The Most Dangerous AI Model Just Leaked

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2:23Welcome to Prof G Markets. I'm Ed Elson. It is April 23rd. Let's check in on yesterday's market vitals. The S &P 500 and Nasdaq hit record closing highs on the ceasefire extension. The the price of Brent crude rose back above$100 per barrel after Iran seized container ships. The dollar and treasury yields climbed. And finally, cannabis stocks soared on news that the DOJ is moving to reclassify marijuana as a less restricted substance. Okay, what else is happening? Anthropic built an AI model so dangerous they refused to release it to the public. We discussed that last week. However, we just learned that unauthorized users got a hold of it anyway.

3:11Bloomberg reported that a small group of unknown, unapproved users have had access to the model mythos for two weeks. They broke into the model the same day Anthropic launched Project Glasswing, a controlled rollout giving a select group of companies exclusive access to the model. Anthropic says it is investigating the security breach from these unidentified individuals, but has found no evidence of malicious use so far. The question is, if they can access Mythos without permission, then who else can and how bad could it get? Here to help us answer those questions, we're speaking with Sherry Davidoff, founder of LMG Security and co-host of the podcast Cyber Side Chats.

3:53Sherry, thanks for joining us on the show here. So we discussed Anthropik's Mythos model the other week. it's extremely powerful how powerful i don't know but i know that it was so powerful that they refused to release it to the public i know i know also know it was so powerful that we saw meetings at the white house where they convened among some of the most powerful people in the nation to figure out what to do about this thing and now we learned that someone accessed it i guess and it was unauthorized. I can't tell how much of this is real and how important it really is. So that's why I have you.

4:33What do you make of this? Well, I mean, this is something we've been expecting from day one. They say three can keep a secret if two of them are dead. Mythos Preview has been released to over 40 tech companies, and Lord knows how many people at those tech companies. So from day one, I'm sure there was unauthorized access. The question is, who is accessing it? when they shouldn't be? Is it just people at those companies? Is it someone who has wormed their way in from the outside and has actually hacked in? But honestly, the part that I didn't expect was that we would actually hear about it. So bravo to Anthropik for investigating and for whoever it is that figured this out and has started to publicize it.

5:14Well, it wasn't them. It was Bloomberg. It was the reporters over at Bloomberg who figured this out. I mean, I guess if we could just go back a little bit, from my understanding, Mythos, the problem with Mythos is that it can basically hack any cybersecurity infrastructure anywhere in the world. And you are an expert in cybersecurity. So could you just take us through like, what is the danger of Mythos exactly? And how powerful is it? What are the capabilities? Sure. Mythos is completely changing the security risk landscape right now. I was just saying to somebody, I have been in this industry for 25 years, and I have never seen something that completely altered the security landscape to this extent.

5:58So absolutely, we need to be paying attention, and it is very serious. The capabilities of Mythos Preview, according to Anthropic and those that have used it, it's basically like a hacking ray. You can point it at software, and even if you don't have the source code, it can still detect vulnerabilities and write code that will exploit it. So a human doesn't need to do anything to break into that software. And that means that already researchers have discovered thousands upon thousands of bugs, and there are working exploits to go with that. So what that means is that literally anyone who has access to this could potentially just point it at wherever they want and break into that system before the vendor has a chance to even think about patching it.

6:43And so there are some defensive measures that we all need to be taking right now. And the goal by releasing it to some tech companies was hopefully to give them a leg up. But let's be honest, that's a lot of people that have access. And when that many people have access, it's going to get abused. So are you concerned that this will get into the wrong people's hands? It sounds like your view right now is that people who aren't supposed to have it have it. But since we haven't seen a mass data breach or at least something that is extremely concerning yet, then it's not a problem yet. Well, first of all, unauthorized access is absolutely inevitable when this many organizations already have access.

7:22And I've actually been wondering for those companies that do have access, how are they being vetted? How are their security procedures being reviewed? How are they limiting this access? Because there's only so much you can do to secure any one company, but I'm hoping that Anthropic is maybe vetting them in this process. The challenge is you have to weigh that with the desperate need for these companies to start patching bugs. When you think about it, some of this software is used on millions and millions of systems, whether it's antivirus software or operating systems or systems in the cloud. And so when, not if, an adversary is able to find and exploit these vulnerabilities, it's going to have a massive impact and we need to give these tech companies a leg up.

