OpenAI’s IPO Plan, Deconstructing The AI Bet, Apple’s iPhone 17 Revival

Channel: Alex Kantrowitz

Published at: 2025-11-06

YouTube video id: WyNtzRQfCyM

Source: https://www.youtube.com/watch?v=WyNtzRQfCyM

Open AAI has a clear path to an IPO.
Will it be the biggest ever? Plus, we
deconstruct the broader AI bet and ask
what happens if it fails and Apple's
back in a surprising way. That's coming
up with MG Seagler right after this.
Welcome to Big Technology Podcast, a
show for Coolheaded, a nuance
conversation of the tech world and
[music] beyond. MG Seagler is back with
us for his first, usually first Monday
of the month appearance, but we have
such a big show for you, we moved it to
Wednesday. This is the big show of the
week. We're going to be talking about
the potential OpenAI IPO, looking at
what happens if the AI bet fails, and
then we'll both take a look at the
[music] iPhone 17's impressive
performance and ask what it means for
the future of Apple. Great to have you
back on the show, MG. Welcome.
>> Great to see you again, Alex. And yeah,
as always, just keeps mounting all the
all the news.
I love going through the spy glass
headlines as we do our monthly recap and
just seeing how much ground how uh the
the tech industry and the AI industry
covers in just 30 days. We started Octo
October really with Sora. We ended with
this big deal between OpenAI and
Microsoft and uh it it all adds together
because it shows that OpenAI is on the
path to an IPO. They of course have Chat
GPT. They have other products. They have
a hardware product in the planning
process which by the way is going to be
free of any influence from Microsoft it
seems under this new deal. Uh and it
sort of all points to yeah we'll see it
all points to this IPO and that's sort
of how that that is how you lead your
post on the OpenAI Microsoft agreement.
That's the I think to me one of the big
things here. You say looks like an IPO
is back on the menu. Open A has a much
cleaner path towards at least uh the
financing goals that it's going to need
to hit because guess what? There is now
actual equity for sale, not just the
nebulous promise of future profits. You
know, Ron and I were talking a little
bit about how important this deal with
OpenAI and Microsoft is. Uh and I think
this really gets to it, the fact that
there there's equity for sale, which
means they can sell it to the broader
market. So, uh, what do you think we
should anticipate from this potential
OpenAI IPO? And I jokingly, I mean, you
I didn't just said, should it be the the
will it be the biggest ever? Of course,
it's going to be the biggest ever,
right?
>> Has to be. Yeah. Yeah. Yeah. I mean,
given their fundraisers are bigger than
any IPOs ever. So, this has to be, you
know, an all-time record IPO in the
making. And Yeah. I mean, I kicked off
that piece as soon as I saw that news
with exactly what you stated there, the
quote, um, IPOs back on the menu,
because that was my initial thought. And
then the few hours later, of course,
Reuters, I think, had the reporting that
sure enough, they're they're at least
talking about it behind the scenes. No
surprise there, of course, like everyone
sort of assumed that that was a big part
of this equation. And I do think it one
of the more interesting sort of um, one
level deep layers of this is that they
got it done this year. everyone talked
about, right? Like there was the the
notion that they maybe had to for some
of the soft bank round, you know, that
seems like it it was uh that tension was
alleviated a bit because it didn't seem
like uh SoftBank was really going to not
give OpenAI more money at, you know, a
great a great deal for them, a lower
valuation than than what the company is
currently at. So, I didn't think that
that was too big of a risk, but at the
same time, it does sort of at least um
fulfill a promise that they were making
to investors, right, to say like we're
going to be able to to sort of steer the
ship towards uh becoming a for-profit
entity, a public benefit corporation. Um
and and they were able to do that again
this year, like they said. I do think
that ties into the weird news a few
weeks ago about, you know, sort of
pre-announcing the uh the agreement with
Microsoft and and I think that that um
you know, sort of leads directly
obviously to this this actual agreement
um and now uh getting the states to sort
of sign off, you know, both California
and Delaware signing off on being and
allowing um open ad to make this
conversion. And so, yeah, the conversion
just should uh like you said, make it
much easier to IPO, [laughter]
actually selling equity. Imagine that.
How how strange for a for a company. Um,
you know, that that's that's raising
billions and billions of dollars. Um,
and so all of a sudden, OpenAI becomes a
much more not quite straightforward
maybe, but certainly more than it had
been up until this this point,
straightforwardness. And the IPO to me,
you know, writing about this leading up
to this event even has always been I it
feels like eventually sooner rather than
later, they're going to have to be a
public company to be able to sort of tap
into all of the different finance
financing mechanisms be beyond uh what
they've been doing obviously to the
greatest extent of anyone ever in the in
the private markets, but there are still
there probably going to be limitations
on that at some point. you would imagine
like we're well into sovereign wealth
fund territory now and that will still
that still has ways to go probably and
and whatever soft bank caning cook up
but they're going to be able to do
things like you know eventually bond
sales which we see Meta doing right for
also for their AI buildout. It's like
these are instruments that OpenAI
wouldn't have had access to um you know
until they're able to go public.
>> And we could talk about the timing of
this IPO and the Reuters report says it
might be in the second half of 2026 or
2027. We could talk about how much money
that OpenAI might raise. There's talk
that it's going to be 60 billion.
Although Brad Gerson in a podcast with
Sam Alman floated 200 billion and Sam
didn't seem to flinch. That's obviously
a small number for him. But I think what
we should really get to is the meat of
this, which is how is this going to
happen? Because the reported revenue of
OpenAI is 13 billion. Reuters is saying
this year, uh, Reuters is saying that
the company wants to do a 1 trillion
IPO. Uh, Sam Alman was asked about this
by Brad Gersonner in the podcast I just
referenced and kind of threw a fit.
