FULL INTERVIEW: Dylan Patel Says We’re Still Underestimating AI

This is our full interview with SemiAnalysis Founder and CEO Dylan Patel, recorded live on TBPN at the Cisco AI Summit in San Francisco. We discuss data centers in space, the limits of today’s AI hardware, and how chips, power, and geopolitics will shape the future of AI infra. TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to podcast platforms immediately after. Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has recently featured Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dylan Patel?

  Good to see you.

• 0:01John Coogan?

  Good to have you. Data centers in space, what you got?

• 0:06John Coogan?

  When are we going?

• 0:07Jordi Hays?

  Coming in hot.

• 0:07John Coogan?

  Me, you, the International Space Station, let's break it down.

• 0:11Dylan Patel?

  You know, the space tourism industry is quite a, quite a fun one, right?

• 0:14John Coogan?

  Yeah. Would you go? Would you do the Blue Origin thing where they blast you up past the Karman line? It's good enough for Katy Perry, it's not good enough for you? What's going on?

• 0:22Dylan Patel?

  It's like, you know, like you're in freefall, you're not actually in space.

• 0:25John Coogan?

  It doesn't count?

• 0:26Jordi Hays?

  Shots fired.

• 0:27John Coogan?

  Karman line can hire.

• 0:28Dylan Patel?

  I want to be like going around for days, you know, I want my bone density to start to atrophy, right? I truly want to feel the negative effects of space.

• 0:36John Coogan?

  Yeah, yeah, it's not enough just to go. I think I would do it, it's even if it's just a freefall. Yeah, but it's better than being hanging out on Earth.

• 0:44Dylan Patel?

  All the cool stuff that astronauts do, right? Like, you know, put water and then like they're bubbling and then you like try and drink the water or like, you know.

• 0:50Jordi Hays?

  Soon they'll be unplugging the GPS, plugging it back.

• 0:53John Coogan?

  Oh, yeah, yeah, yeah, yeah. That's what you pay for your space tourism, you gotta go on the seat of a ship.

• 0:59Dylan Patel?

  Ninety seconds of servicing SpaceX satellite.

• 1:01John Coogan?

  One ninety second trip at a time. No, but people were wondering, you know, TPUs and video going on the, on the Starlink V5 or whatever, whatever something gets up there, it feels like this will be something more like a Tesla silicon chip, an AI chip. Like, do you have any insight into like what the process, if you wind up figuring out how heat dissipate? If you wind up figuring out the costs, what might the chip look like?

• 1:29Dylan Patel?

  So I think, I think, you know, everyone freaks out, oh my God, putting stuff in space is expensive.

• 1:33John Coogan?

  Yeah.

• 1:33Dylan Patel?

  But if you look at like Starship launch costs and, you know, they keep falling, you're like, fine, right? Like, I think that's not, you know, by the end of the decade, the cost of space launch will be fine. The heat dissipation, I mean, it's a challenge, but you just put a massive, massive effective radiator.

• 1:47John Coogan?

  Yep.

• 1:47Dylan Patel?

  And it's, it's fine, right? By the end of the decade, like you'll be good. I think, I think the big challenge is that chips are just really unreliable, right? And so, so how do you deal with like a couple of things, right? Satellites can only be so large before they like, you need, start needing a lot of support and structure before they tear themselves apart. So when you look at like the, the launches, right, these, these things are shooting out satellite, tiny satellites.

• 2:08John Coogan?

  Yeah.

• 2:08Dylan Patel?

  And many of them, okay, so you can't have like a big, fully connected. Cluster of chips. And then, and then like on top of that, right? How do, how do you deal with any random error? On, on earth, you have techs running around the data center, unplugging stuff, putting in spares, things like that. What do you do in space? You RMA it to the factory where they like might unsolder it and re-solder it and then like test it and it works and go back out. Sometimes it is just trashed, but like, you know, that's the challenge to me.

• 2:37John Coogan?

  Is that, is that, I, I, I feel like maybe the, the pattern we should be looking at is like, how often do the Tesla self-driving chips need to get serviced? Because that's like the, the, the team that would probably be building or like bridging the gap there. Like the Starlink satellites, sir, they go down, but like the service works. Like you're, you're just relying on some sort of like, you know, 90% uptime, stuff's coming down. But most people that are in a Waymo, like the chip keeps working, right? Most people that are in a Tesla self-driving, like they're not, like, you don't hear about Tesla owners being like, I love FSD, but I'm constantly in the shop getting my, my custom silicon chips unseated and reseated, right?

• 3:15Dylan Patel?

  Well, I mean, it's, it's also a function of like the complexity of a chip, right?

• 3:18John Coogan?

  Sure.

• 3:19Dylan Patel?

  You know, if, if a chip is twice as fast.

• 3:21John Coogan?

  Yeah.

• 3:21Dylan Patel?

  And let's say the bit error, right, right? Like how often a bit flips.

• 3:24John Coogan?

  Sure.

• 3:25Dylan Patel?

  Is the same, then it's erroring out twice as often.

• 3:28John Coogan?

  Yeah.

• 3:28Dylan Patel?

  Um, but let's say the chip is 10x as big, right? And so when you look at like a Tesla FSD chip, very, very good, very, very efficient, very, still like relatively inexpensive and cheap compared to, you know, a big old GPU or TPU or whatever, right? Those things are extremely large. And, you know, again, like if, if the error rates are the same, then it, it fails 10x more. But in fact, the error rates are a bit harder, higher because they're pushing these things to the absolute limit.

• 3:52John Coogan?

  Yeah.

• 3:53Dylan Patel?

  Um, whereas, you know, Tesla does have some level of like, well, first of all, the Tesla car has two chips. Sort of redundancy already built in, right?

• 4:01John Coogan?

  Maybe you do that on the satellite, that has more power, more.

• 4:04Dylan Patel?

  Yeah, right. So, so the whole allure, right, of it is, is, you know, effectively power is free, right? And solar panels, you look at the cost curve of solar panels, you look at the cost curve of satellite launches. You're, you're like, this is, this is free, this is great. But power is less than 10% of the cost of the cluster.

• 4:19John Coogan?

  Sure.

• 4:20Dylan Patel?

  Right?

• 4:20John Coogan?

  Yeah.

• 4:20Dylan Patel?

  So, so like, it's that 90%, you're not saving anything on.

• 4:24John Coogan?

  Yeah, yeah.

• 4:24Dylan Patel?

  Um, and insofar as much as.

• 4:26John Coogan?

  Potentially a hundred times the hassle.

• 4:29Dylan Patel?

  Yes, yes.

• 4:31John Coogan?

  Yeah.

• 4:31Dylan Patel?

  Um, there's this whole like, you know, like if you look at Nvidia GPUs, right?

• 4:34John Coogan?

  Yeah.

• 4:34Dylan Patel?

  When you first turn on the cluster, about 10 to 15% of them. Fail RMA in the first two weeks.

• 4:41John Coogan?

  Wow.

• 4:42Dylan Patel?

  And then that's fine, like you have to reseat them, whatever. And like the industry knows how to deal with this, right? And over time, like Hopper's now at 5%, but Blackwell's still 10 to 15%, right? Actually started out higher than that.

• 4:53John Coogan?

  Sure.

• 4:53Dylan Patel?

