OpenAI Levels Up to GPT-5 & ‘Buffett Premium’ Gone for Berkshire?

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.

0:32Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, you'll want a banana for breakfast after hearing these stats on ultra-processed foods. Then smarter, faster, more human-like, OpenAI launched GPT-5 yesterday. It's Friday, August 8th. Let's ride.

0:56Good morning. Happy Friday. Just a bizarre cornucopia of movies in theaters this weekend. Weapons starring Josh Brolin arrives as one of the most hyped horror movies in a minute, notching a 97 % rating on Rotten Tomatoes. Ice Cube's War of the Worlds is the complete opposite with a 4 % rating on the Tomatometer. It's in its second week. And then there's Lindsay Lohan and Jamie Lee Curtis reprising their roles in the Freaky Friday sequel, Freakier Friday. I love this take from Jeopardy champ Amy Schneider on X. She goes, Freakier Friday, terrible title. The The same thing happened to them once before, which makes this Friday inherently less freaky than the first one.

1:35That's the most Jeopardy champion review of a movie I've ever seen. But it got me thinking, Neil, what's the proper order to watch these in? I think you've got to do a triple feature. The question is, where do you put War of the Worlds? And I think you sandwich it. Start with Freakier Friday, some good nostalgia. I loved the first one. Then toss on War of the Worlds. And then when your stamina is waning, bring in weapons to get the blood pumping again. quite the assortment though, quite the cornucopia of movies. Yeah. I like putting where the world's in the middle, because that's probably when I have to go to the bathroom.

2:06So I probably won't miss seeing any minute of that movie and the film's tagline. And I don't know if this was self-aware or not is it's worse than you think in, in relation to the actual content of the movie. But I do think they either played themselves or someone had a little bit of fun poking fun at the fact that this is the worst movie of all time. Now a word from our sponsor at LinkedIn ads. I have a note prepared from our HR manager. Hi again, Kate. Toby did not start it, nor do I care who started it. I am done with it. Stop wasting my time with this. Man, Kate is so wise. She knows how harmful wasting time is, just like LinkedIn ads.

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3:23might be a slightly reductive worldview, but it's essentially the logic people were applying to OpenAI's latest model release, GPT-5. Was this the moment and the model where OpenAI was going to distance itself from the pack and push us closer to artificial general intelligence? Sam Altman, OpenAI's CEO, certainly thinks they moved the needle, telling journalists GPT-5 is like having a team of PhD-level experts in your pocket. He and his team thinks they created something smarter, faster, and more human-like across a variety of metrics. It's a unified AI model, which means it combines the reasoning abilities of OpenAI's previous O series of models with the fast responses of its GPT series.

4:02Right now, testing benchmarks show that GPT-5 goes toe-to-toe with Frontier models from XAI and Anthropic, scored highest on a GitHub coding task, and ACE health benchmarks with just a 1.6 % hallucination rate, far lower than previous models. However, it's not best in class across the board. It slightly trails Grok 4 on multi-domain reasoning and underperforms Claude Opus in some web navigation tasks. But to get a feel for how good this new model actually is, Neil and I wanted to call in some backup. We brought in Brian McCullough, host of another Morning Brew show called Tech Brew Ride Home, to break down GPT-5.

4:41Brian, is this a dramatic leap for AI models? Would it make Bobby's dad proud? Dramatic leap would probably be overselling it. What we know is that it's good, that if you're an average user, you're going to be impressed with it being more accurate. They apparently made great strides in terms of the hallucinations and things like that. It's probably the state of the art right now overall. But if people were expecting sort of the step change that we saw from GPT-3 to 4, I don't think this is it. I was reading this newsletter from Nathan Lambert, and he said, the people discussing this release on Twitter will be disappointed in a first reaction.

