Leopold Stays in the Game, Big Tech Earnings, OpenAI Slashes GPT-5.6 Prices | Diet TBPN

Diet TBPN delivers the best of today’s TBPN episode in 30 minutes. TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays 11–2 PT on X and YouTube, with each episode posted to podcast platforms right after. Described by The New York Times as “Silicon Valley’s newest obsession,” the show has recently featured Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. TBPN is made possible by: Ramp - https://ramp.com Public - https://public.com Cisco - https://www.cisco.com Console - https://www.console.com CrowdStrike - https://www.crowdstrike.com Figma - https://www.figma.com MongoDB - https://www.mongodb.com NYSE - https://www.nyse.com Railway - https://railway.com Shopify - https://www.shopify.com/ Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

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

• 0:01John Coogan?

  We have a guest co-host today. Introduce yourself for those who don't know.

• 0:04Speaker 01

  Jordy's out again. I'm back.

• 0:06John Coogan?

  Yeah, we got Tyler in the Ultra Dome in the hot seat. You're back. You know who else is back? Leopold Oshenbrenner is back. He says, you're gonna have to drag me out of Sulp, out of situational awareness, LP, because he's down but not out, little beat up, but he shared a letter that's making the rounds, thanks to some intrepid reporters on the DBBN team that posted this. He sent LP letter that clarifies a lot of the questions. Yesterday, I mean, even internally, we were going back and forth on like, okay, he sold a bunch of the portfolio to Ken Griffin to Citadel. Does this count as a liquidation?

• 0:39Speaker 01

  Yeah.

• 0:39John Coogan?

  Does this count as blowing up? And these are like sort of vague terms, like what does it mean to blow up? There was definitely a drawdown. The fund definitely was underperforming that month. But what does it mean? Is the fund gone forever? Is he going to work at McDonald's? As some people were trying to make it seem like it was happening. Obviously, that's not gonna happen. He's gonna have a long career. Lots of people are rooting for him. I'm certainly rooting for him. There are some facts in this letter that we should read through. So, he writes, this is Leopold Oshenbrenner to the LPs of situational awareness LP. We let you down this month. We came closer to permanent capital impairment than is acceptable to us. While we ultimately found a solution that protected the fund and you as investors, that was the sale of the of the public equity book to Citadel. There were some other structure

• 1:25John Coogan?

  going on to get liquidity. He said, we ultimately found a solution that protected the fund and you as investors. Our intention in running the fund is to never find ourselves in such a position in the first place. Volatility is the price of long-term investment returns. Over the past two years, we have delivered outstanding results. That's 100% true. It was up, what, 1,000% at one point or something like that?

• 1:48Speaker 01

  Yeah, something like that. I mean, it got up to, what, 45 is the number?

• 1:51John Coogan?

  Yeah, 45 billion AUM from an original raise, less than two years ago, I believe, of $250 million, which seemed crazy at the time. People were like, he's a young, he's a young first-time hedge fund manager. He's got $250 million. That's crazy. Then pretty soon, it was like, oh, he's got a couple billion. That's crazy. Then it was like, he's got tens of billions. Then he's got half a centi-billion. So, he says, over the past two years, we have delivered outstanding results despite occasional sharp pullbacks. Probably not the first time. There's been other pullbacks in the market, and those have probably been amplified, but never gotten to this level of actually distressing the fund in this way. He said, but our fund must always be structured such that we can take a loss and fight another

• 2:36John Coogan?

  day. And that's a recurring theme in this. The writing in this letter is really good. Very clear, very direct, not being dodgy, very upfront. I love the way it's written.

• 2:46Speaker 01

  Almost kind of like there's that Fiji advice to like, write very clearly.

• 2:50John Coogan?

  Yeah.

• 2:50Speaker 01

  I think it was very

• 2:51John Coogan?

  For sure.

• 2:51Speaker 01

  Kind of in that line.

• 2:52John Coogan?

