Apple’s AI WWDC Approaches, Nvidia $3 Trillion, OpenAI Safety Concerns

0:00It's WWDC Eve as Apple prepares to roll out its AI strategy. NVIDIA, meanwhile, surpassed Apple momentarily en route to a$3 trillion valuation. GameStop is running up again. And OpenAI is hit with an open letter from current and ex-employees demanding better disclosure. All that and more is coming up right after this. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and nuanced format. Very big show today. Three major headlines. WWDC is en route. We have some major Apple AI announcements coming. NVIDIA,$3 trillion. We talked about whether it was going to surpass Apple, and it did.

0:42Although Apple's taking the lead again. And then this open AI safety thing, it seems like there's never a dull moment with that company. But we're going to cover it all. And we have Ranjan Roy here with us to do it. Ranjan, welcome. Good to see you again. Happy WWC Eve, Alex. WWC Eve, that's right. It's going to be nuts. My favorite time of the year. Yes. So before we get into it, I want to first welcome any new listeners that we have. I've been doing the rounds on the podcast circuit, and I think we've seen an uptick in listeners, which is amazing. Just to give you, if you're a new listener, just to give you a heads up of how we do this, we do a flagship interview every Wednesday.

1:19and then we have this Friday news recap where Rondon and I look at all the news of the week and share our perspectives on it, tell you what's happening, and we try to do it in a pretty digestible and fun format. So that's how we do it here. And let me start this week's episode with a bit of fun news. I got a credential for WWDC, so I'm hopping on a plane tomorrow, and I'm going to the Bay Area, and I'm going to be there on site in Apple Park in Cupertino, and I'm going to get a chance to witness Apple's big AI announcement with my own two eyes and I am pumped. You're going to get to be there? That's right.

1:56At WWC in the audience for the AI announcement. Few thought this would happen, Ronjan, including myself. I'm excited for you and for us because this has to be one of the biggest Apple events in recent memory, I think, because there's been a lot of incremental hardware upgrades, it's felt like, for the last number of years. But I really believe that this one is going to be, I mean, it has to set the pace for the next era of Apple. Definitely. And we'll get into some of the announcements, you know, as we go. And a quick programming schedule for next week, because I'm going to be on site. I'm almost certainly going to do a very quick solo podcast on Monday, recapping what I saw there.

2:37On Wednesday, M.G. Siegler is going to come on to break down exactly what happened. He's one of our favorite analysts. And we're going to talk through exactly what happened with the announcements, Wall Street's reaction, the tech community's reaction, where to go from there, how OpenAI navigates this now that it's partnering with Apple and Microsoft. Then on Friday, Ranjan and I will be back. And I think Mark Gurman is going to join us. So I'm still working to get the scheduling down on that. But beat reporter extraordinaire on Apple, Mark Gurman, should be here with us on Friday. I don't want to overpromise.

3:09It's still working out the details, but hopefully that will happen. So let's set the stage. We won't talk too much about WWDC this week because we're going to have plenty going on next week. But Apple wouldn't say the word AI for quite some time. And now they're ready to go full bore into AI. They have a partnership with OpenAI. They are going to apparently release a bunch of new product features. Is there anything in this buildup, Ranjan, that's caught your eye in terms of something that might be important to watch or something that you're excited about? We know you love Siri. So is that what the thing that you're going to watch is or something else?

3:45I will say to hear and read in Mark Gurman's reporting that Siri will be a major part of the new AI push. I cannot deny I'm very excited. As I've said in the past, just fixing Siri and making it barely usable would be a huge win in itself. But I think the really interesting thing that I'm looking for is how they integrate large language models into Siri and how it pervades the rest of the operating system. And what I mean by that is one of the things Mark, his reporting said was that we potentially will be able to use Siri to activate other apps. Now, Apple has had the shortcuts feature for a long time, which has allowed you to basically custom design specific shortcuts that I want to launch a very specific task within a specific app.