  And when a new generation comes out, it's going to be higher than 10, 15%. It'll have its curve gradually decline down, but you know, who's gonna, are you going to test it and burn it in on the ground? Or are you going to say 5% of my chips or 10, 15% of my chips are trashed?

• 5:05John Coogan?

  Yeah.

• 5:06Dylan Patel?

  Because someone can't go up there and like do these things? Or am I saying, oh, I need robots who can do all this stuff in space? And now that's like an additional engineering problem when sacks of meat are actually very cheap.

• 5:15John Coogan?

  Yeah. Speaking of Nvidia, we haven't talked since the Grok acquisition. What does that look like in the bull case? Like if it's, if it's a good, if the next version of Grok is a great chip, is it sitting next to the, you know, H200, H100s in the, in the rack, GB200? Like, how does it fit into the actual, like what Nvidia deploys? Is it just a separate chip?

• 5:38Dylan Patel?

  I think it's, I think it's a big vibe shift from Nvidia, right? Before they were like, all right, I got this big GPU. Everyone's going to use this GPU, software ecosystem of the GPU is so good. It's one size fits all. Everyone, you know, like everyone's trying to make all these like specific point solutions, but we've got the thing that's good, good at everything.

• 5:54John Coogan?

  Okay.

• 5:54Dylan Patel?

  And then they had a vibe shift, right? They launched this thing called CPX.

• 5:58John Coogan?

  Okay.

• 5:58Dylan Patel?

  Which is a chip made for pre-fill.

• 6:00John Coogan?

  Okay.

• 6:01Dylan Patel?

  With, you know, prompt processing, creating a KV cache, and also good at like video generation and image generation. And that's coming out later this year.

• 6:08John Coogan?

  They were really talking about video generation as well.

• 6:10Dylan Patel?

  So, so yeah, you've got like CPX, you've got like the standard GPU. Now you've got the Grok chips and they all fill a different niche.

• 6:16John Coogan?

  Okay.

• 6:16Dylan Patel?

  But really it screams, oh crap, we don't really know exactly where AI is going, which I don't think anyone does, right? I mean, it's, it's moving so fast, the software is, the model architectures, et cetera. So we're just going to like engineer solutions that are along multiple points of the Pareto optimal curve. And then, you know, if. One of them will win, right? And I think, I think it's like, sort of like a big vibe shift from Nvidia. Also, they just knew OpenAI was gonna do this Cerebras deal, so they freaked out, but.

• 6:39John Coogan?

  Got it. Yeah, well, yeah, get me up to speed on what makes Cerebras important in the ecosystem right now?

• 6:46Dylan Patel?

  So, you know, you have people thinking like, oh, latency matters in terms of where our data center is. It doesn't matter at all. What matters is, you know, as we've moved from, you know, chat applications, which were like, or search response immediately, chat applications, let's say response takes 10, 20, 30 seconds. You've got agents, you know, I don't know, my Claude codes are working in the background for a long time, right? Doesn't matter where the data center is, but what does matter is that these streams of inference take, you know, 30 minutes versus 10 minutes, versus five minutes. And for a lot of people, I'm fine to spend 10x the price on something that completes 10x faster.

• 7:20John Coogan?

  Yeah.

• 7:21Dylan Patel?

  And so Cerebras sort of just makes a ton of sense there. So OpenAI, you know, they've got these like long horizon. There's, there's like Codex 5.2, extra high thinking or whatever, it's terrible. Can you guys teach them how to market? OpenAI, you have to sponsor this podcast.

• 7:38John Coogan?

  Yeah, yeah. We had T-Bone yesterday, and I did actually ask him like, I, I, I had the Codex app pulled up on my desktop, and I was like, there are six different models, and then there's a, then there's another button that I can pick.

• 7:50Jordi Hays?

  Well, how many different products are called Codex now?

• 7:52John Coogan?

  There's a lot.

• 7:53Dylan Patel?

  Now there's an app, yeah.

• 7:54Jordi Hays?

  Yeah.

• 7:55John Coogan?

  We actually had another guy on just to do branding. Lexicon Branding came on the show yesterday talking about the, all the naming.

• 8:02Jordi Hays?

  Naming architectures.

• 8:02John Coogan?

  Naming architectures, it is complicated, but hopefully.

• 8:05Jordi Hays?

  You could tell he's just blood boiling because like all the AI companies just have the most chaotic. Anthropic, Claude, Claude code, but also you can use Claude code for other stuff.

• 8:16John Coogan?

  Yeah. But yeah, I mean, with Cerebras, it seems like there is a value to it, but are they constrained on the supply side? Like, can they actually scale up to, you know, a, a Colossus-style data center that could actually speed up Codex not just for like one user, but all the users?

• 8:33Dylan Patel?

  So, I mean, Cerebras can speed up multiple users for sure. The question is sort of like where you use it, and that's what they have to like. Figure out where within Codex, right?

• 8:41John Coogan?

  Yeah.

• 8:41Dylan Patel?

  Because there are times where Codex is running for like 10 hours.

• 8:44John Coogan?

  Yep.

• 8:44Dylan Patel?

  And sometimes you don't mind, right?

• 8:46John Coogan?

  Yeah.

• 8:46Dylan Patel?

  Screw it, I've put up this nice prompt, gone, work on it, refactor my code, do this thing, do this task. Other times, I want this iteration feedback loop. So how do you expose it to the user without saying, hey, actually, there's another toggle? So your presentation is 18 times.

• 9:00John Coogan?

  Hopefully, like a really robust model router, but it feels like that's been a process.

• 9:05Dylan Patel?

  Yeah, so the OpenAI deal is like for 750 megawatts. It's not that much capacity.

• 9:09John Coogan?

  Yeah.

• 9:10Dylan Patel?

  On the order of like what OpenAI has talked about. You know, by the end of 28, they'll be at like 16 gigawatts.

• 9:14John Coogan?

  Sure.

• 9:15Dylan Patel?

  Of that.

• 9:17John Coogan?

  The absolute cutting edge, the most price insensitive customers. In that specific use case of this is the type of prompt that you need to return fast, then you'll get the speed up potentially.

• 9:26Dylan Patel?

  Right, right, and they've got to figure out how to do it from a product, exposing it to the user, et cetera. But it's clearly something where there is demand, right? Like, I don't know, like Andre Karpathy doesn't care if he's spending a thousand bucks per agent per second or whatever, right? Like, you know, whoever it is, these like super cracked engineers don't care at all.

• 9:43John Coogan?

  Yeah, yeah.

• 9:43Dylan Patel?

  And then obviously, there's like a long tail of like, actually, cost does matter for most people. And so all along that curve, they've got to have solutions, right?

• 9:51John Coogan?

  Yeah.

• 9:52Jordi Hays?

  When did you first think that XAI might end up at another Elon company?

• 9:59Dylan Patel?

  I mean, this has been rumored for a long time, right? Like, people are saying Tesla, Tesla, Tesla for the longest time.

• 10:04John Coogan?

  It's harder with a public company.

• 10:05Dylan Patel?

  Yeah, yeah, and then a few, a bit ago, people were like, oh, SpaceX, I'm like, wait, this makes no sense.

• 10:10Jordi Hays?

  No, but there was a very coordinated like narrative pump.

• 10:13John Coogan?

  Oh, yeah.

• 10:14Jordi Hays?

  Like, at the end of last year. At the end of last year.

• 10:17John Coogan?

  No, it's perfect.

• 10:18Jordi Hays?

