OpenAI's GPT-5 Flop, AI's Unlimited Market, China's Big Advantage, Rise in Socialism, Housing Crisis
In this episode of All-In, the hosts explore recent developments in artificial intelligence, including OpenAI's GPT-5 release and its performance relative to competitors like Grok 4. The discussion covers AI's economic implications, examining the substantial investments required for data centers and the potential returns, with specific examples from companies like Meta showing how AI implementation affects revenue.
The conversation also delves into US-China trade dynamics, particularly regarding high-tech smuggling and tariff impacts. The hosts examine Apple's business strategy over the past decade, discussing the company's $700 billion in share buybacks and its position in the AI landscape. They consider how Apple might have allocated these funds differently, specifically toward AI development and data center infrastructure.
This is a preview of the Shortform summary of the Aug 9, 2025 episode of the All-In with Chamath, Jason, Sacks & Friedberg
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1-Page Summary
State and Future of AI and Language Models
Industry experts discuss the evolving landscape of AI systems and their implications across various sectors. The release of ChatGPT-5 brought disappointment, with Gavin Baker noting it's the first OpenAI model that didn't clearly surpass its predecessor. Meanwhile, Grok 4 has outperformed GPT-5 in certain benchmarks, including humanity's last exam and RKGI-2.
Ben Shapiro expresses concern about whether AI productivity improvements will justify the rapid investments in the sector. Jason Calacanis points to the substantial future outlays required for data centers, while Gavin Baker discusses promising economic returns, citing Meta's improved revenue from AI-enhanced ad targeting as an example.
US-China Trade, Tariffs, and High-Tech Smuggling
The US-China trade relationship continues to evolve, with tariffs generating $30 billion in July alone and $127 billion in 2025. Gavin Baker suggests these measures might provide valuable experimental data, while Ben Shapiro acknowledges their impact while noting potential economic dampening effects.
The discussion turns to high-tech smuggling, particularly the illegal export of Nvidia GPUs to China through Singapore and Malaysia. Phil Deutch emphasizes the importance of stable policies in fostering economic competition, while David Friedberg suggests China's centralized control might hinder its competitive edge.
Apple's Business Strategy and Lack of Innovation
The panel critically examines Apple's recent business decisions, particularly its $700 billion share buybacks over the past decade. Gavin Baker expresses frustration with Apple's AI products, noting their deteriorating quality, while Ben Shapiro voices disappointment in the lack of exciting new products.
The experts suggest Apple could have better allocated these funds, potentially investing $200 billion in data centers to compete in AI. While Baker remains optimistic about Apple's future AR glasses, Jason Calacanis expresses skepticism about the company's commitment to AR, citing the lack of developer versions and meaningful progress since initial announcements.
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Counterarguments
- ChatGPT-5's perceived lack of progress may be due to diminishing returns as AI models become more advanced, which is a natural part of technological evolution.
- Grok 4's outperformance in certain benchmarks does not necessarily mean it is superior in all aspects of language modeling and application.
- AI productivity improvements are often not immediately apparent and can lead to significant long-term benefits that justify current investments.
- The high costs of data centers may be offset by the efficiencies and new capabilities that advanced AI systems can provide.
- Economic returns from AI, such as Meta's ad targeting, may not be universally replicable across different sectors or companies.
- Tariffs can have complex effects on the economy, and the revenue generated may not fully account for the potential costs to consumers and businesses.
- High-tech smuggling is a multifaceted issue, and focusing solely on the act without addressing the underlying causes may not lead to a sustainable solution.
- Stable policies are important, but they must also be adaptable to keep pace with the rapid changes in technology and global markets.
- Centralized control in China could also lead to efficient mobilization of resources towards strategic sectors, including technology.
- Apple's share buybacks could be a strategic move to increase shareholder value and could be part of a broader, balanced capital allocation strategy.
- Criticisms of Apple's AI products may overlook areas where they are successfully integrated and provide user satisfaction, such as in device interoperability and user privacy.
- The lack of new exciting products from Apple could be due to a strategic focus on refining existing products and services, which can also drive business success.
- Apple's decision not to invest in data centers for AI could be based on a strategic choice to focus on core competencies and outsource or partner for AI capabilities.
- Optimism for Apple's AR glasses could be well-founded if Apple is taking a deliberate approach to ensure the product meets its standards for user experience.
