AI Job Panic Fades, Data Center Backlash Grows and Quantum Gets $2B

Hey everybody, welcome to the Tech Drawing Gang for Friday. Happy Friday. And we have our usual assortment of folks for Friday.

I'm going to introduce them as we speak here. Jon Swartz, how you doing, buddy? Good to see you as always.

Good. Good to see you all. Hi, everybody.

All right. And we have a pair of Jacks once again. Jack Poller, how you doing?

Very good, thank you. Excellent. And Jack Gold, good to see you as always, my friend.

Good to see you guys as well. Happy Friday. And finally, Jeff Reich, how you doing, buddy?

Hey, I'll see your pair of Jacks and raise you. There you go. Well, I do remember Friday nights was kind of poker night at one point in my life, so I'm not quite sure if I'll ever return to that game.

I'll be honest, I wasn't very good at poker, so I was contributing to other people's income, so I decided that was probably not the best use of my money. But there you go. I will say though, speaking of money, we have good news on this Friday apparently.

The AI jobs apocalypse has been called off. Not going to happen after all, apparently. " But John, you wrote the story.

What's going on here, and should we believe these folks? I have three letters for you, Mike. IPO.

So these concerns about the job displacement are growing, and the scrutiny's intensifying because we have people like Sam Altman and Dario Amodei telling us that they're going to wipe out the workforces. They said that until recently, and they changed their mind because the conversation's being recalibrated in real time. What's changing isn't the framing of AI's impact, I don't think in the short term, but the pressure is on companies to manage perception along progress.

So they want to talk to their investors, and the potential shareholders, and to the greater financial community. " And the reason why is because in OpenAI, I think to a large extent, OpenAI and Anthropic plan to go public this year. Actually, Anthropic yesterday raised $65 billion, so they're now worth nearly a trillion dollars.

So they have surpassed OpenAI in terms of market valuation. This is what's motivating them more than anything else. There's also some financial and economic data that backs up what they're saying.

So this economic data, I'm going to say there's a Yale Budget Lab report, and there's a Brookings Institution report that shows that AI has had minimal impact on the job market despite some recent layoffs at Meta and some other big names like Intuit and even Amazon. So it's kind of a mixed bag, and I think the narrative's going to change probably again, until these companies go public. I think this is something that was overstated, and I think in the case of Anthropic, it was overstated because they were, in a sense, trying to juxtapose themselves against OpenAI and present OpenAI as the evil black hat.

But I think the investors got into Dario's ear, and so now we're going to hear a different story for now at least, until the next big event. I don't know. Jack Gold, I'm going to ask you this, but it seems to me that the organizations using AI or trying to use it to automate tasks are simply not prepared for it.

And basically, the data that they have is a mess, therefore the agents aren't really reliably being used to do anything that is meaningful in terms of an outcome. It automates a task here or there, and it's good for an employee per se, but I don't think it results in a material change in the net income or the top-line revenue just yet, because a lot of these organizations simply aren't ready for it. And it may one day, but right now it seems like we need to go back in and clean up our IT shop before we get any of these benefits.

I don't know, what's your take? No, I fully agree with you. In a lot of organizations, data is scattered all over the place.

The AI model is only as good as the data that you feed it and the ability to use that data. That's one piece. The other piece is costs.

We've been seeing a lot of reports from companies cutting back, scaling back on the use of AI because of the escalating costs. Microsoft just cut back. Salesforce is cutting back.

There are a bunch of companies cutting back on the... Tokens cost. They're not free, right?

We're moving into a new AI model where in the past it was unlimited use. You paid a fee, and you just got to use it. Now they're talking about cost per token.

And in many cases, with this massive use of AI, they're actually spending more on AI tokens than what they would if they hired somebody. So at the end of the day, if this is going to hit the bottom line as expense as opposed to if I can get an entry-level employee for, I don't know, 80K a year, and I'm spending 150K a year on AI tokens, what's the better deal? So there are a lot of interesting dynamics going on in this market right now until we figure out what AI is really good for from an ROI perspective, not how it functions.