  It was like, almost like perfectly telegraphed.

• 10:20Dylan Patel?

  Well, there's a bet, right? Between basically the head of compute of XAI and the head of compute of Anthropic. And the bet is what percentage of worldwide data center capacity is in space by the end of 28? And the bar is 1%.

• 10:34John Coogan?

  Oh, wow.

• 10:34Dylan Patel?

  And so the XAI guy is like really bullish, the Anthropic guy is like, eh. Yeah, yeah, so but it's a really interesting bet. I take the under on 1% by 28% because that's a gigawatt in space.

• 10:46John Coogan?

  Yeah.

• 10:47Dylan Patel?

  But it's actually not that crazy, right?

• 10:48John Coogan?

  Yeah.

• 10:49Dylan Patel?

  It's roughly 150 starship launches.

• 10:51John Coogan?

  Yeah.

• 10:52Dylan Patel?

  We'll get them to 100, to get them to a gigawatt in space.

• 10:54John Coogan?

  Yeah.

• 10:55Dylan Patel?

  So, you know, Starship hasn't worked yet.

• 10:57John Coogan?

  Yeah.

• 10:58Dylan Patel?

  Fully.

• 10:58John Coogan?

  I was looking at the energy draw of the current Starlink fleet, and I think they're at like, what is it, 200 kilowatts or something like that? So you, you get 1,000 of those 200 megawatts and like, you're starting to be in the territory, something like that.

• 11:13Dylan Patel?

  Yeah, so the V2 Star satellites, I think, are the only ones they've launched. Maybe they've launched a few V3s, but the V3s are coming soon and those are, those are like 100x more bandwidth each, right?

• 11:23John Coogan?

  Yeah.

• 11:23Dylan Patel?

  And more power.

• 11:24John Coogan?

  And just more power. And so when I'm just thinking of like, can you scale this thing up at all? It's like, are they two orders of magnitude off? Are they three orders of magnitude? It feels like they're like one order of magnitude off being able to run something that looks like an H100.

• 11:35Dylan Patel?

  I think the metric is like 50, it's either 50 kilowatts.

• 11:38John Coogan?

  Yeah.

• 11:38Dylan Patel?

  A ton or something like this per satellite for V3.

• 11:41John Coogan?

  Yeah.

• 11:42Dylan Patel?

  If, let's say from V3 to whatever the compute thing is, they double it again, get to 100, I think the V2s are like 25.

• 11:48John Coogan?

  Yeah, yeah.

• 11:49Dylan Patel?

  So if you get to 100 kilowatts per ton for launch, it's, it's only 150 or so Starship launches.

• 11:53John Coogan?

  Yeah.

• 11:54Dylan Patel?

  I think that's so reasonable.

• 11:55John Coogan?

  Yeah.

• 11:55Dylan Patel?

  Maybe not 28, maybe it takes 29, but like, you know, it's, it's so reasonable. The question is cost and reliability and, you know, what happens when the chip fails? How do you service it? That kind of stuff. How do you, how do you deal with having clusters be much smaller instead of like, you know, these big clusters? Even for inference, big clusters are useful.

• 12:12John Coogan?

  Yeah. Yeah, how do you think about Google's response to Grok's, TPU's obviously very successful, but are they forking that project to eat more of the Pareto curve?

• 12:26Dylan Patel?

  Yeah, so, so for the longest time, Google's had one main line of TPU's, right? All made by Broadcom and then sort of next year, they've diverged it, right? Where Broadcom makes a TPU and MediaTek makes a TPU. These two TPU's are focused at different things.

• 12:40John Coogan?

  And they're fabbed.

• 12:41Dylan Patel?

  They're both fabbed. Everything at the end of the day goes to RACIS, right?

• 12:45John Coogan?

  I want to, I want to go there next, but.

• 12:49Dylan Patel?

  So fat by TSMC regardless, but both of these TPUs are focused on different things. And they've actually got a third project for another kind of TP there. They also see this need to proliferate along the curve of like, hey, do I care a lot about super high amounts of flops, not much memory? Do I care a lot about super fast on-chip memory only? Do I care about 3D stacking memory? Do I care about, you know, the sort of general purpose middle ground AI chip, which is what, you know, an H100, a Blackwell, a TP looks like today. You know, they're sort of like, oh, we need to hit the entire Pareto optimal curve. And it's like, okay, within this, there's training versus inference differences and like what numerics you want and all these other things. There's so much complexity there. Everyone, everyone sort of is diverging their roadmaps. Once they're at a sufficient scale, I think.

• 13:34John Coogan?

  Yeah. Or is Google still way ahead on cross data center training?

• 13:38Dylan Patel?

  Yes.

• 13:38John Coogan?

  And are the other labs like, is that, is that important to the other labs to catch up there? Or is it something that will just naturally happen because everything sort of commoditizes? Or do the other labs need to sort of marshal some Herculean effort to like, crack the code on what it takes and what Google's doing?

• 13:54Dylan Patel?

  Yeah. So it's a couple of things, right? In 2023, everyone thought that scaling was pre-training.

• 14:00John Coogan?

  Yeah.

• 14:00Dylan Patel?

  Right? You know, more parameters, more data. And that's very difficult to split across data centers.

• 14:05John Coogan?

  And has Google been able to do that?

• 14:07Dylan Patel?

  And Google's been able to do that to an extent, right? So what they've done is they've got, you know, they don't have the largest individual data center campus, but what they do is they do these like regions where it's like, hey, each data center is roughly 40 miles apart from each other.

• 14:20John Coogan?

  Sure.

• 14:20Dylan Patel?

  So in Nebraska and Iowa, and then in Ohio, they've got like these complexes. And now they're building one in Oklahoma, Texas.

• 14:26John Coogan?

  Got it.

• 14:26Dylan Patel?

  You know, these complexes where there's all these data centers pretty close to each other.

• 14:29John Coogan?

  So it's not really cross data center, like cross, across the world?

• 14:31Dylan Patel?

  Right.

• 14:32John Coogan?

  It's just across like region?

• 14:33Dylan Patel?

  Yeah. And then that, that makes a lot of the difficulties a lot easier. Flip side is we've also moved to RL, right? And majority of the time of the chips is spent generating data, right? Only doing forward passes through the model.

• 14:45John Coogan?

  Sure.

• 14:46Dylan Patel?

  And then you only send the final tokens that you've verified sort of back to train on to the training, to the train, to train, right?

• 14:53John Coogan?

  Yeah.

• 14:53Dylan Patel?

  So then you end up with like, Oh, instead of in pre-training scaling, you need to like synchronize all the weights every 10, 20, whatever seconds. When you're doing these rollouts, and especially as things get more and more agentic in training, you might not only need to send not the entire weights, but just the tokens that are relevant, so way smaller amount of data and way less frequently, right? Minutes at a time instead of seconds at a time.

• 15:14John Coogan?

  Yeah.

• 15:14Dylan Patel?

  And so you've got this like now, now it's become like reasonable where, oh, actually, multi-data center training is completely reasonable. And people do this. People do multi-data center, multi-chip training.

• 15:23John Coogan?

  Sure.

• 15:24Dylan Patel?

  Right? You know, you do your inference on one set of chips and you do your training on another set of chips. So like Anthropic does this. I don't know if Google does this, but Google's kind of already got the cards, yeah.

• 15:35John Coogan?

