Dylan Patel Explains the AI War While Cooking | In-Context Cooking

I'm not crying because of the AI researchers leaving. I'm crying because of onion. I promise. I swear to God if Uncle Roger finds this video, I'm going to cry. It's about to be sweeter than Panda Express.

Hello. Thanks for having me.

Uh, probably like a five or six.

Maybe three. Maybe three. Let me revise.

The presentation is great, just not the plate.

Eggs, rice, chicken. This is like very... This is like very like... Yeah. Anything, anything. But then the right side, you know, like the peas really throw me off.

The ginger though. So, and soy sauce. Okay. This is like fried rice.

Cheers.

M. That was very good.

Yeah, we nuked it a lot and then kept it as is. So, yeah. Just to get started, do you want to introduce yourself? I know that you went to Minnesota briefly after college, and was it you were a beekeeper for two years? You did a lot of these kind of like side quests. You have a lot of these states, but now you're, you know, the leading voice on chips and everything that, you know, whether it be hedge funds or even people in AI.

So, I did live in Minnesota briefly after college. I'm from rural Georgia. Yeah, we... I did beekeep for like a year and a half basically. I feel like I've just kind of sort of went through a lot of life just next step, next step, next step. Doesn't seem like there's a clear immediate path. Yeah. Looking back I can spin a narrative like oh obviously I wouldn't be doing this because my interest when I was eight was this and my interest when I was 12 was this but you know like moderating forums related to chips but you know I thought it was just like a serendipitous thing you know. But then eventually sort of everything culminated and like blogging and doing consulting and doing research being interested in AI and data science being interested in chips and then it all sort of like culminated in like oh my god everything blew up all together and so I guess right time right moment maybe some foresight to have your passion be the thing that everyone cares about now.

Yeah. So, what happened was I had an anonymous blog on the internet for many years. Yeah. I was moderating Reddit and all these things anonymously for around like hardware, Nvidia, Intel, AMD, this kind of stuff. I was posting all this stuff and I had an anonymous Twitter in the silicon Twitter, right? Which people on like teapot and like tech Twitter don't understand. Yeah. And so I was doing this anonymously. Doug started posting and I was like, 'Wow, this is interesting, but like I think I could do a lot better.' And then he's like, 'Dude, why are you like why are you like posting on WordPress, right? Like do it do it non-anonymously. Do it on Substack and start charging for it.' So then but then I was like too I was like I'm not going to charge for this. I'm so great. And then one day I was like you know what screw this I'm going to start charging for it because Doug told me too many many times. And then a few years go by and then Doug joins the company. So it was really a great moment that he told me to do it because otherwise it might still just be like a niche anonymous blog where I'm still just doing random consulting rather than actually you know a company with 60 people.

It was consulting related to the blog and industry.

We're just going to eat the whole garlic.

Like baby. So sweet. Okay, let's see.

Okay, it's sugar. Yeah. So, this is sugar. We'll know because everything will be laid out for you exactly like this. So, we'll have to eyeball and we'll be going fast. This I don't think we need to taste. I'm pretty sure this is baking powder.

Yeah, that's true. That's true. Uncle Roger. Yes. But yeah, we have soy sauce here, baking powder, sugar, onion, of course. I think this is...

Yeah, he will. But hopefully, you know, he'll give us some grace. But okay. And then eggs, salt. Yeah.

Yeah.

Yeah. This is also short grain rice, which is also a red flag, but we just have it. And this is day old. So, this is the important ingredient to have a day old, not fresh.

It's a little drier and it'll make the fried rice just like the grains be a little more separated compared to being a mushy mess. But yeah, I think we're good. Are you ready to show off your cooking skills?

Great. Let's get started.

Absolutely.

A pinch or what are we talking?

Yeah.

You said salt and soy sauce all over.

Bro wants to make fried rice and talk about China politics. Let's go.

Very on topic.

Just vaguely. Just vaguely.

Yeah. Such as... So in some cases, right, like it's like you know status quo is the best, right? You know, no war happens. I'm done with the chicken by the way. No war happens and just...