Gersonner asks, "How can a company with
13 billion in revenue make 1.4 trillion
in spending commitments?" Right? So
that's just the commitments and
spending, not even the valuation. And
Sam says, "We're doing well more revenue
than that." And Brad, if you want to
sell your shares, I'll find you a buyer.
Are do you do you have faith that any of
this is going to work out with an
attitude like that?
>> [laughter]
>> I mean to to be fair they they both I
think or at least Gersonner said later
like it was in you know in better humor
than it appeared to be right like that
uh that Sam was just ribbing him a bit.
Um but in the moment it and you know
when you when you listen to it it does
feel like yeah he's um he's Sam is a at
least annoyed sort of you know by the uh
the potential question line of
questioning along these lines because
you could imagine
>> he just kind of sits there and says
enough. I mean, he does go into more
detail than the clips show after he
makes this kind of off-hand remark,
>> but
>> but you get the sense that he's been
asked this or, you know, this this
notion obviously has been put out there
a lot and certainly a lot in in the past
several weeks, you know, with all the
financings going on and everything and
just the really the mounting um cost
because as you as you talked about sort
of the surpassing one trillion in
commitments and it's like when you look
at the actual numbers of the company
like how on Earth, are they ever going
to live up to these commitments that
they've made? And I think, you know,
when when you're when you're that far,
there's that big of a chasm between
those those numbers that they are
actually generating in terms of revenue.
Obviously, not any profit, a big money
hole in terms of uh how much they're
losing and these commitments like it's
it seems ridiculous when you sort of
look at it just on the surface level.
And he probably Yeah. gets is getting
annoyed by everyone pointing that out to
him. Um and you know he's saying like
look the the revenue growth remains
incredible. You have to sort of trust in
us. And I mean this all leads into you
know what you and I both have sort of
yeah latched on to the notion of this
being a AGI or bust. And it's basically
this is now to me the most binary bet
possible that they're [snorts] really
betting that they can do something, you
know, be it AGI, whatever you want to
call it, that they're going to
fundamentally transform all maybe all
business uh in a way that's that's never
happened before to the point that that
maybe these kinds of conversations will
look silly. It would be how they would
frame it. I would guess you know in
hindsight that they would say like
remember when people were complaining
that that we uh were only generating x
you know billion of revenue and we were
committing to trillions. Well those
trillions helped unlock us to get to
hundreds of billions and then eventually
trillions of dollars in revenue. This
would be their I would imagine sort of
talking point and perspective on that.
And the reality is like there's a lot to
go between now and then. Um, and the
thing that I always come back to that's
sort of the most I I would guess I would
phrase it as the most concerning just
not not that it's a concern right now,
but it's the potential concerning layer
behind all this is just like there's
very real macro risk in that not even
tied to open AI, right? Like everyone
knows the markets eb and flow. You know,
the economy es and flows. It's not the
stock market is not going to go up and
to the right forever. Um and so when
that changes like what are the
ramifications of that uh with this deal
with these deals that OpenAI is doing
and with you know as they're getting
more debt done and is there getting all
these sort of these new new uh
mysterious ways of financing done and
and all that that uh that they're
talking about like what actually happens
if um if everything hits the fan in
[snorts] the economy
>> right and we we will go through some of
the risks here to this trade or moment
continuing to run a pace because as you
think about it further and as the stakes
get larger the risks do pile up. Uh but
I'll just say two things can be true,
right? You can have one of the most
impressive exponentially growing
technologies ever, which is certainly
what OpenAI has in its GPT models and
chat GPT in particular. And it could be
fair to question what's happening on the
money front. Totally.
>> And I think Brad's talking about how
first of all, how are you going to fund
all this investment if you're making,
you know, X bill like 13 billion? How
how do you fund 1.4 4 trillion if you're
making 13 billion a year which I think
is a perfectly fair question and I'm
wondering about and I'd love to have
your perspective on and then the other
side of it is um you know are you able
are you really able to go out uh in an
IPO in 2027 again the numbers are the
most recent numbers that we've seen is
that open is going to lose 120 billion
between now and 2029 so does an IPO
in 2027 when you're still doing this
math
uh where like we had someone on the live
stream of the Ranjan uh Friday episode
say OpenAI as a converting to a
for-profit is a joke in and of itself
because there is no profit. Um so are
you able to IPO uh under these
conditions? So I'm curious what you
think about both of these MG.