Yeah. There was that ROI report, where only just a small sliver of companies were having a return on investment. And one of the things that I keep coming across, and Mike comes across I'm sure, at these conferences, these companies that are making these agentic AI announcements, they're having a really hard time coming up with examples beyond one or two high-profile customers.

I think most of their customers are just in the early phase where they're using itTo a very much smaller extent than anyone anticipated. And I haven't seen that change in months. No, in fact, it's going the other way, where didn't you write a story about Uber saying that, basically- Yeah ...

they're seeing the benefits? Yeah. So, I think that there's a lot of companies in the same boat as Uber.

Yeah. That was with the CTO. Yeah, they're scaling back.

It's too expensive. Some of these companies were burning through ridiculous amounts of money scaling up. I don't want to misspeak.

Probably Jack Gold or Jack Poller can help me on this one, but I think, was it Amazon? There was somebody who spent this ungodly amount of money in one day or a short period of time. Yeah.

As an extreme example, but I think it also aligns with what a lot of other companies are facing. I think it was the dude from OpenClaw who's working at OpenAI, spent some extraordinary- Yeah, which, and I couch anything he says... I actually made a comment to somebody else about this, that do we trust engineering wisdom from a guy who stored passwords in clear text?

So, take that all with a grain of salt, but I think the panic over AI and taking jobs is driven by both people who have an agenda. This is going to be a big topic, right? So, we first had the AI people driving this, both Dario Amodei and Sam Altman were saying lots of things, and now they've flipped on it for a variety of reasons.

And I was having this conversation with some other people in another forum, and I looked at the data from Layoff Tracker, and since the beginning of the year, there have been 200,000 layoffs, which seems like a large number, but it's actually a very small percentage. It's about a tenth of a percent of the US workforce. So, it's not a significant impact, and that's layoffs overall, 50,000- If you go deeper than that, Jeff, just sorry, Jack- Yeah ...

I think Challenger, and Gray, and Christmas, whatever it's called, they said I think it was a fourth of those layoffs, like 50,000 were directly attributable to AI. So... Well, right.

But the mistake here is conflating the layoffs because of AI versus layoffs because of investment in AI. Right. Almost all of those four, so 50,000 of those were in California, most of those from three or four companies, and they're not laying off those people because they're replacing their jobs with AI.

They're laying off those people because they need the capital they're spending on those people to spend instead on investment- That is what- ... in AI infrastructure and data centers. Yeah.

Right? And so I think we need to be careful about this and how we couch the discussion, that what the impact so far that we've seen in terms of job losses has not been AI taking other people's jobs. And the fallout from that, eventually, maybe not today, but if you get rid of 10 or 15 or 20% of your workforce so you can invest in AI, and AI isn't giving you an ROI, you've just cut back on your ability to function long term.

Yeah. It's a real challenge. Right.

Now, I think the risk comes in not from overall numbers of people being laid off or AI job replacement. The risk comes in from attitudes. We hear a lot, and we've seen a lot of rumors and rumbling about software development orgs and groups deciding too that AI is equivalent to a junior engineer.

So instead of hiring a junior engineer, they're giving more AI capabilities and resources to their senior engineers. And the problem with that is that at some point in the future, those senior engineers are going to age out or leave, and then you have no junior engineers that you've trained to become those senior engineers. So now you're really screwing yourself when you do that.

Yeah. And that's where I think the bigger challenge is. Right.

And 50,000 is, the people that are impacted by that, it's rough, but I think that they're finding jobs elsewhere because there's other reports saying that the mid-market now is eating up those people and looking to hire them. It's just that they may have to move from Northern California to Detroit or somewhere, but the issue is that there are jobs out there for those folks. And I would also just point out, hey, 50,000 people is what fits in Yankee Stadium on a Sunday afternoon.

So- ... in the grand scheme of things, it's not a huge number. But Jeff, you haven't weighed in here yet.