4:36And it never really worked that well. I know some people who swear by it, but overall, it was not great. But large language models should be able to solve the logic underlying these things so it can actually easily do this for you just with your voice. and basically Apple will get its own agent and Siri will become an agent now. So I think if they can pull this off, it changes the way the entire iOS operating system works. And if they can actually get people to adopt it, I think this is huge for them. And I wrote about this in Big Technology a little bit today, which is that all great CEOs are judged by their ability to thrive in the middle of a computing shift, right?

5:17So Steve Jobs and Steve Wozniak, they built the personal computer, but Apple really hit its stride when they were able to navigate the shift from desktop to mobile and release a device that was generations ahead of the rest. And they still haven't looked back from that. Like that is like the true Apple story when you think about it. And this is a computing shift here for Tim Cook. And the way to navigate a computing shift is you don't go half in. You think about what your fundamentals are and you say, do I have to hang too tightly to this? And if you decide that the answer is no, then you change your fundamentals.

5:49And I think you picked out the exact right thing. The fact that they're considering tweaking the operating system, right? That's the way you interact with the Apple device. The operating system sucks. You might think about something else, right? And so they're going to go at the core of the product. They're thinking about the operating system. And they're also going to do away with another sacred cow, so to speak, because they're not going to just develop this entirely in-house. They've brought a third party in to do a core piece of development in one of their core products, which by the way, I can't remember a single time that that's happened where Apple's not getting paid or yeah.

6:25Well, where Apple's not paying out. I don't know. No, Apple's not getting paid. Apple got paid by Google for search. Apple is paying out to open AI, right? So this is a very big deal. Yeah. I'm honestly a bit confused by this because Apple has definitely had a long enough period now, even if they were behind initially to build their own foundation models. And to me, I really don't understand why they would bring OpenAI specifically to get into that operating system level, as you said. Even having Google as a search bar in Safari as the default is one thing. This is you're going to have to trust OpenAI and an external partner to, as you said, redefine your entire operating system and the way people work with it.

7:10But that being said, though, I do think OpenAI has shown that they understand how to use user experience to actually get people to use these products. Again, ChatGPT, I still will argue the kind of the way it makes it look like the computer is thinking and then it streams the text rather than just returning it in a block was one of the smartest things they did because it made everything feel more magical or like the LLM was actually thinking as opposed to just quickly processing. So I think if anyone can help them do it, it would be open AI. But I don't know. It's going to be, it's still a bit of a risk for me, the fact that they're partnering like this.

7:53Yeah. Well, I think what it does is it shows a sense of urgency that Apple isn't going to wait till it's perfect. It's just going to say, okay, perfect is the enemy of the good. And we are going to use the good. And the good is going to come from somebody else. And over time, maybe we build those models in-house and we sort of don't rely on a third party too much. the one and the one thing that i also thought was interesting that's kind of new is this is also coming from gerbin that apple is planning a catch-up feature for missed notifications allowing users to quickly absorb what they miss when they weren't looking at their phones and this is what an ai device is going to look like right it goes beyond the it supersedes the graphical user interface and it says instead of tapping through all of these apps we're going to give you this catch-up fun function you know instead of uh tapping through them to change things, we're going to allow you to do it with Siri.

8:41For instance, like one of the examples that's been tossed out is that Siri will allow you to say, text this, you know, crop this photo and text it to my friend, and it will be able to do that. And so I do think that this, again, it goes back to what is the core of the product? It's the operating system. And to rethink the operating system and to find new ways to present information to free users from the constraints of the graphical user interface and to show the urgency to do it. I think that is where you end up winning if you're Apple. And I think it's positive to see them making some of these changes.

9:10I mean, it's amazing to think about what this is describing is the humane pin. It's the Rabbit R1 device. It's like basically what we've said, which always kind of felt it, you know, and the big, the big knock on those devices when they came out is, isn't this just an app that's going to live on the phone? But actually what's interesting is no, it was never an app. It was actually redefining the operating system. But I feel bad for those devices because the entire, and do you remember Rabbit they had instead of a large language model, it was a LAM, large action model. That's basically what this is describing here.