>> Again I I go immediately to the the
macro there because who knows what the
market looks like in 2027, right? It's
impossible to guess. It could be better
certainly it could be the same obviously
or it could be much worse and what's mo
more likely I mean we've been in sort of
a bull run for a bit now and um
obviously there's way too many factors
too many global you know elements to all
of this like with not let alone tariffs
and everything else that's been going on
and so it's hard it would be impossible
to guess but there's a very good chance
that the market is not as good as it is
right now and if that's the case like
what does open AI trying to go look
like. And some of that I a large part of
that will really depend on what the the
story is in terms of if investors are
still just buying a anything and
everything that's sort of tied to AI or
if that narrative has changed and
they've decided like as we're starting
to see a little bit right with Meta
again this sort of es and flows where
investors are get wary of their spend
right um uh you know some quarters and
then other quarters they have great
numbers and so they go back to buying
Meta and then they then they seem like
they're they're overextending themselves
and so then they pull out of meta and so
I feel like with open AI it's going to
be obviously the ultimate bet on AI
itself. Um and so unless they have some
sort of slam dunk narrative that they're
like close to AGI closer than we are
right now or right on the path to it and
all they need is sort of you know more
capital and and just to keep that going
and then you you too can buy in right at
like public investors can buy in to the
future of everything. Um you know that's
the narrative that they're obviously
going to be pitching one would assume in
2027. Um, but again, like if the market
is is tanking, like I don't know how
that is possible. Now, I would assume
that they delay if that is the case. Um,
and that they don't go out in a bad
market. Um, but again, to what we kicked
off talking about, they need the
capital. They need access to the capital
is is the likely reality there. And so
um how it goes down it it really is uh I
think largely again yeah like macro
dependent and how the market overall is
looking in the health of the market and
where investor appetite is on the AI
narrative uh element of it
>> right and I I think we would both agree
that given the current conditions like
if openi were to IPO today and wanted to
raise let's say 200 billion at a
trillion dollar valuation it could do it
>> it could do it right right that was like
I think in an earlier post I had written
about um just sort of playing out in my
head how an IPO would go. It's like
because everyone's again pointing to
before the before this this Sam and Brad
Gersonner thing, you know, people were
like how this company is going to go
public like they're burn they're losing
hundred hundred million hundred billion
dollars over the next um you know
several years like how on earth is that
going to be sustainable as a public
company? And the reality is exactly what
you're saying like right now they for
sure could like a lot of people would
buy into that and say like again this is
the future of everything. Um we don't
mind you know the the burn right now as
long as there's there's hope of the you
know the promise of the future. And of
course they would point to like the
Amazons of the world right where it's
like look they burned and they burned
and they burned until they you know were
able to sort of turn the corner flip the
switch and and become this hugely
profitable company. even Netflix like
same same general idea but just on a
different scale you know of the in terms
of the promise of what they could do and
that's what they would be selling. Now,
there was a part of this interview that
I think people didn't really focus on
that I liked a lot, and I think it
really goes to, well, what happens after
that IPO hits, right? The IPO isn't the
end, it's the middle, and when OpenAI is
a public company because inevitably it
will be, the public is going to get a
chance to see its numbers. Uh and that's
the that is one of the points that Sam
made on this podcast that he would
welcome the scrutiny from the public
markets uh to take a look at OpenAI's
numbers and you know make their
determinations on their own about
whether because right now as it's in
while it's on the private market we
really just get like these kind of like
leaked financials and then vague
discussions about what's happening. I
think it would be good for there because
it's such a big part of the economy
right now. It would be good for there to
be financial rigor uh that the public
markets bring around this company. And
then the other thing is [snorts] all of
the value that OpenAI has accured of all
unless maybe you're a holder of Nvidia
or Microsoft has happened on the private
markets. And so now public market
investors will actually get a chance uh
to own it and do so in a way that like
now it's somewhat proven uh to be a at
least established business with a lot of
revenue. But I I'm curious what your
perspective is on the on the um
financial visibility and transparency
into opening eyes financials and what
might happen uh when we can all see
exactly what it's doing.
>> Well, yeah. I mean, I think again Sam
Alman is is feeling good about it now
knowing, you know, I think what their
growth is and if that if that growth can
continue, then okay. Yeah, sure. Maybe
that's that's again that's what you can
sell to the p public market and public
investors and you say like you know the
just focus on the revenue growth. We're
continuing to just just grow incredibly
fast and you know all the the
limitations are on compute and the
limitations are on power generation and
those are the things that we're working
to alleviate and why we're spending all
this money. But if that's, you know,
narrative is not in place, if they start
to slow a bit, if if other things
happen, then it's obviously going to be
much harder to make that. But yeah, in
terms of transparency, um, I do think
obviously I think it would be, you know,
a better thing. Um, and it would
hopefully it, you know, it tends to
focus a company itself, right? That they
they know they have these numbers that
are going to be disclosed and so they
have to do things. There's also a
downside of that too, right? like maybe
they have to do some some ju not juicing
in a negative sense necessarily, but
they have to figure out how to get more
revenue out of what they're doing. And
so maybe that, you know, it leads to a a
faster move on the ad front and, you
know, faster move on some of the other
business lines where they where they
need to show better better growth. You
know, there's also the sort of I I would
imagine that that they would hope that
the uh the proposal to move to sort of
the twice a year uh reporting is in
place by then and not the quarterly
reports as uh as you know the pres
President Trump has thrown out there uh
is in place and maybe it will be. it
seems like there's some there's some
level of uh of ground swell behind that
right now. And so that would be um I
think good for them because if they're
in the quarterly cadence I think yeah
they they have they have a real risk of
um of sort of getting slammed over and
over again uh if they yeah can't
maintain sort of the growth and we
already know at least from leak
financials they're not going to be
anywhere near profitability anytime soon
in 2027 and they're saying I think the
most recent one said 2030 right they
pushed it out another year and so um so
we're talking about being public with
you know potentially three year two or
three years until you're profitable. Um
and if they are not showing that in
their public numbers which again will be
open to everyone to see if they're not
getting towards that trajectory to get
to be profitable when sort of it's been
reported that they would be uh that can
be a problem for for them
>> right and that is a big projection 5
years out and that is projecting that
all this
>> spending on infrastructure pays off I
mean to be you have to how are you I I
don't know what this math is but I
imagine you have to make more than a
trillion dollars in revenue revenue. If
you're going to pay for 1.4 trillion in
infrastructure, you're at 13 billion
now. Maybe maybe 20. I don't know. Takes
him at his word right now. That is that
is going to be very tough. It could be I
mean it it could just sort of stick on
the public markets without making any
profit for a a much longer time if ever.