What's your sense of, is this kind of just a momentary blip and maybe long term we will see some sort of apocalypse, or is this just the new reality? Well, I'm not convinced the robot overlords are coming for us just yet. So, I don't think the apocalypse is in the near future.

I often speak in analogies. We have companies that are selling organizations Ferraris at a steep discount, but those companies find out they can't afford the premium fuel that has to go into them, and they don't have tires that are rated to go over 80 miles an hour. So, even though they bought this high-powered car, they really can't take advantage of it.

I think in many cases, that's where companies feel they are with AI and agentic AI right now. Plus, it became a good screen for organizations, including those selling AI, Anthropic and OpenAI, to hide behind because you could say, "AI's taking over this. " For many of them.

And now we're seeing the result of it. It, in many cases, was really no more than a PR campaign that we're now- Yes ... that we're now paying for.

AI is- I've been saying that it's a lot of marketing and PR spin that's been going on right now around the discussion about jobs. It's not based on reality, it's based on perception and what your ultimate goal is, at least for the immediate time. Mm-hmm.

Do we think, Jack Gold, that there's going to... " And they bought the whole story, hook, line, and sinker. " And do those people now have no credibility?

Yes. That's the answer. Look, at the end of the day, these people are running businesses.

And especially if you're a public company, if you're not making a profit or if your profits aren't going up because you're investing billions of dollars in AI, your stock's going to get hit. You're going to get hit as a CEO or CXO. Your board is going to ask why you're making all these investments.

And in the early days, a lot of this hasn't been measured yet, to be honest. We're still pretty early on for most companies, and it takes a year or two to figure out whether any new technology is really going to help your productivity, really going to be worth the investment in. And for a lot of companies, they're not there yet.

They're still experimenting. So, this is going to take probably another year or two years to all fully play out to see what the bottom line is ultimately going to be. But in many cases, the executive suite has been sold the Brooklyn Bridge, right?

If you're not organizing your organization to take advantage of AI properly with the right workflows, it's not going to do you any good. Mm-hmm. " And- ...

did somebody sit them down and say, "Hey, you guys-" God, finally. Yeah, it took a while. Jesus.

What was it? Last year, we have Jensen at Nvidia and Marc Benioff at Salesforce just cackling about how many jobs they're going to eliminate and how they're going to add a million-plus AI agents within their organizations, or how this is going to happen throughout the industry. " The messaging was so ass-backwards to me.

In a sense, they're perpetuating this fear of AI and distrust, and then finally, somebody got to them. By the way, maybe it's not coincidental, but the head of PR at Salesforce left a couple of weeks ago, so maybe that's a reflection of them going in a new direction, or trying to revise their narrative or their story. But yeah.

Well, and Benioff says he's hiring again, by the way. I don't know if you saw this the last couple of days. Yes.

Yes. So- So this is why there's so much confusion and angst among the general public, I think, around AI. It's like we can't get a straight story from these companies because these companies themselves are going through this whole process because they don't know.

Right. And so we have a very impatient culture. We want immediate results.

We jump on these bandwagons of bubbles and apocalypse, whatever fits the fine headline-grabbing events, but it doesn't portray reality. And so yeah, here we are. And the reality is we're using AI every day, and it does have an impact, and it does make certain things more productive and easier to do.

But to be honest, it also creates little headaches as well along the way because it doesn't just magically do what it needs to do. Somebody has to guide it, and there's that one little thing that never quite comes out the way you want it, and then you wind up spending some time to go and actually fix it, and eventually you'll get it to what it wants to be. But I'm not necessarily sure that that results in some massive benefit to the business as much as it does, it creates something better or it makes it easier, and theoretically, maybe I can do more of something in a given day, but other times, I wind up arguing with the AI for a couple of hours over little things, so.