9:49I mean, you're totally, you're taking the words from my head because I was about to say that. This is what I wrote in Big Technology today. Laugh all you want at the failures of Rabbit R1 or the humane pin, but these early efforts to rethink how we relate to, with our devices, were simply the first attempts to figure out what's next, and they won't be the last. More AI devices will come, more will fail, but eventually something might work, and that matters to the$3 trillion iPhone maker, which has driven the last major computing shifts and isn't interested in missing this one. You know, we laugh a lot at the R1 and the pin, and for good reason, but there's something that they were pointing toward, a new reimagination of the way that we interact with devices, And I don't think that intuition was wrong.

10:34It's just the execution sucked. Yeah. Have you ever seen a pin in the wild? Have you ever walked into it, met up with someone and they just had the pin on them? I'm going to be disappointed. No, I'm going to be disappointed though, if they go out of business and I never had seen a pin. There was a story that they told users to stop using the charging device, I think, because it would light on fire or something like that. So you may not get your chance, Ron John. I may not get my chance because the charging case for the humane pin apparently can set on fire. They did not even announce that they would be replacing them for users.

11:15They just announced that they are looking into it right now. They're giving up, I think. I mean, also, I think there's rumors that they're trying to sell. But broadly on this Apple announcement, and then we're going to quickly move off of it, but isn't this the biggest win for opening eye? in its history. Like the talk is that OpenAI might make billions of dollars from partnering with Apple. It's making, I think, 2 billion this year in revenue. Like this is huge. And it solidifies itself. And Brian McCullough and I talked about this a little bit last week, but it solidifies itself as a partner to Microsoft and a partner to Apple.

11:48Like what more could you want? Yeah, I think this is huge for OpenAI and it firmly establishes them, you know, and the most valuable real estate in the world, iOS. So I think for them, if they can prove that they effectively will be able to drive this and help Apple redefine the way we compute, I think this is going to be a big moment for them. But yeah, and to establish, because the chat GPT Plus and the consumer side of OpenAI, we've discussed a number of times, is that ever really going to get them to their insane valuation? I don't think so. So it always had to be on the enterprise side. And enterprise, because of the power of Microsoft's cloud business and Google's cloud business and the lock-in they already have with a lot of enterprises to be able to then upsell them onto the AI side, OpenAI doesn't have that.

12:43So I think it's exactly this kind of creative deal that will make the difference for them. So very quickly, I wonder how Wall Street is going to react to the Apple move. I think this is going to be a big narrative afterwards because, you know, from a strategic point standpoint, you can like the moves from an investor standpoint, you can wonder where's the money going to come from, right? Okay. So these are supposed to, these new experiences are supposed to work on the iPhone 15 and, and better because of chip capacity and probably because Apple wants you to upgrade. But, uh, there's been some discussion of like, what's whether Wall Street really is going to believe the narrative.

13:19And Apple's up 6 % over the past month. So clearly people are already buying the story before it's happened. And a lot of the people that I've spoken with, including Brian last week, Eric Jackson on the compound and friends this week have started to say, you know, there are people who are like going bananas over where the Apple stock is heading, but they just do not think that this is going to translate into positive sentiment on Wall Street after this event is over. And maybe it will even underwhelm. What do you think? I'll take the other side of that. I think if Apple sells this vision, it will excite investors because what's been the knock on Apple?

13:54The upgrade cycle is over. The idea that you're going to buy a new iPhone every year, new iPads every year. They lost that business model within the last few years, and it's certainly not being ascribed to future growth. So they need to find something. And if they sell this vision that this is the new iPhone and you have to buy this new iPhone, otherwise you're not going to get all the benefits of using it. I think that's hugely bullish. And then you start to think about how does that pervade other devices? And again, I say this as a user of Apple HomeKit and HomePods, which suck, but I still use it.

