Josh: If you're a fan of Apple products, this is an incredible week.
Josh: And even if you're not, chances are something that was just announced in the
Josh: last three days is for you.
Josh: Apple just announced over five products this week. But there is a headline within
Josh: this that everyone's missing.
Josh: I think a lot of the headlines point to the fact that prices now start at $600,
Josh: that the specs are now really high, that you can run OpenClaw on a laptop from
Josh: anywhere in the world at a pretty high rate of performance with models that
Josh: actually run locally on the device. These are all very cool things.
Josh: But one of the things that people are missing is the AI angle to all of these
Josh: releases and how Apple is quietly becoming one of the biggest players in the
Josh: AI space, even though they haven't actually spent any money on building AI models
Josh: or scaling their infrastructure.
Ejaaz: This is probably the most bullish I've been on Apple in the AI race.
Ejaaz: And the funniest part is that they've made no mention of an AI device,
Ejaaz: but that's exactly what they released. You mentioned five devices.
Ejaaz: We've got, what's it, a MacBook Pro. There's a new laptop and a specialized chip.
Ejaaz: I've got my turtleneck on today, Josh, in honor of Steve Jobs.
Josh: I'm going to be Steve Jobs, Sarah.
Ejaaz: For those of you who are new to our Apple episodes, we have the number one fan
Ejaaz: of Apple on the show. That is Josh. It is his Super Bowl.
Josh: I'm fired up.
Ejaaz: Today, we're going to get into the weeds about why Apple just released the top new AI device.
Josh: Okay, so let's first get into what they actually released.
Josh: Because there's quite a few things they released the macbook pro they released
Josh: a macbook air a brand new macbook named the macbook neo which starts at a surprising
Josh: price point of 600 this is important remember that they released the studio
Josh: display and studio display xdr pause right there because these studio displays
Josh: are awesome the previous xdr display used to cost 6 000 this
Josh: way better specs across the board so i will be trying to purchase
Josh: one of those bad boys and then finally they released the ipad
Josh: air and the iphone 17e those two devices
Josh: are also priced at 600 so for the first time there are three entry-level apple
Josh: devices priced at 600 bucks and this is important and this is noteworthy what's
Josh: also important and noteworthy that wasn't mentioned as much is the chip architecture
Josh: that lives within these devices particularly the new MacBook Pro and the MacBook Air.
Josh: Now, Apple created their vertically integrated silicon back with the M1 chip,
Josh: the M series chips, and they are now on the fifth iteration.
Josh: But this fifth iteration is pretty amazing. And I think that's the product that
Josh: a lot of people are sleeping on today is not only now do they have the MacBook Neo,
Josh: the iPhone 17e and the iPad Air that are capable of running Apple intelligence
Josh: locally for $600, but now they have these chips that are capable of running
Josh: actually large language models locally on a MacBook. And this is the first time ever.
Ejaaz: I think this is the most excited I've been about what's inside an Apple product
Ejaaz: versus what's actually outside.
Ejaaz: I'm usually a display guy. I'm usually an iOS app guy. I'm like,
Ejaaz: wow, this experience is amazing.
Ejaaz: But these chips are actually insane. So let me give you the rundown of the headlines.
Ejaaz: The AI compute processing power
Ejaaz: of an M5 chip is around 4x larger than the previous generation of M4.
Ejaaz: It's 8x larger than the M1, so the first in this entire series.
Ejaaz: Now you can do a bunch of AI prompts, toolings, apps, and system integrations
Ejaaz: on your laptop, and it just feels buttery smooth.
Ejaaz: In fact, it's just super quick. And the reason why this makes me really excited
Ejaaz: is now you can conceivably host and run AI models on your own local device.
Ejaaz: That means you can give private access to private data without handing that
Ejaaz: over to the likes of OpenAI or Anthropic.
Ejaaz: And you can create a more personalized AI experience without having to hand
Ejaaz: over all that private data.
Ejaaz: But there's a really unique architecture around how these chips are made.
Josh: Before we get into the novel architecture, I just want to double down on something
Josh: you said, Ejaz, which is a testament to how fast this is relative to previous hardware.