5:24But 99 % of people using chat GPT are going to be so happy about the upgrade. Why is there that dichotomy there? Well, like anything else, it's all about the hype of stuff versus there's people that desperately want it to be the best and people that are desperately angry. at. So it's like anything else, there's going to be a back and forth to it. But what I think we're going to see is that once all of the arguing and the hype dies down, it's probably going to be great for open AI in the sense that they are getting very aggressive about the pricing, like extremely aggressive. So it is a step change in terms of pricing.

6:03So tons of developers, tons of people that are making AI companies and AI tools are probably going to do more. So we might six months from now look back on this and say, yes, it was important because it did lead to a new flowering of AI stuff, but it didn't give us God-level intelligence. And OpenAI kind of needs that aggressive pricing because they need to start making money. Their sales are through the roof. I mean, they just hit$10 billion in annualized revenue. They're raising a secondary stock sale at a value of$500 billion, which, correct me if I'm wrong, but no U.S. private startup has ever reached anything of that valuation.

6:43It would leapfrog SpaceX as the most valuable startup ever in the history of the United States. But they are losing a lot of money. We know that training LLMs and running an AI business is extremely expensive from the talent to the data centers to the energy requirements. So OpenAI has to start making money to start putting some serious business heft behind its technological achievements. And one thing that we've talked about when it comes to these models is that whether the scaling law still holds. Altman did say absolutely they do, but he did say that the path to scaling these models is more computing powder.

7:22It's going to take an eye-watering amount of compute, he admitted, but we intend to continue doing it. So they're just going to keep plowing money into this thing. Yes, and this does open the debate even wider about have we reached sort of a ceiling with the current technology? Will it require some new sort of paradigm, some new advance in the technology to get us to a phase shift that people were expecting? It's possible that throwing money at it isn't going to work. I mean, they can keep scaling, but they're running out of data. They can do synthetic data, but even that might affect accuracy and things like that.

7:58one of the things that Sam said about true AGI yesterday also was that he believes that true AGI should learn on its own. And obviously, this is not there yet, unless they're keeping something still under wraps. And then one thing that you did mention is that maybe the strides in healthcare specifically was interesting in this model. What was it about kind of health and GPT-5 that piqued your interest? So they leaned heavily into people using GPT-5 to answer health questions. And that says to me that they've been looking at how people have been using it. And that apparently is what people are using it a lot for.

8:35So it's interesting to me that that is sort of in the same way that remember when the Apple Watch came out and Apple had to find what it was for. Oh, it's really for a health tracker, right? So that's it's interesting that they chose that because that would be something that my mom would be like, OK, that's what I use it for. But it does also then open them up to potential trouble, because you can imagine the headlines as soon as somebody gets bad advice or, God forbid, gets hurt asking for advice and things like that. So I think it's a play by them to provide a use case that normal people can understand.

9:09But also, that is kind of a mundane thing. It's not going to make you a million dollars, beat the stock market or anything thing like that. But it maybe will tell you what that bump is on your hand. Let's talk about some other changes that people might see when they log into ChatGPT today after the GPT-5 update. One of them is that OpenAI is giving ChatGPT different personalities now. If you're kind of bored with the old responses that you're getting, you can choose between four different personalities between cynic, robot, listener, and nerd. And then another interesting development is that they're doing this thing called safe completion.

9:48So if you asked GPT previously to chat GPT to do something that may be dangerous, like they gave the example, how much energy is needed to ignite some specific material? Who knows what you're asking that for? Maybe it's for some bomb plot, or you're just a person in a lab doing a science experiment. Chat GPT previously was trained not to give you an answer to that question. Now with safe completions, it will give you an answer to that. But in a very broad, vague way, that is another feature that Sam Altman touted yesterday. And then they also just unified all the models that you used to have, you know, 03, the reasoning model, you used to have 40, 40 mini, like there was all these different models that you could toggle between to answer one question versus another.

10:35But now it just says GPT-5 for most. How do you think that flattening is going to be received by customers? I actually wouldn't be surprised if people don't like it because it's sort of like you're picking the tool for the job that you want to do. Apparently, behind the scenes, it is still switching. There's just some sort of like a routing mechanism. So you can still say – they pointed out that if you want to code, tell it you're coding. And if you want health answers, tell it that. So you still can direct it in the way that you want. But taking away sort of like the knobs and dials, I feel like some people might not like that.