  Okay, got it. Let's go to Arrakis. Yeah, talk about Arrakis. Just, there's this debate, TSMC risk, is that the bottleneck or is energy the bottleneck? I was doing back of the envelope calculations. It seems like we're using maybe like 1% of global energy production or Western energy production on, on AI specifically workloads. And then we're using like 50% of leading edge fab capacity on AI workloads. And so that feels like, okay, well, even if we all agree, and we say as a society, we're going all in on AI, we can only double the AI chip capacity before we need to build more fabs. That takes years. Whereas we could say, everyone turn off your air conditioning, we're sending the electricity to the data centers, right? Like, we have the ability to generate it without, without creating new.

• 16:20John Coogan?

  Clapping for turning, turning off the AC. Turn off your, Claude needs to eat.

• 16:27Dylan Patel?

  Heat strokes for all the grandmothers.

• 16:29John Coogan?

  Yes, yes, yes.

• 16:30Dylan Patel?

  I need my cat dancing videos.

• 16:32John Coogan?

  You need to feed Claude, right? But, but, but seriously, like, there's this debate over, you know, is TSMC the main bottleneck or energy the bottleneck? How are you feeling about that?

• 16:40Dylan Patel?

  Yeah, yeah. So sidebar before I answer the question, because I think it's fun.

• 16:43John Coogan?

  Yes.

• 16:44Dylan Patel?

  You know, in the US, it's insane to say, turn off your AC for AI.

• 16:47John Coogan?

  Yes.

• 16:47Dylan Patel?

  Right? And the general public hates AI already.

• 16:49John Coogan?

  Of course, of course.

• 16:50Dylan Patel?

  But in Taiwan, they've had droughts before and they've turned off water to entire cities. They're like, oh, you get to, you get water three days of the week.

• 16:57John Coogan?

  Whoa.

• 16:58Dylan Patel?

  And then the fab still gets supplied water. It's like, this is, you know, you've got to understand the mindset. We are not ready as weak Americans to do this.

• 17:05John Coogan?

  Yeah, that's true.

• 17:06Dylan Patel?

  No, but at, at the end of the day, right? Like, water, water and power are certainly less big of constraints. Now- Now, you've got to imagine like, you know, semiconductor industry is used to, hey, doubling the amount of transistors made every year or two. Yep. Um, part of that is Moore's Law, part of that is more, more capacity. Yep. Um, whereas the energy industry in America wasn't. And, and so like initially, people were like not creative. They're like, let's do, let's do these kinds of gas plants. It's like, well, no, now we've realized, you know, yes, there's three main, uh, manufacturers of turbines and then you've got for a dual combine cycle, then you've got like IGTs, but you've also got like medium speed reciprocating engines, right? Like turns out Cummins can make like a million diesel engines a year and like those can make electricity. Like if I don't give a fuck and I put it in West Texas, easy.

• 17:49Dylan Patel?

  Um, so now it's more of like a regulation thing, a supply chain thing. Power is not a constraint in, insofar like that much, right? I think it certainly is a constraint still today. Um, it was the biggest constraint in 2425 data center capacity, power, uh, because the industry was not ready. People have woken up, they've like sort of been shocked to the system. Now you've got, you know, tens of gigawatts being deployed, um, you know, next year 30 gigawatts are being added and we think the power is there for it. Wow. What was it this year? Uh, it's, it's, uh, this year is like, I think it's like 18 ish, 10 ish. Okay. 15, 18 ish, sorry. So, so almost a doubling. Yeah, almost a doubling, yeah. Yeah, wow. Um, and when you look at, when you look at, um, TSMC and the crew, right? There is not really, oh, this random, you know, there's 12 people making medium speed

• 18:33Dylan Patel?

  reciprocating engines that you can now convert to make Yep. uh, power at some random data center. No, no, no, there's like, there is Arrakis. Yep. Right? There is one set of spice, like, you know, there's, you know, that's it, right? And so, um, and then, and then the flip side is like, okay, when you have 12 vendors, everyone's got a little bit of slack capacity, you know, there's more likelihood, you know, you can, people are like, oh, turbines you can't get. You can call a broker and you can get a turbine. You might be paying 50% more, 2X more, but you can get a turbine. Yeah. Right? Like it's, You can't get a 3 nanometer fab. You cannot get a 3 nanometer fab, exactly. Um, and so when you talk about what's the, you know, the, the baton got passed from semiconductor shortages in 23 to power and, and data centers in 2425. Um, 26, we're still, we're, we're swinging the peddle, but it will fully be semiconductors

• 19:17Dylan Patel?

  again in 27, right? And so we see this across the entire space of the ecosystem. It's not just TSMC, it's also memory, both. Because both of them have built at a certain pace. Now, TSMC has been expanding at some rate. Uh, the memory makers, in fact, have just not expanded capacity. Basically, they have not built new fabs since 2022.

• 19:35John Coogan?

  Yeah.

• 19:35Dylan Patel?

  Because they're, they're like, they're cyclist so undulating. Yeah. And, and so when you look at it, it's like, oh, even if they wanted to double capacity, they need to build the fabs.

• 19:44John Coogan?

  Yeah.

• 19:44Dylan Patel?

  Right? And building the fabs, it is the most complex building humans make, right? Um, it's, it's, it's, it's the entire air of a clean room circulates itself every 1.5 seconds. And you don't even feel it when you're inside.

• 19:55John Coogan?

  Really?

• 19:56Dylan Patel?

  It's like that. And, and it's like parts per billion of particles, right? Like, it's, it's actually insane how, um, you could, you could get coughed in the face by someone who has COVID, um, and not get COVID.

• 20:07John Coogan?

  And so it circulates so fast, it doesn't even hit you?

• 20:09Dylan Patel?

  It's like, it's like.

• 20:10John Coogan?

  It's like that meme of like the spraying when someone's talking and then it's just, it circulates.

• 20:14Dylan Patel?

  So, so one, another, another sidebar is, um, everyone knows COVID like really popped off in Wuhan.

• 20:19John Coogan?

  Yeah.

• 20:19Dylan Patel?

  Right? Wuhan also is home to, uh, China's, uh, largest memory company, YMTC.

• 20:25John Coogan?

  Oh.

• 20:25Dylan Patel?

  And so when they were like welding people into their homes, the people who worked in the fabs still went to work.

• 20:30John Coogan?

  Wow.

• 20:31Dylan Patel?

  It was, because it's, you know, one, it's a national, like, it's a national importance, but two, like, these people are getting sick. This fab is like way too clean.

• 20:39Dylan Patel?

  Yeah.

• 20:40John Coogan?

  Sorry, Jordy.

• 20:41Jordi Hays?

  I, I want to talk about Oracle. They put out a post this morning that said, "Our partners financing for the Doña Ana County, New Mexico, Shackelford County, Texas, and Port Washington, Wisconsin data centers are secured at market standard rates, progressing through final syndication on schedule and consistent with investment-grade deals." Obviously, they were fast following their post from yesterday where they said that Nvidia OpenAI deal has zero impact on our financial relationship with OpenAI. We remain highly confident in OpenAI's ability to raise funds and meet its commitments. And obviously, everyone was looking at this being like, give me a cigarette. Smoking, like, it's like bank run language. I haven't seen posts like this since, like, the FTX era.

• 21:19John Coogan?

  Is it just bad comms or is there something worse?

