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Welcome to OK Computer. I'm Dan Nathan, joined by Deirdre Bosa. She is the host of Tech Check on CNBC. Debo, it's been a minute, as the kids say. It's been a minute. Happy New Year, Dan. I'm thrilled to be here. I mean, it's been, I think, a couple months since we talked. I think we were kind of going through Q3 tech earnings last we spoke. And generally, you know, pretty good for all intents and

purposes. I know that the focus is going to come on Q4 earnings, but more importantly, you know, Q1 and 2025 guidance. So we're going to hit that. We'll get like how the macro might be affecting that. We got to talk about these new restrictions on chip sales. Is that a Biden administration in their last week? Again, this has been an onslaught over the last six months or so, but you did some great reporting on tech checks. We want to hit the

that. AI models, actually, as it relates to that, you were talking a little bit about the Chinese and how they've been innovating despite those bans. Apple, iPhone sales. I don't think this has kind of come as a huge surprise, but down year over year, Apple intelligence has been a bit of a bust. And then we're going to kind of hit Mark Zuckerberg. D, where do you want to start? Like, as far as the macro is concerned, you know, this brings me back to 2021. I've been kind of

thinking about this a little bit. A lot of folks are trying to make a comparison between the dot-com bubble and what's going on with Gen AI. And there's certainly some similarities. I mean, there's lots of huge differences and we don't have to debate that right now. But at the end of 21, when we saw interest rates starting to go higher, the Fed indicated they were going to do that to battle inflation. Well, here we are. We have inflation, which has at least stopped

going down and possibly going back up. CME Fed Funds tool is kind of pricing in very few rate cuts. And some folks are suggesting higher rates, higher dollar. You know, when I think about this, this is what happened in 2021 when we saw a big turn in tech. Are you focused on the macro or a lot of the folks, whether they be investors or some of the companies focused a little bit on the macro right now? The macro is important.

What's different between today and 2021, obviously, is the whole Gen AI movement, that it's here, that ChatGPT came out at the end of 2022, and that still underpins so much of the market. You could argue that the big tech companies that are spending the most

ungenerative AI and infrastructure and GPUs, et cetera, et cetera, they weren't really affected in terms of their spending plans by higher interest rates last time. These are largely defensive companies. They have giant cash piles that they got to spend and they got to stay on the cutting edge of innovation. So I don't think that changes their spending plans, maybe their valuations. That's a good point. And you talk about Apple, which I know we'll get to later.

which has just been a really interesting story. But you also look at them in the Gen AI race. For a while, they were exciting, but they kind of haven't really followed through on that yet. Apple intelligence has been a little bit of a bust. But here's like the main thing that I want to get across. We haven't talked, I think, in a few months. And so...

so much has changed in the generative AI complex in the investment thesis. Towards the end of last year, there was this really debate circulating in tech circles, have we peaked in terms of AI technological advancements? And that is sort of the pre-training large language model advancements. That's open AI going from ChatGPT to ChatGPT4, all the advancements at Anthropic and Gemini. And the idea that bigger is better, and we were

always going to get bigger, better models. But all of a sudden, folks started talking about hitting the data wall and that a lot of the advancements were going to be made post-training, right, in the inference side of things. And I think that that has changed a lot of how we look at the trade, even in the public markets. If bigger is better and you're making these technological advancements, you need more GPs, you need more infrastructure. So the thinking was that

The mega caps, the hyperscalers, Microsoft, Amazon, Google, et cetera, were going to be spending the same meta, I should say, too. Their CapEx ramp was going to continue to go higher. But what did we hear from Microsoft just a few weeks ago? They expect CapEx to be about $80 billion, which, yes, is a huge number. But that would essentially be flat on the fourth quarter of 2022.

So that has big implications. And yes, there's going to be a lot of spend at this next phase, the inference phase. But I think it's still unclear who the winners are and where that's going to accrue. On the Microsoft front, as you mentioned, so they just gave that guidance about $80 billion in CapEx. Again, flat-ish year over year. Those sorts of guidance is not going to, in my opinion, be able to lift these stocks, especially in the face of some of the questions that you have about the training of these models and some of the thresholds.

that they might hit. And, you know, investors seem fairly downbeat as it relates to Microsoft, one of the early winners as far as from a narrative standpoint, right? And so obviously their investment in OpenAI, but the stock really can't get out its own way. It was trading at $470,000.

in mid 2024 and here we are now at 415 or so and really underperforming many of the others if you look at meta it's very near its all-time highs i want to make one point though when you think about 2021 and i think a lot of folks forget this

Meta sold off 77% from its all-time highs made in November 21 to its lows in 2022. And a big focus there was the spending on the metaverse. And I think that the fact that so few investors are willing to acknowledge that right now, that that could potentially happen again. And I don't mean losing 80% of the value because Meta is one of these companies that not only repositioned a bunch of that spending, but they obviously are building this

Open source model, it's benefiting the way they serve ads and the way that many of the 3 billion people that access their platforms on a monthly basis are interacting with that. So again, I think there's a push and pull there. But thoughts on meta, because I think that's one of the interesting debates as it relates to, let's say, a Microsoft or an Amazon or a Google that don't have this big public cloud infrastructure.

