, you know, this new technology that forces companies to either innovate or, you know, or sort of die on the vine.

That's right. Yeah. And I don't think like this is our second week in a row talking about this. I don't think it's because we hate Apple or rooting against it. I just think that like this is a fascinating business story. It's the most powerful, most valuable U.S. tech company failing to get ahead of the latest, the most important tech moment.

In a long time. And that's why we're here. Not to try to like, you know, shit on Apple or anything like that. I agree. I mean, I probably sound like I'm anti-Apple. I just bought a new MacBook Pro. It's amazing. Love it. We always have this in every one of these segments. We would talk about how bad Siri is and then our latest trips to the Apple store. But I do hate Siri.

Yeah. I mean, it's, it's, it both can be true and that there's a reason why they're still the most valuable company in the world, by the way, um, a little more collateral damage to this, um,

I don't think anyone picked this. Very few people picked up on this, but it was buried within a germ. And sorry, in Bloomberg, he says Apple is still working on a foray into a new product category, the smart home hub. It's developed device code is called J490 with an iPad like screen and home control features. At one point, the company had hoped to announce the product in March.

which is now, but because the device to an extent relied on the delayed Siri capabilities, it has been postponed as well. So there's collateral damage here. Well, have we, have we belabored that point? I don't know if we've, we've done enough. Uh,

Uh, but, but it's now, now it becomes interesting because like I said, wall street for a long time, didn't penalize Apple here. Uh, they still expected big upgrades in the iPhone 16 and the iPhone 17. And because of that stock price has held very strong. And again, it's a story stock in some ways it's trade. It trades at a premium. Uh, people hold it, uh,

as a deer possession, like even in the comments on some of the CNBC clips I watched on YouTube this week, people are saying everything these people downgrading Apple are saying is correct, but I'm still never selling a share. But the downgrades are coming.

And Apple got, in the past week, downgrades from Jefferies, from Barclays, and from Morgan Stanley. And there's this analyst, Eric Woodering, at Morgan Stanley that I thought has had some terrific coverage on what's going on with the stock. And I'll just read a little segment that he shared on Closing Bell with Scott Wapner about this on CNBC. He says...

Okay. He says it has an impact on upgrades that Siri or an advanced Siri integrated with Apple intelligence is the number one feature that consumers want from Apple. And in the event they don't get the Apple intelligence feature they're looking for, 50% say they defer their iPhone purchase. As a result, it has an impact on upgrade rates. So Wall Street has gotten in. They have seen what we're starting to see.

They're starting to see what we have seen and they're downgrading and the stock is down 12% right now. I don't want to do like a stock prediction game, but you know, like how far down could this go? But again, if it's a stock built on a story and built on a sterling reputation, if the story and the reputation starts to take a hit, those share prices can as well.

Yeah, for sure. And I think they're not even really, I mean, even, even those analyst reports are like, it's such short term thinking that,

It's like, oh, well, maybe it'll be next year when Siri gets better and then people will, you know, flock to the iPhone again. This is, I think the AI thing is changing the whole paradigm. And so you have to think there will be things about the way we, you know, that the phone may not be the form factor, you know, in the future at some point, right? Because of the way AI is changing things or, you know, it doesn't really, it may not make sense to, it may not matter. Like the technology, you know,

It may surpass the whole concept of a walled garden, you know, all together. So and again, it's not predictable and I'm not making a prediction, but I just think this is how these things go. Like we just can't you can't even imagine what the world is going to be like when these new waves of technology come in and

All I know is it won't be the same. But do you really think that the phone is not going to be part of the mix? I mean, I imagine even if AI becomes... Even if we get AGI, so to speak, we'll still be using phones for a while. Like the Humane pin, I don't see that happening. Well, yeah. Again, it's not that I know what the form factor is. I just know... Even calling the iPhone a phone is almost...

is almost thinking like in a previous, it's a previous era of technology, right? Like it's a, it's a device that, that connects us to, you know, to intelligence, right. To, to the world, to the world, to this web that gets us, you know, into the cloud and that allows us to communicate or allows us to be entertained. And if you think of it that way, I mean,

there's all kinds of devices, all kinds of things that could sort of replace that or add to that, that sort of take you outside of this ecosystem that Apple has built. So I just think, again, who knows what it is? Like neither of us are, you know, we're not technologists, right? Like we cover this stuff, but it's just, if you look at the trajectory, you know, of new technology, that's what will happen. Yeah.