We have no war, no invasion, there's no blockade, sort of status quo. China continues to industrialize itself with the industry that Taiwan has but there's no major event that occurs. That's sort of option one. Option two, which is what a lot of people seem to think is the best, which is Taiwan actually like more stringently claims it's independent, at least a lot of Westerners. And that seems like actually a poor option just because that potentially causes China to move much more aggressively on Taiwan. And sort of like there's another set of options which is like okay well what if China moves close or Taiwan moves closer to China in a political way, right? And so like that's an example of that is like hey like they elect the KMT and the KMT ends up winning. So there's two parties in Taiwan, the DPP and KMT. If the DPP wins, they've won for the last decade and they're sort of more pro-US, more anti-China, more Taiwan independence. And then there's sort of like the last scenario, which is just a full-on invasion. Or at least a political coup or takeover of some sort. And so there's a variety of options possible. What I think is most likely is that there is some sort of political coup or action that destabilizes Taiwan in some way but doesn't necessarily lead to an invasion. And so sort of this is the best of both worlds for at least China, right? Like they don't have to actually enter an invasion, but they get to continually creep more and more on Taiwan without actually having to deal with the repercussions of a war and subsequent blockades and so on and so forth. The like kind of galaxy brain thing for an American to want is for actually the Taiwanese government, the pro-US party to lose, right?

So you want KMT to win. And if KMT wins then that means China will be placated more and you don't have Taiwan fully move into China's orbit. But you do have the government sort of placated in China. At the same time, even if the KMT wins, it's not like TSMC starts disobeying American export restrictions because the way American export restrictions are upheld is that Taiwan utilizes American banking systems, American equipment industries, and so they'll still have to uphold any US export restrictions. So sort of like you know China's placated by the fact that they have a friendly government in power and yet China doesn't actually have any of the chips and the US continues to get to access the chips.

He left Anthropic.

How much should I dice?

You know, I'm not crying because of the AI researchers leaving. I'm crying because... I promise. No, but it would be a travesty, right? If like a lot of Chinese researchers left American labs, you know what? I think it's probably like half or at least a third of researchers at labs are Chinese. So obviously there's a level of like you know why are you antagonizing too much. Yeah. At the same time there is a level of like you know this is the greatest technology to ever fall into humanity's hands. You know obviously we think we're the good guys and by we I mean Americans. And so Americans think that they should control it and maybe Anthropic thinks they're the good guys not Americans as a whole. But whatever the moral justification is, like you know, whether it's hey we're the good guys and AI is going to be super powerful and we're the only ones who can steward it or hey AI would be a great weapon so let's make sure we're the only one with that weapon. There's certainly some level of control that needs to be had, right? Now, the question is like where does that control start and stop, right? Because one could say, 'Okay, well, let's just control the chips.' Or let's just control the AI, but then it's like, 'Okay, well then you let them buy the chips and they're able to do everything they want to do anyways.' Yeah. Right. And this has existed across many technologies, right? You know, China has great engineering. You only remove one piece of the puzzle, they're able to re-engineer that last bit of the puzzle. You know, that's one context, right? And so that is like some people's argument, right? So for example, if you look at Nvidia or you look at like David Sacks, I think their argument is like, you know, hey, we should not let them have the models, but we should let them have the chips and everything else because then they're still relying on American ecosystem, American talent, American technology, American platform. The other argument is like hey like look this stuff you know if they don't have access to our models but they have access to our chips that alone gives them... shoot... that alone gives them all the control and capabilities they need to basically be on par or just slightly behind, right? And so we see that in the current regime today, right? China has effectively great access to chips, not completely unfiltered access, right? They either have to rent it or they have to smuggle it or there's some chips that are allowed. And China's not that far behind, right? You look like Kimi K2.5 agent swarms and it's like, well, this is like not worse than Codex by a marginal amount. Maybe 5.3, right? But 5.2, it's like not worse than Codex by a large amount. Mhm. And so there is an argument to be made that like hey current regime does not have the US leading in AI by enough, right? And that's sort of the argument that like Dario would make I think is that look like current regime of export controls China is still way caught up, China is still not that far behind and it would be disastrous if they are in their eyes, right? And so the question is how does one write that circle, right? So one could either a) antagonize China more, ban more things, does that risk a Taiwan invasion or does that lead to something let's say catastrophic, does that alienate researchers in America? That's one argument. Another one is like well look this is like we've got like two years, right? You know AI 27 bros, right? I'm not fully there on terms of AI 27 but I'm pretty bullish on AI generally and so then the other argument is like look we only have a few years until the capabilities of AI accelerate GDP growth. And it's a... By the way, am I cooking something? Am I cutting something else?

Okay.

Okay.

So we're just cutting all the vegetables to...