  There's a lot of that in here. Yeah. So, he says, I will make it my mission to ensure that we learn the necessary lessons from this experience. Here's where things stand. One, the portfolio experienced a significant drawdown over the course of July, which was exacerbated by extreme moves in core positions over the past week. Many AI names drew down by half or more, while our positive long-short spread reversed violently. While we could say much more about how unusual the month was, we hold ourselves to a higher standard irrespective of market conditions. Two, as these moves proceeded, we started to see increasingly adverse trading in names publicly associated with us. So, this is the rumor that Martin Shkreli was talking about yesterday, this idea that there's blood in the water.

• 3:36Speaker 01

  Yeah, you can kind of sniff out if someone's hurting and then

• 3:39John Coogan?

  Exactly. And then short, sell those positions, sell those names, go, put some pressure on those downward pressure to actually intentionally hurt that fund. It's a knockout, drag-out fight there on Wall Street, clearly. But that's the game you're playing. That's why you get paid the big bucks if you can pull it off. So, these dynamics are essentially similar to a bank run. Crazy to put that word in there. A lot of people would be dodging that, but very, very direct. I love it. Vulnerability be getting more vulnerability. We worked to keep the portfolio within our risk parameters, but gradually this became more difficult as positions rapidly moved against us and market liquidity dried up. On Wednesday night, Thursday morning, we took decisive action to protect LP capital.

• 4:20John Coogan?

  We traded a portion of our public portfolio in a block transaction to remove all leverage from the fund and prevent further losses. All shorts were closed and reliance on portfolio financing removed. We currently manage a fully paid-for public book, long stock and long fully paid-for options with no margin liquidity risk. This restored stability and allowed us to preserve our private positions. So, this feels like down but not out, for sure.

• 4:45Speaker 01

  Yeah.

• 4:45John Coogan?

  And he says, I take full responsibility for these events. That's just the full paragraph. He just says, I take responsibility. No equivocating. It's great. To be clear, this should rightly have been a very painful month in terms of the performance of our fund. When AI stocks draw down dramatically while AI technical business fundamentals are improving, you should expect our fund to be down a lot. We embrace volatility, but it should never jeopardize the fund. The fund was not shut down. It was not liquidated or transformed into a private-only fund. This was something that a lot of people were speculating on, was, is this going to be private-only? Are they only gonna have their private book? Is it just gonna be the anthropic position?

• 5:24Speaker 01

  Yeah.

• 5:25John Coogan?

  That's gonna be riding? Or is it just gonna be liquidated and they're just gonna return capital LPs and just say, hey, we're gonna start completely fresh, do something completely different, even like an Aqua Hire, like the, you know, situational awareness becomes like a desk at another fund? None of that's happening. He's very clear about this. Situational awareness is not shutting down. It's not liquidating, and it's not transforming into a private-only fund. He says, we are continuing to operate as a hybrid public-private fund as before. However, we will manage our public book on a fully paid-for basis while we draw the lessons from these developments. Most importantly, we took the steps that were necessary to fight another day. I love it. A rallying cry to both the LPs and the employees, I'm sure. In the coming weeks, I will focus on putting in

• 6:08John Coogan?

  motion the necessary changes across our portfolio management, risk team, and vigilance applied across the board to ensure a higher level of resilience going forward. AI may continue to intensify market volatility for years to come, and that is something that is so clear outside of the situational awareness, bottleneck trade, long-tail low-market cap, high-volatility stocks. Like, I have never seen the Mag 7 trading like this, where across earnings, we're gonna get into this with recapping, Meta, Apple, Amazon, Microsoft.

• 6:37Speaker 01

  Yeah. I think the stat was Microsoft had the biggest day ever of any public company.

• 6:42John Coogan?

  The biggest move in value ever.

• 6:43Speaker 01

  Yeah.

• 6:43John Coogan?