- Apple's commitment to AR development may be more cautious and focused on long-term success rather than rushing to release developer versions.
Actionables
- You can evaluate the performance of your tech investments by setting up a simple spreadsheet to track their outcomes versus expectations. For instance, if you've invested in a new software tool for your business, record the projected productivity gains and compare them with actual performance data over time to decide if the investment was worthwhile.
- Stay informed about international trade policies to make better investment decisions by subscribing to a trade policy newsletter. This will help you understand how tariffs and trade agreements might affect the markets you're invested in, allowing you to adjust your portfolio accordingly.
- Encourage stable policies in your community by participating in local business forums or town hall meetings. Share your thoughts on the importance of consistent regulations and how they can help local businesses thrive, drawing parallels with the broader economic competition discussed in the podcast.
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State and Future of AI and Language Models
The conversation regarding the current state and future potential of AI and language models reveals mixed sentiments. Industry experts discuss the evolving nature of AI systems and their impact on various sectors, including technology, business, and economics.
AI Firms Release Evolving Language Models
GPT-5 Update: Disappointment as Performance Barely Surpasses Previous Models
The release of ChatGPT-5 was greeted with some disappointment because its performance did not significantly surpass that of its predecessors. Gavin Baker remarked that this is the first time OpenAI released a model that was not clearly better than the previous one, marking a potential slowdown in advancements. He also noted a technical glitch that occurred shortly after the release of GPT-5, where a system designed to route to the most appropriate model malfunctioned, which could have affected the initial performance metrics.
Benchmarking: Grok 4 Outperforms GPT-5 in Some Areas
Grok 4, another language model, was mentioned as surpassing GPT-5 in certain benchmarks. Grok 4 scored higher than GPT-5 on tests like humanity's last exam and RKGI-2, with percentages of 44.4% and 42% respectively. While GPT-5 may lead in specific chatbot functionalities, Grok 4 exhibits superior performance in other significant assessments.
Impact of Advanced AI on Jobs and Economy
Fears AI Productivity Gains Won't Justify Quick Investment
Regarding the broader implications of AI, Ben Shapiro expressed concern about whether the productivity improvements from AI will validate the rapid and large investments in the sector. He drew parallels with the early days of the internet, noting that it took several years before the internet had a substantial impact on productivity. Jason Calacanis expanded on the investment scale for AI, considering the large future outlays required, especially for data centers. He suggested that the business sector could see substantial Total Addressable Market (TAM) growth due to AI.
Gavin Baker discussed the economic returns from AI investments, mentioning that they are commonly measured through return on invested capital, suggesting a promising trend with initial savings mostly in ...
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State and Future of AI and Language Models
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Clarifications
- GPT-5 and Grok 4 are advanced language models developed by different AI firms. These models are designed to process and generate human-like text based on vast amounts of data they have been trained on. GPT-5 and Grok 4 are evaluated based on their performance in various language tasks and benchmarks to assess their capabilities and improvements over previous models. Each model may excel in different areas or tasks, showcasing the diversity and ongoing advancements in the field of natural language processing.
- Total Addressable Market (TAM) growth represents the potential revenue opportunity available for a specific product or service within a defined market. It indicates the total revenue a company could achieve if it captured 100% market share in a particular industry or sector. TAM growth is crucial for businesses as it helps them assess the market's size and potential for expansion, guiding strategic decisions and investment priorities. Understanding TAM growth enables companies to evaluate their market positioning, competition, and opportunities for revenue growth within a given market segment.
- Return on invested capital (ROIC) is a financial metric that assesses a company's efficiency in generating profits from the capital invested by shareholders and debtholders. It is calculated by dividing the after-tax operating income by the average invested capital. ROIC provides insight into how effectively a company utilizes its capital to generate returns for investors. By focusing on the profitability relative to the amount of capital employed, ROIC helps investors evaluate a company's performance and value-creating potential.
- Meta's ad targeting systems are tools developed by Meta (formerly known as Facebook) that use artificial intelligence and data analytics to deliver personalized advertisements to users based on their interests, behaviors, and demographics. These systems analyze vast amounts of user data to optimize ad placements and increase the effectiveness of advertising campaigns on Meta's platforms. By leveraging AI algorithms, Meta aims to enhance ad relevance, engagement, and ultimately drive higher revenue for advertisers while providing users with more tailored and engaging content.