8:07So what does it mean for some of the largest tech companies? I mean, these are big names in the world of markets, companies like Cloudflare and CrowdStrike, all of these cybersecurity firms. What does this actually mean for them? I can't, I think, I guess this is a debate whether it's a bad thing or perhaps even a good thing, because I guess now you need cybersecurity more than ever. Well, in the long term, it means we're going to completely change how we manage software vulnerabilities. Because up until this point, at least in theory, you find out about a vulnerability, you work really hard, you patch it.

8:42Maybe it'll take a few weeks, maybe it'll take a few months, and you hope that the bad guys don't manage to figure out the same thing and exploit it first, right? So we've had that lag. And now I'm sure this is a complete emergency for all the major tech companies. And honestly, I'm concerned about every organization in the software supply chain because, frankly, your small businesses, your smaller suppliers also need access to this to patch their bugs as well. So I'm sure they're scrambling. They're trying to figure out how on earth are they going to patch these thousands of vulnerabilities? How are they going to prioritize?

9:15They've got to be using AI to help counteract this. But AI can also introduce bugs. My guess is right now they're scrambling to work on the system, to make it so they can patch things faster than we've ever been able to before. And we're going to need to be shifting to more continuous software updates instead of like, oh, you get an update once a month or something like that. Do you think the government should have a role in this? I mean, some people have made the comparison of AI to things like nuclear bombs. And I mean, I'm not sure if that's the analogy to be making, but I think you can compare it to a weapon, at least.

9:53That's very insightful, Ed. And when I first heard about this, I thought it reminds me of the cyber disarmament movement where there was talk that like the CIA and the NSA were stockpiling vulnerabilities and that creates risk for everybody. And certainly AI with these capabilities creates risk for everybody as well. And so one of my questions is, what other companies beyond Anthropic have access to these capabilities? They may not be the only ones that have invented an AI that is capable of doing this. And so where I see the government potentially being involved is maybe setting some standards for disclosure.

10:31If you have an AI that has certain capabilities, do we need to track that? Do we need to notify anybody? And how is this going to be coordinated? Right. Do you think that, I mean, some would say, or I think some people think or suspect that maybe it's all being overhyped, that part of this is sort of like a fear-mongering marketing tactic to say, look how powerful, look how scary our technology is, to kind of get investors excited about, wow, this is going to be really transformative. And I guess it's sort of tough to understand, because I think that's a pretty compelling point. Like, it would make sense for Anthropic to say, look how crazy and bad this is, and get a lot of headlines and generate a lot of heat.

11:17And then people like you and I come on podcasts and we talk about it. But then at the same time, it also seems very dangerous and frankly stupid to just assume that it's marketing and sort of cover our eyes and say, no, this isn't going to be a problem because it could very well be a problem. I guess, where do you stand on this? To what extent is this hype and fear-mongering to get everyone kind of excited and also scared versus no, this is very legitimate and we actually should be scared. Yeah, I wish I thought it was hype, but I myself have been using Claude Code. I've been looking at the capabilities of Opus.

11:53Last year, I actually did a research project with my colleague, Matt Duren, and we researched the dark web and looked at tools like WormGPT and FraudGPT that were already pretty darn good at finding vulnerabilities and writing exploits without all of the ethical guardrails that we have on legitimate tools. So absolutely, I think that there are some real capabilities here. I do think that the future will be different than any of us are predicting. The other thing to remember in security is that, frankly, cybercriminals have had the ability to get into most organizations for a long, long time. And it doesn't always mean there's some disaster that comes out of it.

12:34The same thing is it's possible to burn down a building. That doesn't mean all buildings will burn down. Even adversaries have limited resources. And so there's always going to be that balance. But yes, absolutely. This is a huge change to the cyber risk landscape. I'm sure Anthropic is capitalizing on that. They put out a press release. I also suspect that there are probably many other organizations and groups that have similar capabilities that are not putting out press releases. But we should absolutely be concerned. Do you think that China, this is the kind of thing that China would be focused on or Russia or any other, or perhaps Iran.

