Big Tech Picks Up Data Center Bills? & Apple Intros Low-Cost Laptop

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0:38Toby:Good morning, Brew Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, America's new Gilded Age is in Wyoming.

0:45Neal:Then Apple just released its cheapest laptop ever. It's Thursday, March 5th. Let's ride.

0:56Toby:I think we're all in need for a feel-good story. and I think I found just the one. So each year in Paris, a competition is held, the Grand Prix de la Baguette de Tradition Francaise, to determine the best classical baguette in the French capital. The winner receives 4 ,000 euros and the opportunity to supply bread to the French president's residence for the next year, plus immense bragging rights. The blind tasting competition was held last weekend and the victor was Sitham Paripilai Jagathipan, a 43-year-old Sri Lankan immigrant who taught himself to bake in 2008. He is the second immigrant from Sri Lanka to win the competition in the last three years and joins other baguette makers from West Africa, Algeria, and Tunisia who've been crowned the best bread maker in Paris.

1:40Toby:Toby, I am submitting my candidacy as a judge for next year's Grand Prix.

1:44Neal:This is a serious operation. The judges grade the entries on five criteria, appearance, cooking, inner texture, smell, and taste. Aesthetics are huge when it comes to brand. You need the crunch of the outer shell. to pair well with the soft inner pockets of air. It should look like a beehive, very uniform air pocket distribution. And each group of judges gets five baguettes at a time. So most of them say, if you are a rookie to the judging aspect of this, you take too big of bites, you fill up too soon. So you have to pace yourself throughout the afternoon. Also, as soon as the winner was announced, people went to Google to check out this bakery.

2:23Neal:And someone screenshotted the Google reviews of this place. 88 reviews, 3.8 stars. So maybe take it with a grain of salt or a grain of yeast whenever you're shopping around for a baguette to try in Paris.

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3:21Neal:When Trump was running for office, a core pledge of his was to cut electricity prices in half. But your bill has likely gone in the exact opposite direction. The cause is no secret. Power-hungry data centers are popping up everywhere, pulling billions of dollars worth of electricity off the grid, contributing to an affordability crisis that is looming over midterm elections. So Trump told tech CEOs to meet him in his office. Yesterday, leaders from Google, Amazon, Microsoft, Meta, OpenAI, and others made the trip to the White House to sign the Ratepayer Protection Pledge. The promise is, you build these data centers, you pay for your own power.

3:59Neal:No more plugging into the grid and sticking regular old Americans with the bill. The companies also agreed to work on individual pricing deals with different power providers, put money into training local workers, and use their facilities to help power neighborhoods during power outages. Sounds good on paper, but many are criticizing the pledge for looking a lot like Neil at five months old. A little toothless. The federal government has limited control over the energy market since electrical grids are regulated state by state. So outside a new federal law, it will be difficult to make this pledge stick.

4:32Neal:Neil, great photo op, but critics are saying it's more of a political move ahead of the midterms than real policy at this point.

4:38Toby:Trump was very blunt at the ceremony. He said that data center developers have, quote, developed a little bit of bad publicity and that they need some PR help. And the tide has turned extremely quickly. Heatmap did a survey of registered voters across the country last year. 44 % said they would support a data center coming in near where they lived. And 42 % said they would oppose it. So pretty even there. And they repeated the survey in February a few months later. The contrast was huge. 52 % were opposed and only 28 % were supportive, which is a net approval of data center dropping of 24 points in the matter of a few months.

5:21Toby:So there is a huge PR crisis here. Trump was absolutely right. And data center developers have every incentive to not drive up residential home prices because they are in a race against each other and against China and against the world to build out these data centers to fund their AI ambitions. They're pouring$750 billion into this. So whether this is a political ploy or not, they need to ensure that electricity prices don't go up because local places can stop the data center build out.

5:48Neal:And the administration is trying to kind of split the middle between these two factors because Trump definitely wants to maintain a pro-business and innovation stance when it comes to the AI build out. But also he is completely aware of the backlash going towards these data centers as well. His pledge was to cut energy prices. That was one of these big things that he talked about when he was entering office. But if you look at the data, national residential electricity costs rose 6 % in February. It's even worse in places where data centers are extremely concentrated. New Jersey prices up 16%.

6:21Neal:Pennsylvania up 19%. And a lot of the energy market watchers are saying, we are entering the summer period right now where you need to get rates under control because demand on the grid is going to go up exponentially. So it could be record costs when it comes to summer cooling.