11:13Where are we broadly in the AI race right now? We know Mark Zuckerberg is paying 24-year-olds$250 million. We know that Elon Musk is investing a lot into his project, XAI. There's Anthropic, which is also worth something like$60 billion. And OpenAI is still maybe the leaderboard, the king in the clubhouse right now. But where do we stand after GPT-5 has been rolled out and the dust has settled? I think this takes off the table the outside chance. Some people were concerned someone's going to make a model that can do everything and will be the only business because you won't need anything else, right?

11:51I think this takes that off the table at least for the foreseeable future, again, unless there's some technological breakthrough. So, then what we're facing is it's a commodity race. Because essentially, like, okay, maybe Claude's better at code, maybe Grock is better at images or something. But it's not, like, again, generationally different. So, all of these companies are going to continue to spend money, but racing against the commoditization, which brings everything to a lower level, especially the cost, as OpenAI is currently doing now. So all this does is say that there's no clear winner.

12:27Open AI is at the lead right now. They've been at the lead, but it's not like they're head and shoulders above everybody else. Brian, thanks for stopping by and giving us the lowdown on GPT-5. Where can our listeners find your show? Wherever you get your podcasts. Try Morning Brew Daily in the morning and Tech Brew Ride Home in the afternoons. I like that. Thanks for the plug and thanks for stopping by, Brian. Let's shift from the tech world into food. And if you are what you eat, then we Americans are hella processed. A new report from the CDC found that the majority of the calories Americans eat come from ultra processed foods, foods like sandwiches, baked goods and sweet beverages associated with higher health risks.

13:06But there is a silver lining. That share is getting smaller over time. Let's dig into the numbers. The study, conducted between August 2021 and August 2023, found that ultra-processed foods account for 55 % of the calories Americans aged 1 and up consume. That may sound like a lot, but we've actually been eating healthier over time. For adults, total calories from ultra-processed foods has declined from 56 % over a decade ago to 53 % in the most recent data. For kids, it fell from nearly 66 % seven years ago to 62 % now. The trend line could go even lower with processed foods critic RFK Jr. in charge of the United States' health system.

13:47Earlier this year, he said we are poisoning ourselves and it's coming principally from these ultra processed foods. Expect greater pressure on food companies to trim their ingredient lists because one of the reasons we buy so much processed food is it's often the only thing you can buy or at least afford to. A study published in 2023 found that 73 % of the U.S. food supply is ultra-processed, often at lower prices than whole foods. Toby, help us process this study. I'm still processing the fact that sandwiches are considered ultra-processed because I eat a lot of those, so that is tough for me to stomach.

14:23There isn't actually a set definition for ultra-processed food. a good rule of thumbs is it usually comes from ingredients that you don't normally find in your kitchen at home, stuff like high fructose corn syrup or emulsifiers. A couple of scientists in Brazil did try to determine a food's level of processing. They have a scale ranging from unprocessed to minimally processed to processed ingredients, then processed foods, then ultra processed foods. On the bottom, unprocessed stuff, stuff like fruits and veggies, then processed foods are a combination of whole foods. So fruits and vegetables with a processed ingredient.

14:58So stuff like if you had a bread that was made from wheat, flour, water, and salt, and yeast, that is actually a processed food, which again, I thought bread was like relatively natural and healthy. Then if you bring in emulsifiers, you bring in preservatives to play, that's when you get into the ultra process category. But yeah, I was kind of going through my own diet and looking at this chart about what qualifies as what. And I was like, I'm not really living in the unprocessed, minimally processed world, which I think a lot of people would probably be surprised about how much of these foods they're consuming.