Maybe it's the vision pro. Maybe that's where we go. Nicely done, Tim Cook. You were ahead of it. Well, you know, at some point that will be, you know, that will be something people use. I'm sure that will be one form factor, but you know, I mean, what they really wanted to build was, was AR glasses, right? Like these, which now sort of metas, you know, kind of getting into that game. They have this amazing prototype who knows if they'll be able to mass produce it, but that's that technology again, it's like,

it's not quite there yet. It's like you, they're looking at these things that they think are the next, you know, the next wave. And it turns out to be something completely different, right? Like they did not see chat. I mean, nobody saw it coming to be fair, but they were completely unprepared. They were the least prepared of all the big tech companies for, for that to happen. Definitely. And, you know, I say Apple stock is down 12% on the week and

Well, maybe that's Apple intelligence related, or maybe that's just something related to what's going on in the market right now, because the S&P 500 has entered correction territory. It's down 10% off its highs. And a lot of that is coming at the expense of the quote unquote magnificent seven or the big tech stocks that were the growth engine behind the market's strong rise over the past couple of years, up 50% in 23 and 24 overall. Now it's

It's a different song. And this is from Yahoo Finance. An astonishing $1.57 trillion wiped off the Magnificent Seven since the start of 2025. The volatility in the tech sector has wiped that amount off of the Magnificent Seven's valuation. Nvidia saw the biggest decline in the group, having lost $539 billion off its valuation year to date. Tesla, Amazon, Microsoft, Apple, Alphabet have all fallen since the beginning of the year. The only one holding up is Apple.

is meta. Maybe it's just the Orion glasses. Maybe the market loves those AR glasses. But look, it is a big downturn right now. We're in the middle of, obviously, there's bigger forces than tech that are sending the market down. Obviously, the tariff threat may be an impending trade war. But to me, a big question that comes up in the middle of all these declines is,

Wait a second. We are in the middle of maybe the biggest moment of funding for tech R&D ever when it comes to building research and data centers for AI development. And

A lot of this has been funded based off of or bolstered based off of the fact that the stocks have been so high and you can expect a pretty nice return because of your spend might help your share price go even higher and you'll get better earnings. Does the fact that all these share prices have gone down as much as they have, you know, does the fact that Nvidia could lose a cool half trillion dollars in a couple of months mean

Does that impact the tech industry's willingness, ability to continue to invest in AI? What do you think, Reid? No, I think that the investment in AI will continue.

I think there's two things happening. One, for sure, if you look at the private markets, there's plenty of money to go into building out AI infrastructure, etc. I think there may be a question around, is it going to be the public companies that do that? Because

Amazon is spending $100 billion this year on AI infrastructure, for instance, and Microsoft is not far behind that. All these companies are spending huge, huge dollars on building out their AI infrastructure, which

There is huge demand for as well. I mean, it actually makes sense. I mean, this stuff is very useful today. It may not be profitable. It may cost more to run those, you know, to run these data centers than they're getting paid for right now. But we know those costs come down over time. So there's this huge demand for a new technology and they're trying to meet that demand.

that's not a complicated thing to figure out. I mean, investors understand like, you know, you need to fund this stuff and some of those investments will turn out well and some will fail. But that, that will just continue. But I think there's this like, this other thing that's happening, which is like,

All these VCs in Silicon Valley supported the Trump administration. And, you know, they felt like the Democrats were kind of anti-tech. They were regulating too much. You know, it was like there wasn't a great relationship between tech and the Biden administration, right? So they went to Trump.

At least part of it, you know, a bunch of VCs, people like, you know, Andreessen and obviously Elon Musk. I think you have to wonder at this point, though, whether, you know, we're looking at a fundamental shift in like the economic system right now because of the tactics or whatever you want to call them that the Trump administration is playing right now.

