Motley Fool Hidden Gems Investing - Sora Is No Mora

Episode Date: March 25, 2026

OpenAI is shutting down Sora and its video generation models to focus on enterprise customers and coding. Meanwhile, Coinbase and Circle are crashing as congress considers a bill that could eliminate stablecoin rewards. The irony is, Coinbase could be more profitable without rewards.Travis Hoium, Lou Whiteman, and Rachel Warren discuss:- Sora is shutting down- Stablecoins in congress- Amazon’s latest robot acquisitionsCompanies discussed: Disney (DIS), Coinbase (COIN), Circle (CRCL), Amazon (AMZN).Host: Travis HoiumGuests: Lou Whiteman, Rachel WarrenEngineer: Kristi WaterworthAdvertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

open ai's sora is no mora motley fool money starts now welcome to motley fool money i'm travis hoy i'm joined today by lou whiteman and rachel warren And guys, the OpenAI news continues to come out. Lou, we talked about this a little bit yesterday with Tyler Crowe on the show. But the breaking news yesterday was that they are shutting down Sora, this sort of social media video app that they launched not too long ago, a few months ago. But not only that, they're actually shutting down making their own video models. Rachel, this seems like a huge shift for OpenAI.

they're really focusing on kind of the enterprise side, coding, you know, their Codex product. We talked about that. It was so striking that they have put so much time and energy, even a billion dollar deal with Disney to try to build up this video business, one of those spaghetti at the wall kind of things. And now they're just saying, you know what, we're done with that. Yeah. I mean, there was a lot of viral buzz around Sora, but there had also been kind of some major challenges. So Sora had this ability to generate lifelike videos. I mean, it was generating unauthorized clips of people like Michael Jackson and Martin Luther King Jr. So there was fierce opposition from actors' unions, family estates. There was even an issue they were

having with the Japanese government demanding that OpenAI stop using copyrighted anime and manga characters in Sora V2. The other point I think to make here is very high computational costs required to run these models, very much putting a dent, I think, in the bigger dream of OpenAI for profitability. Ahead of its reported IPO, potentially later this year, I think they're really refocusing on their upcoming SPUD model, their AI agents, right, designed for coding and robotics. I think they're really trying to kind of cut their losses and reallocate their resources towards autonomous AI agents, enterprise-grade tools. It is interesting the impact on Disney. I mean, they have this three-year, billion-dollar partnership that

included licensing over 200 characters for Marvel, Pixar, and Star Wars. That feels dead. Disney publicly said they respect OpenAI's decision, but there was some reports that the news caught the company off guard that maybe they didn't even hear about it until about 30 minutes after a joint meeting. So a lot going on there. I mean, for Disney's part, they're now an active free agent in the AI space. They're reportedly engaging with other AI platforms to find a new partner. So that could be something interesting to see. I think now with this kind of leader out of the race, a lot of eyes are turning to Alphabet and Anthropic. you know, Anthropic has notably chosen to avoid video generators entirely. So maybe this is

something that we're not going to see as much investment in the space. That remains to be seen, but it is a big shift for OpenAI from, I think, where a lot of people thought the business was going. Yeah, Lou, it does seem like they're at least focusing. And we've asked a lot of questions about how are they going to build a sustainable business model? So this is maybe a step in the right direction. But the other interesting thing is it seems like they're kind of seeding a lot of this consumer space. You know, if you want to make a video, go to Gemini. And that was the theory even 12 or 18 months ago was that Alphabet was going to be, and Google were going to be disrupted. This is kind of seeding that entire area to them. You're giving them the focus award,

Travis? Is that the thing? Yeah. Well, I mean, for now, we'll see until they go public and then start throwing spaghetti at the wall again. I think this is a rare moment of honesty from OpenAI, a company that loves a good press release. For all of the bluster, for all of the statements about how wonderful it is, things are not going well. And we're supposed to make bold statements here, Travis. This may not come true, but I am increasingly wondering if OpenAI will ever get to an IPO. I mean, the simple math here is that they were not making money on this. As Rachel of a sudden, just the sheer bandwidth needed was too much for the revenue. Also, I think it's fair to say that they didn't see a path for revenue, which is kind of the scarier thing. And add into

it the fact that even with a billion-dollar sweetener from Disney, if they would have kept going, they still couldn't justify it. I think the conclusion here is they were losing tons of money with no path to profitability. And hey, I guess credit to them for at least backing off. But look, Anthropic is doing it better. Anthropic is using a lot fewer resources to actually grab the enterprise customer. So copying them makes sense. I don't know if the consumer matters here. I think the enterprise matters for now.