Right. So you're saying they don't have the same kind of inflows from a from or place even because it's not a hyperscaler like Amazon or Google or Microsoft. Yes, but they kind of are. They're just doing it all for themselves. Their spend is so huge. And you're right in the sense that they don't serve other companies. They don't have the same kind of customer base yet. Their spending is so high.

I'm fascinated by what they've done with Lama. And you hear so much about it from industry insiders here that especially as we've sort of tapped out in these advancements in large language models, the closed source ones from OpenAI and Google, for example, Meta has a really interesting spot with sort of the prevailing open source one. You can get to the frontier now a lot faster. I think this year companies are going to start to realize that these open source models are

more agile. They're more scalable too. So maybe these are the models that companies are going to be implementing into their own workflows and they're going to use a Lama. So I think that, you know, one of the themes of 2025 is going to be more uptake of these open source models and that positions Lama and Meta very well. So I think that they could be interesting. What is the other thing that I've been playing around with, Dan? I got a pair of the Meta glasses.

Have you tried them, the Ray-Bans? Dude, not only do I have a pair, I think you and I talked about them in late October. I absolutely love them. That was like a huge gift for me over the last month or so in the holiday season. I think for the price point at like $325 or something, it's a great piece of tech.

And I think it's a little underestimated, right? Because people like you and I, early adopters, we use them. We love them. But this is really like AI as it's meant to be used. And if 2025 is the year we've already been heading this way, that you're searching for the killer app. I mean...

The glasses, I'm already convinced, has got to be a killer form factor. Google has said they're working on a pair. Apple may be working on a pair. But Meta has a pair out right now, like you said, a decent price point. And they look good. I look great in mine. I'll send you a picture. No, I think they're really cool. I mean, for me, I'm using them largely in place of AirPods because my ear is open when I have them on. And I think the camera thing is kind of cool. At my age, I'm probably taking...

fewer videos and pictures off of my head, but we'll see. It'll be interesting to see how they iterate. And I guess more importantly, they told us already that they're going to expand this offering across different brands, not just Ray-Ban and the like. So I agree with you. Let's talk about some of these latest chip bands, these restrictions of high-end GPUs. I know that this is something I feel like we talk about every month, that there's been new ones. You know, I think some of the focus has been obviously keeping these out forever.

of Chinese developers' hands so we can keep the sort of lead that we have over here in the U.S., there is a sense of irony here is that as we're trying to keep them out of the Chinese national champions' hands, you know, the FTC and the DOJ are all over our companies here, right? And so we also know that a lot of these chips have found their way into Chinese markets.

servers, whether they're renting them from U.S. companies. I know there's some like infrastructure in Singapore and the like where they're getting access to the compute. What does this mean on the way out of the Biden administration? And we know that the incoming Trump administration is going to be very hawkish on China. Yeah. And let's not forget that these chip restrictions were put in place by the first Trump administration.

So it's easy to say this is, you know, a Biden era thing. But actually, it started with the Trump administration. And as you said, extremely hawkish. Both administrations extremely hawkish towards China. Doesn't feel like, you know, Trump is going to roll them back. Although the only difference now is that he has a lot more tech and AI people in his ear who know they have not worked. They haven't worked at all. And this is I mean, I'm absolutely fascinated by this subject right now. I can't get enough of it.

The key takeaway is that necessity is the mother of invention. It doesn't, it's actually not even that Chinese medicine

AI research labs have been able to have access to the highest end chips by renting server space elsewhere. It's that they're using a less performative model, a dumbed down GPU to create large language models, open source models that are as good and rival or better in some cases than our own American models, which is just, I mean, such a mind blowing thing. You know, a lot of the folks I talk to in tech say,

also are talking about this and how this has changed the AI game entirely. I've been talking about this AI research lab called DeepSeek. We're doing our next, by the way, our big tech check deep dive on this coming out in the next week or so. But basically, this AI research lab was able to create an open source model that rivals

OpenAI's ChatGPT 4.0, even in some of its reasoning models, it was built for less than $6 million. It used H800 chips. These are the dumbed-down versions of the H100s because they haven't been able to access the H100s because of the export ban. And they did it in two months.