And I sort of wonder whether, I mean, I think the industry was like, hey, we kind of just wanted like a little less regulation. Like we didn't necessarily want you to tank this entire system that actually works pretty well, has worked pretty well, right? Like there's free capital. You fund these startups. They have a great stock market to go public in. You know, basically the whole system favors the stock market, right?

And now it's not even changing. It's just completely unpredictable, as you said. So I kind of see those two themes as really interesting to watch.

Yeah. And it works well for like the system works well for who it works well for VCs. It works well for shareholders. It wasn't working well for, I would say, a good chunk of the U.S., which is why they became why I think support built in favor of protectionism and against free trade. It's really hard to undo free trade. I think we probably could have been more careful in terms of the way we entered trade.

these trade agreements, but free trade as it happens, uh, does benefit big tech in a big way, whether that's advertisers, um, from other countries, you know, trying to sell into the U S market and running ads on Facebook, uh, or expanding in the U S and then buying cloud compute here. Uh, and in particular, uh, buying, buying cars. And then you look at Tesla and you're starting to see some, some ripple effect here. Uh,

This is from Business Insider. Tesla's latest decline could be one for the history books.

It says Tesla has lost so much value in a short period of time that JP Morgan analysts said they couldn't think of another comparable moment in automotive history. We struggle to think of anything analogous in the history of the automotive industry in which a brand has lost so much value so quickly. The JP Morgan analysts wrote in a note on Wednesday that those, the historical cases before were confined to a single market, whereas the decline in Tesla sales in 2025 is not specific to any one nation or geography. So I guess you have,

The threat of tariffs, which Tesla has now started to say could impact them, and maybe also some blowback to Elon Musk being so close to the Trump administration and associated with his policies that you see in places like, I think, Germany, that sales have dropped something like 75% on Tesla's.

It's ironic, I think, that the Germans don't want to buy Teslas. I mean, you know, and there used to be the whole meme about German cars, right? Like...

if, you know, within the Jewish community. I mean, I think it's sort of... Well, Tesla is a special case, right? I mean, it's hard to like separate all of these things out. I mean, people don't like, you know, they don't like Elon Musk. There's all these protests. People are throwing Molotov cocktails at the, you know, at the dealerships. Obviously, a lot of people in the press don't like him either. They're writing nasty stories. That's probably having...

a ripple effect in the market. I mean, they've also seen sales drop, I think in part because they have this whole, you know, this whole new lineup of cars coming out, right? Like the, there's a slump in January anyway. And then on top of that, their cars are like about to be refreshed. It's like the new iPhone is about to come out. Why would you buy an iPhone? Um, so I think, um,

I think there's a lot of things. The company, though, is still... I mean, they're just way ahead of the industry technologically. I mean, the full self-driving...

technology is just like, it's incredible. Like somebody gave me a ride home from the airport yesterday in a Tesla. They did not touch all the way from, you know, the San Francisco airport to Marin County. They didn't touch the steering wheel once. I mean, the, the stuff is, it's incredible. It's running on like transformer models, right? A single transformer model. Um, and,

So if Tesla starts, if they start updating their cars and they're selling cars that allow you to not have to pay attention at all, like not even look at the road. I mean, I think that company, people are still going to buy that product no matter who's running it, I think.

Well, let me then put this to you. Is this a moment? And of course, this is not investment advice, right? This is just two reporters kind of riffing. So don't buy based off of this advice. But is this a moment that you'd want to invest in companies like Tesla as they're being hit by sentiment and maybe the Magnificent Seven as they're sort of, they're being put in the middle of a potential trade war? Now, I think the optimistic view would be that,

A lot of this is just posturing or at the very worst, it's Trump trying to get some of the tough stuff out of the way in the beginning of his term. So he looks like someone who's really saved the economy towards the end and left it in good shape. Do what you have to basically crush inflation and then build from there. And in fact, I asked you, Reid, if there are any stories you want to discuss today. And you said it's a great time to invest today.

in AI stocks thanks to Trump tanking the market. So I turn that to you, is this the moment?