Yeah. There was a report that came out yesterday, I just got it, and it was to that effect, was that a lot of organizations were finding that they couldn't trust, they had to revise what AI was telling them, and they had to use more of a human element than they anticipated. So there was this kind of a backlash or a major editing or distrust of AI, and it was a really significantly high number among organizations that they were going back and the human was modifying or correcting these organizations.

AI often gets things wrong, guys. Let's face it. Mm-hmm.

And that's a big part of the problem that people haven't realized. They think that it's magic. It's not magic.

Yeah. Now, to be fair, humans get things wrong, and other humans have reviewed that and kind of fixed that over the years, and there's just more things to look at now because there's AI helping me do those kinds of things. But Jeff, you want to weigh in?

Absolutely. Humans constantly get things wrong. I know I do.

I'll question some judgements I made today. But when a human gets something wrong, usually they can intuitively and sometimes subconsciously say, "Oh, I've seen this before. " Those biases that create the problems in the first place are built into the AI engines and language models that we build and use.

But the reactive, "Oh, I've seen this," it doesn't exist, at least not yet. So we're off by a degree And a human would potentially bring us back on course and maybe not even have it noticed. " All right.

Well, I'm going to leave this here. I think we shouldn't be throwing out the AI baby with the bathwater just yet, but it is a baby, and it makes mistakes, and it needs humans, and it needs adult supervision, and I think this is going to be the case for many years to come. But I guess what that means is we'll all be working for many years to come as well.

That'd be my take. No retirement for you, Mike. Not yet, anyway.

And besides, I have kids in college, so I won't be going anywhere for a while. All right. Anyway, but talking about, well, things that might be going wrong, Erin Brockovich is weighing in on this whole AI data center growth issue that we seem to be encountering, and a lot of it comes back to, well, is it contaminating the environment and the water?

And for those of you who don't remember, Erin Brockovich made her name because she was out there pointing out that our water supplies were being contaminated, and she led the charge on this for many, many years, and now she's weighing in on this particular issue. And at the same time, the governor of New Jersey is suggesting that we have a moratorium on data center growth in the state of New Jersey because, well, all these environmental issues are coming to a head, and it turns out that data centers are not only polluting our water supplies, they're noisy, and it's not quite clear how many jobs that they actually generate. And even the state of Ohio is thinking about limiting the tax breaks that they give to data center folks because, well, they're not quite sure what the benefits to the state are either.

Jack or Gold, are we having a moment here suddenly where everybody is kind of piling in on this particular issue? And is there going to be a part two to the Erin Brockovich movie? And who will play Jack Gold in that movie?

Not me, for sure. Yeah, look, this is kind of a pile-on situation, right? A lot of people don't really understand the whole issue around AI and the issue around data centers.

They hear stuff, they see TikTok videos of what data centers have done to particular parts of the country. And so they're piling on and saying, "Not in my backyard. AI is great.

I want it. I want to be able to use it, but don't build it in my backyard. " The truth is that there are a lot of issues with AI data centers, with data centers in general, whether they're AI or just general purpose data centers.

They use a lot of electricity. They use a lot of water for cooling. They create basically an eyesore because they're these big warehouses in the middle, perhaps of nowhere, or even worse, in fields that were farms before that were growing food.

They don't create a lot of jobs. They're huge facilities, but maybe there's a couple of hundred people at most running them. So we're not talking about a lot of employment.

And because they use a lot of electricity, my electric rates will go up. Your electric rates will go up just because of the infrastructure costs involved with powering them. And then there's the water pollution and all that.

So they've kind of got that right. That said, if we don't build out data centers, AI fails. Not only AI fails, but data in general fails.

This is a data economy. Data is the new oil. AI is the new super oil.

I don't know what to call it. But we need to continue to build those out. But, and this is a big but as well, the guys that are building out these data centers are not doing a great job of letting people know what the issues are on the one hand, and how they want to mitigate those issues so that it's not negatively affecting the companies.

And the politicians are doing an even worse job. They're just going with the flow wherever they think they can get votes. So this is going to play out over a long period of time.