• 21:21Dylan Patel?

  Um, it's, it's terrible comms. Yeah. Like, like, uh, I, I, I, I told my Oracle contacts, like, who the hell is in charge of the Twitter? Like, what are you doing? Um, Nvidia did something similar last year when the whole TPU mania was going on.

• 21:34Jordi Hays?

  It was, yeah, it was, it was, it was like, we're, we're thrilled with Google's progress with the TPU. That said, Nvidia chips are the only, you know. It's like, no one asked you to comment. I mean, like, I'm sure a handful of people in your DMs and random, but. That doesn't mean.

• 21:51John Coogan?

  Doesn't project confidence.

• 21:52Dylan Patel?

  It's it's sort of the lion shouldn't concern themselves with the sheep.

• 21:54John Coogan?

  Yeah.

• 21:55Dylan Patel?

  And like, okay, Nvidia's line, maybe maybe Oracle's a little bit more bumpy, but I think Oracle's like, fine.

• 22:00John Coogan?

  Yeah.

• 22:00Dylan Patel?

  Um, people are just freaking out because, you know, OpenAI is is peak. You know, people are peak negative on OpenAI right now because of how good Anthropic's been killing it.

• 22:08John Coogan?

  Sure, sure, sure.

• 22:09Dylan Patel?

  Um, yeah, I think it's just like, kind of silly, like, they need to, they need to hire someone to do comms, like a Lulu or something, right? Uh, both Nvidia and Oracle, because what are you doing?

• 22:19John Coogan?

  Yeah.

• 22:19Jordi Hays?

  Uh, how did you process yesterday in general Jensen was clip farming? Uh, he was like, I don't know why he does these street interviews, right?

• 22:28John Coogan?

  No other CEO does those, where they just stick 25 microphones in your face and the paparazzi's flashing. It's a great vibe.

• 22:35Dylan Patel?

  It's it's, you know, Jen- Jensen's not been as famous as other CEOs for as long, and yet he's so important now. Um, and if you've like, if you know of Jensen, how he's in meetings, there's, I feel like there's two Jensen's, right? There is like PR, like, good at PR, just good at talking, good at like, making people hyped up and believe what he's doing.

• 22:56John Coogan?

  He's great at standing on stage, holding up the chip, delivering like a sermon.

• 22:59Dylan Patel?

  And then there's the real Jensen, which is like a business killer.

• 23:03John Coogan?

  Yeah.

• 23:03Dylan Patel?

  And like, actually just knows about every like, aspect of the supply chain, right? Um, all the way from like, niche semiconductor, you know, design and and manufacturing stuff, all the way to like, energy power data center, like, and and and then doing the business deals too, right? And so like, you've got this whole credo, like, of the whole thing, a whole range of things that he's good at, and he's a killer in.

• 23:23John Coogan?

  Yeah.

• 23:23Dylan Patel?

  And clearly, he's like, he was in a meeting where he was being a killer and like, negotiating like, supply contracts or something.

• 23:30John Coogan?

  And when he walks outside, he's still in that mode. That's hilarious.

• 23:33Dylan Patel?

  Yeah, yeah. This is my experience.

• 23:34John Coogan?

  I like it, yeah, that's awesome.

• 23:36Dylan Patel?

  And and that's why he was like, you know, like, he was like, still killing, like, no, we never said we committed to 100 billion, you know, like, and it's like.

• 23:42Jordi Hays?

  I don't know, where do you even get the hundred billion dollar number from? It's like, well, you did go on CNBC and make a big deal out of it. So I think people would assume that it was, but, but they did say in the press release, or remember, these are early talks. But they just kind of jumped the gun. This was the height of the press release economy.

• 24:01Dylan Patel?

  Yeah, yeah. What's funny is Oracle stock peaked like just like a week after they announced the OpenAI deal. And so like the press release of like, hey, OpenAI is gonna do this humongous deal, stock peaks. Same happened with a couple other vendors who announced deals with OpenAI or Nvidia, like sort of a lot of these like, like they all peaked at that. And then it's sort of been like Nvidia, OpenAI trade has been going poorly. And sort of like the TPU, Anthropic, Google, Amazon complex has been doing well. It's quite interesting that this happened.

• 24:30Jordi Hays?

  Good, good energy back at home with the roommates.

• 24:34John Coogan?

  What, what, what's going on?

• 24:36Jordi Hays?

  I wanted to, uh, uh, yeah, I got one more thing. I, uh, so yes, over the weekend, it was sort of drowned out by all the Justice Department stuff, but.

• 24:47Dylan Patel?

  Wait, have you guys talked about Elon saying you can smoke a cigar in the fab?

• 24:51Jordi Hays?

  No.

• 24:52John Coogan?

  Yeah, yeah, yeah.

• 24:52Dylan Patel?

  Yeah, I was gonna say, this is, this is part of the whole thing.

• 24:55John Coogan?

  I didn't realize that was related. Yeah, that makes so much sense.

• 24:57Jordi Hays?

  Indoor heaters. We have indoor heater technology. No one's taking advantage.

• 25:01John Coogan?

  What does the fab look like if you have no humans inside? Like, that's probably his long-term thing is like, yeah, there, there will be an optimist.

• 25:07Dylan Patel?

  But no one, like the number of people who work in a fab is like irrelevant.

• 25:11John Coogan?

  Yeah, but, but is it, is it irrelevant because there's all these things you have to do when a human's in there because they sweat and they breathe? And if you don't have to do that because it's a robot walking down, even if it's puppeteered or teleoperated, you, you might be able to have different considerations. I don't know if that actually affects.

• 25:26Dylan Patel?

  Well, it's like a nesting of like, it's a nesting of like cleanliness, right? For example, you've got this wafer, you've put like down, let's say you put down copper. And now you're moving it from one area to another. Well, it needs to be stored in a vacuum, but easiest way to store a vac, like, or, or an inert gas. And that's like the thing that's being transported in, but then around that you want it to be super clean as well. If you don't, then the copper starts getting oxidized, it affects your yields, all this sort of stuff happens. And so like you kind of want it to be a nested layer of like, well, this thing inside the UV tool is super clean. And then the thing feeding it is super clean, and then the thing it sits in is super clean. Because that's how you get to like, there's zero particles. Because like, you know, in the FOUP, in the transportation devices, like parts per, you know, trillion and maybe FOUP. It's called F-O-U-P, front operated, uh, front opening, I don't know, something pod.

• 26:12Dylan Patel?

  But it's called a FOUP, it's like the thing that moves and it carries the wafers. And then the fab is like parts per billion and you know, sort of like, you know, you've got to like, got this nesting relationship. So everything is super clean. You know, I'm bullish on robots, like super bullish on robots, but only for like, not for tasks that have like, TSMCs, Arizona fabs, or okay, let's say TSMC Tynon, which I think produces like, you know, indirectly hundreds of billions of dollars of global GDP. Even directly, it's like still tens of billions of dollars, has like 5,000, 10,000 people in it. Like it's like irrelevant in terms of the number of people who work there.

• 26:48Jordi Hays?

  In terms of the overall economic value.

• 26:50Dylan Patel?

  Right, it's like, it's like, it's like how many people fold laundry, or how many people wash dishes? Or how many people like do construction work, like these are way bigger markets.

• 26:57John Coogan?

  For robotics, yeah.

• 26:58Dylan Patel?

  Yeah.