And that will be very interesting. The
uh one other element that I just am
thinking of while we're talking is um
you know so now we know Microsoft stake
officially right at 27% um which is yeah
long been sort of like guesstimated and
everything and I think um so that's
that's a healthy percentage and when you
think about when open AI goes public
like they better that I I assume that
they're going to have to have Microsoft
sort of have some sort of agreement with
them to be locked in locked up right
like because if if Microsoft moves to
sell that you that that stake. Uh, you
know, not to say that they would do it
in one fell swoop, but remember,
Microsoft owned a pretty good chunk of
Facebook when it went public um because
of a deal that they had done, the Steve
Balmer deal, one of his one of his best
deals uh that they had done in uh around
Bing and and some other um side bets
that they were doing with with Facebook
at the time. And it wasn't big enough
that it was going to, you know, tank um
I think the stock when they sold, but
they did end up exiting it. And you
think now if they have if Microsoft has
this 27% stake and they do move to sell
um a sizable chunk of it like that's
going to be that's going to put a lot of
pressure on the stock unless it's the
market as it is right now where just
everyone is clamoring to buy. Um and
then there's Nvidia and everyone else
who owns owns these stakes. Of course,
it's going to be the weirdest IPO of all
time because it is OpenAI because not
only do you have that stake that
Microsoft has and the stakes that Nvidia
will have and I think AMD, well, no,
OpenAI will have part of AMD. So, in the
OpenAI IPO, you're also getting some
AMD. Uh, but [snorts] you also have
Microsoft uh owning the rights to
OpenAI's intellectual property at the
time of IPO, right? It's going to go
till 2030 or 2032 in some areas. And uh
it's like, all right, so now I'm buying
in on this IPO. This company is probably
not profitable. Um I'm getting some AMD.
That's good. But I'm also just like I'm
I'm buying shares of a company that
legitimately some other a competitor
really owns their IP for the next couple
years. It's wild. And what and one other
point is that um you know presuming like
it's somewhere in the ballpark of the
trillion dollar valuation that that sort
of Reuters was reporting which is
incredible but you seems like it sort of
has to be right just given where they
are in terms of private valuation 500
billion already it has to be at least
like there in order to sort of make it
work um from a numbers perspective
obviously they could they could you know
uh go public I guess at a lower
valuation but a lot of people would not
be happy about that uh if if that were
to happen. And so say it does go public
at you know around a trillion um you
have to you have to sell a lot of upside
right like a lot of people buy into um
[snorts] these IPOs you know knowing
that uh this is like you said sort of
the middle it's not the end of the
narrative and there's going to be a lot
of growth from here like all the big
tech companies right now you know when
they went public um they ended up having
huge huge upside potential from the
point that they went public at uh and
can you say that for open AI well
obviously They'll be trying to say that,
but like when you're already at a
trillion dollars, like what is it? 5
trillion. Okay, that's now the most
valuable company in the world right now.
Is Nvidia at 5 trillion? Is it 10
trillion? Like is is any other company
going to be at that level in 2 years
when uh when they when they go out? I
would have to imagine no. But again, the
way Nvidia's been growing, I mean, I
guess it's possible that they could be
at that level. you you basically you
would be buying into uh OpenAI already
becoming the biggest company of all
time. uh if you really are a bull on on
the company
>> and you know one way it might be able to
get there is if it pulls off this device
and we love talking about some like
gadgets and hardware on when we talk MG
and it it's going to be very interesting
to see whether opening I can actually
execute on this device that Sam Alman is
building with Johnny I now have had this
conspiracy that they actually paid all
that money for this device uh
partnership because they could sort of
have that as one of the pillars in the
IPO and that would sort of juice the
valuation. And the way Sam was talking
about it on this Gersonner podcast was
really interesting.
>> He was saying like imagine you could
have like something as smart as GPT5
running locally with you all the time um
that will sort of give you advice and
help you do things. He also had a tweet
about this in August. Someday soon,
something smarter than the smartest
person you know will be running on a
device in your pocket helping you with
whatever you want. Um it I I guess like
I'd just love to hear your perspective
on whether how seriously we should take
this device um and whether it is going
to be a big part of the recipe as
opening eye goes towards IPO.
Um, I do think you're right. Like it's
it's a good part of the narrative
because it's obviously it sort of layers
in a an Apple like narrative, right?
Where it's like, you know, you know the
iPhone, you know, Apple another it's a
$4 trillion company based off the back
of their device. The iPhone largely off
the back of the the iPhone um you know
is the most successful product of all
time. Well, that's what we're trying to
build as well. You know, the new version
of that alongside everything else we're
doing. And so that's that's sort of I
guess the narrative that they would
convey. By the way, we have the, you
know, chief designer of the iPhone, uh,
building this for us. And so I think
that that will certainly resonate with
the market. Um, and, uh, I do think I'm
glad you you brought that part up of the
interview because this is something
that, um, I think I'm going to write
about, too. It's like you honed in on I
thought it was super interesting that
Sam said specifically locally that these
that these models are going to run
locally. So, like when I've been trying
to think through the potential of this
device, everyone sort of knows and the
reporting, you know, to date has been
that it's it's not a phone, but you
know, it's sort of a device that that
you is both meant to sort of could sit
on your desk or could be in your pocket
alongside a phone, right? Um cuz one one
thing that I'm having trouble wrapping
my head around is like, well, yeah, it's
another device and and sort of
historically people don't like, you
know, just like adding superolous
devices for for no reason. And it's a
hard sell, right? You already have the
iPhone, so why is this better than the
iPhone? The the idea that it could be a
device, and again, this is just sort of
a comment made in that he made in
passing, but he's brought it up before,
but the local element of it is is super
interesting to me because one that that
suggests that they could potentially
make a device that doesn't need a
connection um to the internet, right?