By the way, it's not just a US problem. This is playing out in other countries as well. It's around the world now.

So except for perhaps China, where you don't get a say, and they're building like crazy. So they're going to have a lot of data centers as well. So this is an issue that's both political, technical, and psychological, and I don't know how we resolve this short-term.

I think they did a great job of convincing people not to pay attention to these issues, and they spent a lot of money doing it. " I think they damn well knew what the issues were, and they spent money trying to convince local politicians to not pay attention to them, then they threw up all these data centers, and now the locals are starting to storm the castle. But John, it looks to me like this has become a political issue for this coming year.

What do you think? Yeah. Major political issue.

So when you think about it, I think it's Microsoft, Amazon, Google, and Meta, this year, just this year, are expected to spend collectively $600 billion on AI infrastructure. " And not many jobs are going to be created long-term, as far as I know. And I mean, if you're in a local community, this NIMBY kind of approach, given this financial amount of money that's being spent in your area on something that you didn't necessarily know about, you really don't have much leverage or recourse as a local community to react except through voting, I guess, or through protesting.

And I'm telling you, the midterms are coming up, and data centersare not just an issue in California. I think they're issues in Louisiana, Texas. This is like a national pushback.

It's part of this impatience with AI. We need to build out data centers. I'm not disputing that, but the fact is nobody wants them near their communities.

Mm-hmm. So, build it out in Podunk, Kentucky or some Laredo, Texas, or someplace in Louisiana. Just keep it away from me.

Yeah. And unfortunately, the people who live in those communities are affected adversely. So how will this play out?

And I don't know, I'll throw this out to Jack Poller for grins, but are we going to create the equivalent of a bunch of AI data center ghettos in the middle of rural areas, whether it's Texas, Africa, or somewhere in Asia? Is that where this is all headed? No, there's technical advantages to doing so and technical disadvantages.

Everything else, it's a compromise. Everything here is going to be a compromise, and I think that we always tend to take a short-term view, and particularly in the political aspect of it, and the political aspect right now is seen as one side can use this as a cudgel to beat up the other side, and therefore you see these dividing along party lines. Right?

Some states are very pro data centers. 5 billion facility being built in South Reno. So, they're all for it there, or at least the government is there.

And then you have other state governors who are very much against it. In the long run, when you look at, what was it you said, John, that the big four or five are going to spend more- It's $100 billion this year ... I mean, hundreds of billions of dollars.

That investment generates jobs. Generates not only construction jobs, but there are people who have to build the infrastructure, who have to design it. It's not only the construction guys, it's the plumbing guys, it's the power guys, it's the power cable guys.

It's the guys who dig copper. It cascades everywhere, and if we don't do this, there's a huge detriment to our country and our society, and society overall, for not continuing to move forward. So I don't see how you can't do it, but I think you do have to moderate it and compromise it about where you put data centers and about how you mitigate some of the negative effects of data centers.

And I think people, for me, water and power can be solved. The big issue really is the noise, and that's something- There is another piece to this, though ... people don't think about Sorry to interrupt you, Jack, but I think from a political perspective, I think you're right on.

But part of the issue for a lot of communities is that a lot of states who want to bring in their data centers are giving them pretty extensive tax benefits. Yes. And at the end of the day, that costs me, because I still have to pay for fire and water and electricity and ambulance service and all of that, and these guys don't have a great tax base.

Once they build out these data centers, they're not taxed very heavily. So, it becomes also financial, not just on the technical side. But I also think in the short term, there is going to be a big build-out.

It will be a boost to the economy, but longer term, that's what I'm more concerned about. One thing I was interested about Brockovich's involvement, for most people who don't know a lot about data centers, I wonder how this campaign fundamentally reframes AI as a physical industrial threat, and how her approach or this messaging might resonate with average people, especially in a political season. I think that's interesting the way she's kind of couching it or what she's trying to do, and I think it's going to be effective, at least for a short period of time.