• 26:59John Coogan?

  Speaking of China, what are you making of the Dario essay? Or I guess his comments at Davos about, you know, selling chips to China is equivalent to, you know, nuclear weapons these days. The Ben Thompson line was something like, uh, he's okay selling chips because he wants dependency on the Nvidia ecosystem, CUDA. But he would ban lithography tools from going to China. And I'm always, I've been wrestling with this idea of like, I don't know if China would accept this, but wouldn't there be a different world where you want them dependent on American LLM APIs? And you don't even send them the chips and you say, yeah, you're you can have as much AI as you want, as long as you're paying, you know, OpenAI and Anthropic API.

• 27:43Dylan Patel?

  Yeah, I think it's I think it's like a curve of like.

• 27:46John Coogan?

  What they will accept.

• 27:47Dylan Patel?

  It's it's it's, you know, one, you you you push someone to the corner, they're gonna start swinging, right? And and I'm like very concerned that China does this, right? Do they do you do you push them too far into the corner? Do they say, screw this, we're gonna start being a lot more aggressive, we're gonna we're gonna, you know, do more military actions.

• 28:04John Coogan?

  Or military actions, or or even just invest twice as much in.

• 28:07Dylan Patel?

  In global in supply chains, like take over Africa more than they already have, like LatAm, like etcetera, there's there's or or just take over Taiwan.

• 28:15John Coogan?

  Yeah.

• 28:15Dylan Patel?

  Right, because if I can't have the chips, what values are in Taiwan existing?

• 28:17John Coogan?

  Sure, sure, sure.

• 28:18Dylan Patel?

  In its current state, right? So there's like, there's this like game theory aspect.

• 28:21John Coogan?

  Yeah.

• 28:22Dylan Patel?

  Um, at the same time, you don't want China to be able to like, you know, if you believe AI is gonna be do what I think many, at least in San Francisco, think it's gonna do, which is like completely revolutionize humanity and cause GDP growth to accelerate. Um, do you want to have China also own that technology? Um, and the and all, you know, their ability to integrate that into their military and all these other things much faster. You know, so there there is like these competing like, you know, interests.

• 28:46John Coogan?

  Yeah.

• 28:47Dylan Patel?

  Where where is the like right line? And some people think it's like, hey, yeah, sell them AI model. Well, I think Dario would say, don't even sell them AI model access.

• 28:54John Coogan?

  Don't even sell them tokens.

• 28:55Dylan Patel?

  Yeah, I think so. I think like, I think Anthropic does not sell AI access to China. You know, they they loop it through and you can see this in the traffic data, they go through Korea and Japan and other places, but like, and so they get it.

• 29:04John Coogan?

  Yeah.

• 29:05Dylan Patel?

  Um, and then the other other side is like sort of like, I think, like the Ben Thompson view, which is like, um, and I think I'm more sympathetic to that. Although I think I'm not exactly aligned with that, which is like, and we've been saying like, don't sell them equipment, don't sell them equipment, don't sell them equipment. Um, and my view, my argument is like more economic in the sense of like, if you sell them like tens of billions of dollars of equipment, they can make hundreds of billions of dollars in AI value or chips with that equipment. Whereas if you sell them AI model access and it costs them this much to get the economic, you know, they're they're not able to.

• 29:31John Coogan?

  You're capturing more of the value.

• 29:33Dylan Patel?

  Exactly. Um, and so that's sort of the question that is is at foot here, right? Do you want them to capture all this value of the of the supply chain?

• 29:41John Coogan?

  Yeah.

• 29:41Dylan Patel?

  In equipment or by buying the chips or using the models, right, and services? Um, and we've seen, you know, across many, you know, stacks, China refuses to accept. Uh, you know, using American ecosystem and they'll wait many years before they develop their own. Whether it was like, hey, they didn't use Windows, they figured out a bootlegging economy, or they didn't use Visa and eventually they came out with like Alipay and WeChat Pay, or whatever it's called on, uh, and, and like, these things are way better than Visa in fact, right? Lower transaction cost and higher volume.

• 30:11John Coogan?

  I've never used Red Star Linux. It's North Korea's Linux.

• 30:14Dylan Patel?

  Wait, really?

• 30:15John Coogan?

  Yeah. If you, if you don't, uh, if you put it on a network, it'll immediately call home. So you have to put it on a, on a, on a firewall network or else it just like steals everything immediately.

• 30:24Dylan Patel?

  I'm, I'm, I'm a fan of TempleOS, you know?

• 30:26John Coogan?

  Yeah, there you go. All right. Is Doug O'Laughlin suffering from a case of Claude code psychosis?

• 30:35Dylan Patel?

  Okay, yes, yes. So I think, I think everyone's like Claude code is for coders. And it's like, no.

• 30:40John Coogan?

  No.

• 30:40Dylan Patel?

  Claude code is for people who don't code now.

• 30:42John Coogan?

  Yes.

• 30:43Dylan Patel?

  Right? And that's the big realization this year.

• 30:45John Coogan?

  Yeah.

• 30:45Dylan Patel?

  Um, you know, we've got, we've got a couple of folks now in the firm who have psychosis, but Douglas O'Laughlin, who is like, you know, Semi Analysis, number two, he's president. You know, he's my boy. Um, he's the one, in fact, he's the one who encouraged me to make a Substack.

• 30:57John Coogan?

  Oh, really?

• 30:58Dylan Patel?

  A long time ago, a long time ago.

• 31:00John Coogan?

  What were you doing before?

• 31:01Dylan Patel?

  Uh, I had a WordPress blog.

• 31:02John Coogan?

  Oh, okay.

• 31:03Dylan Patel?

  And I was like consulting on the side, but I was like, okay, let me do a Substack now.

• 31:05John Coogan?

  Yeah.

• 31:06Dylan Patel?

  Um, because I saw him making money off it. I was like, this is shit. Like, why are you, are you getting paid for this? Like, there were multiple times where he wrote something. I was like, I could do way better.

• 31:15John Coogan?

  I'll show you.

• 31:15Dylan Patel?

  And, and, and like, obviously like, it was good because we both taught each other a lot of things and we've been great friends. Uh, and eventually he joined Semi Analysis, but like, you know, he, he, his background is he was a hedge fund analyst.

• 31:25John Coogan?

  Yeah.

• 31:26Dylan Patel?

  And then he decided to do a Substack slash walk, hike the Continental Divide Trail for like six months, walking from Mexico to, you know, and then, and then, you know, came back to doing Substack and tried to do a fund.

• 31:35John Coogan?

  Six months of touching grass and then he was like, I'm ready to lock it on Claude code.

• 31:38Dylan Patel?

  Yeah. And, and, and so now he's, you know, like, he's, he's never been a software developer.

• 31:42John Coogan?

  Yeah.

• 31:42Dylan Patel?

  Right? But he's been on a generational run, like, he's, he's, he's not coding anything, right? He's just telling Claude to do stuff.

• 31:48John Coogan?

  Yeah.

• 31:48Dylan Patel?

  And like, it's to the point where it's like, our, our, like head of data, head of IT is like, oh, can you send me that? And he's like, uh, how do I do that? And then he like, he zips the whole thing and sends it to him. It's like, local host. He sent some a leak once. It's like, local host. It's like, bro, that's not how this works.

• 32:03John Coogan?