I mean, clearly, these chip restrictions have done absolutely nothing to slow China. It's actually made them more innovative and more efficient. Yeah, it's interesting. I saw Arvind Srinivas with you last week on Tech Check, the CEO of Perplexity. And obviously, you know, that answer engine, you can choose basically any model you want. If you want to use GPT, you want to use LAMA, you want to use CLOD. And, you know, the comment that he made to you about DeepSeek that

Facebook or Meta might start incorporating bits of that model into Lama, which I think is pretty fascinating when you think about, again, open source, but if you think about all of this trepidation. And so what would some Chinese code going into Lama mean for regulators? And I think that's the other thing that's going to be really interesting when you think about

What does regulation look like for generative AI in the new administration, especially when you have all these folks like David Sachs and Elon Musk and Peter Thiel hanging around the rim? Because I have to assume that they're not going to be on the regulatory bandwagon for this technology. Well, you raised an important point. This is something that I was really interested to learn last week. Jensen Huang, NVIDIA CEO, the godfather of computing, said,

said he hasn't met with the president-elect yet. He actually hasn't been invited to Mar-a-Lago. And I found that to be so interesting. He's in the best position. NVIDIA gave this very uncharacteristically stern, hard statement against these chip restrictions, the new ones. And yet the president-elect Trump is surrounded by all of these tech people and not Jensen Huang, who would be in the best position to understand how best to sort of counter

China in the AI arms race. So I don't know what's going on there. It feels like NVIDIA should be part of the conversation. Yeah, no doubt about it. Let's talk about NVIDIA for a second here. Obviously, the chip restrictions are focused on NVIDIA. AMD doesn't have any product per se that is competing with Hopper or Blackwell at the moment. And I thought this was interesting. A couple of weeks ago, I think it was the first week of the year, Microsoft had this comment out how they stopped

production in phase two of a data center in Wisconsin. I know that you were looking at that. They were talking about changes in technology. The information has an article out today talking about some of the glitches in Blackwell and the kind of size of the compute or the energy that it takes. It's causing overheating in the server racks that the Blackwell is going into, which is causing some delays in production, but also maybe pulling back on orders from their biggest

customers, when you think about it, we know this, that Microsoft, Amazon, Google, Meta make up 40% of their revenues. So if that CapEx starts to wane a little bit from a growth standpoint, as we just kind of talked about, you start to wonder, and I know that you listen to this, Satya Nadella, CEO of Microsoft was on the B2G podcast with Gurley and Gerstner, and he said he is no longer chip constrained, but he's

power constrained, right? And I thought that was really interesting from one of their biggest customers. So my question to you is that Jensen has been talking about insane demand for Blackwell, but over the last few months, we've heard of numerous situations where we've had glitches, we've had push out in orders. And then when you think about the ASICs, right? So why did Broadcom rally 40% in two days? They're talking about working on custom silicon with some of

NVIDIA's biggest customer. So at some point, NVIDIA's growth is going to go sideways to lower. And I just wonder for all those folks who are making a valuation argument here after two and a half years of just bang up growth, whether it can continue this way.

I go back to sort of the shift I described at the beginning of our conversation. If we're past the pre-training advancements and we're in the inference phase, it's not obvious that NVIDIA is going to remain the dominant player. There's so much more competition. Like you said, custom chips, you've got Google's TPUs, you've got Broadcom working with a number of companies. So I have been really interested in this question. What happens to NVIDIA? Plus you add in that the Chinese are developing competitive models with lesser chips. Right.

They're using the cheaper, less capable H800. So what does that mean about selling GPUs, selling Blackwell to customers? The answer I got that I think was quite convincing is that these hyperscalers, the big tech companies, they have so much money and energy.

generative AI is too critical of a race for anyone to sit back, doesn't matter. They're going to buy Blackwell's no matter what, because we don't even know the capabilities, what can be done with Blackwell's yet until they start getting into customers' hands in the data centers, building, tweaking models with them. I mean, you don't think Microsoft, Google, Meta, Amazon are going to sit back. They're going to buy those chips because of the promise and because of what

NVIDIA Transformers did in the first place. Yeah, and this is why to me Q4 earnings are so important and Q1/2025 guidance because the use cases of their customers kind of have to emerge, right? And if all the training that goes on with the renting of compute from AWS or Google Cloud or Azure