Jeff, what do you make of all this, at the end of the day? Well, first of all, she brings a lot of name recognition. All you had to see for people of a certain age, certainly, the name Erin Brockovich, okay, there's something going on here that a politician's not going to like and businesses may not like.

And to Jack's point, and I'll say either Jack, both Jacks, let's see how people feel in six months, because the politicians that are driving messages right now are either going to be in a better position or a worse position six months from today. And I think that will have a lot to do with the messaging that we hear around it. Now, with all that, I think we can't ignore the fact, and if we go back through the tapes, about six months ago, I made a reference to the movie "The Graduate" and the term plastics.

Yep. Right? And I was saying AI is the new plastics.

Mm-hmm. Because it's going to solve everything right now, and plastics are wonderful. We wouldn't be talking on this equipment if it weren't for plastics.

But we now know there's a lot of downstream effects that are negative that we have to deal with now, remediation for it now, and I think AI is going to give us the same thing. Some people are forward enough looking to say, "We know what's coming down the pipe. Let's start getting in front of that," while others are saying, "No, let's just build it.

We really need the infrastructure. " It's another plastics situation. We do need it.

Jack's absolutely right. " On the other hand, Ohio can't say we can't eliminate our tax base anymore either. So, what we need to do is have a little forward-looking, and Erin Brockovich may be the name that gives us a little shove to get that way.

I think at the end of the day, this is a solvable issue, and the tech is out there to deal with it, but we have avoided it, and now we're going to pay the price, and you're going to start hearing phrases like, AI love canal. But this is what's going to happen in the short term, but hopefully, cooler and smarter heads will prevail. We've just got to get there faster than where the current pace that we're on, because right now it's kind of a mess.

In the meantime, there is no word whether or not Julia Roberts has signed up for the sequel yet, but it'll be interesting to see what happens here. I would expect that there will be another movie coming out in the not-too-distant future. It'll be an- They'll get an AI Julia Roberts to do it.

Exactly. Yeah. I was going there.

Video-generated, yes. All right. But let's shift a gear here because, well, the next big thing is quantum computing.

And Jack Poller has a story talking about what the United States government is up to here. Apparently, they've set aside a couple of billion dollars to help drive the innovation in this space, a large chunk of which went to IBM. But I don't know, Jack, I get the value of quantum computing and all kinds of amazing things could happen here, but also, are we in danger of having a replay of this whole thing all over again, or are we going to be smarter about this next technology?

What do you think? Well, I think this is a move to be smarter about this next technology. It's also an acknowledgement of this next technology, quantum, represents two things.

It represents, first, a huge opportunity for innovation. We think that there's lots of things a quantum computer can do that we can't do with classical computing, and that'll open up new areas of research, and that's really good. But there's also this other big Sword of Damocles hanging over us, which is there is a belief that through an algorithm called Shor's algorithm, we can use quantum computers to basically break all the encryption technology we have in place today.

And so this big sword, and there's this thing called Q-Day, which is when quantum computing achieves enough power that we'll be able to do that. That's a huge impact on everything and anything we do, both from a cybersecurity aspect, but it's how commerce exists. You can't trade a credit card and do stuff e-commerce without encrypting your credit card number before it flies across the internet, right?

Also, the US government is concerned that it's a big military threat if the adversaries can get into our communication by breaking our encrypted communication. So the government is saying that quantum computing represents a very big strategic issue for the US government, and we want to invest in it to make sure that the US government is there at the forefront and has a foot in the door and is able to protect our environment, our infrastructure, our government, our military, and the US economy, and the US environment as a whole, and has therefore invested $2 billion as part of the CHIPS Act into a bunch of companies. So nine companies received the investment.

IBM got a billion dollars to develop a foundry for superconducting quantum computers. GlobalFoundries got $375 billion to do another foundry, and then seven other companies distributed the $600 and whatever was left over went to seven other companies that are involved in cutting-edge research to solve various aspects of challenges among building large-scale, highly powerful quantum computers. The big sort of controversy in this is not the investment, and $2 billion is actually not a big investment, especially when we think about the investments we've been talking about in the other segments.

