AI Voice Mode Launches, $500B Selloff, Sandbox Escape

**Beth** (0:30)
I'm going to change that top thing. It currently says, go ahead and join our community at community.com. We normally start the show with, hey, we're live Monday through Friday, 10 a.m. Eastern, 7 a.m. Pacific. Like, comment and subscribe. We love our folks who are commenting and liking. Hey, Jeff, hey, Jen, hey, Waldo. All kinds of great stuff happening already here.
See, now I sent a message to Jude like, you are missed, buddy. If you think we don't know who's in the comments, we do.
Hey, Jude. Andy, what's on top of your mind in terms of AI today?

**Andy** (1:13)
Well, I'm a big fan of Google, but both Tesla and Alphabet, the parent of Google, is their stock out there. Although the stock symbol is still GOOGL, which is very cool. GOOG, they have both of those. They're two slightly different, but very closely slaved stock prices.
Tesla and Alphabet got whacked yesterday because investors are finally saying, look, despite Google's extraordinary performance at the moment, the scale of the capital investments they're making in AI for compute infrastructure is just crazy levels. We don't understand them as stock investors. It's got to come back to bite them eventually. And they lost 7% of their value. Now, the value of Alphabet is enormous. So 7% of that is a lot. But even worse was Tesla. Now, Tesla is not an AI stock, but it is also, in this little group that got whacked yesterday, they lost 14.5% of their value.
Those are enormous and frightening numbers where a stock can lose that much capital value.
Just the valuation drops dramatically. Together, that was $500 billion worth of value wiped off the stock market yesterday in those two leading stocks. So that's definitely on my mind. I don't own Tesla, but I do own Alphabet. So that hurts my portfolio a little bit, a lot. Okay, let's say a lot. Okay, so that's the lead off. And then, you know, I think we're going to end up talking about voice today because there's big announcements about voice. But Beth, what did you want to talk about?

**Beth** (3:26)
Well, a weave off or a slight weave off what we were talking about. There is scuttlebutt about the unacknowledged debt that most of the Frontier Labs are holding that for whatever reason isn't considered in the valuation or on the books. Maybe it's a commitment to a future build of a data center or something like that. But there has been more and more discussion about like, hey, so A, there's a lot of money being made, but it's not profit because of the training and the commitment to the new trainings.
I still feel like this is an industry that it's hard to nail down valuation, because it's changing so fast and there isn't knowledge really about how it's going to impact business in the long run. We're still in the small, what's happening and one of the ways that the valuation gets confusing or problematic is the most obvious way that it could impact business in the long run is AI replaces workers, because humans are the most expensive cost in many businesses. Certainly, the people in the work, they help the and do all sorts of the human things that are needed for humans to do the work. While at the same time, there's a tipping point if that happens, where all sorts of things go with, because now humans aren't working.

**Andy** (5:19)
Yeah, let me reinforce your thinking there, which is the valuation, the current valuation, the present value as it's called, is a function of whatever its current profit generating capacity is, plus the future value of its growth opportunity. What's really a big piece of AI valuations out there, which are in the stratosphere, is this expectation that in the future, they will become very, very much more profitable than they are today.
There are very, very few companies out there in the world of AI that are currently profitable. This is all a growth logic, expecting that growth will continue and that future profits will be dramatically higher than they are today. In the case of Alphabet, for example, they are immensely profitable right now. But does the valuation have a future growth of profit component that justifies their current price?
Ten percent off of the total valuation of Alphabet is painful, but it's not like rocking the boat. It was a bump. That's a bump. So it's all about, does it make sense for Anthropic, for example, to make a commitment of $5 billion to AMD for compute capacity using AMD processors in their creation of a network of different sources of inference compute for the future, because they expect that they'll be able to charge money at very high rates that they currently do across an even larger body of customers to justify those huge investments. And that's where it's hard to imagine that, especially with the advent of the Chinese models at much lower cost, and at near parity or parity for all practical purposes, it's hard to imagine for many investors that this is going to play out in a positive way, there's going to be a reckoning. And that's why you'll see volatility, which in the world of stock trading is called beta, right? What's the beta of a stock? Does it go up and down a lot or is it rock steady? And the beta of AI stocks, and Tesla particularly, and SpaceX is very high. I don't follow Tesla and SpaceX carefully, but I also glanced at something that said that SpaceX is really getting hammered.