  So, you're seeing, you're seeing trillion-dollar companies move by 10%, 9%, 15%. It's insane that anything can happen at that scale. And so, clearly, there is going to be a lot of volatility. And I think he's right to point out that it is based on the AI trade. There's so much uncertainty about one little number about how the capex is gonna trade back, you know, the investors in these, in these large companies, let alone the small ones, are moving the stocks significantly, and that makes his job all the harder. He says, these were very expensive scars, but I am dedicated to ensuring they will be invaluable lessons for our organization and for myself as we move forward. My core promise to you is that

• 7:28John Coogan?

  we will not waste the opportunity to learn from these events on the portfolio itself. We are very optimistic about the current investment opportunities. Of course, I mean, the thesis still holds. The underlying fundamentals are accelerating at the very same time that prices have declined significantly. Thank you for your patience and your partnership. I'm fully invested alongside you. Virtually all of my capital is in the fund, and I intend to work relentlessly to demonstrate that the events of this month have made me a wiser and stronger investor. He says he's available for calls. But he also says that the, as an interim update, the current unaudited estimate of net month-to-date performance, this is for all of July, basically, negative 67%. Sounds atrocious until you realize that

• 8:11John Coogan?

  net year-to-date, they're still up 80%, which is like better than any investment fund ever. So, people are definitely, you know, maybe down but not out. There's gonna be a second act here, which I think everyone's very excited for. A lot of people were praying for his downfall. It's very unfortunate to see.

• 8:30Speaker 01

  Yeah. I think this was really good letter. I mean, this is like, instills so much faith. Like, yeah, he's completely level-headed. He's not like freaking out.

• 8:37John Coogan?

  You're calling it another billion-dollar PDF.

• 8:40Speaker 01

  Yeah, this could be the second billion-dollar PDF.

• 8:42John Coogan?

  It might be. I mean, Schulte agrees. Schulte

• 8:46Speaker 01

  Yeah, Schulte had a great take.

• 8:47John Coogan?

  Had a great position. What did he say?

• 8:49Speaker 01

  He said, prediction. Situational awareness will be bigger than Citadel by the end of the decade. Leopold has predicted the last two years better than anyone else. Now that he can combine that with very expensive lessons in risk, he will be unstoppable. He has my full confidence.

• 9:02John Coogan?

  This is such a wild post. Ken Griffin sitting there being like

• 9:06Speaker 01

  You gotta ride with your boys.

• 9:07John Coogan?

  Schulte, like, you're gonna take a shot at me like that, bro? Really? Really? You're gonna come for me like that? Because I will die before I am not the biggest hedge fund manager in the world. Pull up a live view from the Citadel trading floor, because we got some leaked video.

• 9:28John Coogan?

  This is not the vibe that Martin was articulating Ken Griffin's wanting to be framed as like the savior in like your last resort, positive force.

• 9:39Speaker 01

  This is the guy you want to call.

• 9:40John Coogan?

  I guess.

• 9:43John Coogan?

  Dune, so good. Is this from Dune one or Dune two?

• 9:47Speaker 01

  Dune one? I want to say Dune one.

• 9:53John Coogan?

  Beautiful.

• 9:56John Coogan?

  It's very heavy.

• 9:56Speaker 01

  So I, I think one of the, the big stories of the last, you know, few days is we've seen all these new Leopold photos. We've never seen these before.

• 10:03John Coogan?

  Yes.

• 10:03Speaker 01

  Brand new rare Leopolds from Wall Street Journal.

• 10:06John Coogan?

  This might be the biggest story of them all.

• 10:08Speaker 01

  Yeah. Cause I mean, for a while, the only image of Leopold was basically, there was like one headshot and then it was just stills from Dorkesh Podcast.

• 10:15John Coogan?

  Yeah.

• 10:15Speaker 01

  And now we're just seeing all these new ones.

• 10:17John Coogan?

  Yeah.

• 10:17Speaker 01

  Where did these come from?

• 10:18John Coogan?

  There was one, and then there was a photo that was done, I think for the Wall Street Journal, but then the New York Times writes up the whole story of the, of the situational awareness, uh, deal with Citadel and they just drop a banger new photo that they just had in the archive that they could have leaked. Uh, let's pull it up. It's here. Uh, it's uh, Leopold looking very, uh, pensive behind a glass wall. This one's in the Wall Street Journal today. This one's new too.

• 10:44Speaker 01

  Yeah.

• 10:44John Coogan?