14:35The idea that that starts to change smart homes and iPads, you know, every single iPad line starts integrating this kind of technology and it changes the way we learn and kids are learning. Like, I think there's so many opportunities that just being able to sell the vision that we're going to figure out multimodal LLMs for consumers, I think, is exciting. I think it's good. They just have to sell it now. And this is one of those moments where we're all trying to think about what's happening at WWDC and then reporters just chuck all the reporting they have at the wall and see what people will pay attention to, including the stuff that's not imminent.

15:13And one bit of preview caught my eye, which is that Gurman said that Apple is looking beyond chatbot. It aims to use large language models to help power a pair of robotic devices that it's developing. So there's a tabletop robotic arm with an iPad display. It's also working on a mobile robot that can follow users around and handle chores on their behalf. And this is really the thing that caught my attention. It's looking to equip its AirPods with cameras and AI features. Cameras on your AirPods, folks. I like that a mobile robot following you around is not what caught your eye, but cameras on the AirPods is.

15:50I'll tell you why. I've had the Ray-Ban Metas, which are the sunglasses that Meta's made for the past week. And they're like regular glasses, but they play, you tap on the side, they can play music. You squeeze the brim, they can take photos and video. And there's also an AI assistant embedded within them. And you can say, hey, Meta, and ask it questions. Like I was up on the rock climbing wall middle of the week and wanted to know what time it was. and I couldn't see the clock. And I was like, hey, Meta, what time it is? What time is it? And it was like very useful. Now, I don't think that's the average use case, but I thought that just like, it was so cool to have that, you know, whenever you need it.

16:32And I think these things are going to go mainstream. I think they're pretty cool. So put some cameras on the AirPods and then build that functionality into the Apple ecosystem. And I think you're really looking at some very interesting product potential. I think one of the viewers watching on LinkedIn asked the question, will you have to pay a subscription for Apple Intelligence? And I think that's a really interesting point because, again, Apple services business has exploded in the last number of years. I probably pay for a lot of Apple subscriptions that I forget about and just see the bill kind of come through on my Apple card, which I also have.

17:13So I think the subscription revenue potential for this, especially if it's good, is another huge area for growth that Apple has already shown. They can do it with all sorts of iCloud and Apple Music and other Apple One upselling that I think I think that that's an important place part of this as well. Yeah. Just got to juice that service business. Juice the services. Okay. So speaking of things that get juiced, how about NVIDIA's valuation? Okay. That was a good segue. So NVIDIA jumped 5 % Wednesday. It became the second most valuable publicly traded company in the world. Surpassed$3 trillion on the same day.

17:58it's fallen back a little bit now, not even back to earth, right? It's still worth$2.97 trillion. Trillion, I still can't believe these numbers, right? It's up 150 something percent on the year, and it was already coming into the year at a crazy number. And it is a very interesting moment. I was on CNBC earlier today and was talking about how like, you know, should we say that the picks and shovels are worth more than the gold? And obviously, it's not 100 % true, because like, just because it's the second most valuable publicly traded company doesn't mean they're a company. The accumulated value of stuff that's built with it isn't worth more or won't be worth more over time if you take the rest of the companies in the world.

18:39But it still kind of strikes me as a little bit weird. And you can look at the numbers and you can say, okay, it makes sense because of this and that. But it still strikes me as a little bit weird that NVIDIA is now the second or third most publicly traded company, most valuable publicly traded company and maybe it one day goes and surpasses Microsoft as well. I mean, what does it say about your economy if the most valuable company is a chip maker? Yeah, I think that's a good point because NVIDIA is clearly, they're the center of the story and they're the beneficiary of it. But I don't know, I think it was two weeks ago, that's why we had called when we were talking about the upcoming 10 to 1 stock split that those kind of moves for me were just not a good sign as they're trying to almost like force themselves into i don't want to say meme stock territory but at least more retail does the nvidia story i mean this is a company trading at 48 times earnings i mean you know typical tech range even 20 25 is a strong multiple so this is an incredibly rich stock and yes the revenue growth has been insane but i just don't understand where the continued growth is because it's everything is already priced in everything this is already priced to perfection and the idea that unless they come up with something completely new and they keep you know coming out with these new chips that do show some kind of promise but i still think Like, I don't know.