But it is the fact that the US government is taking equity stakes, non-controlling interest, non-voting interest, but equity stakes in the companies they're investing in. And I think that's a reflection of the new administration's desire to, A, say, if we're going to invest in these companies and they're going to become wildly profitable based on our investment, we should get a piece of that for our investment. And it also ties them more closely to the US government so the US government interests are protected, and they don't give quantum technology to our strategic opponents.

So I get that this is an important technology race, and I get that the Chinese are involved in this, but here in New York, there's a big hole in the ground in Poughkeepsie where IBM is building out this quantum capability, and I drove through Poughkeepsie over the weekend just to be sure, but it seemed to me that they kind of chose this town because, well, shall we say, it's seen better days. And maybe this is kind of where they want to build these factories because I guess they needed the tax base, or they thought somebody needed the revenue. But I'm a little bit concerned, Jack Gold.

Are we just going to see the same story play out again here with these massive facilities for quantum that we just talked about with AI? Well, I think the answer is yes and no. Quantum is, right now at least, is at a much different scale.

By the way, IBM just announced, I think yesterday, they were going to put $10 billion into quantum research, so it's not a small business for them. They're actually leaders. So they are building out stuff.

They're building in Poughkeepsie. They're building in Albany, which is where the chip plant, I believe, is going to be. So it's kind of in their vicinity.

That's kind of where they are anyway located, so they want to keep it close to home. And they're probablyIn a leadership position, they're not the only ones. There are a lot of companies that are trying to do quantum chips now, including all the major hyperscalers.

But the real issue, I think, for quantum is that if we don't do it, the other guys will. If we don't lead in that space, they will. And there's already concern, Jack Poller talked about the ability to break encryption.

There's already concern that we're getting close to that ability, not for all encryption, but for a lot of it. And so what's actually happening is that many of the agencies that Shagun mentioned are recording transactions now for future decryption. And because a lot of data that's out there stays data for a long time.

And it's not just us, it's our adversaries as well. So, yes, there's going to be an arms race. Yes, there's going to be this whole issue of where do we build out this stuff.

Quantum has a lot of environmental issues around it because you have to have computers running at near absolute zero temperatures, so there's all kinds of cooling issues and gases that go in and on, et cetera. They're going to get big over time. They use a lot of power.

By the way, interestingly enough, most of the quantum research now also has an AI component with it because they're going to be using AI to make the quantum computers more efficient, to get rid of some of the noise and some of the issues that make the quantum computer actually work. So long answer to your short question, Mike, yes, we are going to have a build-out. There's going to be another issue around this.

Not clear where it's going to lead, but it's probably at least three or four years out before we see massive build-outs. Quantum itself will be useful before then, but it probably is going to take a long time. And the expense is actually, my estimation is the expense of building a quantum computer is probably orders of magnitude higher than it would be for just an AI data center.

Wow. Jon Swartz, is the Valley being left behind in this conversation? Are they so- Maybe ...

on AI that they're missing the boat? Yeah, here's an instance where IBM is pushing the envelope. This stuff's good.

I enjoyed that. It's kind of refreshing to see somebody outside this area kind of adopt something on their own and own it. We do the same thing here.

We just kind of claim we own it, even if that may not be true. But one thing I was going to ask, I want to ask Jack Poller about this was, so if we master quantum, which lets us break existing cryptographic infrastructure among other things, how could those specific capabilities reshape the balance of power between competing nation-states in terms of defense and commerce? Is that...

Well, and Jack Gold alluded to this. So there's two aspects. One is our ability to peek in and see real-time or near real-time communications among our adversaries.

And the other is what Jack Gold alluded to, which is what we call harvest now, decrypt later, or harvest now, break later, HNBLL, right? In HNDL, harvest now, decrypt later. So we have collected massive troves of data, that is currently encrypted, and we can't decrypt it right now.