like and so famously like you know
Amazon was able to strike that deal in
the early days of the Kindle right with
uh with getting a 3G connection um but
historically it's very very hard for
other companies to sort of make that
work and even Meta right now like right
like you have to pair it to the to the
phone and and um and other such devices
always pair to the phone so I would
assume I was assuming that whatever
device that uh they end up that OpenAI
comes out with would be paired to the
phone and I'm sure that there will be a
part of that maybe But um but if it can
actually work without the phone
completely and without needing a cell
connection, like I think that that's
that could be a a potentially really
interesting layer to this. And
presumably then it would work a lot
faster than the current the way we
currently think about thing these models
working and everything. If you could
fully run it um locally without a
connection and if you needed the
connection for like um up-to-date news
or or things like that, you could still
sort of fall back to that maybe. Um, but
if it can do most of it locally and it
becomes super super fast, um, I I could
start to see a world in which this is a
different type of of use case uh, for
people. Maybe I'm seeing the OpenAI
narrative now come to like full boore
because you could say OpenAI is going to
be, you know, if you invest a dollar in
OpenAI's IPO, you get some a company
that could be, and this is the most
optimistic scenario, but this might be
what they take on the road show. A
company that might be the next Amazon or
Microsoft with the AI cloud division. A
company that might be the next Apple
with a device built for the future. uh
and the company that might be the next
Facebook with these AI uh social media
networks like Sora. It's a compelling
story.
>> There you go. Right. It's it's basically
taking all of the all of big tech and
packaging it into one super company. Uh
you know, maybe even they use the
everything app to steal from, you know,
what the the narrative that Elon's
trying to do and that would be a nice
like poke in the eye and they, you know,
are able to sort of uh yeah come come up
with some sort of narrative uh packaging
around that. But I think you're right,
like you bring up the the cloud part
too. Uh I know I think Sarah Frier,
their CFO has said this also um you know
just out out loud now at this point
where it's like if we have if we're
building out these data centers and we
have excess capacity like there's
there's a world in which we become yeah
the next AWS too or Google Cloud. Um and
and that you know so you buy into that
narrative, you buy into the device, you
buy into the apps, you buy into the
social apps, you buy um Yeah. and then
all of a sudden this is packaged as you
know the potential 10 trillion plus
company. Uh I'm not sure that it will
work and that we'll be able to sort of
land that ship but that's that's how
it's going to be packaged. I would
imagine you're right.
>> Right. And as you answer I'm like
thinking I said all those things. Uh,
and I didn't even include the fact that
it's pioneering a new form of computing
with chat GPT or whatever you want to
call it, like its own proprietary 800
million user app, which will definitely
be a billion by IPO day. If it doesn't,
they might as well not go out because
this whole thing is over.
>> Yeah. Yeah. And all the, you know, and
the other layer of it will be the
interesting narrative with the other
players, right? Like, so where is Gemini
at for Google at that point? Where's
Anthropic at at that point, right? like
there's there's currently this narrative
um sort of bubbling around anthropic and
how they're doing you know a much better
job sort of on the enterprise side as
has long been the case right but it's
like they're probably open I would want
the narrative to be that uh you know
their own coding tools are eating into
cloud and and uh some of the cloud code
and and the other um uh models that
Anthropic has been working on that are
considered better for coding right now.
you would imagine that OpenAI wants to
snuff out that narrative um by the time
of IPO and so is that going to be
feasible because that's obviously what
Anthropic is working harder than ever on
on maintaining that lead,
>> right? Yeah. And add it all up and I'm
just saying, "All right, Sam Alman, take
my money." Which is what most of big
tech and uh basically anyone with money
to invest has been saying. So, um I want
to break down whether there are going to
be some risks and vulnerabilities from
that. uh we've hinted at it this AGI or
bust thing you've written uh post AGI or
bust we've done a show AGI or bust. So
on the other side of this break MG and I
are going to break down the broader AI
bet and uh talk about why and I think
this is right he sees this as a bigger
risk than I would say a lot of
mainstream folks do. So we'll be back
and talk about that right after this.
And we're back here on Big Technology
Podcast with MG Seagler of Spyglass. You
can find Spyglass at spyglass.org.
Highly recommend you go sign up for the
great newsletter there uh and read all
the posts. And uh MG, I found this post
that you wrote AGI or Bust to be really
interesting because as I read it, I kept
coming back to the point where you said
to your you kept saying in the in um in
your writing that this bet on the whole
market is betting on uh OpenAI and this
is a very big risk. Like it's almost
like you're it almost felt like you were
screaming, hey, there's there's a big
risk here. I'll just read uh one one uh
part of it. OpenAI is worth $500 billion
as a private company. It's silly, but
it's not particularly funny. And I
increasingly do worry that it runs the
risk of getting quite serious because I
believe OpenAI strategy here is
basically AGI or bust. Sam Alvin has
positioned his company to the point
where it can only work if they achieve
AGI and it truly does transform well
everything. Like there's been talk about
whether this is a systemic risk or not.
Why are why are you sort of outlining
the fact that, you know, this is a a
systemic risk?
>> I mean, it just feels like I guess once
the narrative has ramped to the point
where, as we were talking about, we're
we're well over a trillion dollars in in
commitments in terms of yeah, what the
these buildouts look like. And it's not
just OpenAI, right? It's it's it's Meta,
as we've talked about. It's Google, it's
Microsoft, it's all these neoclouds,
it's Oracle. Everyone's getting
involved. AMD like we're we're on to
like layers and layers and layers of all
these companies and the intertwined
nature is the thing that I would that I
would I guess highlight in that in that
risk too because it does feel like that
at least led by open AI I think that
that again going back to the notion of
these uh unique and interesting new
methods of financing that Altman has
talked about it feels like he's been
able to woo a lot of uh the rest of big
tech to buy into the notion that, you
know, they need to get on board with
this this
mentality that this is the absolute
future. And by the way, like if you
don't, you're going to be left behind.
And you can even see it right now in the
stock market. If you do these deals,
your stock jumps like all these stocks
are jumping because they do these deals
with Open AI. And so clearly the market
loves this.
>> Someone will buy your shares, Brad,
mentality.