Right. I mean, yeah, back to not get... I mean, look, I don't invest in individual stocks. I basically never have because, you know, being a business reporter all these years doesn't allow me to. But it does... Look, just Tesla aside, I mean, I would say Tesla is probably an AI stock. But Tesla aside, like, you know, there's huge demand for this new technology. I mean, at the end of the day, like...

I mean, something very drastic would have to happen to change the current situation, which is you have a new wave of technology that is going to completely upend the world economically in the long run. It's just a question of how fast it will happen. And all these companies that are building the infrastructure around that

are they're kind of no brainer investments in my mind. Um, but it's easy for me to say, right. I'm not, I'm not like, you know, putting my money. I mean, I have whatever a 401k, but, um, how, how does that not like, how does a company spending a lot of money to build a new technology that has tremendous demand? Like, how does that not make sense? You tell me, I, I can't, you know, no, I think it does make sense. It makes sense as long as

It delivers. And I think we're still in this point where we're not exactly sure the magnitude that AI will deliver. I think we've gotten over the hump of will AI be useful? It sure is. But we don't yet know, like, let's say, what percentage of GDP growth AI will contribute to. And if it's not a meaningful percent, then a lot of this investment will be like, all right, well, you know, you can upload your tax returns into ChatGPT and...

have a fun conversation with it, but it's not going to like, you know, help a company make 10% more revenue. Well, wait, there's two things. There's two things there that I think you're, I think you're combining, which is like GDP growth and companies making money. Like you don't, you don't have to, to make a lot of money. You don't have to move the GDP of a country.

No, without a doubt. I was using that as an example to illustrate the cumulative productivity increases that we're seeing from AI. And so the argument for those who support AI is that it will be profound enough that it will lead to tangible nationwide productivity increases.

Of course, a company can make money that you can make money again off of these like pay $10 and you can put JD Vance's face on a lemon. But the question is the magnitude of this. And that's that to me is like when you ask, like, should we question the wisdom of this technology that's going to change everything? It's like the reasonable doubt that you would have here is not that that.

Anything that's been done politically will change what's been happening, where the trajectory is. But just like how much they live up to the big promises that some of the AI labs have put out there, like Dario Amode saying, you know, there's not going to be a software engineer in like three months. If that's the case, that's a very different than if it's, again, just this thing that you can kind of joke around with and, you know, tell your secrets to and then it can give you some advice. Yeah.

Right. I mean, what I'm saying is, I actually don't know what the GDP impact is going to be of AI. Because the thing that people always forget is like, you can invent something that's amazing. But people have to adopt that technology. And it's, you know, generally, we're very slow to adopt technology. I mean, if you look at the internet, you know, or just the personal computer internet web sort of era of the last like 35 years. I mean,

And it's a massive change. It's completely disrupted the job market, right? But it happened gradually. It wasn't like it just smacked everyone over the face and instantly all these jobs ceased to exist. But it did change their jobs that don't exist, a lot of jobs that don't exist because of that new technology change.

And I think AI is, it might happen faster. There's different scenarios, right? If it, if all of a sudden it's like, it just happens so fast and there's no, you just have no choice but to adopt it. And, you know, that is probably not a great thing. Honestly, that would really, if that might really affect,

things in a negative way, because I don't think humanity is really great at sort of, you know, adjusting to these really fast changes. But, you know, over time, for sure, right? But then, at the same time, like, you don't have to have it, like, if even just software development gets totally disrupted, if that's the only thing that comes out of this, which seems like pretty likely at this point, then

That's enough for these companies to make a ton of money. It's still a good investment, I think, regardless of what the big long-term impact is on the world. Does that make sense or do you disagree?

I only disagree slightly. I think that the money that we're seeing being put into these companies would be very different if the use case was only software development. Are you still going to make a company that is extremely profitable? Potentially. But are you going to make something that's going to live up to the expectations of investors if it can just do software engineering? I don't think so. And I don't think that's what's being pitched to the investors either.