If that slows down, I mean, that's an indication that there's not a lot of uptake from their customers. Since we last talked, this whole battle between co-pilots and agents, that's been kind of raging. And again, we don't know what the uptake there, at least as far as co-pilot and Microsoft's concerned. It doesn't seem...

that promising in the near term, right? So when I think about this, if you want to start focusing on valuations of these stocks, again, Microsoft trades pretty expensive. Nvidia seems kind of reasonable. But when you look at Google, fine, it's kind of reasonable, meta reasonable relative to their expected growth. But with the

dollar where it is and how many of these companies get so much of their revenue from overseas, if you see a slowdown in demand for the compute that these companies are offering and they continue to spend, that's going to hit margins, which should take a couple turns off the valuations a little bit. So again, if we're going into a digestion phase, if all the stuff that we talked about, the chip bands and how that might affect here, custom silicon, how that might affect NVIDIA, I think there's still a lot of enthusiasm, at least in the stock

market as it relates to NVIDIA. So if that stock were to come in, I think you're going to see a lot of their customers follow suit. I mean, it's still early days, January 13th. But what we've seen so far this year, if it's any indication of what's to come, the AI trade isn't working the same way that it was over the last few years, even a lot of the software names. If we're in this next phase of AI development, the inference phase, it's supposed to be software companies creating use cases.

And there's skepticism. You mentioned Copilot. There's agent force as well. I mean, this is when the rubber hits the road for a lot of these products. And it hasn't been an easy shot for investors. Yeah. And that's a great point about the software. I actually just wrote that for our fast money call today is that the next phase of this should be beneficiary to a lot of these enterprise software companies. And we heard

We had that huge gap higher after earnings in Salesforce. I think they said the term agent like 20 times. Benioff has been extremely aggressive about agents versus co-pilots. And the stock has given back that entire gap. It's down more than 10% from its recent highs. Adobe, you and I have talked about this for a year, hasn't seen an uptick in basically a year. 2023, they outlined how they're going to be an early beneficiary of Gen AI. It goes back to workability.

Oracle, right, which was kind of gaining some share in the public cloud. That stock, again, has been hit very hard over the last couple of months. They saw weaker than expected uptake in cloud when they reported a couple of months ago. Workday now. So to me, I think you want to cover or watch these software names very closely because, again, that outperformance that we saw since early November relative to the semis has almost given it all back.

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podcast today. Should we talk a little Zuckerberg? Well, at the end of the day, I mean, he totally zucked it. When you think about what's going on over

over the last eight years or so. I mean, the guy, and I'd love to get your take, and I know that you've spent some time not only looking at this, but talking to a lot of folks in the Valley. I mean, this has gone from, I guess, 17 when he was sitting on that cushion in front of Congress about what happened in 2016 or all the different times that he sweated in the seat across from Kara Swisher. I mean, this hard turn to the right for him, we've seen it with others. We saw it with Elon. But this is

been kind of interesting. Again, a few months ago on the campaign trail, Donald Trump was saying that he is an enemy of the people and if they have any problems with how they dealt with the election and he wins, he's going to find himself in jail for the rest of his life. We know that Zuckerberg and Elon Musk have been battling over a whole host of things for the last five or six years or so. So for him in this hard turn, especially given all this other stuff that's going on in his personal life, the UFC stuff and the look

and feel of this guy and what he's saying. And I know you kind of highlighted a little bit about what he said on Joe Rogan the other day. I mean, this is a pretty hard turn. And to go and bend the knee or kiss the ring or whatever after everything that he's been through, to me, it's pretty pathetic. I mean, he has all the reason in the world to make this turn. I think that a lot of the fact-checking stuff was so hard for him. I thought that he was vilified for a very long time. But the way he's done so, which you kind of hit on, Dan, is incredible.

It feels way more disingenuous. And I think that that's something that the tech community, his user base, others have taken note of, right, is doing it. Right now, it's very trendy and very convenient to make this turn, whereas you've seen other tech leaders and CEOs make this turn when it was extremely unpopular, extremely difficult to do. Musk spent decades.