Josh: One of the fun facts that I love is that previously, when Meta was releasing
Josh: the LLAMA model, the $70 billion model, that required something like $40,000
Josh: worth of GPU clusters to run 18 months ago.
Josh: And now you can run that on this new M5 chip. And that brings us back to the
Josh: novel breakthrough that enables this to happen, which is the post that we're seeing on screen.
Josh: They basically took what other companies were calling
Josh: the chiplet architecture and built their own version of it where you take the
Josh: cpu and you take the gpu two of these things are both very important to processing
Josh: ai and they fuse them together into a singular chip and what's interesting about
Josh: this is the cpu part of the chip is the same on every single version of the ship there's the m5
Josh: chip there's the m5 pro and there's the m5 max all of
Josh: those have the exact same cpu the only difference is the amount of
Josh: gpus that they bolt on so the pro gets 20
Josh: cores the max gets 40 cores and you could think
Josh: of it like these lego blocks for apple silicon and this
Josh: is noteworthy because you can scale this a really
Josh: long way what we know about ai models in general is that
Josh: gpus are how you scale these things and the cpu is
Josh: kind of used as the orchestration layer so this allows
Josh: these new chips to be modular in the sense that they can just kind of
Josh: stack gpus more and more and more and i assume this is the architecture that
Josh: we're going to see with the ultra chip that's probably coming out later this
Josh: year that's going to be able to run some serious ai models locally on this device
Josh: and it's a really novel way of architecting these m-series chips that apple's
Josh: kind of doubled down on and i think
Josh: we're going to see some really amazing improvements from it what i like
Ejaaz: About the modular approach is um it doesn't seem to come at the cost of the
Ejaaz: size of the device like these things are still getting smaller and sleeker and
Ejaaz: thinner every single year and generation.
Ejaaz: So that makes me like, you know, super excited about like how much further we can take these devices.
Ejaaz: The other thing is I watched a really unique video this week where some random
Ejaaz: dude hacked into Apple's, I think it was their M4 chip. I don't know if you saw this, Josh.
Josh: This is so cool.
Ejaaz: Yeah, they converted it into an AI transformer.
Ejaaz: So what that transformer was capable of doing was training, inferencing,
Ejaaz: or fine-tuning an AI model right there on his Apple MacBook.
Ejaaz: And what he found out was the inference and training costs were 80 times more
Ejaaz: efficient than an NVIDIA GPU, an A100.
Ejaaz: Now, that's from some lone person hacking into this. And Apple's obviously,
Ejaaz: not necessarily seen this example, but they're aware that they have the most bleeding edge chips.
Ejaaz: There is no consumer tech hardware
Ejaaz: device that has more premium components making it up than Apple stuff.
Ejaaz: Like their supply chain is just insane. So I'm really excited about that.
Ejaaz: The other thing is what this unlocks is, in my opinion, what I'm calling a new
Ejaaz: era of personalized intelligence.
Ejaaz: I think one of the main challenges that AI is faced today is that we're relying
Ejaaz: too much on model labs, which kind of results in a more fractured experience.
Ejaaz: Like the model doesn't know who we are. It keeps asking us to tell us about ourselves.
Ejaaz: And with this new chip architecture, you can have a more persistent AI agent
Ejaaz: that understands who you are, that is more useful, that is there right with
Ejaaz: you in the weeds as you're doing stuff on the internet or on your computer.
Ejaaz: And that's really bullish for me.
Josh: I can't help but imagine what it would look like if Apple decided to really
Josh: scale the manufacturing production of these chips and turn them on for AI training,
Josh: similar to what Google did with their TPUs, and kind of have their specific
Josh: hardware accelerated version of these GPUs.
Josh: I feel like that would be a huge business opportunity, but clearly they are
Josh: not taking advantage of this position they're in.
Josh: Because previously on an episode a few weeks ago, we spoke about CapEx,
Josh: how much money these companies are spending on scaling AI infrastructure.
Josh: This includes data centers, this includes GPU, powering the data centers,
Josh: all of the employees that are required to make this happen.