>> Exactly. Exactly. Exactly. Um there's
there's no there's no lack of buyers out
there for this. And so, um, again, it
just feels like it's ramped to the point
where the promises, not just with OpenAI
itself, but across all of these
companies and all of them being so
intertwined both in investing in each
other, but also these these data center
deals and and everything else, it feels
like unless they do truly transform
everything with the, you know, again, we
call it we can call it AGI, we can call
it super super intelligence, we can call
it anything we want, but unless it truly
transforms everything, it feels like it
will be both let down and um it
potentially will be a business uh
letdown in terms of not being able to
fulfill all of these uh these trillions
of dollars being spent um on this. And
so I think that the narrative that
they've built up and and I think Sam
Alman has has explicitly done this and
and gotten everyone who's on board on
board right now around this notion that
they need to do get to AGI and they're
going to be the first and uh it's going
to be the biggest opportunity of all
time. And I'm just saying that there's a
lot of risk as we talked about. Um, but
specifically with the macro picture,
even if everything goes great for all of
these companies, if something just
happens in the macro markets and like
causes Nvidia to slip on earnings one
quarter, you see like this cascading
effect. It's not hard to see like you
can see how all of a sudden they uh the
market gets spooked by, you know, Nvidia
being public, missing that. Imagine if
Open Eye is public and they don't hit,
you know, the numbers that they're that
they're projecting one quarter and the
the market gets spooked about the future
of AI. And so not only do they hit open
AI, they hit Nvidia, they hit Google,
they hit Microsoft, they pull back from
these things because they think, you
know, people start giant funds start to
think that they're overindexed perhaps
in in their AI bet and they're um you
know, they're there's too much risk um
in their portfolios and and uh you can
see a cascading effect that just like
isn't really that big of a of a like
miss even required, I think, in order to
sort of cause this to happen. And so I
just am trying to point out like that
that's like a real possibility and I
think it's a fairly high uh you know
likelihood of that happening at some
point. I think it's a matter of timing.
>> But you say okay so you say in your post
um that the issue is that OpenAI has
increasingly dragged others along for
the ride and those others run the risk
not of not so much failing as much as
collapsing the stock market and thus the
entire economy. But then the narrative
up until this point has said, "Well,
it's just their profits that they're
investing. It's just Microsoft's profits
and Nvidia's profits." And so where's
the you know, the risk of uh you know,
sort of cascading failure is not there.
>> So it is different in that um I I think
it would largely be a psychological
event. You know, again trying to like
extrapolate out how this would play out.
I think it would be like the the yeah
psychological sort of contagion of
everyone that all of a sudden being
worried that AI is perhaps not the
future that everyone thought it would
be. That doesn't mean again to my point
like it doesn't mean that it can't be
great and it can't be great technology
and it can't be used for interesting
things and there can't be real business.
It just is saying that like what if it's
not the future of every single thing as
is being sort of built up in the promise
right now that that I think that we're
starting to hear around the the
narrative around from open AI on down.
And so, um, I I fear that that is the
thing that basically spooks the market.
And because these, uh, you know, the
Magnificent 7 and beyond, uh, tech
companies now control so much of the,
uh, S&P 500, um, and they're just, you
know, they're the the biggest companies
and largest stocks in the world where if
they fall, like it just starts to have
this contagion against the whole market.
Again, you can sort of see this like
it's it's probably like again like a
matter of timing because there is like
always going to be a downturn and if
there's a downturn there's is do you
really believe that like big tech is
going to be insulated by it from it
because um you know the future of AI I
mean that would be the hope that they
would project I would imagine but that's
just not how markets typically work
>> right and I I mentioned earlier that I
have this list of risks and it just
keeps getting longer the more we see the
the bets grow and and I'll read a little
bit from it. I mean here are some risks
that could really make things uh go
sideways. One is that compute gets
really cheap. Like maybe a company like
Grock, not Elon Musk's Grock, but Grock,
the inference chip, um makes it so cheap
and then all of a sudden you have a
company like OpenAI with a trillion
dollars of buildout um uh contracts and
I don't know what happens there, but
like a lot of companies stock prices are
hinging on that. Um another thing that
could happen is that training doesn't
yield improvements anymore. like we've
been running on this idea that bigger
models will get you exponential
exponentially better um you know AI
sorry bigger bigger training runs will
get you exponentially better models uh
but that might be leveling out if that
doesn't happen you know there's going to
be a sort of roadrunner off the cliff
type of moment um there could also be no
economic advantage in holding AGI and I
think we're going to start talking about
that uh much more on the show uh as we
you know maybe get closer to this but
like if you of all powerful AI um and
then
>> you know you could have it's not going
to be a long time till uh a lot of
others catch up there and so then what
happens like open AI hits AGI let's say
anthropic gets there the next day and
Meta gets there a couple weeks later and
Amazon gets there a couple weeks later
right
>> and then there's of course the the uh
the market downturn problem
>> so you add that all up and you're like
hm [clears throat]
>> I think that's you know these are all
one other a few other things to throw
out there like along those lines which
is that, you know, what if just LLMs end
up what if AGI is is really the the
beall end all, let's say, but what if
it's not LLMs that get us there, right?
What if that's just a small part of the
equation which has long been stated by
Yan Lun and others like right talking
about that and but what if that h that
narrative and that uh actuality sort of
shifts faster than um open AI can sort
of manage it and it that sort of gets
out in front of them and all these other
companies like what if they're in the
middle of these trillions and trillions
of of buildouts and then all of a sudden
it need it it turns out you need let's
say robots right you need robots out in
the in the in the world and you you
know, do they do they pivot these data
centers to become robot factories like,
you know, or there's any number of
directions that this stuff can go in?