And yeah, Anthropic is showing the way. Opening eye would be insane not to follow. So is the theory there, if you're looking at a potential IPO, that, hey, the consumer space is just going to be too hard. Maybe Alphabet is already there with the ad business in particular, something that OpenAI really said they didn't want to do until it was kind of too late. So if you want to build a real business and go public, you have to go after these coding opportunities, these enterprise opportunities. And that's what they're focusing on, even though we've seen seemingly everything else. We had the browser shut down.

We've seen now Sora shut down. Is even ChatGPT going to be the future of the company, or is it really just Codex at this point? It's weird to compare them to Alphabet because it's such a different set of circumstances. One is an established business that in part is backfilling. Let's be honest, you know, the whole, it used to be Alphabet's going to get killed by OpenAI because search is going to be destroyed. Instead, they're kind of just transitioning search, but you have an established customer base and an established business.

And so it makes sense to stay in that business that you know so well. I think on the OpenAI side, like Anthropic, starting from scratch, you need to earn customers and the cost of acquiring a customer in almost any business is high. So you want to go after the customers with the highest payout that's on the enterprise side. I mean, again, we'll see what becomes a consumer AI. We'll say, maybe we all will pay hundreds of dollars a month for these magical tools that make our lives better. There's time to fight that out if, and when that happens for now, if you are trying to build a business, you need to see your efforts generate revenue. And clearly, I mean, I don't think this is unique to AI or anything, but clearly the

enterprise is the customer to go to get that. Yeah, I think it makes a lot of sense in a lot of ways, especially if you are trying to get to the IPO, but it's just striking how many things they've tried that were supposed to be the future of technology, the future of artificial intelligence, and they just didn't really work out. So we will see where OpenAI goes. I'm sure we're going to be talking about this again soon. And when we come back, we're going to talk about crypto and what the future of stable

coins looks like. You're listening to Motley Fool Money. New from Nespresso. Blend wellness into your coffee routine with the Coffee Plus range, infused with functional benefits. Choose the coffee you love with added B vitamins, like Coffee Plus B12 to help support immune function and Coffee Plus B6 to keep your day moving. Or go with the flow and choose Ginseng Delight, our new double espresso with ginseng extract.

Whatever lies ahead, don't change your morning. Let your morning change you. Discover Coffee Plus on Nespresso.com. Welcome back to Motley Fool Money with the Hidden Gems team. Yesterday, we saw shares of Coinbase and Circle plunge. I think Circle was actually down over 20%, at least one point. And the reason was Congress is pushing through this Clarity Act, which is going to set the rules for stable coins.

And one of the things that's been on the docket is our crypto company is going to be able to offer rewards for holding stable coins. This is something that Coinbase does on their platform. If you have USDC stable coins, they'll pay you, I think it's three and a half percentage points right now as a reward for that. So it looks a little bit like interest on a bank account, even though it's a little bit different than that. But this would make that illegal, Lou. And the interesting thing here is this would make it maybe a little less attractive to be holding those stable coins in an account like Coinbase. But if you do still hold them and you don't really care about that three and a half percent because it's a more efficient payment

method or whatever your logic is, this is actually going to make companies like Coinbase more profitable because they're not going to have that rewards expense. So it's sort of an interesting reaction from the market. Stocks are down, but at least short term, Coinbase should make more money because of this ruling if it ends up passing. Yeah. I keep thinking of that. Life comes at you fast when I see this. Sure, Travis. You know what? Banks would make more money if people just put their money in without demanding interest. So you're right. Definitely. But look, I don't know if this is fair, but I think it's the right call. Okay. And look, life is not fair. I'm not pro or anti stable coin. I'm not going to say that, but I want them to solve problems, not