13:10I mean, to what extent is this like a real national security risk? Well, I'm wondering if China already has capabilities approaching this. If not, I'm sure they're trying to get their hands on it. Same thing with Russia and other nation states and organized crime groups. I also thought about when Tesla was almost hacked. This was several years ago, and I don't know if you caught this news, but Russian agents tried to bribe a Tesla employee into installing malware on Tesla's network. And they offered this employee a million dollars. And amazingly, that employee turned around and reported this. But what if the bad guys offered any employee at one of these 40 tech companies a million bucks?

13:54Is somebody going to take them up on it and say, oh, yeah, you can come into my computer and access it? So we really need to be about how our nation states going to get these capabilities if they don't already have them. Really good point. Sherry Davidoff, founder of LMG Security, co-host of the Cyber Side Chats podcast. Sherry, appreciate your time. Thank you. Thanks, Ed. After the break, a breakdown of Tesla's earnings. And by the way, we are heading out on tour at the end of May. So for more info and to get your tickets, head to ProfitMarketsTour.com. Can't wait to see you.

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15:43Support for the show comes from Anthropic. When you're solving a problem, just scratching the surface isn't going to get you anywhere. You want to understand the deeper questions and implications. And that's where Claude can help. Claude is the AI for minds that don't stop at good enough. It's the collaborator that actually understands your entire workflow and thinks with you. Whether you're debugging code at midnight or strategizing your next business move, Claude extends your thinking to tackle the problems that matter. And Cowork brings Claude code's agentic power to your desktop, no terminal required, so anyone can use and have Claude do real work.

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16:48support for the show comes from amazon there are the things you can plan for a first birthday party a movie marathon a renter-friendly bathroom reno and then there are the things you can never plan for a surprise rainstorm a blu-ray player calling it quits stick on tiles that looked way better on the package. For all things planned and unplanned, Amazon has you covered. You'll find low prices on everyday essentials and last-minute lifesavers. Shop Amazon and save on essentials. Save the everyday.

17:29We're back with ProfG Markets. Tesla reported first quarter earnings yesterday that largely beat analyst expectations. Revenue rose 16 % year over year with both cash flow and profit coming in ahead of estimates. The company also signaled that vehicle demand is picking back up. That said, not everything was strong. Q1 deliveries came in below expectations. Nonetheless, the stock rose as much as 5 % after hours. So to help us break down Tesla's first quarter, So we are speaking with Seth Goldstein, Senior Equity Analyst at Morningstar. Seth, thank you for joining us on the show here. Better than expected, pretty much.

18:12Stock rising 5 % after hours. Let's just start with your top line reactions to these earnings. Yeah, so we knew deliveries was only up 6%, which did come in below consensus from the report at the start of April. but I think what the stock was up and reacting to were positive business developments and namely positive free cash flow in the first quarter of 2026. With Tesla starting a heavy capital expenditure program, at least$20 billion, if not higher, to fund its transition to an AI and robotics company, I think the market was worried coming into 2026 of where would that cash come from and could Tesla still generate strong free cash flow or even some positive free cash flow while that program is ramping up.

19:02And so positive free cash flow in the first quarter puts them to a good start to the year. And then if we look operationally at the businesses, Tesla was able to launch its RoboTaxi in two new markets by April, where we see them starting in Dallas and Houston. And interestingly, they're launching immediately into the unsupervised robotaxis. So if you remember when they started in Austin, there was a human safety monitor who would ride in the front passenger seat of the vehicle. But with the Dallas and Houston launches, they're going directly to no safety monitor, which tells me that the software is progressing well.

19:39Testing is going well enough to enter new markets and immediately not need the safety monitor. And then if we look at factory expansion plans, the transition to take the factory that was making the Model S and Model X vehicles and take that to produce the Optimus humanoid robots is still on track to enter production by the end of this year. And so, you know, with Tesla's two big pillars in the future going to be self-driving cars and humanoid robots, both of those initiatives are on track with the positive free cash flow. And that led the stock to rise after hours. That does sound pretty good.

20:16I guess let's just start with the Robotaxi for a moment. um i mean it seems that we're on a better path but if you look at the robotaxi over the past year or two years and you compare it to the growth of awaymo for example the fact that we're just getting to having actual robotaxis as in there isn't someone sitting there monitoring the thing in the driver's seat, i.e. basically a driver. It seems that this has been largely a failure so far. But it sounds like what we're learning is that actually they are kind of getting there. I mean, there have also been some reports that they've only launched one vehicle per city here, which seems a little bit concerning.