  But yeah, no, I, I've talked to some folks in vibe code and they'll be like, and I'll be like, why'd you choose Node JS? And they're like, what's Node JS? That's a very specific.

• 32:10Jordi Hays?

  Someone? Someone?

• 32:12John Coogan?

  Yeah, Tyler.

• 32:12Dylan Patel?

  No, but like it's, it's, um, we went on, we went on a little tour of a lot of our clients, like, you know, roughly like half our business is, or forty percent of our business is like hedge funds. So we, we went to New York a week, two weeks ago and we went to all of our clients. And like, part of it's like them asking me, is opening high fucked?

• 32:28John Coogan?

  Yeah.

• 32:28Dylan Patel?

  And I'm answering like, no, I think they're fine. And, and then like some like actual ideas. And then like, a lot of this Doug just telling them Claude code is like, they, they're like, you don't have to hire any junior hedge fund analysts anymore. And they're like, the junior hedge fund analyst. And then he's explaining, you know, what, what can you do? It's like, well, like, you can just do like financial models and perform a financial models and like, everything in Claude code without ever opening Excel.

• 32:48John Coogan?

  Yeah.

• 32:49Dylan Patel?

  And you can generate charts and like, you don't need.

• 32:51John Coogan?

  Yeah.

• 32:51Dylan Patel?

  To know how to code.

• 32:52John Coogan?

  Yeah.

• 32:52Dylan Patel?

  You just need to know how, like, how this stuff generally works and you can just do it.

• 32:56Jordi Hays?

  Are, how, how many hedge funds are just trying to copy trade situational awareness?

• 33:02Dylan Patel?

  Um, I mean, I think everyone who's, I think, I think a lot of hedge funds obviously believe in AI. I think there's a lot of them who don't believe in it, right? To be clear, but a lot of them that have done the best.

• 33:12Jordi Hays?

  They believe in it. Why are they selling software everywhere?

• 33:15John Coogan?

  Oh, you mean selling software stocks?

• 33:16Dylan Patel?

  Yeah, yeah.

• 33:17John Coogan?

  Oh, yeah. Why the sell off then?

• 33:19Dylan Patel?

  Yeah. I mean, I mean, of course it's like an incremental thing, right? Um, but anyway, so, so these hedge funds like, and then, then the question is like, okay, if you believe in it, how do you manifest that trade? Um, and, and so when you look across the like ecosystem, I would say almost all my clients sometimes think are two years out, numbers are too high.

• 33:38Dylan Patel?

  But like there's, there's like Leopold's like, your numbers are too low. And so it's like, it's like, it's like, uh, in, in general, right? And I think, I think like, if you think about how much do you believe in AI and what's your access to information of AI? You know, there's not many hedge funds who live in San Francisco and like fully breathe and live and understand it. And then, and then depending on how much you believe in AI, how do you manifest that trait, right?

• 33:58Jordi Hays?

  Are you surprised that more hedge funds wouldn't like, even just smaller shops wouldn't say like, hey, this AI thing seems like it's going to be big? Maybe we should set up in San Francisco or hire.

• 34:08Dylan Patel?

  There's, there's a number of people, right? Um, so we're, we're, you know, we're, we're getting an office, uh, together, Leopold, myself, Duarkash, and then a client of mine, another hedge fund.

• 34:17John Coogan?

  Cool.

• 34:17Dylan Patel?

  And they have one analyst here and it's like, and there's like a number of other hedge funds that are like hiring analysts here, but you know, being plugged into the AI ecosystem does not mean you're just in San Francisco, because you can just walk around and talk to like doofus, like startups and VCs and like not actually, you know, see what's coming down the pipeline. And you have to combine it with all sorts of information, right? You have to have a good tune with like what's going on in Asia supply chains. You have to have a good tune with what's going on in New York. You have to get tuned with like what's going on like in the in the financial markets, right? And then like what's going on in credit markets and what's going on in all, you know, the data center, energy, blah, blah, blah, all these different industries. And so it's it's it's actually not like so simple to like be in tune with what's going on in AI. You can easily get like head faked, right?

• 34:59Dylan Patel?

  You know, for the longest time, people were thinking, you know, Adobe is an AI company and like, and it's like for for a bit like Adobe was going down on AI and then they like launched a few AI features and the stock skyrocketed. And then now it's going back down again because people realize, oh, wait, no, actually, it's not an AI company. I I think it's it's the manifestation and thought of like, what is actually gonna, the world gonna look like? If Anthropic three X is its revenue again this year, OpenAI two X is its revenue again this year. Or, you know, by the end of the year, do how many people even believe by the end of the year, AI startup revenue is over a hundred billion dollars? I think that's an insane statement for a lot of people, but that's what it's gonna be. Right? And who believes that number, right? It's like, very few people. And then you you you draw the continuation, it's like, and who believes?

• 35:41Dylan Patel?

  You know, and what Anthropic says in their funding, like, hey, we're gonna have three hundred billion dollars of revenue by the end of the decade. And it's like, actually, I think that number's too low.

• 35:52Dylan Patel?

  Because because the economic value of what they're gonna create is gonna be insane. And and you tell people, oh, excellent, you know, OpenAI is gonna have eighteen gigawatts or sixteen gigawatts by the end of twenty eight. And they're gonna be able to pay for it. And that's like, well, that's three hundred billion dollars of spend. How are they gonna pay for it? It's like, you, you, sweet summer child, don't worry. Sam can raise, they're gonna blow up on revenue, they're fine. Right? Like, it is like a bit of a vibe thing. It's a bit of like, you know, irrational exuberance, almost, right? Like, Leopold's in his, you know, mid twenties, like I'm twenty nine, like we are irrational. Right? Because we have not lived through, you know, you've got these, these PMs who like. You've never been, you've never been that humble. I don't know, like we almost, my family almost went bankrupt in 2008, like, you know, because we lived in a motel and we almost foreclosed and we actually did foreclose on

• 36:37Dylan Patel?

  one motel. It was like pretty bad, but like, you know, I mean, I was still a kid, right? Like, it was like, yeah, I've never been humbled in the same sense.

• 36:42Jordi Hays?

  I mean, it's good to live through that and understand how things can go wrong. What are you expecting out of Zuck and Meta this year? We've been big Zuck defenders, especially, I mean, there's this pressure of like, oh, Meta is spending so much and yet they haven't created, you know, any, any AI product that's super compelling or that's really working. And our stance has, has generally been Meta's making more money from AI than almost any company in the world outside of Nvidia. So it's like, of course, Zuck should be justified in saying, hey, this is real, it's big. Like, I'm gonna like back the truck up and, and go all in.

• 37:19Dylan Patel?

  Yeah, I mean, it's, it's clear, if you look at the most recent earnings, I think their CPM went up 9% when the consumer's weak, which means like, if you were to like, try and strip out like, what is consumer spending increasing for a CPM of ads versus what is the effectiveness of their algorithms? Their algorithm got better by double digits in one quarter, right? It's like actually insane how good the algo's getting, right? At serving you the slop in the ads, right? So, so, so in that sense, like...

• 37:46Jordi Hays?

  The big sound of the trough.

• 37:49Dylan Patel?

  I gotta hear it. Slop for the, slop sound.

• 37:54Jordi Hays?

  We're going all in on that.

• 37:55Dylan Patel?

  All in on the farm.

• 38:00Jordi Hays?

  I love it.

• 38:01Dylan Patel?