No, no. I mean, you're, you're right. It's, and it is, I think it is much more than that, but yeah, but even that is like, you know, that's a pretty design. That's big. Yeah. Yeah. I mean, like if anyone can hire, if anybody can have an army of software developers for basically nothing, like that's pretty, it's pretty impactful.

I agree. Having been as deep in the technology as I have been, I'm sure you've done the same, trying it out, testing the new features. It is incredible what it's doing, like how quickly it's moving and how good it is already. But again, there's one more question overhanging all this, which is how much better is it going to get? Because...

Those concerns about the diminishing returns on pre-training and growing the size of your models, those are legit. Jan LeCun's going to be on the show next week. We're going to talk about it. He's pretty convinced that we have hit that moment of diminishing returns. And hearing him speak to it, it's like, okay, so we're going to need some more breakthroughs to keep

this to keep having this technology be more, more useful. And we don't know what those break breakthroughs are. So there's a chance that we just kind of hit a cap of what LLMs can do today. And of course, then you go to productizing them. And that's the big debate we have on the show all the time. It's the product or the model, uh,

uh, that matters. But I would say it may be trouble, uh, again, if this is the best they are, I'm not complaining, they're very good, but they need to get better to again, live up to these expectations. Yeah. There's totally a leap of faith thing that happens. And, and I think Jan is so smart and, and, you know, love his, you know, just anything he puts out there is, is fascinating to listen to. Um, but I think that, um,

there's this leap of faith thing that happens with AI where you build more compute capacity, right? You allow AI researchers, computer scientists, access to just more compute power and they just come up with new ways to use it. And so, yeah, I mean, of course, if you start to, if you ramp up, if you just increase the compute power by orders of magnitude overnight, right?

I think it looks like there's a plateau because it takes time. Like normally that happens more gradually. So like the AI research and the compute power kind of go together over time. Like they, you know, it's like a ping pong. There's a little more compute, a little more research, a little more. Right now there's just this huge leap in compute. So I think the research hasn't quite caught up to it yet.

But again, that's not something you can prove. You can't prove that there will be some breakthrough in the future, that some kid who's graduating from Stanford today is going to figure something out two years from now.

But I do think it will probably happen. And I guess we're going to talk more, you know, about some of the new technology later, too. So I don't want to get like too much into that now. Well, that is a great tease. So we are going to talk about some of the new technology, including the development of proprietary chips from Amazon and what that's going to lead to. That's going to advance AI. And also, we haven't yet talked about how open AI works.

is going to let other apps deploy its agent AI. So we'll do that when we come back from the break right after this.

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And we're back here on Big Technology Podcast with Reid Alberghati, the technology editor at Semaphore. We have big news coming out from OpenAI. This is from The Verge. OpenAI will let other apps deploy its computer operating AI. Agents are said to be the future of AI and now OpenAI is trying to help developers build their own.

The company is releasing a new responses API that offers building blocks for developers to create agents capable of searching the web, digging through files and performing tasks on a computer on their behalf.

There are some agents that we will be able to build ourselves, like Deep Research and Operator, says Oliver Godemais, the head of product for the OpenAI platform. But the world is so complex that there are so many industries and use cases, and we're super excited to provide these foundations, building blocks for developers to build the best agents for their use cases and their needs.

I want to say that this is big because giving this technology to developers, to me, seems like a real opportunity to be able to sort of prove out the agent use case we've been hearing about so often. But the skeptical side of me says no.

operator and deep research seem more like a party trick than an actual application right now. And I guess it might be useful in some maybe obscure data entry case, but these companies are already using macros and robotic process automation. And I don't know if this will necessarily be a leap ahead. You've been following the news. What do you think about it? Well, yeah. I mean, I think you bring up a good point. I mean, look, I think

I think it's probably big just because you're giving developers, you're giving the general public access to something that will allow them to just unleash their creativity on this technology. And I think that's always interesting. It's just sort of exciting to kind of see what people come up with. I haven't played around with it yet, but I don't know if you've done this. I learned that it's called vibe coding. I didn't really know, but like,