  Everyone's been clamoring for this because the one that goes viral is him in that green suit. This is the one.

• 10:48Speaker 01

  I'm pretty sure that's AI.

• 10:49John Coogan?

  That's AI.

• 10:49Speaker 01

  Yeah.

• 10:50John Coogan?

  But this one is not. This is from the New York Times. They went and shot this and then never published anything. Like the first time Leopold was mentioned in the New York Times was yesterday and they used this photo. And so you have to wonder if they were like working on a profile.

• 11:04Speaker 01

  Yeah. They've just been sitting on it.

• 11:05John Coogan?

  But Leopold's been so quiet with his public relations strategy. He's not talking to media, doing photo shoots, doing profiles constantly. Like he certainly could be doing more in Bloomberg, at Forbes and Fortune. Like he could be doing a lot, but he's had a very narrow strategy and I think it's worked very well for him. Um, but it's funny that somehow all the mainstream media just has secret Leopold photos. They've been dropping on the timeline. Uh, John Arnold is chiming in. He says, my philosophy, when I used to hire traders was that the optimal number of past blowups was one. He's not saying zero.

• 11:37Speaker 01

  Yeah.

• 11:38John Coogan?

  He says, you gotta learn your lesson.

• 11:39Speaker 01

  Is how does the FTX future fund count? Does that?

• 11:42John Coogan?

  I don't think that counts at all.

• 11:43Speaker 01

  That, it definitely doesn't count as a full blow up.

• 11:45John Coogan?

  He wasn't a fund manager of it, right? It wasn't like for donations and then FTX was just the one that was funding.

• 11:51Speaker 01

  Yeah. It was like plan three. He was doing plan three stuff.

• 11:53John Coogan?

  That seems, yeah, that seems completely separate.

• 11:54Speaker 01

  Yeah.

• 11:55John Coogan?

  Is, is the wedding photo AI or is this real? And is he carrying an American flag? Let's pull up this image.

• 12:00Speaker 01

  Yeah. I suppose, yeah, this one I've never seen before until yesterday as well.

• 12:03John Coogan?

  I, I mean, like if it's the wedding, like the wedding's happening right now, this wouldn't exist, but, but I, I'm wondering if this like leaked onto the timeline from someone who was there. Also this photo hit like Wednesday and I think the wedding would be over the weekend. Um, but it's cool that he's just rocking, carrying an American flag international. Uh, yeah. The real lesson here is never travel internationally because he takes one day off, one weekend off to go to Europe and everything goes, everything blows up. Now, of course, this one I was laughing at before the show, Rambo says, comparing Leopold Ashenbrenner to Bill Wang. Wang is, Wang is the goat. The Wang's from Arca Ghosts. Wang is the goat of degenerates and Leopold is a sheep compared to him. Did you know that

• 12:44John Coogan?

  Wang turned 200 million into 36 billion and it was all personal capital? The guy literally led prayer circles in the conference room before trading day started. He had a hundred and 60 billion dollars of stock exposure on just 36 billion of capital. It's like five or six X levered.

• 13:02Speaker 01

  That's neat.

• 13:02John Coogan?

  His blow up happened in two days and he literally caused the collapse of one of the most prestigious investment banks. Banks lost a total of $10 billion combined because of his collapse. Leopold is nothing compared to Bill. So.

• 13:16Speaker 01

  Gets her numbers up.

• 13:17John Coogan?

  Yeah. No. Uh, yeah. I mean, that, that, that's the interesting thing here is that like, it is this sort of like dramatic unwind, but at the end of the day, it is just like an over the counter transaction with Citadel for a block of trades and block of equity positions.

• 13:30Speaker 01

  Yeah. And the fund is still around. I mean, they're still seem to be like, probably going to be doing very well.

• 13:35John Coogan?

  Yeah. They'll be, yeah, they'll be okay. Citadel will be okay.

• 13:37Speaker 01

  They're going to be bigger than Citadel pretty soon.

• 13:39John Coogan?

  Any day now.

• 13:39Speaker 01

  Yeah.

• 13:40John Coogan?