Josh: And the numbers were staggeringly large i mean
Josh: between what is this amazon google microsoft meta
Josh: we have over 630 billion dollars of spend
Josh: but apple is only at 1.4 which is
Josh: actually down 19 year over year you
Josh: see this little sponge down here it's like so sad and depressing and they're
Josh: spending no money on scaling this and you have to ask like why what is going
Josh: on here um because clearly they're in a position where they can win if they
Josh: double down on these things that they're working are working well,
Josh: but they're just not doing it.
Josh: And I wonder if you have any takes on this of what you think...
Josh: Like, what are these other companies doing? And why is Apple not participating?
Ejaaz: So there's an optimist take on this story. And then there's a pessimist take.
Ejaaz: The pessimist take is Apple was asleep at the wheel and they were not focused on AI.
Ejaaz: They completely missed that rush. And they fell behind creating one of the leading
Ejaaz: intelligence models when they are the most valuable company.
Ejaaz: So Google, Microsoft, Amazon, and all these companies that you're seeing on
Ejaaz: the screen here got way, way ahead.
Ejaaz: Now, the optimist's take is this was all planned because Apple's decision was
Ejaaz: never to partake in the AI model race.
Ejaaz: Apple's plan was to own the distribution and operating system layer of AI,
Ejaaz: which is, hint, hint, what they did with cell phones and the App Store and iOS,
Ejaaz: and they're doing exactly the same thing on AI.
Ejaaz: So you could actually look at it as Apple was so smart, not wasting hundreds
Ejaaz: of billions of dollars of their hard-earned cash, and instead pays Google a
Ejaaz: billion dollars to rent Gemini and then build an ecosystem right on top of it.
Ejaaz: It's kind of genius if you think about it.
Josh: This is like the ghost of Steve Jobs hand, like looking over the company.
Josh: And actually, if you scroll up on this post a little bit, it's kind of me making
Josh: fun of Apple and how they've kind of accidentally stumbled upon this miracle.
Josh: And I would believe the optimist case, if in fact they didn't totally fumble WWDC two years ago,
Josh: there was a very clear intention to deploy Apple intelligence throughout the
Josh: suite of hardware and to place themselves into this AI race,
Josh: it just failed completely and catastrophically.
Josh: And had that not have happened, I think I could have believed this optimist
Josh: take where they really are just being slow and calculated. But I think this was an accident.
Josh: Just so happened to create the best hardware in the world.
Josh: And it just so happens that all the AI models need to run on hardware just like this.
Josh: It's kind of like NVIDIA. Like NVIDIA accidentally became the most important
Josh: company in the world. And it required a lot of execution along the way.
Josh: And they deserve every bit of that. But they were in a unique position to do so.
Josh: And I haven't seen any signs of Apple doubling down to do so on the software side, at least.
Josh: It's only been on the hardware side. And it's only because this has been the
Josh: trajectory since 2021 when they first launched the M1 chip. But it is interesting.
Josh: I mean, if we look at this chart down at the bottom of this post here,
Josh: it shows the increase in CapEx from everyone is going straight vertical and Apple spending none.
Josh: And yet the Mac minis are sold out everywhere.
Josh: You cannot buy one because everyone's running OpenClaw on it.
Josh: The Mac studios are running local models on everybody's machines.
Josh: The new MacBook Pros are incredible.
Josh: They're going to be running models. I mean, there's just everything is sold out.
Josh: Everything is backlogged. They can't make enough hardware to support this.
Josh: And something is happening here.
Josh: The market forces are at play and they are saying, Apple, you are making great
Josh: hardware. Please do more of this.
Ejaaz: I was joking with some friends the other day that the only real threat to NVIDIA's
Ejaaz: hardware mode is Apple with their Mac minis and with their laptops because they're the second largest,
Ejaaz: most valuable company that comes
Ejaaz: behind them for a reason because they're selling out all their hardware.
Ejaaz: People can't get enough of it, but consumers in particular use it to run their AI models.
Ejaaz: On the software side of things, listen, it's not clear just yet,
Ejaaz: but I do think Apple gets ahead for two main reasons.