20:15It's tough to see how this keeps going, but I certainly would not be the one to try to call the top on NVIDIA. Well, let me try to explain how it might keep going. So, like, we have companies that are already building today with the AI technology, like Aaron Levy was talking about, that OpenAI made the technology 50 % cheaper, two times faster. So that's going to enable a building cycle of its own, and NVIDIA is well-positioned to support that from a hardware and a software standpoint. But over the next 18 months, what's going to happen is anyone building a foundational model, talk about OpenAI, Meta, whoever it might be, is going to just buy as many chips as they freaking can.

20:53Because we know that adding more compute and more data to this equation has led to incremental or seriously exponential progress, right? And there hasn't fully been a sign of that slowing yet. So NVIDIA through Blackwell, right? So this week they put their roadmap till 2027. And through Blackwell, they should be able to at least sell all those chips, right? It's not like they're not supply constraint. They are. And so you could imagine that there's going to be some serious growth there for investors to reap. And that's why people say, I heard this week that it could go up to$4 trillion. And that is the bet.

21:33because look, let's say hypothetically, the next round of development is as impressive in terms of progress as this previous round has been. Then people are going to buy even more chips for the one after that, right? So it just has to keep pace for NVIDIA to keep printing cash and making their margins. They have something like 78 % margins. That's the bull case. What do you think about that? I'll give you, it's a hardware company with software margins And that's always been the most impressive part of what they're doing. But I still, two things on that is one, even if Apple, and I agree that like, let's say WWDC, they bring generative AI and large language models to every consumer, even those who have never used ChatGPT, suddenly every device maker is trying to figure out every operating system maker, how do we integrate LLMs into the way these work?

22:31will increase the supposed demand for the actual compute and the chips. But I still think that everything that I've seen and worked with, that the compute demands are going to get smarter and smaller. That the idea that everything is going to require just massive, massive amounts of compute is actually not the way things are going to go. that the actual use cases and actually applying this kind of technology will be able to be done with more specialized models, with smaller models. So that completely changes the entire trajectory and the way everyone's assuming this is going to go for NVIDIA. So I think that to me, that's the biggest bear case within the stock itself.

23:19The other is they have a monopoly right now, but competition will and can slowly come in. And I think that's the other space that they have not had to really face yet. And they still could. And Jensen Huang signing a woman's shirt in a very provocative manner. Did you see this photo? I'm sure that was circulated everywhere. Of course, that was not a shirt, Ron John. He signed the boob. He signed the boob, all right. He's like, should I do this? in air quotes over here it's like do not do not do that jensen i even i i know like she asked him to sign it but just like don't do that i don't know i get to like i i wonder nvidia their communications department clearly he has kind of positioned and sold himself as the new steve jobs it so well yeah the leather jacket rock star status like but i i agree like come on man maybe yeah maybe you know what that's my reaction but maybe i should lighten up like it was a consensual thing it wasn't it was funny i don't know i don't know i'm i'm still because you're just at everyone is waiting for the top and then like this is this is the kind of thing that you look back on and And it's just such an easy one that you just don't need to do.

24:46I know. But five minutes later, they surpassed Apple as the second most valuable publicly traded company in the world. That's fair. And we had a question here on the live stream. So we do live stream these on LinkedIn and YouTube. And here's a question from Sarah. Whether we think NVIDIA would stay as a hardware supplier or should it jump into AI application in the software stack? And from my understanding, it already is. Like if you're going to develop on NVIDIA, you're going to use the chips and its CUDA software platform to develop large language models. And that's why it's been so irreplaceable.