  And the, and importantly, uh, all of the, all of the prime brokers, the big banks, like they were not affected. There was not, uh, there was not like a liquidity crisis that.

• 13:49Speaker 01

  Yeah.

• 13:50John Coogan?

  That, uh, contagion effect did not take root. Uh, Roy Driscoll says, uh, there's nothing to learn from the situational awareness situation about the AI trade. Leo was right in 2024 and based on the Amazon results, he's still right today. Hyperscale capex continues unabated. There's obviously something to learn about risk management. Forex leverage with high beta stocks is a mistake in trading stocks. Half the battle is getting the trend right, but the other half is nailing the portfolio construction.

• 14:15Speaker 01

  Well, I mean, this is what, um, Martin was saying yesterday, right?

• 14:18John Coogan?

  Yeah.

• 14:18Speaker 01

  Like the underlying completely makes sense, but like you get into these crazy psychology things where it's just like.

• 14:23John Coogan?

  Yeah.

• 14:23Speaker 01

  Who's really?

• 14:24John Coogan?

  Everyone's focused on the leverage. It does also seem like there were, like every time the 13F would drop, it would be like 12 names, which is like not a lot of diversification. So I wonder, like right now, the message from the letter is we're not using leverage right now. We're going to be learning the lesson.

• 14:37Speaker 01

  Yeah.

• 14:37John Coogan?

  Maybe the lesson is, hey, two X leverage or three X or something like that, or four in certain scenarios with smaller trades, not portfolio wide or something like that. But it will be interesting to see if there's a difference in, uh, if, if the, the lesson that's learned, when the next 13F drops in a couple of quarters, we see, oh, wow, he has like a hundred names or, or there's, you know, he's, he's using more options or less options or, you know, whatever, however it changes, that will be interesting to see for sure. So Leopold still has Anthropic, Maddox and Fluid Stack, tier one private companies. He can probably raise two to three billion more. It's not over for him by any means, says Zephyr. There's been this vibe of like, it's too good to be true. He's too young.

• 15:18Speaker 01

  Tall poppy syndrome. You know, he's, he's the AI.

• 15:20John Coogan?

  Can't keep getting away with it.

• 15:21Speaker 01

  Wonder kid.

• 15:22John Coogan?

  Yeah.

• 15:23Speaker 01

  Yeah. You know?

• 15:23John Coogan?

  Yeah. People, uh, people hate to see a young, a young.

• 15:28Speaker 01

  A young goat.

• 15:28John Coogan?

  A young, young hedge fund manager run it up crazy. Lexi Guzzi says, uh, keep, people keep making fun of Leopold on the timeline, but everyone, one, everyone needs to get margin called once in their life. Is this true?

• 15:40Speaker 01

  Delian had a similar take, right? He said, um, uh, basically all the goats on Wall Street have had some sort of blow up earlier in the career, part of the game being live player on the field.

• 15:50John Coogan?

  So.

• 15:51Speaker 01

  But yeah, is, is that true?

• 15:53John Coogan?

  I don't think that's actually true. I don't think Warren Buffett ever blew up. I don't even think Ken Griffin ever really blew up. I think he had a really bad year in 2008 during the financial, uh, during the housing crisis, the financial crisis. But early on, I think he got his start sort of post.com and was doing convertible debt trading and, and never really like, the entity has always been Citadel. There was no precursor to that. Um, but, but it's a fair take that like clearly people can blow, can, can build back up after there's a.

• 16:24Speaker 01

  Yeah. I mean, there, there's a lot of comparisons to PT, right?

• 16:26John Coogan?

  Yeah.

• 16:26Speaker 01

  Ethereum.

• 16:27John Coogan?

  Yeah.

• 16:27Speaker 01

  And then they're saying, oh, this is also kind of.

• 16:29John Coogan?

  Yeah.

• 16:30Speaker 01

  A loose take, right? You go into VC.

• 16:32John Coogan?

  Yeah.

• 16:32Speaker 01

  Then you can kind of do the long only.

• 16:34John Coogan?

  Yeah.

