Apple's Biggest AI Announcement This Week (Not MacBook Neo)

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