25:20Anyway, as part of my Bay Area trip, I'm spending the full day inside NVIDIA on Thursday. So hopefully there'll be some stuff to talk about on Friday. A large chunk of it is going to be on background. So I'm not a hundred percent sure how much I'm going to say, but I'm definitely going to be able to come out with a better understanding. And who knows, maybe I'll be able to recruit some people to the podcast that I meet. We'll see. But by the way, on your story about Is This the Top, I can't help but think about your zero interest rate policy thesis as the explanation for why there was so much silliness, right?

25:59Because there's somebody who's, he works for Facebook. He has a popular account on threads and Twitter. It's called Carnage for Life. And he said this, Bitcoin is at 69 ,000. Roaring Kitty is sitting on over 250 million in assets from GameStop stocks and option. And then there's Nvidia's CEO giving out autographs at Computex. It's 2021 all over again. And of course he has the Jensen picture signing the proverbial shirt what do you think about this moment ron john we haven't even had a rate interest rate decrease yet okay bitcoin and roaring kitty which we'll definitely get into i think those certainly mirror 2021 but for me the the overall ai driven boom is actually a logical one it makes sense this is a you know like that's like the the transformation that mobile brought to the entire world of technology that cloud did like this is as big if not bigger as all of those transformations so there's going to be a ton of value created and some you know big tech companies are already positioned to capture a lot of that some other people will as well so i think on that side that's why this is a more logical if we want to call it a bubble than 2021 when remember like literally zoom peloton all these companies that things were extrapolated to insane levels where they never were going to realize be realized versus now there there's a there's a real fundamental to the story but yeah bitcoin and gamestop okay maybe not so much yeah and eric newcomer has a very interesting uh newsletter out today talking about how artificial intelligence is papering over the downturn.

27:47And he's saying software as a service companies, the bread and butter for many VCs over the past decade are having a rough go of it as enterprise customers look to cut costs and rationalize years of heavy software spending. And across the startup industry, down rounds are on the rise. Then you look in the public market and the bounty of this rally has not been shared evenly or really at all by the rest of companies. Even Salesforce, for instance, had a huge down day i mean the worst day in the stock market in its history i think last week so is there a level of concern for you that's a great point actually the idea that ai has kind of been papering over this because because yeah like we you see those kind of stats that the big the you know the big tech what is it now it's certainly not fang but uh yeah you could call it fang and just put oh yeah replace nvidia for netflix which never belonged there i'll always hold that that belief or you could just call it the magnificent seven which is the cnbc catchphrase magnificent seven like uh you know are they driving the vast majority of the gains while many many many stocks especially software stocks are down so i think that's that's actually a good point and it is a bit worrying then that if that ai fever dream loses a bit of steam like you know That could definitely remove that shine, and it's not going to be good for the market.

29:17Man, interest rates go down, and you add that to what's happening in the stock market right now, and it seems like things will just explode. Well, interest rates, but unemployment still low. Inflation is not decreasing. I mean, the rate is not increasing. So I don't think – it is funny that at the beginning of the year, it was expected I think there would be three rate cuts. And now I don't believe there's any that are being priced in. So I think we're at this very, very weird, but I guess overall good moment where, you know, certainly there's technologies fun and exciting. The stock market is up.

29:57Bitcoin's at 69K, Roaring Kitty livestream today. So we're in a moment right now where I think everyone's trying to figure out what's next. Well, let's talk a little bit about what Roaring Kitty is up to. I mean, we are recording on a day where GameStop is down 39%. What has happened with this return of Roaring Kitty? And what's your read on what it means for the moment? Okay, okay. So this is nuts. Like this is... This is Ronjon Red Meat. This is Ronjon Red Meat right here with Roaring Kitty. So I think a few weeks ago, Keith Gill, a.k.a. Roaring Kitty, a.k.a. Deep Fucking Value, posted an image on Twitter where he was just kind of hinting that he's going to return.