• 16:34Speaker 01

  Thing.

• 16:34John Coogan?

  The real, the real hack would be to, uh, just raise the smallest hedge fund ever, $10,000, lever it, blow it up and be like, wow, I'm post fall.

• 16:45Speaker 01

  Oh yeah. He's post fall now.

• 16:46John Coogan?

  He's post fall now. And so, but, but if you do it with like such a small amount of capital, but you can still be like, oh man, I learned so much. That was really crazy. Those were crazy, crazy times. I lost $500. Ready, ready for the real fund now? Uh, no. Leo still made incredible returns. His fund will do incredibly well in the long term. Lots of people coming out in support. Um, one person that's not in support, Joe Weisenthal is, uh, is going back and forth with Tracy.

• 17:15Speaker 01

  This was hilarious.

• 17:16John Coogan?

  So Joe has been, uh, uh, live tweeting this. He's, he's been making a bunch of great points and, and just illuminating the deeper level of like what's going on with prime brokerages and all these different aspects of what's going on. But Joe started by sharing the Wall Street Journal article that said that Citadel buys situational awareness stock portfolio after big losses in AI. And Tracy says, why does he have to get bailed out at all? And this is another question, like, is this a liquidation? Is this a blow up? Is this a bailout? Uh, it would be, it would have been a very different conversation if this had been like a government bailout of situational awareness. That's not what happened, but.

• 17:51Speaker 01

  Risk.

• 17:51John Coogan?

  Tracy says, why can't we just let the speculators fail? Joe Weisenthal says, who says he's getting bailed out? He entered into a transaction with a willing counterpart. And Tracy says, isn't that a bailout? Why not just keep managing the fund? Why not beat Kathy Woods and have a bad day and live to tell another tale? Uh, except there were probably too many redemptions. So it was spiraling. Uh, Joe says he got margin called and Tracy says, so it is a bailout. Just let it fail. Uh, but maybe it was too big and could see the contagion. Uh, Joe says, I don't get what you're saying. Someone got, gets margin called and they have to pay the broker and the way they pay the, back the broker is selling off shares to some other counterpart. How is that a bailout? Like he's just selling and people associate every sale with a bailout now, I guess, but that's not what this is. This was not, uh, the government stepping in.

• 18:34Speaker 01

  Yeah. Yeah. He was not too big to fail.

• 18:36John Coogan?

  No, not at all.

• 18:36Speaker 01

  I mean, some people are saying that he could have been too big to fail going in, but.

• 18:39John Coogan?

  Yeah. It doesn't seem like that's what happened. It seemed like there, there were significant losses and then they ran an auction and there were three, three parties bidding and they, and, and the bids came in above, above like, uh, you know, liquidation level. So the fund is not liquidated.

• 18:55Speaker 01

  Yeah.

• 18:56John Coogan?

  And it, and it remains. Uh, and so, uh, Joe, after fighting back and forth for several posts, he says, I think we might have a different definition of the term here. And I think you do. I think you do. Very fun. This is an interesting scoop from Berber Jin over at the Wall Street Journal related to this. Situational Awareness tried to sell a $3.5 billion stake in Anthropic to a group of investors led by Green Oaks and Sequoia. Obviously, there's a lot of demand for the stock. The parties reached a deal late Wednesday, but then Situational Awareness pulled out Thursday morning.

• 19:24Speaker 01

  They turned it down.

• 19:25John Coogan?

  They turned it down. They turned it down.

• 19:28Speaker 01

  They were going to offer like 3.5 billion, something like that.

• 19:30John Coogan?

  Something like that. And they turned it down just to grind for the public equity book. They sold that to Citadel. That obviously cleared a lot of the risk out. And they said, hey, let's keep this position. We're extremely excited about this. We're bullish.

• 19:44Speaker 01

  Yeah.

• 19:44John Coogan?

  And so, I don't know. I think, will this be the subject of a book? Will this be the subject of an actual movie? Is it drama enough? Have we gotten the FTX movie yet? Because that's way more dramatic, and I don't think that ever happened.

• 19:58Speaker 01

  Yeah. I haven't seen it.