6:37Toby:And this is going to be extremely salient for the upcoming midterm elections because politicians across the aisle, across different parties, are targeting data centers. Democratic Illinois Governor J.B. Pritzker proposed a two-year moratorium on tax incentives for data centers. Senator Bernie Sanders of Vermont wants a total data center moratorium. Florida Governor Ron DeSantis has proposed legislation to regulate data centers and protect people from price hikes. AI companies are looking at this and saying, well, this is our business now. We need to build data centers. Zuck is spending over$100 billion a year on data centers.

7:13Toby:That's why some like Elon Musk are saying, with all this opposition, maybe it'd just be easier if we put these things in space.

7:18Neal:Yeah, because right now a lot of people are relying on gas turbines to power these things. And if they can't connect to the grid like Trump is saying, don't do that, then what are you supposed to do? And big tech is trying. They're literally bringing other de-mothballing nuclear power plants, and they're trying to invest in the nuclear energy. But that obviously takes a long time to come online. They are buying these gas turbines, these natural gas-powered solutions, but they are only temporary solutions. They can't be online all the time. So everyone has agreed that this is a problem. Everyone is aligned on they don't want to drive up electricity costs, but right now it does look like space might be the easiest option.

7:55Neal:All right, moving on. In a world where everything is getting more expensive, Apple just cut the price for a MacBook nearly in half. Introducing the Neo, a$599 budget device that is$400 less than any new-gen laptop Apple has sold before. This release is Apple's first real foray into the entry-level market that has long been dominated by Google Chromebooks and Windows devices that tend to pop up in classrooms and amongst first-time buyers. The reason Apple was able to cut the price so much was because the Neo is basically an iPhone in computer form. It runs on an A18 Pro chip, which is the same chip family that powers the iPhone, the first time ever a smartphone processor has been put in a Mac.

8:37Neal:Using this chip gives Apple room to cut costs significantly, but it also means that the Neo specs are on par with something like an iPhone 16 with base storage of 256 gigs and 8 gigabytes of RAM. It also strips away things like Touch ID and keyboard backlighting. The Neo caps off a week of rapid-fire product launches from Apple that had a through-line aimed at affordability. The iPhone 17e, which came out on Monday, clocks in at$599 as well. Sort of an interesting approach, Neil. While everyone and their mother is stuffing AI into every nook and cranny of their business, Apple is moving down a market.

9:13Toby:Well, even Apple needs a McValue menu now. This is like the Volkswagen Jetta of MacBooks. And there was a raging debate yesterday online about who this particular laptop was for. It is very colorful, too. It comes in citrus, silver, indigo, and blush color options. Reminded me of my first iMac that I got, you know, maybe 20 years ago with those particular pastel colors. So who is this for? Well, I was thinking, this is maybe what Apple was thinking, is that when you show up to your dorm the first day of freshman year at college and you say, oh, and you're pulling out your laptop, you're meeting your new roommate for the first time.

9:48Toby:You pull out your MacBook Neo and you say, oh, I got this particular color. What's yours? And maybe that is the sort of target audience, at least one slice of it that they're going after, is students. It's entry-level people who have never had a laptop before.

10:02Neal:Yeah, and education pricing is part of their launch strategy. you get$100 discount if you are a student. So then the entry price is dropping to$499. That is a very cheap machine because you still do have a pretty powerful laptop. It's not great for video editing or deep projects that require a lot of compute, but most people are just surfing the web. Most people are just using their browser most of the time on their laptop. I think we could easily do our jobs with the MacBook Neo. We're not really in Premiere Pro or anything that takes a lot of RAM. So I think you are right that students are going to be a main target.

10:39Neal:Also, you mentioned the McValue menu. Zach Bowden on X did the math. You can acquire an entire Apple ecosystem for$1 ,925 now. The 17e,$599. MacBook Neo,$599 or$499 if you're a student. iPad is$349. Apple Watch,$249. AirPods,$129. Again, some people do acquire the entire ecosystem, and that is relatively cheap when you compare it to the rest of the tech world.

11:07Toby:But if you want the souped-up stuff, the souped-up MacBooks, those are going to cost you even more because this is three days of announcements. Well, Apple also released a new MacBook Air, and they released a new 16-inch MacBook Pro. Those are going up by$100 to$400 each. So we saw that memory is being squeezed right now, and we're seeing price hikes across Apple's laptop portfolio. Yes, they rolled out this McValue menu laptop, but when you look at the other parts of the portfolio, they are going up, and we could see laptop prices increasing across the spectrum because of this memory shortage.

