Is AI Slowing Down?, Trouble at Tesla, Kate Middleton’s Bad At Photoshop

Episode Summary

Executive Summary: The episode argues that the AI boom is entering a trough of disillusionment: expectations at Amazon, Google, Adobe, and OpenAI are colliding with slower-than-promised adoption and tougher enterprise budgeting. The hosts contrast that slowdown with genuine breakthroughs in generative search and coding, then cover Tesla’s weakening growth story, a Senate pause on the TikTok ban, OpenAI’s internal turmoil, and the viral Kate Middleton Photoshop controversy.

Main Topics: AI hype cools and enterprise reality sets in (Priority: 5/5): The hosts discuss reporting that Amazon and Google are tempering generative AI expectations because the technology’s promise has outpaced what customers can get at a reasonable price. They frame this as the Gartner 'trough of disillusionment' rather than failure. Adobe as a test case for AI monetization (Priority: 5/5): Adobe’s earnings miss and weak forward guidance are used to show how AI features may improve products without immediately expanding customer bases. The discussion focuses on whether AI will create new demand or simply become a better tool inside existing budgets. Search and coding as competing AI narratives (Priority: 4/5): The hosts debate whether generative search is already replacing traditional search more quickly than analysts expect, while also noting that demo-driven products like Devin suggest coding automation may eventually reshape software work, even if the timing is unclear. OpenAI’s governance, branding, and product scrutiny (Priority: 4/5): The episode revisits OpenAI’s internal chaos, Mir Murati’s comments on Sora’s release and training data, the board review after Sam Altman’s ouster, and the possibility that new board members signal future advertising or search ambitions. Tesla loses its premium growth narrative (Priority: 5/5): A wave of analyst downgrades and weak sales growth are presented as evidence that Tesla is no longer being valued like a hypergrowth tech company. The hosts argue it is becoming more like a normal automaker while investors still expect an AI-era moonshot. TikTok ban advances, then slows in the Senate (Priority: 4/5): After the House vote, Senate resistance introduces uncertainty around the TikTok divest-or-ban bill. The conversation centers on national security, free speech concerns, and whether the company can realistically divest from ByteDance. Kate Middleton Photoshop controversy and viral media dynamics (Priority: 3/5): The hosts close on the AP pulling a manipulated Kate Middleton photo, her apology about 'editing,' and the online frenzy around her disappearance. They argue the incident is more about bad Photoshop and attention dynamics than AI itself.

Key Arguments: Generative AI expectations are too high relative to current product usefulness and pricing, especially for large enterprises trying to justify incremental seat costs. The current phase of AI favors infrastructure and platform owners like NVIDIA and Microsoft more than companies trying to sell AI as a standalone feature. Adobe’s AI tools may enhance existing workflows, but they may not materially expand Adobe’s customer base or revenue unless they prove strong enough to justify higher pricing. Generative search appears to offer a real step-change in utility and may displace traditional search faster than skeptics think, especially on mobile and inside Google’s own products. Tesla is becoming a normal car company in economics and margins, but the stock is still priced like a technology story; without a stronger ecosystem narrative, the valuation is vulnerable. OpenAI’s public image of openness is increasingly at odds with its secrecy around training data and governance, which could provoke more scrutiny and weaken trust. The TikTok legislation is distinct because it targets a wholly foreign-owned platform with direct information-control implications, not just a company with foreign influence. The Kate Middleton incident is being overread as an AI story; in the hosts’ view it is mainly a standard Photoshop manipulation problem amplified by social media speculation.

Data Points: Adobe stock drop after earnings: 12% - The market punished Adobe after its earnings beat but weaker guidance disappointed investors. Adobe new recurring creative business guidance shortfall: $19 million - Adobe expected $440 million instead of the $459 million Wall Street expected for the current quarter. Google Workspace AI add-on price: $20 per seat - Used as an example of how enterprise AI pricing can be hard to justify at scale. Traditional search volume decline forecast: 25% by 2026 - A Gartner prediction discussed as a major assumption about AI’s impact on search. Alternative search decline prediction: 32% - One host argued the Gartner estimate was conservative and forecast a larger drop in traditional search usage. Tesla stock decline from highs: about 60% - Used to show how far Tesla’s valuation has fallen from its peak. Tesla price target cut: Deutsche Bank: $250 to $218 - One of several analyst downgrades cited during the Tesla discussion. Tesla price target cut: Wells Fargo: $200 to $125 - A sharp downgrade reflecting worsening growth expectations. Tesla price target cut: UBS: $225 to $165 - Another sign that analysts are becoming more bearish on Tesla. Tesla current performance vs S&P 500: worst performer in the S&P 500 - The hosts note Tesla is the weakest stock in the index so far this year. Tesla share price decline since January: 32% to 34% - The hosts reference Tesla’s year-to-date drop during the segment. Tesla peak valuation: $1.2 trillion - The company’s earlier peak market capitalization before the decline. Tesla current valuation range: about $500 billion - The discussion frames Tesla as far smaller than at its peak but still expensive. Tesla P/E ratio: 37 - Used to compare Tesla to traditional auto manufacturers and highlight it remains richly valued. Ford P/E ratio: 7 - A benchmark showing how much more expensive Tesla still is relative to legacy automakers. Tesla growth in second half of 2023: 3% - An analyst cited this as evidence that Tesla has become a no-growth story. Tesla price declines in second half of 2023: 5% - Mentioned alongside weak growth as part of the bearish thesis. Tesla margin change: from around 40% to 25% - Used to illustrate margin compression as Tesla cut prices. TikTok engagement metric: usage up this week - One host said personal TikTok usage increased after the ban chatter and notifications. OpenAI board changes: 3 new board members - After the internal review, Sam Altman returned to the board with new members added.

Pivotal Quotes: "the hype has gotten ahead of what it can actually do for customers at a reasonable price" — The Information headline read aloud by the host: Used to frame the argument that generative AI expectations are outpacing commercial reality. "we're in the trough of disillusionment" — Ranjan Roy: A Gartner hype-cycle framing for the current AI phase, suggesting disappointment can precede productive adoption. "Like many amateur photographers, I do occasionally experiment with editing" — Kate Middleton: Her apology after the AP pulled a manipulated family photo, sparking debate about whether the issue was Photoshop or AI.

Implications: The episode suggests AI’s near-term winners are infrastructure and integrated platforms, not every AI-branded product. Expect tougher enterprise buying, sharper scrutiny of claims, more volatility in Tesla and OpenAI narratives, and ongoing culture wars over platforms like TikTok.