- AI tools for investing are software applications that utilize artificial intelligence algorithms to analyze vast amounts of data and make investment decisions. These tools can process information quickly, identify patterns, and predict market trends more efficiently than traditional methods. By leveraging AI, investors can gain insights into market behavior, optimize their portfolios, and potentially improve investment outcomes. These tools are designed to assist investors in making informed decisions based on data-driven analysis and can range from automated trading algorithms to sophisticated risk management systems.
- AI integration into workflows involves inco ...
Counterarguments
- The disappointment with ChatGPT-5's performance may be premature, as its full capabilities and potential applications might not have been fully realized or assessed at the time of release.
- Technical glitches are common in the rollout of complex systems and may not necessarily reflect the overall quality or potential of the AI model.
- Benchmarks are only one way to measure performance, and different models may excel in different applications or contexts that are not captured by specific tests.
- AI productivity gains are often not immediately apparent, and the value of investments may become clearer over a longer-term horizon.
- Comparing AI's impact on productivity to the early internet might overlook the unique and potentially more immediate applications of AI in automation and data analysis.
- The expectation of large future investments in data centers and AI infrastructure could be mitigated by advancements in AI efficiency and the development of more cost-effective computing solutions.
- Improved return on invested capital from AI may not solely be due to cost-cutting measures like reducing labor but could also stem from creating new revenue streams and business models.
- While Meta's revenue improved due to AI ad targeting, this may not be universally applicable to all businesses or sectors, and o ...
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US-China Trade, Tariffs, and High-Tech Smuggling
As the trade relationship between the United States and China remains fraught with tensions, discussions on tariffs, their impacts, and the smuggling of high-tech equipment take center stage.
Trump Tariffs Generated Significant Revenue, but Long-Term Economic Implications Unclear
Tariffs Spark Retaliation and Inflation Concerns
Tariff revenue has swelled to $30 billion in July, with a total of $127 billion collected so far in 2025. These measures saw the trade deficit shrink to its lowest since June of 2023, indicating immediate fiscal benefits. Gavin Baker expresses that the experimental approach may yield insightful data, as there is dispute over their efficacy.
Despite expectations of significant retaliation, the U.S. has not experienced much, and Baker suggests this might indicate more leverage than anticipated. Ben Shapiro, aligned with President Trump's use of tariffs against China, also notes their impact. The panel reports a 10% tick up in inflation, somewhat connecting it to the tariffs, and discusses the possibility of tariff revenue decreasing should demand drop. Shapiro also highlights the economic dampening effect of the trade war, suggesting the U.S. economy might perform better without it.
Nvidia GPU Smuggling Into China Defies Export Controls, Highlighting Enforcement Challenges
Focusing on illicit activities counteracting trade policies, the panelists mention the smuggling of Nvidia GPUs into China at astonishing rates. Two Chinese nationals were arrested for exporting millions worth of these GPUs to China via Singapore and Malaysia, which underscores the challenges enforcement agencies face. This black market activity indicates a deficiency in controlling such high-tech contraband, reflecting the complexity of the geopolitical tech conflict.
Centralization vs. Stable Policies in Global Economic Competition
Panelists Debate Government Intervention: Hands-Off Vs. Coordinated Policies
David Friedberg assesses China's centralized control over its economy, suggesting that occasional suppression of entrepreneurship could hinder its competitive edge. Phil Deutch underlines the rule of law as a keystone for innovation and touches on the unpredictability of tariffs, emphasizing the importance of stable policies in fostering economic competition.
Unstable Policies Undermining US Competitiveness With China
Calacanis questions the centralization of power in the U.S. government and how executive orders from Presidents, including tariff decisions, could be creating instability in U.S. global economic positioning. Deutch speaks to the negative impact of shifting policies on America's technological ...
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US-China Trade, Tariffs, and High-Tech Smuggling
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Counterarguments
- Tariffs may generate revenue but can also lead to higher costs for consumers and businesses, which can negate the benefits of increased tariff revenue.
- A decreased trade deficit does not necessarily indicate a stronger economy, as it could also result from decreased domestic demand.
- The lack of significant retaliation to tariffs could be temporary or could result in long-term strategic losses or shifts in trade partnerships.
- The dampening effect of tariffs on the U.S. economy might be offset by other economic factors or could be a short-term issue before businesses adjust.