21:01I guess what you're hearing from me is a skepticism about the Tesla Robotaxi program, which I feel like has been hyped for a very, very long time. And I always feel like, oh, it's about to get good. They're finally figuring it out. They're finally launching. And then we come back like a quarter later or even a year later. And it's like, we're in the same situation we were. So I guess, tell me a little bit more about the RoboTaxi because I still feel skeptical. Well, the RoboTaxi has been a year away for most of the past decade. And so I understand the reason for the skepticism, but we're seeing tangible progress now where The RoboTaxi is launching a service with no human safety monitors in the vehicles in three cities in Texas with plans to expand to five more cities over this coming quarter.

21:46And so we're actually seeing progress, but Tesla wants to go intentionally very slow here, like we saw Waymo go very slow for years at first, because nobody wants a repeat of the cruise incident where the vehicle injured someone and then all cruise operations were paused indefinitely. So I think Tesla is intentionally going slow here and we're going to see them grow in new cities, but they want to be confident in the technology, confident that the software can handle all of the edge cases that you might see while doing a robo taxi trip so that they can progress in a safe manner. And so we do have real revenue.

22:25We have real operations in three cities, but I expect it to be a very slow pace of ramp. But then if we look, you know, three, four, five years down the road, then all of a sudden, I think we'll start to see, you know, the vision for the future where we see many Tesla robotaxis throughout cities, probably mostly in the southern part of the U.S. still. but being able to be a full ride-hailing participant, not just in this sort of early testing phase that they're in today. Let's talk about sales or deliveries as well before we get to the humanoids. So as we mentioned, missed expectations on deliveries, but we already knew that because they had already reported it before.

23:06They produced 50 ,000 more vehicles and they delivered this quarter, largest gap in their history. I mean, I'm still someone that views Tesla as a car company. At least that's what it is right now. They haven't launched these other businesses yet. And the car business does seem to be deteriorating. That does seem to be concerning. What do you make of the sales of the vehicles this quarter? Well, sales were still up 6 % year over year. So while it did miss consensus, it ought to still grew at the end of the day. And we did see solid profit margins, over 20 % if you include the regulatory credits, 19 % if you exclude the credits.

23:50And that still tells me that that's a strong business. We also saw full self-driving subscriptions grow, another over 100 ,000 subscriptions added during the quarter. So that tells me there's consumer enthusiasm for full self-driving subscriptions. Even though it's still a level two product today, it can still make for an easier driving experience. And that's an additional revenue stream for Tesla. We're also seeing insurance grow. And so Tesla's plan for their vehicles was not only to sell the car, but then also to have these other recurring revenue streams that consumers would buy with the vehicles, namely the autonomous driving software, insurance in some US states, and charging all over.

24:34And this plan seems to be going well. And so, yes, Tesla today, autos is still the biggest business, and I think it will be for a number of years. But we're still seeing a decent automotive result, even if the deliveries came in below expectations. And I'll note one other thing. We did see about 50 ,000 or so Model 3, Model Ys produce more than they delivered, but they just recently got approval in the European Union by the Dutch regulator to launch full self-driving software, which I think differentiates Tesla. And without that, Tesla in Europe is just another EV company. And right now in Europe, there are many long-range EVs at a similar or cheaper price point for consumers to choose from.

25:18So it's no longer that Tesla is the only choice for a long-range affordable EV. And as we see, the Dutch regulators approved FSD throughout the next one to two quarters, likely to see the entire European Union and multiple countries approve full self-driving, which I think will really boost deliveries. And so Tesla could have been producing more in anticipation that they were going to see increased demand, just like we saw in China last year, where deliveries were falling to start the year, but then full self-driving was approved and we saw deliveries immediately improve once consumers could buy that software.

25:57Yeah, I mean, hearing it makes me feel a little bit more optimistic about the prospects. I think the question is kind of going to be for Tesla, can they come back, especially in Europe, from this massive slump that we did see in sales, where everyone basically just turned against Tesla as a company essentially because of Elon. on. Just looking at the valuation here. So Tesla's trading at 185 times forward earnings. It's the most expensive stock in the Mag 7. By far, the next most expensive is Apple at the moment trading at 30 times forward earnings. How do you justify that? And is it basically just humanoid robot expectations?