The one stance that a lot of folks have is that you know, yeah, like let's be more anti-China because there's only a few years left and so like you know until like super powerful AI systems and those super powerful AI systems will make next generation AI systems, right? Mhm. And that's like a lot of the argument that like let's say the Darios of the world would make and I'm sympathetic to that argument to some degree as well, right? If we start looking at like hey this year Amazon spending $200 billion, Google spending $180 billion on AI infrastructure primarily, right? Yeah. This is, you know, 4x what they were doing just not too long ago. Mhm. And if they get returns on that of any degree, then we're talking about trillions of dollars of economic value being added in just the next handful of years. Yeah. And so, you know, the risk here is that like, okay, whatever AI is capable of doing, it's obviously adding hugely to the economy, and you want to do anything and everything you can to slow China down. We've never had an explosive growth like this. We're on the cusp of it, right? Right. Right now we only have like you know the AI industry maybe does 50 billion of revenue, you know, but like we're seeing it explode, right? Anthropic's adding two, three billion of revenue a month now versus they were just adding a few hundred million of revenue a month earlier. So clearly we're in the takeoff period. And so the argument there is that like let's just limit them completely so they don't end up with all these super powerful AI systems. I'm a little bit like, you know, it's hard to rationalize, you know, every specific argument just because like, you know, I could steelman any of the arguments, right? Yeah. Actually, okay. No, maybe China should be sold our chips because at the end of the day, they're still relying on our chips now for their AI systems. And then they have less incentive to invade Taiwan. And if they invade Taiwan, then, you know, all of a sudden the whole party stops and we can't do anything. And when you think about what's the capability of China versus the US to have a vertical supply chain in chips or AI or in really anything, China has by far the most advanced supply chain in semiconductors if you just look at China itself, right? In which case like if the lifeblood of AI is compute to a large extent then China would win if we didn't have Taiwan, right?

Yeah.

I mean I think sort of not answering your question but talking about something else I want to talk about which I love to do. Is sort of like you mentioned like these doomsdayers and these believers. I think the biggest risk is actually just like the general public hates AI, right? You know, I think if you go literally anywhere, the general public absolutely hates AI so much. They have literally no... they don't... Yeah. I mean, like, you know, you go to your random artist and they like hate AI. You go to your random person in rural America, they're like, 'Screw AI. It's like, you know, taking all the water.' Completely like nonsense arguments, but like it doesn't matter. So when you look across the ecosystem, you've got that problem. And so like, and then you've got the doomsdayers, right? There's also the general public which doesn't quite understand AI or maybe they do. You know, and they're just like so worried about AI taking our jobs and like all sorts of other things, right? And so I think that's another aspect of this that's like quite interesting is general public hates it. The doomsdayers, you know, look, I'm a bit of a too live-in-the-moment person to like think, you know, hey, what exactly does alignment mean? And does AI kill us all? You know, obviously there's huge risk to that. That's not what I'm an expert in. So I don't really care to opine too much. But as far as like, you know, is it a bubble? Are we doing too much? Like, what's going on? Is there a bubble? Are we doing too much? You know, the question is, if AI model progress slows down, then of course we're in a bubble. That's obvious. But you know, the way that progress is accelerating, so fast, right? You see it month on month, right? I mean, you know, the new models are coming out every month, every week almost it feels like nowadays. Or new capabilities, right? Just think about this year so far, right? Obviously Claude 4.5 came out and Claude Code came out last year. But adoption really upticked in the beginning of this year. And so we saw a huge uptick just in this month, just in January. It went from 2% of commits on GitHub to 4% of GitHub commits were done by Claude Code. Right? That does not mean a lot of people use Claude Code without having Claude commit for them. So you're talking about like... and then they use Codex, they use Cognition, they use Devon, they use all these other platforms, they use GitHub Copilot, they use Codex, you know, we're probably at 10% or so of total code is being committed or written by AI if not more. But at least for Claude Code itself it went from 2 to 4% in one month. Right? This acceleration is like... I think it's the thing that we've all been waiting for because like fine people are using ChatGPT, that's great, fine people are using like image gen, that's great. These were not like things that add trillions of dollars to the economy. These are social networks. These are like, you know, help me on my homework. These are like chill things. Yeah. But now we're in the stage where it's like, no, no, no, like these are trillions of dollars of economic value that could be added. And if you think about worldwide software developer wages, $2 trillion in wages, you end up with a pretty incredible amount of spend that could happen. I feel like it's my worst interview ever because I'm so focused on chopping garlic and not cutting off my fingers. I wonder if people are going to trash me for my lack of claw grip because like I've tried to do it but then I've failed and I've done like more dangerous cutting grips. Mhm. I do wonder how vicious the audience is.