And it's like again, what if LLMs are
just a small part of the of the bigger
um equation that's needed for this? And
how how well prepared are these
companies for that? Um, and what if you
know something else comes in like Google
and Microsoft and all them are still are
working on quantum computing, right?
like what if that comes into play and
that becomes like the next big thing
that everyone wants to bet on and not AI
anymore because AI to your point is like
now just table stakes and everyone has
achieved AGI and so um you know it's
this thing and even going back to what
we were just talking about with the
device and and local models like what if
you know a lot of the best work uh that
can be done with AI can be done via sort
of these local models or smaller models
and you don't need these giant giant
data centers in order to train them
anymore and and or do inference um you
know in the cloud anymore. Um what does
that look like? And then there's the the
also the thing that's always been in
play but again seems to be bubbling up
more recently I guess because we're past
these trillion dollars of commits now.
It's like what is the actual uh like
value depreciation value of Nvidia chips
and and uh you know what is this world
in which um these data centers like have
to be refreshed basically every year
buying billions and billions of dollars
worth of Nvidia chips or they're
obsolete. Like they would say like well
they're more profitable but like is that
really playing out that way? It's it's
unclear if that's like that's actually
how it's going to work. Um, and what
does that mean for Nvidia if um if you
both have to always buy the latest and
greatest and what if you realize, oh,
you no longer have to do that? Like
there's dual sides to all of this and
there's a lot of risk in in sort of
every single side of it.
>> And let's briefly hit there's one more
headline that just dropped uh earlier
this week that we should talk about.
OpenAI has signed this from CNBC. OpenAI
signs $ 38 billion compute deal with
Amazon partnering with the cloud leader
for the first time. Open has signed this
deal. Uh it is the uh first contract uh
with the leader in cloud infrastructure
and the latest sign that OpenAI is no
longer reliant on Microsoft. The first
phase of the deal will use existing AWS
data centers and I think this is already
coming up. Some of the capacity is
already available. This is according to
an AWS executive and OpenAI is making
use of that. I mean speaking of the
entanglement everywhere uh it's very
very interesting that this is now
happen. they just uh yeah the deals are
happening all over the place.
>> Yeah. Um you know this is obviously a
direct offshoot of of sort of the new
agreement with Microsoft where they can
yeah no longer need to be um exclusive
and more importantly because obviously
Open Eye has been signing some deals um
with other players but Microsoft had a
right of first refusal on all of those
and they no longer have that um you know
per their new agreements. And so Open
Eye is free you to sort of go out and
and play the field as it were. Um and so
they're doing so right away with the
biggest players. This one is interesting
too from the anthropic angle, right?
Because obviously Amazon is a huge uh
shareholder in Anthropic and has that
big partnership around their uh tranium
chips, right, to to be used for
anthropics models. Um and then Anthropic
goes and does a deal with Google uh to
use TPUs potentially. And now
>> Anthropic is helping I think Anthropic
is also helping Amazon build the data
centers. So it's like now is that
knowledge being used for open AI to
>> a sudden we have Amazon teaming up with
open AI uh and uh it seems like this is
also around Nvidia chips too uh because
yeah they already have have them in some
of the data centers but it's is it are
the tranium chips involved at all? It's
doesn't it's not cited so maybe not but
like this is get I it's it's even more
entangled by the day which is wild
>> right okay so we have like 10 minutes
left I definitely want to talk with you
about uh some positive news in the app
world and I think we've talked about
obviously Apple's AI failures uh they've
lost many more people to meta uh since
the last time we talked which is crazy
because you'd think that they would hit
a limit of people that would go to meta
but they haven't um but Actually,
there's positive news in the Apple
world, which is that the iPhone 17 is
proving to be a hit. It has it led Apple
to a strong quarter in the most recent
quarter that they just uh spoke about
last week, and there's expectations that
it is going to have a powerhouse quarter
in Q4, doubledigit iPhone growth. There
were months and months, really years of
stagnation on the iPhone line. It just
wasn't growing. And it's growing again.
and Apple is in the middle of an
unquestioned revival. The the question
that I have for you is, is it enough?
>> So, this goes to I I wrote a few weeks
ago about um the notion of I think I
called it a uh a retreat to safety um in
terms of what Apple is is focused on
now. um have as you noted sort of with
the you know the the problems that
they've been having to put it lightly
with AI it feels like um you know they
may be going back to sort of their
strength which is obviously devices
right and I think that this news uh only
will sort of um embolden them more to do
that and sort of really double down on
like look a lot of people are doing AI a
lot of people are focused on that you
know we haven't had success to date um
maybe it's something we should you know
more deeply partner on. There's growing,
you know, talk uh that Google is is
going to be a partner on sort of backing
up Siri and being able to bring it up to
snuff relatively soon. And so, look,
that's great. We'll get that taken care
of. But what we do that no one else can
do is build these great devices. Like,
you know, that's OpenAI is not going to
build a smartphone. They're working on
their other device, which is a faroff
thing. And we'll see. Um, you know,
Microsoft doesn't do this. Amazon
doesn't do this. Meta is trying to do
the glasses but they can't do the
smartphone. Like we should really focus
on the iPhone, we should focus on the
MacBook. We should focus on iPad. We
should focus on these devices and that's
our strength. And again, I think that
you'll see them, you know, over the
coming years now sort of double down on
that as realizing that that's the one
thing that they can do that's unique um
and that is proven. And you know,
regardless of of what we think about the
future of AI, the reality is that all of
this stuff has to run somewhere. Um,
certainly in a consumer, you know, side
of things, you're going to use it, at
least until OpenAI's magical, mythical
device is out there, you're going to
likely be using it on Apple devices. Um,
whether that's a MacBook or whether
that's an iPhone or an iPad. Um, you
know, that's how you're going to be
running a lot of AI and interacting with
a lot of AI. And so to me, that that's
that story. I do think that the iPhone
in particular uh narrative here is is
interesting because obviously they tried
to come up with a new model this year in
terms of the iPhone air. There's
conflicting reports on whether that
model has actually been successful um or
whether it's not been but it's sort of
um it seemed to maybe focus in on like
people realize like oh I want the iPhone
17 basic model the sort of cheaper
version or I want the pro model you know
the faster and and better battery
version. Um, and I do think the the
colors oddly help them, too. And I think
that we might see more of that. Uh, as
silly as it is, I just think like, you
know, these are things that that
consumers like and and and want to buy.