Ejaaz: Number one, they have like the largest distribution ever. I believe it's 2.5
Ejaaz: to 3 billion active Apple devices currently in the world right now. It's insane, right?
Ejaaz: So if they wanted to, they could switch on bleeding edge AI via Google's Gemini
Ejaaz: or their own fine-tuned version of that model to 2.5 to 3 billion people tomorrow, right?
Ejaaz: So they instantly become the most or the largest consumer moat for AI immediately.
Ejaaz: But they're taking their time.
Ejaaz: I believe they're building something much more curated and better than what we have today.
Ejaaz: Now, the pessimists will say, oh, they're slow. They've been slacking.
Ejaaz: And I would probably agree with you. But hey, they're the second most valuable
Ejaaz: company in the world. They can take that time to wait and build something interesting.
Ejaaz: That being said, all these releases are super cool, Josh.
Ejaaz: But there's one thing that's nagging me at the back of my head,
Ejaaz: which is Siri AI has been delayed again.
Ejaaz: I do not know when I'm going to get this, but it's already been delayed,
Ejaaz: what, a year and a half at this point.
Ejaaz: This is, of course, Apple's personal AI assistant, which is probably going to
Ejaaz: be the conduit and the main spokesman for all the Apple software stuff.
Ejaaz: So until I see that released, I'm not going to believe that it's actually happening.
Josh: Yeah, I mean, the software part, again, they just fumbled so hard.
Josh: There's no denying it and there's no signs that they are going to recover.
Josh: I think the most bullish thing they've done recently in terms of software is
Josh: just license out their ai to gemini clearly google
Josh: can do an amazing job and for a billion
Josh: dollars a year apple is getting access to gemini models and they're going
Josh: to integrate locally into perhaps not locally but they'll integrate them into
Josh: all these mobile devices and that takes us to this new weird place where like
Josh: there is a potential to shift the current market forces based on this distribution
Josh: that you just mentioned that google that apple has of multiple billions of products
Josh: already in people's hands that are AI capable.
Josh: And this is noteworthy. I mean, what we're seeing with OpenClaw in particular,
Josh: it kind of set the stage for how strong of a preference people have to running
Josh: these models on actual hardware that they feel that they own.
Josh: A lot of people bought OpenClaw not because they needed the compute to run the models.
Josh: That's not true. You could do this on a $5 virtual private server.
Josh: They used it because it connected with the ecosystem that Apple provides.
Josh: They used it because it can query through their iMessages and it could send
Josh: iMessages and it could call and it could FaceTime and it can use the Apple speed of software.
Josh: And that is a really big deal. And that gets into this AI edge compute bulk case,
Josh: which is the idea that everyone needs GPT 678910 served from OpenAI's cloud
Josh: servers might not be true for the majority of the users that actually just want
Josh: AI to help them like figure out their grocery store order and summarize their emails for them.
Josh: And there is a limit to the intelligence that the average user
Josh: Actually need access to. And it would seem as if a lot of these current models
Josh: have reached that threshold.
Josh: Not everyone needs to go cure cancer or solve novel physics.
Josh: And with that understanding, we're at a moment now where Apple's hardware,
Josh: particularly this new hardware, is able to run all of these models that are
Josh: capable of these average use cases locally on device.
Josh: And that's a lot of users that will be using this.
Josh: And it may actually be like one of the largest bear cases against companies
Josh: like OpenAI, like Anthropic,
Josh: who rely so heavily on customers paying money and using the API fees because
Josh: these local models are becoming so highly intelligent, so capable,
Josh: and so small that they could just run on an iPhone.
Ejaaz: Yeah, I actually wrote about this at length in the essay that we just dropped in our Substack.
Ejaaz: If you're not subscribed, definitely go check that out. It's,
Ejaaz: in my opinion, a banger, and it goes through everything that Josh just covered.
Ejaaz: My thinking about models has evolved pretty drastically over the last month
Ejaaz: in the light of OpenClaw.
Ejaaz: Because what I initially thought was OpenClaw was just a bunch of open source
Ejaaz: tech-heavy developers that were just kind of toying around and messing around
Ejaaz: with something quite dangerous.