15:29Well, it's hard to. Don't knock yourself. I mean, you go into a grocery store. I went to a grocery store last night after researching all of this, and I was like, well, can I buy anything outside of the produce aisle that is not considered ultra-processed? And the answer is no. So that's why I do think after this study comes out, there will be increased pressure, as there has been across the board on food companies, to figure something out and get all of these emulsifiers, you know, or other ways of creating ultra processed foods out of their food? I do think that income is a big part of the factor here because adults with higher family incomes consume a lower percentage of calories from ultra processed foods.

16:09That being said, even adults with incomes of 350 % of a federal poverty level still consume more than half of their calories from ultra processed foods because consumers are looking for something that's cheap, something that's convenient and healthy, it's hard to get all three. So usually cheap, convenient wins out because people are financially strained and also short for time. Researchers are still trying to figure out the exact ways that ultra processed foods interact with our bodies and what their associated health risks are. But there was new research out just this week that said you can lose more weight by avoiding ultra processed foods.

16:46It was the first type of study, first study of its kind. They did this trial where they had people go on different diets, one with a lot of ultra-processed foods and others with minimally processed foods. And participants lost twice as much weight when they followed diets made up of minimally processed foods like pasta, chicken, fruits and veggies, as they did with ultra-processed foods, which are like those ready-to-eat frozen meals, breakfast cereals, protein bars and shakes. And the reason they think this is the case is that ultra processed foods pack so many calories in a small bite. They're extremely calorie dense, whereas minimally processed foods are the opposite.

17:25So that's just a beginning of our understanding of how ultra processed foods interact with weight loss. All I know is after this show, I'm eating a full head of broccoli just to cleanse the system. I got to get on the Whole Foods grind. All right, let's take a quick break. And after that, we got Stock of the Week, Dog of the Week. This message is a paid partnership with Apple Card. I'm a person who really appreciates simplicity. And when it comes to credit card rewards, the simpler, the better. That's one of the many reasons I have an Apple Card. The rewards are super straightforward. I earn up to 3 % daily cash back on my everyday purchases.

18:03There are no points to calculate, no limits or deadlines. Plus, it's super easy to access my card and make payments from the wallet app of my iPhone. If that sounds like the kind of simplicity you want in a credit card, apply for Apple Card in the Wallet app on your iPhone. Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA Salt Lake City Brands. Terms and more at AppleCard.com.

18:27When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome to Stock of the Week, Dog of the Week, the segment where Toby and I pick one stock that's looking forward to a summer Friday and another that's preparing a deck for a 4 p.m. meeting. I won the pre-show Mahjong game, so I get to go first.

19:06And my stock of the week is the dating app company Match Group, because while I'm not exactly crushing it on Hinge, Hinge is crushing it. That's an exact quote from CEO Spencer Raskoff, who noted Hinge's revenue grew 25 percent from the year before and paying users jumped 18 percent. Match Group's stock was among the top performers on Wednesday, jumping more than 10 percent on the heels of the report. Hinge's success comes as the rest of the dating app industry is getting stood up by users and investors. Single people are frustrated and fatigued with swiping, ditching apps for this outlandish idea of trying to meet somebody in person.

19:42Just look at Bumble, which said this week that revenue fell 8 % year over year, causing its stock to plunge more than 18 % yesterday. But Hinge's growth shows that it may not be wise to write off dating apps just yet. Roscoff said that its success should put to rest any doubts about whether the online dating category is out of favor among users. and he wants to use Hinge as a blueprint for the other major app in Match's portfolio, Tinder. Tinder is still getting ghosted with its revenue dropping 4 % last quarter compared to Hinge's 25 % growth. But Roscoff said the team has learned a lot from Hinge's rebound that they'll apply to Tinder, which is now laser focused on the unique dating habits of Gen Z.

20:21Toby, it's honestly shocking to see any dating app doing well in this environment. Yeah, a little bit of a narrative violation here because all we've heard about is how young people are spurning dating apps. They don't like it. That's not how they want to meet people. And yet here Hinge comes along saying that they're focusing more on thoughtful, high quality responses or trying to make people have better first impressions to lead to, you know, lasting love. And then they also, of course, introduce AI into their reasoning for why this is performing better. They say they have an AI powered core discovery algorithm that has driven a 15 % increase in matches and contact, exchanges since launching in March.