I have, indeed. Yeah, I mean, I started doing that and, you know, it's just like...

it's incredible what you can do you know with you know when just playing around with this stuff is somebody who just doesn't really know anything about coding what you can build is it's amazing but it's also you can kind of see how like again back to like the infrastructure build outs you could see how you know you start hitting these token limits these context limits that sort of

you know, I think limit the technology right now, but like, well, those barriers will, will be, you know, as long as people keep investing in the, you know, in the infrastructure, which I think they will, those barriers are going to go away. And then I think that's when it becomes really, you know, even more transformative. Have you vibe coded anything fun?

Yeah, like I did some stuff with... Which we define vibe coding. It's basically just prompting software and just adjusting based on prompts, not coding things. And just building anything that you want in your daily life.

Right. In my case, it's just like, it's like, okay, I'm going to try this. Like, let me see if I can build a little app with Replit, you know, Replit agent. And then eventually, you know, I need more tokens. I need more power. You know, I'm going to go use, you know, Claude Sonnet. And it's like, you know, create software that does this and you watch it like write code and

And then, you know, you're putting that in the terminal and you're, and at the same time, I mean, for me as a, you know, somebody who's covered technology, but never been a technologist, it's like, I'm learning so much too. It just, it teaches you like in a way, like how software works if you don't know already.

And I find if you do that and you start really getting into it and you start hitting these limits of the token limits and stuff and you're getting cut off, it's like, oh, okay, I can see... I kind of see now...

what this is all about and why we need all these data centers and, you know, to bring the cost down. Um, but, and so like, I just, when I see that, I'm just like, Oh, I want to try that. Like, I want to see how that, how that works. Um,

What have I built? I mean, I, you know, the thing is it's not like, it's not there yet. So these things aren't like super complex, but like just stuff to help me, you know, help me plan kids summer camps, right? Like going out on the web and pulling, you know, pulling information off of various, you know, websites and, and, you know, putting it into different forms. I thought that the one fun was just like,

looking at like having operator look for specific specific emails and then like connecting that to you know Twilio and having it send me a text message about it I mean you could just do cool stuff and it's not but again like

I want to build more complex things, right? I want to like find ways to save lots of time and automate everything from my professional life to my personal life. And we're not quite there yet, but it seems kind of close. Have you built anything? What have you done? Yeah, I mean, I've built, I mean, using Cloud and it's just a couple of prompts, but I've built games like I talked about on our Wednesday episode with the Roblox CEO.

I also built a retirement calculator where I uploaded a fake bank statement and was just like, make me a financial plan based off of this bank statement. And I was like, all right, well now build me a retirement calculator just for kicks. And I built a working retirement calculator with various fields, a very nice and sophisticated one. So to me, I think that...

Just this power to imagine and prompt any piece of software. Like as we're talking, I'm thinking like, do I want to build like my own tracker for big technology stories or podcast guests, a specific calendar? Like you can probably prompt that with Claude and they give you dedicated links so you can kind of use that as a webpage and sort of next thing you know, you have this like custom application that you would have had to pay maybe a few thousand dollars for someone to build for you.

Yeah, totally. And I think it's... Have you played around with any of these ones? Like the Replit agent? There's a bunch of them where you just build me this and the app is just created. Yeah, I mean, that's what... Cloud can do that now. You did that with Cloud? Like totally end-to-end? End-to-end Cloud. Yeah, that's really fun. I mean, Replit uses Cloud, so I guess it's similar, but...

Yeah. Yeah. No, it's, it's crazy. And, and like, when we talk about how things are going to get better, that in particular to me is, is very exciting and, and it might be lucrative. So it's like, again, talking about the payoff. Now we have a story, it's a little bit old, but I think we had, it's worth talking about on the show that open AI is reportedly planning to charge up to $20,000 a month for specialized AI agents. So they're working on a high income knowledge worker agent, which will be priced at 2000 a month.