But assuming we can, then we not only could get to current communications, but the entire history and see people's strategic leaders' thought processes and what they're planning and a whole bunch of stuff that we don't have access to today. Let's just take one example. If we could break in and be able to get access to what's happening in Iran right now, and therefore be able to identify everything that they've been doing in a nuclear program and where they hid all the bad stuff and all of that stuff, that would be a huge strategic benefit to this country, right?

So that's just one example of things that can happen when you have this ability to get into people's communications. I think we're all zeroed in on the security aspects of this thing. But I think one of the things about quantum is we're going to be able to do things that we couldn't possibly do before.

Right. And there's going to be all kinds of new and interesting use cases, and that's part of the adventure in computer science. But I don't know, Jeff, I'll throw this to you for grins.

Is it possible that we'll make advances in quantum that will obviate all the investments we made in some of this AI stuff because the quantum stuff will prove to be more efficient in doing it, and we don't need all this stinking AGI stuff because we'll have quantum? Well, that would be nice. But I don't think it's going to happen for two reasons.

First of all, I think most near-term quantum advances that we're going to see within the next three to seven years, say, or 10 years, are going to be based in the foundation of AI. Jack Gold said this specifically. You're not going to be able to optimize quantum without having some portion of AI driving it.

So AI needs to be polished and refined first because whatever you do with quantum, whatever you do, you're going to do faster. So if you're doing it poorly, you're going to fail faster with quantum. So we need to keep that in mind.

But on the positive side, I think you're going to see things like biomedical research and longevity issues that we'll be able to arrive at sooner because of quantum. But my background's in security and in physics, which is why I love this topic, but I'm not going to ignore the security part of it. There is an arms race to say who's going to break the other's encryption first.

And once that happens, all the dominoes start to fall, by the way. It won't be a single eventBut I don't hear enough people talking about what the next level of encryption has to be, and I believe it's going to have to be quantum entanglement. I've explained this, I think, to Alan once in one of these episodes earlier, that it gives you an environment where everything is truly encrypted, and any time that that communication is even observed, the communication breaks and the link goes away, and there are no more data to view.

That is going to have to be the next step, and quantum can get there because it is a quantum entanglement. But without even worrying about what that is, the arms race is going to be there. No one is planning for what's Q Day plus one look like.

This is true. Jack Gold, I'm going to give you the last word here on the whole show for the week. " So what could go wrong?

Oh, nothing. Everything will be fine. Well, look, a couple of things.

Number one, from the encryption perspective, we're already seeing a major uptick in companies that are promoting quantum safe encryption. That's going to be a big deal. Now, whether it's safe or not, that's a whole other story.

But we're already moving in that direction because most equipment out there is not quantum safe. Number two is that from the quantum perspective and AI, yes, we need AI, but quantum is not going to be a replacement for traditional computing. They're two totally different technologies, and they're both good at certain things and bad at others.

So we're still going to see data centers all over the place. Those probably won't be going away. But number three is we don't know where it's going to lead.

We honestly don't know where it's going to lead. And when you start talking about quantum mechanics, I'm not a physicist, Jeff, I'll leave that to you, but there is some black magic that goes on when you build this stuff. And we honestly just don't know yet.

Talk about entanglement between atoms that are 100 light years away, or there's really some crazy stuff going on out there. The bottom line, though, is if we don't do this, someone else will. And it's to our advantage to do it because we're going to have to use the technology at some point.

All right, folks. You heard it here. For better or worse, we are all taking a leap into the great unknown together.

A quantum leap. Oh! Very good.

And hopefully we'll all be around to see how it all turns out. But hey, in the meantime, have a great weekend. I want to thank our guests for sharing their knowledge and thoughts, as usual.

They had some of the great insights and some of the best jokes. So, hopefully we will see you all again Monday. In the meantime, stay tuned for the rest of the Techstrong TV rerun of the lineup, because, well, it's as interesting as this conversation was, I promise.

Hey, guys, talk to you Monday.