• 20:00John Coogan?

  And then there was Infinity, not Infinity Machine, there was a Going Infinite?

• 20:03Speaker 01

  Yeah, that was the Michael Lewis book.

• 20:05John Coogan?

  Michael Lewis book, but that was written like before the blow up. And so it was like, sort of, it didn't really tell the story like day by day. But like an in the room, fly on the wall, minute by minute account of this would be interesting. But it's not that dramatic because it doesn't end with an explosion. It ends with like a, okay, we're back in the fight, which is cool. I mean, it's maybe more positive outcome. Big Tech's AI spending is continuing to produce blockbuster financial results, even as investors have become increasingly selective about which companies they're willing to reward. Over the past two weeks, Microsoft, Apple, Amazon, Meta, Alphabet, all reported quarterly earnings that largely exceeded Wall Street expectations. It's very boring when you pull the, did they beat on top line? Did they beat on bottom line? It's like everyone beats,

• 20:50John Coogan?

  and then the stock goes down 10% or up 10% based on capex forecasts and also just messaging around AI diffusion and AI uptake. Microsoft led the group with shares surging after reporting fiscal fourth quarter revenue of $90 billion, up 18% year over year, and ahead of the $87.4 billion that analysts were expecting. That was the consensus estimate. EPS came in at 474 versus expectations of 421. So they beat top line, beat bottom line. Azure revenue accelerated 43% over year over year.

• 21:22Speaker 01

  Yeah. So they gained 450 billion in one day, 16%.

• 21:27John Coogan?

  450 billion in one day.

• 21:28Speaker 01

  Yeah.

• 21:29John Coogan?

  That's for.

• 21:30Speaker 01

  Biggest one day market cap gain for any US company.

• 21:32John Coogan?

  Look at that. The god.

• 21:34Speaker 01

  God.

• 21:35John Coogan?

  That's really, really impressive. It's up 25% over the month. Very impressive. Apple also beat expectations, reporting $109.4 billion in quarterly revenue, earnings per share of 202. Stock briefly pushed the company market cap above the $5 trillion mark, but it has been absolutely tanking today, down, what, 10% today or something like that? Let's see. Down 9.47%. Last, we'll go through two more. Amazon has also impressed investors with revenue climbing 20% to 200 billion, 200.6. AWS growing 37% to 42.4 billion, sending shares sharply higher in after-hours trading. Here's Amazon. We can pull that up as well.

• 22:19John Coogan?

  The market is up 13.76%, and the day is looking pretty good, too, of 15% today. The market's reaction wasn't universally positive. Meta posted stronger-than-expected revenue of $60.8 billion, up 28% year over year, but earnings per share fell $6.18, fell short of the $7.22 analysts had expected. Investors focused on the company's $31.1 billion in quarterly capex, along with $3.6 billion in one-time legal and severance costs, sending the stock sharply lower. Let's see what Meta's doing. Down just a bit. Alphabet, meanwhile, reported revenue of $119.8 billion, while earnings per share of $9.11,

• 23:04John Coogan?

  comfortably beating expectations, while Google Cloud revenue surged 82% year over year to nearly $24.8 billion. Even so, investors remained focused on the escalating cost of AI infrastructure as hyperscalers continue pouring hundreds of billions of dollars into new compute capacity. And here's Google. So, we can dig into this more. There's a whole bunch of deeper questions about what is the actual efficacy of Meta spending on AI? How much are they spending on tokens? How much are they spending on headcount? All these things matter. But we'll dig into it another time. Take us through what's going on with OpenAI pushing the model frontier access across efficiency. What happened? They dropped the cost of Luna?

• 23:44Speaker 01

  Yeah. So there's Luna, Terra, Sol. This is the cheapest model.

• 23:47John Coogan?

  Yes.

• 23:48Speaker 01

  Massively reduced costs. You can see on the kind of Pareto curve, this is like actually much cheaper than a lot of like open source models because we've been talking about this recently. It's like, there's cost per task, not just like, can it do it? And how much does it like, it depends a lot how token efficient the model is.