A software developer agent at $10,000 a month and the most expensive rumored agent, $20,000 per month for a PhD level research assistant. The story, I think this is the information story. They say that SoftBank, an open AI investor, has committed $3 billion in debt.

to use OpenAI's agent products this year alone. So maybe this is an answer to our question from what's going to happen from the first half. Do you think this stuff is going to get any uptake, Reid? You know, the $20,000 thing, it hasn't actually launched yet. But my guess is if it does launch...

And I did read that story in the information. Great, great reporting as always. If it does launch, then I think they know, you know, there probably is demand for it, right? And I mean, it's amazing that, I mean, they have like the 200 a month plan too, right? The pro plan that apparently is just, you know, has incredible uptake. And they're still, you know, they're still losing money on it to be fair. But I mean, the fact that people are willing to pay that much for this stuff,

It's just, you know, and it's still so new. I mean, it just feels like, it still feels like V1 to me. I mean, when I play with it. So, you know, it's just, it's, you know, it's an amazing technology, I think. Definitely is. Have you tried or do you have any thoughts on Manus? I think it's called Manus. It's the Chinese agent. Yeah.

You know, I haven't used it actually. I tried DeepSeek, played around with that, but have you used that? I haven't used it. I've just seen it working at like incredibly fast-paced speed. And I actually read this. I mean, I've applied to be on the wait list, but there is apparently a lengthy wait list and...

I don't know. I've been too busy this week to write them and say, hey, can I get like a press access point? But MIT Tech Review did get access and I read their review and

and they found that it feels like collaborating with a highly intelligent and efficient intern while occasionally lacks understanding of what's being asked to do makes incorrect assumptions or cuts corners to expedite tasks it explains its reasoning clearly it's remarkably adaptable and it can improve substantially when provided with detailed instructions or feedback it's promising but not perfect okay so this journalist gave manis three assignments

One of them, let's just talk about one, compile a list of notable reporters covering China tech. So this is the review of how it did. It gave them a list with five names and five honorable mentions below them. Some of the journalist's notable work was listed. Some of it wasn't. The journalist asked Manis why, and it said it was lazy, partly due to time constraints that tried to expedite their research process. Okay.

This is my, again, this is my criticism of this stuff. Yeah. You could probably just ask ChatGPT for a list and it will do just as good a job as your fancy agent. So I think we're going to just have some moments where we try to have to figure out how to use these. And like you said, it's going to take a while for the use cases to develop.

Yeah, and I think the other thing that's sort of about the Chinese ones like DeepSync, I mean, DeepSync had this app as well, is that, you know, even OpenAI, like, do you remember Sam Altman tweeting, like, sorry, we're out of GPUs? I mean, it's like, I'm sure you talked about it on the show, and it's like,

they're blocking GPUs from being sent to China. So imagine if any of those products took off. They would just have a very difficult time

you know, keeping up with the demand. If, you know, so it's all about efficiency, right? Like it's all about creating, you know, doing this stuff with as efficiently as possible, which is great. But like, you know, even the state of the art stuff like Claude Sonnet and et cetera is, you know, pushing the, the, they're barely, you know, it's still like V1, right? So if you're doing the sort of like slightly less than, you know, the state of the art, but more efficiently, it's like, it's never going to be like,

that impressive because it's always a slight step behind. That's how I view these products. They have to get more efficient. Everybody's trying to do that. Everybody's trying to make this stuff as inexpensive as possible. The big labs are doing the same thing. I don't know. I think they're interesting, but it's not like...

It's not going to like blow up the whole market, you know? Yeah. And it's just going to take a while for use cases. I mean, I think criminals will have a great time with this stuff because it will just try to fish everybody and hack into their systems. But the good use cases, I think, will be tougher to find.

So as right before we leave, I want to hear you have a story coming out in semaphore. It's about Amazon's chip effort called project Rainier. And I've always wondered about these proprietary chip efforts because you hear the same thing from every CEO that talks about them. Which is.

Which is we'll take every chip that NVIDIA will give us and we're very confident in our own chips, which to me is somewhat contradictory. So what have you found and which part of the executive statement should we believe the most? Yeah.

