OpenAI's GPT-5 Flop, AI's Unlimited Market, China's Big Advantage, Rise in Socialism, Housing Crisis

FriedbergCommentary

Friedberg pushes back on Apple bear thesis, arguing rumors of Apple's decline are perennial and have always proven wrong, citing the iPad's initially mocked reception that became a massive success, and urges against counting them out.

“Rumors of Apple's demise are 30 years old, okay? This is every year the same story. Lack of innovation, copycatting... I would not count Apple out. There's a system there that's built unlike any other in corporate history.”▶ Listen · 1:36:10 ⚑

Gavin Baker is sharply critical of Apple's AI strategy, arguing the company has squandered capital on buybacks instead of investing in AI capabilities, resulting in terrible AI products and a baffling lack of execution that makes it appear they are 'trying to lose.'

“I'm just shocked at their inaction and ineptitude in AI, how bad the products are from a user perspective. I mean, they're, they're terrible... it almost feels like they're trying to lose.”▶ Listen · 1:33:48 ⚑

Gavin Baker notes that GPT-5 is the first OpenAI model release that failed to decisively beat competitors across all benchmarks, suggesting possible talent-drain effects and benchmark saturation are weighing on progress, though OpenAI remains a highly valuable company due to its product quality and distribution.

“this is the first time that OpenAI has not been able to clearly beat a competitor on all metrics, you know, a month after a new frontier model was kind of released from one of their chief rivals.”▶ Listen · 13:22 ⚑

Gavin Baker, a disclosed shareholder of xAI, is bullish on the company due to Grok 4's exceptional benchmark performance, the largest Blackwell cluster positioning it well for Grok 5, and its consistent ability to outpace OpenAI on key metrics.

“I should note my firm is a shareholder of xAI. So as much as I try to be objective, I am for sure biased because I am human and to be human is to be biased. But they have the largest Blackwell cluster, so I'm optimistic for GROK5.”▶ Listen · 12:52 ⚑

Gavin Baker cites Meta's most recent quarter — with revenue significantly ahead of expectations — as evidence that AI is already generating real economic returns, through increased user engagement and improved ad targeting ROAS.

“Meta just reported a quarter with revenue significantly ahead, and I think a lot of that was due to AI, AI making people spend longer and AI improving the quality of their ad targeting systems such that advertisers get a better ROAS and”▶ Listen · 20:12 ⚑

Gavin Baker implicitly supports NVIDIA's strategic position by noting that GPU demand is so intense that chips are being used to their physical limits and a large black market premium exists, indicating demand far exceeds supply with no end in sight.

“one of the biggest problems with GPUs and, you know, AI data centers is the GPUs are used so intensively that they melt. So all of the dollars that are going into the ground are being used. We're not building ahead of demand. In fact,”▶ Listen · 21:25 ⚑