- Smuggling of high-tech equipment like Nvidia GPUs could be symptomatic of broader market demands and the limitations of unilateral export controls.
- Centralized control in China's economy could also lead to efficient mobilization of resources and rapid implementation of strategic initiatives.
- Stable policies are important, but some degree of flexibility in policy-making can allow for rapid response to changing economic conditions.
- Unstable policies might reflect a democratic process that incorporates diverse viewpoints and adapts to new information.
- Continuous subsidies can lead to market distortions and may not always be the most efficient use of taxpayer money.
- Fluctuating policies could also stimulate i ...
Actionables
- You can diversify your investment portfolio to include industries that benefit from tariffs, such as domestic manufacturing, to potentially capitalize on economic shifts. By researching and investing in U.S. companies that are less affected by international trade tensions or that might be receiving subsidies, like those in the solar or EV sectors, you can align your investments with current economic policies. For example, if you typically invest in tech stocks, consider balancing your portfolio with shares from companies in these industries.
- Start purchasing products from local businesses to support your community and mitigate the impact of tariffs on your personal expenses. Since tariffs can lead to increased prices for imported goods, buying locally not only helps you avoid some of these costs but also contributes to the local economy. For instance, instead of buying fruits imported from afar, visit your local farmers' market for locally grown produce.
- Educate yourself on the basics of economic po ...
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Apple's Business Strategy and Lack of Innovation
The panelists scrutinize Apple's recent business decisions, particularly the company's massive share buybacks, and debate whether Apple has been neglecting research and development in cutting-edge fields like AI and AR.
Apple's Buyback Raises Questions About Priorities and Innovation
The panel expresses frustration with Apple’s significant investment in repurchasing shares, questioning if the tech giant has neglected innovation as a result.
Panelists Frustrated by Apple's Lack of Groundbreaking AI and AR Products
Gavin Baker is especially vocal regarding Apple's performance in artificial intelligence (AI), pointing out that the company’s AI products are not impressive and seem to be deteriorating over time. Ben Shapiro also voices disappointment, noting that there has been nothing particularly exciting from Apple recently that sparked his interest as a consumer.
Debate On Apple's Prioritization of Buybacks and Supply Chain Over R&D
The discussion highlights that Apple has repurchased $700 billion worth of shares over the past decade, amounting to more than enough to acquire major companies like Disney, Netflix, Tesla, Uber, Robinhood, and BMW. The panelists hint that with better allocation of these funds, such as reducing buybacks by $200 billion to invest in data centers, Apple could have become a serious contender in the AI sector. The speakers infer that Tim Cook's background in supply chain logistics may have influenced the company to focus less on product innovation.
Panelists Suggest how Apple Could Leverage Strengths and Resources to Drive Innovation
Looking forward, the panelists discuss opportunities Apple could seize to demonstrate its innovative capabilities once again.
Opportunities For Apple: Expanding With Smart Home Tech, EVs, and Distributed Energy Systems
The p ...
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Apple's Business Strategy and Lack of Innovation
Additional Materials
Counterarguments
- Share buybacks can be a sign of a mature company with strong cash flow, and they can benefit shareholders by increasing the value of remaining shares.
- Apple may be innovating in ways that are not immediately visible to the public or that take longer to develop before becoming market-ready.
- Investment in R&D is not always directly proportional to innovation output; efficiency and strategic focus are also critical factors.
- Apple's approach to innovation may be more incremental and focused on refining existing products rather than releasing entirely new categories.
- Tim Cook's expertise in supply chain management has been beneficial for Apple's operational efficiency, which is also a vital aspect of business success.
- Apple's ecosystem is a significant competitive advantage, and strengthening it can be as valuable as entering new markets.
- The company has a history of entering markets late but then quickly dominating them with well-executed products (e.g., the iPhone and iPad).
- Apple's privacy stance could be seen as an innovative ...
Actionables
- You can evaluate your investment choices by considering the balance between innovation and stability. Look at companies you invest in or support as a consumer and assess whether they prioritize reinvestment in innovation or shareholder returns. If you prefer companies that innovate, consider shifting your support towards those that allocate more resources to R&D.
- Explore the potential of smart home technology by starting with a simple project. Purchase a basic smart home device, like a smart plug or bulb, and experiment with its capabilities. This hands-on experience can give you a better understanding of the current state of smart home technology and its potential for future growth.
- ...
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