Well, I went out and visited the Amazon chip lab and talked to them. And obviously, they want to talk up their technology. The interesting thing I think about... There's a couple of interesting things about the Amazon effort. So they've been at it for a while now. They acquired this Israeli company, Annapurna Labs, 10 years ago. And...

This is their second generation of the Tranium chip. It's Tranium 2. And this chip is... I mean, it's not as good as an NVIDIA chip on a one-to-one basis if you compare them. But if you network them together and you're talking about hundreds of thousands of these things and every piece of the network of the data centers are custom built to be as efficient as possible, you do start to get sort of...

these efficiency gains. And that's kind of what it's all about, right? We've talked about this now, you know, this has come up on this show a few times. So their big project is called Rainier, right? They're going to build this huge cluster of chips. And they say that it's also, they've found a way to connect multiple buildings together, you know, using this elastic fabric technology that they've been at for a while.

If that's true, I think it's really interesting. I mean, to my knowledge, you know, people have trained models across multiple locations for sure. But the state of the art models, you know, either they have to be split apart where like parts of the model are being trained in one building. But what Annapurna is saying is they, you can actually treat a multiple location cluster of compute as one massive cluster as

as if it's in the same as if it's in the same building i mean if that's true then you know i think that puts them a step ahead and then the other the other big thing is that and this is not new but they've you know they got anthropic to you know train the next model of of claude on this you know on this rainier cluster and it worked you know what's that it worked

No, they haven't actually built the... The cluster hasn't even been built yet. So I think this is like... It's like a big test, I think, for Amazon if they can actually pull this off. And the other thing is like they're a huge investor in Anthropic. So it's not like a... I mean, I'm sure that has something to do with this decision, but I also don't think Anthropic is just going to like... They're not going to like...

decide to stake their future of the company on this technology if it's not good. And so I think what happens, what could happen with this effort is that, and also Anthropic has helped them design these chips and all that. And what could happen is, if this is a success, if they're able to build Claude and Claude remains state of the art, that gives them a lot more customers, right? Because now Claude will run more efficiently on

the Tranium 2 chips. And so I think that that actually does start to help. And they've got some other, you know, some other customers as well, like Databricks, Apple is considering it, you know, Poolside, which is like a kind of kind of hot AI company. So I think there's a I think there's an interesting, I mean, they have, they definitely have an interesting story around

around these data centers. And, you know, they're not the only ones. They're not the only ones out there. I mean, Google is obviously, they've been doing this the longest, this kind of vertically integrated custom chip strategy. You know, Meta's getting into it reportedly. So there are other people doing it. But, I mean, if you think about this, the scale of this stuff, efficiency does become kind of the most important thing. So I do think...

Maybe not every custom chip out there, but the ones where you can really vertically integrate are really interesting. And so what happens to NVIDIA? Well, NVIDIA is fine. I mean, I don't think... The pie is growing so big. It's growing so fast. Nobody's going to lose here. None of these big players are going to lose. NVIDIA, people are still going to... NVIDIA still won't be able to keep up with demand for their chips, I think, for a long time. I mean...

It's just that you need more. Like it's just not, you know, you can't meet demand with just NVIDIA, I think. Definitely. All right. We will set this podcast to go live just as your story comes out. Tell folks where they can find it. They can find it on semaphore.com and please sign up for my newsletter. It's free for now. Are you guys getting paid? No, I just... You're going to have a little semaphore scoop here? I just like to, you know, it's a little...

I don't want to make it I want to create some urgency you know maybe maybe you'll get grandfathered in when we do

Okay. Well, I'm subscribed. I get it every time it gets sent out. And I do suggest you go check it out as well. Reid Alberghati, great to see you again. Our returning champ delivers another championship performance here. Thank you for coming on the show. Thank you so much. It was really fun. Super fun. All right, everybody. As I mentioned, Jan LaCuna is going to be on the show on Wednesday. So stay tuned for that. You're not going to want to miss it. And then next week around tonight, we'll be back to break down the week's news. Thank you for listening. And we'll see you next time on Big Technology Podcast.