Ejaaz: And then what I actually learned was that the reason why they were doing it
Ejaaz: was because it led to a better AI experience overall.
Ejaaz: And when you and I have tried out OpenClaw and we have a bunch of episodes that
Ejaaz: demonstrate this, we have just had a much better experience.
Ejaaz: Like the AI actually remembers you but can do so many things for you.
Ejaaz: And I think that's where people are eventually going to settle,
Ejaaz: particularly consumers, like, yeah, okay, we can talk to ChatGPT,
Ejaaz: but I want it to now do stuff for that.
Ejaaz: It's much harder to do that if your AI provider is open AI with their own servers
Ejaaz: versus having an AI model locally on your device.
Ejaaz: So I do think there's a larger trend, which is going to be around edge compute
Ejaaz: and local AI devices and local AI models running on your phone and on your laptop,
Ejaaz: which will lead to a more personalized experience. I'm excited to see people take privacy.
Ejaaz: More seriously, at this point, with OpenClaw, some of the worst examples of
Ejaaz: it was the agent would steal your credit card info and spend it on some random
Ejaaz: stuff or would go rogue and burn up all your compute tokens.
Ejaaz: You have more control and access over that if you go through an Apple device
Ejaaz: that might kind of give you a semi-private experience that you don't have to
Ejaaz: expose all that kind of data.
Ejaaz: If this trend becomes true, then it completely threatens Anthropic and OpenAI's
Ejaaz: moat, which have relied heavily on subscriptions.
Ejaaz: Why would you pay $200 a month on a Claude subscription? I'm just playing the antagonist here.
Ejaaz: If you could get frontier intelligence for a much smaller model that fits on
Ejaaz: your mobile phone device, that's a QN model that got released this week,
Ejaaz: and that can work with all your personalized data.
Ejaaz: Why wouldn't you just do that? It's a no-brainer, and I understand the thesis
Ejaaz: behind it. And I think that's what Apple's going after.
Josh: Well, now we have to ask the question, are they capable of doing this and who
Josh: is going to get them to this place.
Josh: And to do so, we have to look at the leadership.
Josh: We have to go to the seed suite first. And that is thanks to Polymarket,
Josh: who has prediction markets on who is actually going to be responsible for running
Josh: the ship after Tim Cook leaves.
Josh: So it's been widely rumored that Tim Cook is going to be stepping down from
Josh: Apple to as CEO capacity sometime this year. He's been there for a long time.
Josh: He's had an incredibly successful run, But it seems as if the Apple C-suite
Josh: is kind of grooming the next person.
Josh: And according to Polymarket, John Turnness is going to be that guy.
Josh: And this is exciting because John Turnness is the VP of, I believe,
Josh: engineering hardware at Apple.
Josh: He's a hardware guy. He's the person that has helped design,
Josh: develop, and lead these devices.
Josh: And Polymarket has him at, what, over 50% chance of running the company.
Josh: If he does actually become CEO, is there a world in which he can push this company
Josh: forward in the sense that they can really double down on this edge AI compute thing?
Josh: They could get these models running on all the devices, maybe.
Josh: I think that would be a really fun opportunity to see.
Josh: And we really need a shakeup. Like Apple's been so slow. They've been so boring
Josh: for so long that this would make a really big difference.
Josh: And also there's another market that shows the future products that they're
Josh: planning to launch. And there's one that I think surprises a lot of people,
Josh: which is a foldable phone before 2027.
Josh: At an 84% chance. So by September of this year, you will be able to buy a folding
Josh: iPhone, which seems a little bizarre. But according to Polymarket, this is true.
Josh: Thank you to Polymarket for supporting and sponsoring this section of the episode.
Josh: And yeah, I think it's just a testament as always to how Apple is slow,
Josh: but they are figuring it out.
Josh: And man, if they can get this foldable iPhone that turns into an iPad,
Josh: runs models locally on your phone, it's gonna be pretty cool.
Josh: So feeling bullish on Apple in general, I mean, what do you think this means
Josh: for the valuation of the company, EJAS?