11:44Neal:Okay, so we've kind of alluded to McValue and McDonald's a little bit in this segment. So I have one final stat that I want to share with you. Ethan Anderson on X said he plotted the most expensive McDonald's burger and the least expensive MacBook over time. And the analysis projects that the most expensive burger will be more expensive than the cheapest laptop as soon as 2081. Because prices for laptops keep falling while prices for burgers keep going up. And if you extend the log scale out over a long enough time horizon, burgers are going to be more expensive than laptops.

12:17Toby:Wait, do we know the year? Yeah, 2081. 2081. So mark your calendars, everyone. I can't wait for that particular podcast episode. Okay, moving on. Here are some updates from the war in the Middle East, which is expanding as it's reached its sixth day. The conflict has encroached onto new territory, literally, after NATO defenses shot down a ballistic missile sent from Iran to Turkey. Over in the Indian Sea, a U.S. submarine sank an Iranian warship, the first time an American sub has taken down an enemy combat vessel since World War II. And a few hours ago, Iranian drones hit an airport in a region of Azerbaijan.

12:48Toby:This isn't just a Middle East war anymore. And yet, despite the war's widening scope, stocks absolutely popped off yesterday, with the S &P 500 closing 1.3 % higher to put it in the green over the last five days. If that's surprising to you, it's also a surprise to the CEO of Goldman Sachs, David Solomon, who said at a finance conference in Australia, I think the market reaction has been more benign given the magnitude of this than you might think. Investors brushed off fears of an impending energy crisis and focused instead on positive economic data, which showed that the U.S. services sector grew more than expected last month and hiring was brisk at private sector companies.

13:24Toby:Back to Solomon, who explained that markets tend to look at these geopolitical events, and unless they're transmitting through directly in ways that affect economic growth, markets tend to react in a relatively benign way to these events. So while violence and potential economic threats abound, if they're not presenting a direct risk to the U.S. economy, then Wall Street is going to keep calm and carry on.

13:44Neal:And we saw kind of a broadening rally across multiple markets as well. We talked about South Korea yesterday and how it had the worst day in their entire history. Now their market had one of their best days ever. It served over 12 % in a single day. It was triggering circuit breakers in the green this time instead of going down the red. Bitcoin is also quietly up around 9 % over the past few days, behaving more like the digital gold that a lot of people thought it would. It's still down 16 % on the year though. But I do want to talk about a different industry, one we haven't really spoken about too much when it comes to the conflict in the Middle East, and that is fertilizer because this is a supply chain that also goes through the Strait of Hormuz.

14:26Neal:There's three types of fertilizer, phosphates, potash, and nitrogen fertilizers. Nitrogen is probably the most at risk right now because they are made from natural gas. So when gas supply gets disrupted, nitrogen fertilizer supply follows as well. Phosphates also are at risk of disruption. in Saudi Arabia supplies about 40 % of all U.S. phosphate imports. So just another industry to have in the back of your mind as this conflict kind of unfolds.

14:51Toby:Yeah, farmers are definitely watching that closely. One industry that we have talked about a lot that pertains to this conflict is AI. And the drama between the Pentagon, Anthropic, and OpenAI just continues to escalate. There were reports out yesterday that Anthropic CEO Dario Amadei has resumed discussions with the Pentagon about the way its AI is used in the U.S. military. Remember that at the last minute last Friday, OpenAI's Sam Altman swooped in with a deal with the Pentagon after the Pentagon essentially blacklisted Anthropic and treated it worse than they do Chinese or Russian companies because they didn't agree on the way that Anthropic's AI would be used in military warfare.

15:33Toby:Now, there was another report that came out. It was a memo from Dario Amadei to his employees after that OpenAI deal came, and he absolutely ripped into Sam Altman. Remember, these two guys do not like each other at all. He said that the Pentagon didn't want to work with Anthropic for not giving Trump dictator style praise. And he called that OpenAI Pentagon deal, quote, safety theater. So he absolutely went into OpenAI. And who knows whether that will throw another wrench into the talks that appear to have resumed with the Pentagon between Pete Hexet, the Secretary of Defense, and Anthropic.

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