Yeah. Yeah. I mean I think there's quite a bit of... I'm definitely claw gripping now. You know this is I got to make up for it now that I'm cognizant. So I think the adoption of AI has been so accelerated over the last month. You know just think about everything that's happened in the last month. We've had Claude Code happen. We had ClaudeBot, we had Moltbook. Now we have Kimi K2.5 Swarms. We had Codex 5.3 which is a significant step up as well and seems better in some specific areas and these are... there's so many areas, right? And it's like at least internally at my company we've completely flipped over, right? Like about a third of the company's engineers, about a third of the company's hedge fund people and about a third of the company is like passionate individuals. You know so the ex-hedge fund people they're all in on Claude Code now too, right? They scrape data, they do financial modeling, they perform financial modeling with Claude Code as the assistant. And so there's a variety of like sort of like I think we've hit like sort of escape velocity and all these things. And so, you know, over the last month or over the last two weeks, we've had the hyperscalers report earnings. And everyone's stocks have gone down, right? Google announced 180 billion of capex, the stock went down, and then Amazon announced 200 billion of capex and their stock went down like I want to say like 10%. So the market hates it, but they don't realize like, you know, these capex decisions are because they see the light at the end of the tunnel, if you will, right? The amount of adoption is just insane. So now that we've had these companies report earnings and they've disclosed what their plans are for the year, and they're much higher than almost anyone predicted, you've got the market just hating it. And so that brings like this interesting conundrum which is that like okay the market is mad they're spending all this money on compute capex but these companies know much better than you, right? And by you I mean the investor. In reality they're spending this much because they see insane amounts of demand, right? You know Anthropic doesn't just add $2 billion of revenue in one month without having huge demand. And they're doing it at positive margins, right? Yeah. And they're doing it, you know, and when they go to everyone, they're like, 'Look, guys, we need more compute. We need more compute. We need more compute.' And so it's, you know, after 3 years straight of every AI lab saying, 'We need more compute.' The hyperscalers are now saying it's not just we need more compute because we want to train bigger models and we want to do more research. It's actually we need more compute because we need to serve our users, right? We need to add hundreds of millions of dollars or actually billions of dollars of compute. Right? If Anthropic added two and a half billion of revenue and their gross margin is 40% they added like $1.5 billion of compute in one month. Right? Just to serve that. You extrapolate that line out a little bit and you're like holy crap you know they actually need hundreds of billions of dollars of compute. Okay fine well we need to build this all right because it's a front run of you know you build it and then they can rent it. So the bet here is that growth will continue to accelerate and the amount of money that Anthropic and OpenAI makes will just continue to go up.

At any point you know I think my favorite thing was I tweeted about like people were like oh who expected this capex and then I was like well we did right and then someone replies the whale watcher told you that you're going to see whales. Wow surprising. I was like, 'Wow, that's a pretty good reply to me,' you know, but like anyways, like it's like, you know, obviously I'm the whale watcher here. We see the capex coming.

So, the market doesn't like it, but it's...

Clearly obvious that it's needed. And now the discussion is sort of like, I think a couple years ago I said the hyperscalers would have no free cash flow, right? I.e. they would not be generating profits and buying back their stock in a short amount of time.

Yes.

I think the market is going to get really mad at the hyperscalers. They haven't really yet. But we saw the signs of it at the beginning of about mid last year, right?

For example, Oracle peaked within a week after announcing that they were going to do, you know, 300 plus billion dollars of deals with OpenAI. And the market really peaked around then.

And then since then they've gone down and other darlings that were doing AI infrastructure like CoreWeave have also peaked, right? So now we've got this interesting conundrum where now the hyperscalers are starting to say how much capex they're going to do.

And so when we think about what's going to end up happening is these hyperscalers are going to keep spending, right? What is their biggest advantage? It's that they can build the most infrastructure in the world. They've built the organization to build infrastructure faster than anyone else.

Show the camera.

Yeah. They heat up very fast. So just as a heads up.

So the hyperscalers have been the most profitable companies to ever exist in humanity, right? Whether it's Meta through ads, whether it's Google through search, whether it's Amazon through AWS and Amazon.com, so on and so forth, right? Microsoft through, you know, Windows plus Office 365 plus Azure, right? They've all been the most profitable companies. Am I going to continue with the onions and such?

Yeah.

Yeah. Already done.