And so, uh, Apple was so focused on that
they need the AI narrative to like spur
a new super cycle or something of iPhone
sales. And it turns out they didn't need
that after all. It looks like. Now,
>> can I ask you, do you think it really
was the better phone? I mean, the 17
obviously specs-wise much better than
the 16 and the 15. It is a jump and the
more I hear about it, the more I want to
go out and buy it. Currently I have a 15
Pro. Usually I wait 3 or 4 years. It's
been 2 years. I' I'm feeling the
gravitational pull to go get the 17. Is
that is that 100% the explanation of
what's happening here? Or could it be
for instance maybe people bought a bunch
of new iPhones 4 years ago in 2021
during the pandemic?
>> Yeah.
>> And it's just a natural time to upgrade.
So,
>> I definitely think that
>> I think that that's part of it. Like it
is, you know, these the phones are
impressive, but the reality is like the
jumps are impressive every year. I get a
new one every year. It's sort of hard.
It's increasingly sort of hard to tell,
you know, the difference in terms of
just speed um day-to-day speed and using
apps and whatnot. The camera systems
always get better, obviously, and and
these that's important to people, you
know, it's like it's the device you use
most often, so it's it's really
important to people. But, um why this
year uh you know, versus the others? to
your point and I do think you're exactly
right in in terms of just there there
being a confluence of events that are
leading people to to upgrade this year
and and a big one might be yeah the boom
cycle that was that took place during
COVID times is now naturally leading
yeah to a few years down the road of
like everyone sort of needing that that
uh that upgrade finally which they
didn't need a year ago. I do I do wonder
how it plays out into next year though
because the the rumored you know as
we've talked about in the past the rumor
iPhone fold device um and what that
looks like um you know in terms of
success if they're in fact not having
seeing the success they want to see with
the iPhone air like do they are they a
little bit more reluctant to sort of
push into the fold I think that you know
it still goes forward and they still do
it but like what does that actually look
like in terms of uh of success because
they probably thought that would be the
the real marquee thing leading up to
that 20th anniversary iPhone uh that
would get people to upgrade.
>> Yeah, I think they got to they got to do
the fold. People love to fold. So, we
talk we talked about it before. It just
makes people happy. But, um let let me
ask one more question about this then in
if you take the fact that the 17 is
doing really well and Apple intelligence
is still nowhere. Um but it doesn't seem
to matter that app you know if you look
across the the spectrum chat is growing
but it's not like a new device uh Alexa
plus is being released and rolled out
should be out to everybody now um
according to Panos Pane um maybe but
it's not it's not this like you know
paradigm shifter Google's doing well
with Gemini is Gemini anything but you
know another version of Chad GPT I don't
think so yet Um, so I'm I'm asking
myself, did did I make a too big of a
deal about the Apple intelligence
failures? Um, or is it just that that
story is going to take maybe a little
bit longer to play out, but it's still
very relevant.
>> Yeah. I mean, I think the thing that
you're hitting on there is that the one
particular aspect of AI, which is sort
of more of the agentic workflows, those
aren't where they need to be yet, right?
Like I think everyone would agree with
that. We've been promised this for at
least a couple years now and now we have
open uh we have open AAI's chatbt
browser um atlas is out there and and
sort of trying to do the the agentic
work in the browser. We got perplexities
browser doing some of that but it's
nowhere near it needs to be in terms of
actual day-to-day usability and and
usefulness. And that's part of what
Apple's promise was, right, dating back
to the WWDC a couple years ago where
it's like it will be able to yeah like
alert uh you know alert you um and get
grandma home from the airports uh and it
will be able to to you know pull all
this stuff out of out of your own
personal um history and everything. I
think in I think that that remains a
compelling narrative for these devices
like if they can actually access um you
know your your own uh sort of personal
information in a safe and secure way of
course like that potentially is you know
a a thing that that moves the needle for
people with with regard to using AI but
we're just not there yet right like
you're talking about with Alexa plus
with which is out and and all of these
other things like they're fun sort of
like parlor tricks still and they're fun
to, you know, use to to chat with a
little bit, but like until they can do
actual things that are doing real
utility and sort of being able to to
become like an actual assistant um on
your device, like I I don't think that
we're going to see it. And Apple is
perhaps in some ways benefiting from the
fact that no one's really doing that
yet, right? like Google is the farthest
along and they tout a lot of uh you know
cool potential functionality, but it's
not it's not to the point where it's
going to sell um Pixel devices yet,
right? And so um so again, because
that's not the case, I think most people
look at the iPhone and be like, again,
this is a this is a great device for the
things I actually want to do right now,
which is take pictures and use Chat GBT
and use, you know, whatever app I want
and and uh play with Sora and do all
these other things, right? And so until
that uh that moment comes where the
promise of what we were promised from
the new Siri uh actually comes into
place then I'm not sure that uh yeah any
of these are going to move the needle
from a device perspective.
>> Fascinating stuff. The website is
spyglass.org. Our guest is MG Seagler.
MG, it's always great to speak with you.
Thanks again for coming on.
>> Likewise, Alex. Talk to you soon.
>> Speak to you [music] soon. Thank you
everybody for listening and watching. We
will be back on Friday to break down the
week's news. I'm sure nothing will
happen in the next couple days between
now and Friday, right? That's just how
it goes. We'll be back with Ron John Roy
then. So, thank you for listening and
we'll see you next time on Big
Technology Podcast.