  So, so, you know, if you, if you think about it, right, like, okay, Meta's, where are they gonna like win, right? You know, I think if you have the galaxy brain take, it's like, well, they've got the best like wearables coming down the pipeline, they're gonna put AI on it. Apple won't be able to put good AI on their wearable, so they'll cede it all to like Microsoft, Google or...

• 38:19Jordi Hays?

  The other thing is people, people have had this narrative, oh, as AI gets better, the, the value of real world experiences will increase. And I think that's a cool theory, but if you actually play it out, AI getting better means more content that's more like effectively crafted for you, more personalized, a hundred times more content, a thousand, a million times more content. That would imply to me that people will just use digital products more, which means more time on site, more time in the app for Meta. So, I don't know.

• 38:51Dylan Patel?

  I, I mean, I'm, I'm with you entirely, but I think, I think like... The galaxy of intake is that you're just gonna have a wearable and that's gonna have AI assistant. OpenAI is trying to make wearables, you know. You know, there's, there's, you know, everyone's trying to make wearables, Google is, et cetera, et cetera. I think Meta will actually execute and then they'll have a good AI. And then you, you stack on like a few things, right? How do they get users? Well, we've seen, at least if you look at the user metric charts, Google's use, you know, OpenAI's users were growing, growing, growing. They were gonna hit a trillion by the end of the year, eight hundred billion. Why did they not keep growing in the last quarters? Because Nano Banana came out and they took all the incremental users, right? And likewise, if you go look at like, you know, Gemini three didn't actually make Google grow that much. It was Nano Banana and then Pro or two or whatever it's called, right? Those were the ones that made them really grow.

• 39:37Dylan Patel?

  Meta's licensed all of Midjourney's code, data, models, right? One, two, they're like actually just like focusing hardcore on.

• 39:46Jordi Hays?

  Was that a billion dollar plus deal?

• 39:49Dylan Patel?

  The number is undisclosed. Midjourney still exists as a company.

• 39:54Jordi Hays?

  No, it felt, it looked to me like effectively a massive exit, but the best case scenario where they can just keep kind of being artists.

• 40:01Dylan Patel?

  I, I think, I think if you had me guess, I'd bet it's a bill, over a billion, right?

• 40:05John Coogan?

  Every deal that Meta did was over a billion. Basically, like whether it's an employment contract, a licensing deal, an acquisition, everything had to be after it.

• 40:15Dylan Patel?

  Well, so the interesting thing is Meta.

• 40:16Jordi Hays?

  You're missing a zero again. Don't never miss the zero again.

• 40:20John Coogan?

  Yeah, every discussion was how many billions are we spending on hiring this person, buying this company?

• 40:25Dylan Patel?

  Well, you know, Meta, interestingly, has gone down market for a compute because they, there's not enough compute in the big size deals. So they've actually gone and like bought like small clusters.

• 40:35John Coogan?

  Oh.

• 40:36Dylan Patel?

  Because it's like, well, I want more compute.

• 40:38John Coogan?

  From like long tail Neo Clouds?

• 40:39Dylan Patel?

  Yeah, just like, yeah, from a longer tail.

• 40:41John Coogan?

  Okay.

• 40:41Dylan Patel?

  Um, because that's the only place they can get the compute they need.

• 40:44John Coogan?

  Interesting.

• 40:44Dylan Patel?

  Because, you know, they've already like went out and signed big deals with Google and CoreWeave and so on and so forth.

• 40:48John Coogan?

  Is ClusterMax three gonna be a smaller shark because of consolidation in the industry?

• 40:51Dylan Patel?

  No, it's, there's more.

• 40:52John Coogan?

  It's gonna be bigger.

• 40:53Dylan Patel?

  It's gonna be bigger, bigger. But, but, you know, so Meta.

• 40:58Jordi Hays?

  That's thunder.

• 41:00Dylan Patel?

  That's ominous, it's ominous. So I think Meta will, you know, capture consumers through generative. If there's more content, people are just gonna go to the content marketplace, right? The creator of the content captures less value as there are more content creators and more diversification of content, right? And so I think Meta just wins by being a platform, right? Google does too and ByteDens is too, right? But like, those three win by having a platform. And then the real question is, can they get in the assistant productivity game, right? And I think this is important-

• 41:31Jordi Hays?

  And through that effectively, search. Like if you're an assistant, it means that you can like, there's some commerce happening.

• 41:36Dylan Patel?

  Well, they span out and poached a bunch of people from Google. So this wasn't in the media much, but like they actually poached Google search people with similar sized deals as like these crazy-

• 41:46Jordi Hays?

  Yeah, and I always, I always, I, you know, demoing, demoing any of the, the, the wearables. You can imagine like Meta wants you to walk around in the world and see like, oh, what are those headphones? And like while we're talking, I just hit my little thing and buy it, right? And it's like, you didn't even necessarily know that it happened. But like, of course Meta's gonna wanna monetize that.

• 42:03John Coogan?

  Everyone knows those are the Sony MDRX272s, 462-

• 42:07Dylan Patel?

  Dude, I've been, I've been screaming about them like doing some proper marketing. It's, it's literally like, they're, over here is like WHX1000XM5.

• 42:17John Coogan?

  It's crazy.

• 42:17Dylan Patel?

  And then their in-ear is like WF1000XM1000. It's like, dude, just call them like Bravia buds and Bravia like headphones or some shit.

• 42:25Jordi Hays?

  Well, like China just bought Sony, right?

• 42:29John Coogan?

  Yeah, yeah, Bravia brand's actually a Chinese company now. Sony sold their TV and-

• 42:34Dylan Patel?

  Playstation buds.

• 42:35John Coogan?

  Yeah, yeah, yeah, Playstation.

• 42:36Dylan Patel?

  Walkman.

• 42:37John Coogan?

  Oh, yeah.

• 42:40Dylan Patel?

  Something, something.

• 42:41John Coogan?

  For sure. Anyway, uh, anything else, Dory?

• 42:45Jordi Hays?

  No, this is great. I'm excited for this weekend.

• 42:47Dylan Patel?

  Yeah, yeah, super excited.

• 42:50Jordi Hays?

  What are some plays that we don't watch a lot of sports? What are some plays?

• 42:53John Coogan?

  You are a football guy, right?

• 42:54Dylan Patel?

  Yeah, yeah, yeah. Yeah, rural Georgia, so I like football. High school football was the thing, college football was the thing. I think NFL is a little less soulful.

• 43:04John Coogan?

  Sure.

• 43:04Dylan Patel?

  But you know, now, now college football has, has, has the NIL and so it's also soulless to some extent. It's fine. We, we enjoy it, you know? Primal desire of seeing heads clash, you know? And, and, and sometimes that manifests in like, you know, Twitter drama and sometimes it manifests in real football.

• 43:20John Coogan?

  Yeah.

• 43:21Dylan Patel?

  All I can say is fuck the Patriots.

• 43:22John Coogan?

  Okay.

• 43:23Jordi Hays?

  Whoa, okay, okay. Uh, I'm kind of bummed. We're, we're gonna, we're gonna, since we're gonna be at the game, we're not gonna really get the great experience seeing the ads. I'm gonna be like glued to, I'm gonna be like glued to my phone. I, I wanna see all the AI, uh, the different. Well, don't worry. I got some more ads for you. Uh, thank you so much for coming. Thank you so much. Great segue.