• 24:03John Coogan?

  Yeah. Because you could measure it on cost per token. But if a certain model takes 10 times the amount of tokens, and it's only half the cost, you wind up spending more.

• 24:12Speaker 01

  Yeah.

• 24:13John Coogan?

  Why is the Pareto frontier in this graph flipped? I feel like the Pareto frontier used to be this direction. Am I hallucinating that? Has it always been this way? You always want to be on the left side? I thought you wanted to be on the right side or something like that.

• 24:27Speaker 01

  Well, it depends on where you are in the Pareto.

• 24:29John Coogan?

  I suppose.

• 24:29Speaker 01

  I guess. I think I see what you're saying.

• 24:31John Coogan?

  I suppose. Anyway, we also, I don't think we touched on this, but ArcAGI V3, the leading labs have been going back and forth.

• 24:38Speaker 01

  Yeah.

• 24:39John Coogan?

  Opus 5 put up a very, very impressive number. Then OpenAI fired back with 5.6 Sol used to solve open problems in mathematics. So why was it struggling with ArcAGI V3, which you, at one point, were in the top 10, right?

• 24:56Speaker 01

  Yeah. I was globally ranked ArcAGI V3. I don't think it's still up, but yeah, I was.

• 25:02John Coogan?

  Ranked ArcAGI V3 player. That's up there. You were like, you were pro-am.

• 25:08Speaker 01

  Yeah, yeah, I would say.

• 25:09John Coogan?

  You didn't go pro. You turned it down.

• 25:10Speaker 01

  I turned it down.

• 25:11John Coogan?

  You had the opportunity to be an.

• 25:13Speaker 01

  They were going to give you like 10 more tasks, 5 more tasks, something like that.

• 25:15John Coogan?

  Something like that.

• 25:16Speaker 01

  Yeah.

• 25:17John Coogan?

  But apparently, OpenAI was able to investigate the low score of 5.6 Sol on ArcAGI V3, and the harness was not letting it remember what it had learned. We found that enabling two API settings tripled our scores with 6x fewer output tokens. So very interesting to watch these.

• 25:35Speaker 01

  This is fascinating. I mean, we've seen this a lot over the past, like, I don't know, year and a half almost, where the harness like really matters a lot.

• 25:42John Coogan?

  Yeah.

• 25:42Speaker 01

  And if you have the wrong harness, or it's like limiting the model in some way, I mean, it can have like massive like effects on the downstream task.

• 25:49John Coogan?

  Yeah. People were not expecting this. It was definitely like the mod, the god model will be just one model, and you'll just ask it to predict the next token, and it'll just do it perfectly.

• 25:58Speaker 01

  Yeah.

• 25:59John Coogan?

  There's a lot more that goes into the integration here. I still think ArcAGI V3, I mean, fantastic benchmark, love the team. Obviously, Mike's been on the show multiple times. But it's also just a great way to actually illustrate AI progress to someone that maybe just doesn't want to build software or hasn't built software before and doesn't really, can't really feel that viscerally. I can't say viscerally. I don't know.

• 26:23Speaker 01

  Especially, you know, the famous like time horizon task doubling every six months. Like, that's basically, like, we can't actually measure the high end now. It's like too hard. We don't have enough tasks to like measure it efficiently, basically.

• 26:35John Coogan?

  And a lot of people are just like, what? A task that takes me 12 hours? Like, what is that? I don't even know.

• 26:40Speaker 01

  Yeah, it is a bit.

• 26:40John Coogan?

  It's hard to think of that off the top of your head. Like, what does that mean? Like, building a whole report or something? Or like, a lot of people work in like various ways. Like, yeah, 12 hours of meetings, is that one task? I don't know. But if you show someone the ArcAGI V1 puzzle, and it's very easy, and V2 is very, very, very easy, and then you walk them through the story of how AI has progressed on this, and how hidden the answers are, you can pretty easily help someone feel the AGI, which is very, very, very, very fun. And we'll see you on Monday.

• 27:11Speaker 01

  See you.

• 27:12John Coogan?

  Goodbye.