Josh: Like Apple as a stock, is this, are we still being theoretical,
Josh: hypothetical, or does this convert to actual revenue dollars?
Ejaaz: I think it eventually converts to revenue dollars, but they're going to need
Ejaaz: to deliver on, well, they're delivered on the hardware side.
Ejaaz: They need to deliver on the software side. And that's typically where Apple
Ejaaz: has really dominated the consumer market. Yes, they built an amazing iPhone,
Ejaaz: But they also killed it with creating the best perfected app that you can use
Ejaaz: on your phone and that entire ecosystem for developers and consumers on either side.
Ejaaz: So they need to pull off the same thing for AI.
Ejaaz: And the challenge that they're going to face is it's not the same as the internet that we know today.
Ejaaz: It's going to be a new operating system. You and I have discussed multiple things on the show before.
Ejaaz: We've discussed perplexity, releasing a new personal computer,
Ejaaz: and then OpenAI, releasing an AI web browser. And all these random products
Ejaaz: that you and I don't really use anymore.
Ejaaz: It's used for very niche things. And what those attempts are getting at is trying
Ejaaz: to rebuild an operating system around this new weird technology that kind of
Ejaaz: feels like magic, but is also kind of dangerous.
Ejaaz: And so Apple is the company that's currently being presented to solve that problem.
Ejaaz: My bet is they're going to nail it at least within the next kind of two to three
Ejaaz: years for two reasons. One, they have the largest distribution I was mentioning
Ejaaz: earlier, 3 billion active devices.
Ejaaz: So it's easy for them to kind of turn that on. Their biggest threat actually
Ejaaz: might be Google, but Google doesn't really have the best experience of creating
Ejaaz: consumer hardware, aka Google Glass.
Ejaaz: There's actually a new version of that coming out in a few months time.
Ejaaz: But yeah, I think Apple has the best shot of it.
Ejaaz: Valuation wise, I actually think it's up from here. And they're currently valued
Ejaaz: at what, like just under $4 billion or just over $4 trillion.
Ejaaz: Dollars and i think they're going to see their kind of uh nvidia type rise now
Ejaaz: um it wouldn't surprise me if they actually compete uh with nvidia for the top
Ejaaz: spot once once consumer ai takes off.
Josh: So in summary there is a lot of cool new hardware that just came down the pipe
Josh: this week there is probably something for everyone and the noteworthy thing
Josh: is this new kind of ai angle that they're taking they have the accessible devices
Josh: starting at six hundred dollars they have the high-end devices like these new
Josh: MacBook Pros that go up to $7,000, $8,000,
Josh: but that are capable of running these really powerful, impressive local models
Josh: on them. And is that going to
Josh: be enough to actually start to detract away from the market shares of these
Josh: other players like OpenAI and Anthropic. We will see.
Josh: We will be monitoring the situation as always, but that is the news as it relates
Josh: to Apple this week. It is a huge release in hardware.
Josh: Are they accidentally sleepwalking into success or is this a tactical master plan?
Josh: We don't know. Perhaps the new CEO, John Ternus, will tell us.
Josh: But until then, thank you so much for watching. Like he just mentioned,
Josh: he has a newsletter about this, about local edge inference that is releasing
Josh: as you're watching this episode.
Josh: It's out. So you can find that on our sub stack linked in the description below.
Josh: Another way that you can help us is by sharing this episode with your friends.
Josh: That always goes a long way. Share it with someone who you think will be interested.
Josh: We do this four times a week, 25 minutes.
Josh: If you listen to all of them, there's nothing that you will miss in the world
Josh: of AI because our job is to keep you up to date. And thank you so much for staying up to date with us.
Josh: And yeah, we will see you guys on the next episode.
Josh: Hold on let me feed our system prompt we're you are going to record an absolute
Josh: banger of an episode right now and you're going to make no mistakes think hard let
Ejaaz: Me feed my biological llm you're going to absolutely smoke this episode and
Ejaaz: it's going to go even more viral than the previous episode make zero mistakes.
Josh: Let's go this is why we should charge premium all right i know