$40 billion plus on Twitter to make this turn. He really put his money where his mouth was, and he did it when it wasn't at all certain that Trump was going to be elected again. You have people like Chris Best, the Substack CEO, who has long argued free speech ideals when it wasn't popular to do so. You had Brian Armstrong at Coinbase, who was kind of vilified for his comments, too, on politics and the work

place. Palmer Luckey comes to mind, Alex Karp, right? These are tech leaders that have been sort of singing this tune. So you believe that these are their ideals. Whereas Zuckerberg, you know, in the 2020 election, he did a lot of moderation stuff that, you know, the MAGA base did not agree with. So it just feels...

the word that I've heard a lot and seen a lot when it comes to describing Zuckerberg for a very long time is spineless. And remember too, that he and meta does not have the same kind of like cultural cache that Musk and Tesla do. So for better or worse, it doesn't move much.

the meta stock price in the same way that it moves Tesla when Elon Musk says things. It'll be interesting to see how it evolves, but no doubt other Silicon Valley leaders who have done this in a much more subtle way are taking note. The MAGA base, they look at these kind of coastal elites, and this has been a thing until we saw this huge turn, I think, in Silicon Valley and some of these mega cap techs. And, you know, even over the weekend,

Jamie Dimon, the CEO of JP Morgan, was also doing something that you would not have expected from him and the way he was talking about Trump and expected tariffs and some of the policy in the light. And so when I bring it back to the elites, it just I could not see a time where, you know, the MAGA base is so much further away from.

in so many different ways from some of these tech folks who've come into play or these bankers and the like. And I just suspect that this is going to be something that doesn't end too well for a lot of these kind of tech billionaires, because what do we know about Trump? He burns everybody in. So we'll see what happens there. The last thing I want to say about Zuckerberg is really interesting because he put that thread out about some of the changes that they were making about content moderation on threads. And it struck me how little engagement his supporters,

thread got on his own platform. And I suspect just like a lot of folks have left Twitter over the last couple of years who don't kind of agree with Musk in some of his positions, I think you might see that as it relates to meta properties, maybe not WhatsApp, but

Clearly, Threads has not gained a lot of traction. Maybe it's Instagram. So for whatever that's worth, keep reporting on that, the spineless little guy who's trying to make something of himself. Last thing before we get out of here, Apple. Apple Intelligence, it seems like it's a total bust. Year over year, we saw iPhone sales decrease. This is a company that...

had kind of pinned its hopes on what it was able to integrate on their phone, licensing OpenAI technology, possibly Gemini. People did not upgrade the phones for Apple Intelligence. Apple Intelligence is not in China. We know that there's maybe 300 million Apple iPhones there. Thoughts in general about this? They're losing market share globally also. And last thing I'll just say is that this stock, because of the excitement around Apple Intelligence for the last...

half of the year. So it's multiple really expand. And we're seeing some turns being taken off that right now. I just can't imagine a world in which Apple intelligence doesn't eventually work. And, you know, Google's going to give it a good run also. And they have their own proprietary technologies. I don't want to have to look through my emails to see when my mom's flight arrives and what the traffic is going to be like. It doesn't feel like that much of a stretch. I don't know why it's not because because a lot of the stuff was overhyped by the demos themselves. The demos showed it working perfectly and gave us sort of

false sense of how we'd be able to use AI within our devices. But I still do think that Apple and Google have the ecosystems. They have so much integration in their devices and services and apps and all of that, that I can't see it not

And I mean, despite what Zuckerberg said, I think Apple is still a very innovative company. Yeah, no doubt. I mean, listen, if they get this right, I mean, my view after WWDC back in June was that eventually this will be a reason to upgrade your iPhone for, but

but not right now. And when you think about some of the expected hardware changes, maybe a much thinner iPhone, you know, in the fall, I think a lot of folks are going to wait until October, November and see what sort of improvements, you know, Apple intelligence has been rolled out fairly slowly. Let's see if there's any monumental improvements, just like you talked about productivity gain on the phone. And I can see it. The truth is based on Siri and you and I've mentioned this in the past, it's, you know, you have no reason to be that optimistic.

optimistic on that platform. So again, I think it's interesting that Apple this year so far has underperformed to the downside many of these other mega cap tech. Last thing I'll just say, and you and I haven't talked, but we're done with the MAG7 ever since Broadcom reached that kind of trillion dollar market cap. We're now calling it the fateful eight. The market's fate is in the hands of those top eight stocks. How do you think about that? Dan, I hear your fateful eight and I one up you to that.

This is from Barron's, and they say this is the new group, the Gotham Vigilante, Broadcom, Alphabet, Apple, Tesla, Meta, Microsoft, Amazon, and NVIDIA. All right. I like that. I like both. I like that. I mean, again, those are all the names that I'm talking about. I think mine's a little easier. And mine is a double entendre, by the way, because...

The fate of the market is in these eight stocks. All right, Deebo, we covered a lot of ground. I really appreciate you being here. Let's not wait a couple months to do it again. So I appreciate it. Too much changes in just a couple months. All right. I'll see you in a couple weeks. Thanks, Dee.