20:59So they're definitely crafting a narrative here. And it does seem like AI has found its place in the dating market because, remember, a lot of these companies tried to roll out features that would help you craft your profile or write your bio or edit your photos. And a lot of young people have said, actually, we don't necessarily like that. It seems like AI is better off behind the scenes, you know, saying, hey, this person is going to be great for Neil. It's going to increase his chances of a match here versus doing something so up front and match group like i said is taking what's working at hinge and moving it to tinder which has been a laggard compared to hinge and tinder is right now the team behind tinder is really focused on gen z and college they introduced this double dating feature and they said it's been a huge hit 90 of this double dating features users are under the age of 30 they're introducing a college mode for students looking to date within their schools so they're transforming Tinder from this hookup app to be an app that really deals with the very distinct preferences of dating when it comes to Gen Z.

22:03And that is, they say, more casual, like the double date thing. They don't want to have this very formalized process around it. They just want to say, hey, maybe I can swipe in. Why don't you come hang out with my friends and we'll just get to know each other that way. Our Dogla Week might be a first time entrant because Berkshire Hathaway doesn't end up on these lists very often. But sure enough, Berkshire Hathaway's Class A shares have fallen 14 % since the beginning of May, way underperforming the broader market's 11 % gain. Now, the beginning of May is a significant date because that was the last trading day before a 94-year-old Warren Buffett said he was handing over the reins of his conglomerate to his Lieutenant Greg Abel.

22:43Suddenly, good old boring Berkshire, which has outperformed the S &P 500 by more than 5 million percent under Buffett's six-decade tenure has some question marks around it. Berkshire has often traded with a so-called Buffett premium attached to it. Its price-to-book ratio, which compares its market cap to the actual underlying business assets, rose to nearly 1.8 earlier this year, the highest since October 2008. However, investors are not so sure that the Buffett premium will seamlessly transfer over into the Able premium. Still, Neil, it's weird to see this company with a hangover. This is one of the biggest deltas between Berkshire Hathaway and the S &P 500 over a three-month period since 1990, being only during the pandemic.

23:25An odd time to be a stockholder in a company that does not often underperform. Right now, the stock market is in risk-on mode. Tech companies like Palantir and crypto is surging. Everyone is kind of throwing their bets into the tech industry. And what does Berkshire Hathaway not do well is tech. I mean, Apple is really its only holding in the tech industry. Warren Buffett has shied away from tech for most of his career because he says he just doesn't understand it. So when you see the stock market doing well and the NASDAQ 100 doing well, which has a lot of tech companies, that's usually a signal that Berkshire Hathaway is not doing well.

24:02And this happened back during another boom time in tech, which was 1999 and early 2000s during the dot-com bubble. During 1999, NASDAQ 100 more than doubled. At the same time, Berkshire Hathaway stock was down nearly 50%. So we're seeing something similar now. But guess what happened the next year? The situation reversed, the Nasdaq bubble burst, and it fell more than 60%. And then Berkshire surged 70%. So Berkshire Hathaway shareholders are probably hoping that the same trend that happened more than 25 years ago will happen here in 2026. And I do think maybe some investors got over their skis when it comes to buying Berkshire in the early months of this year, because as worries around tariffs started to build, a lot of people were rotating into the safety of Berkshire Hathaway.

24:52And so it hit an all-time high earlier this year. Buffett himself probably thinks his own company is overvalued. He oversees the company's share repurchasing program, and he stopped buying Berkshire Hathaway shares back of May of last year. So he only purchases shares when he believes the price is below Berkshire's intrinsic value. So if the man himself thinks shares are overvalued, then shares probably are getting a little frothier. So taking a couple of chips off the table. Now let's sprint to the finish with some final headlines. Yesterday, President Trump demanded the CEO of Intel, Lip Wu Tan, resign immediately over his ties to China.