create problems. And for all of the flat. And do you not see the efficiency? Let's go there. Let's all of the issues we have with our U.S. banking system, and it's not perfect, it does work and it is the model the rest of the world bases itself on. We have a good thing here. Just like in medicine, the first rule should be do no harm. And to the extent that these stable coins are a threat to that core system, I think regulators should be aware and trying to avoid harm to this system that serves us well. I keep saying this about FinTech, but it is so true. The house always wins. Regulators are risk adverse. That's a feature in the system. It's not a flaw. If you want to come up with something better, it has to be significantly better than the status quo. Because

again, the status quo for all of our complaints about it works really, really well. And most of the world wishes they had the problems we had. I've been following stablecoins for quite a while, but the efficiency of moving money with stable coins. If you own a business and you're paying 3% for credit cards, having an alternative, which a company like Stripe does, they charge about half of the fee to take stable coins as they do to take credit cards. So that would be the disruptive angle. Is Lewis saying it's good that we're not allowing or we're not enabling some of this disruption from stable coins, which is going to just entrench companies like Visa and MasterCard? I guess, what are your thoughts looking at that? Because that seems like the angle that Coinbase

or Circle is going for is, hey, this is better, it's more efficient, but now we have regulatory capture coming in, which is always going to be a challenge. Well, and I think another way to look at it is this. We have heard some pretty lofty ambitions for what stable coins can do for the consumer, for big business. And one of the hallmarks of adoption, one of the on-ramps that enables adoption is greater regulatory environment and more regulations in place. And so I think that in the long term, should this legislation pass, I actually think it's a good thing. When you think about companies like Coinbase, they've been leaning pretty heavily on USDC rewards to drive engagement and revenue. So obviously, this is kind of massive regulatory

red line, so to speak. If you think about the Genius Act and other recent bills have really essentially been trying to treat stablecoins more like traditional cash and less like speculative investments, which again, is a really important element of long term adoption. So I think by cutting off rewards, regulators are hoping to prevent a massive drain of deposits from traditional banks. I think that's one piece of it. But I think it's also about kind of the fundamental safety of the financial system. And there's also the redemption factor. So the new rules would mandate that stablecoin holders get priority in case of an issuer's bankruptcy. And that would finally give users some of the same protections that they would expect at a regular

bank, which again, there might be individuals and entities that have hesitated to adopt stablecoin should those regulations be in place, would be more induced to do so. So I don't think this is a dead end. The free money, so to speak, via rewards might be going away. But I think that core utility of stable coins is still very much intact if you believe in this space. I think for the big players, this is more of a regulatory speed bump, if you will, than a dead end. They'll have to pivot their business models, focus more on transaction fees and infrastructure. But I do think that the genie is already out of the bottle here. And I think stable coins are probably here to stay. Well, Lou, I do want to push back on that a little bit

because the piece that we're missing here is there is still money, billions of dollars of revenue coming into these stable coin companies because these assets are backed in the case of USDC. I think it's their around $80 billion market cap today. That money isn't just sitting in an empty room. It's sitting in bank accounts. It's sitting in US treasuries. That is generating interest. What they're doing with rewards, what they're calling rewards is just returning that to the people that are actually holding the coins. Now you're saying you can't give them that money. So that profit is going to go to companies like Circle and Coinbase. Is that better? I think that's the argument you guys are making, is that that's better not to give the rewards out. That

seems a little bit backwards. A couple of things. For one, we'll see how much of that money stays there for them to generate the interest if this evolves, if there isn't a use for it. Rachel said they can make it up in fees. If the goal is like, hey, this is better than Visa and MasterCard because there's none of those pesky fees and the fees are less, here comes the creep. Again, the house is going to win here. Visa can cut their fees in half a lot easier than these companies will find it to just raise them. Well, it would be Visa and the banks though. I think that's going to be the sticky part is that Visa takes a relatively small chunk of that 2.9% or so. But again, Travis, this is margin and it's always the path of least resistance is the incumbents

lose a little margin versus a new system comes into place. That has happened over and over again. This isn't just about, quote unquote, protecting Visa or protecting the banks. Right now, the system that we all benefit from works because, in part, the banks have so much access to cheap deposits. To the extent that we threaten that for the sake of lower credit card fees, we are potentially causing a bank crisis down the road that will do more harm than the toll that they are extracting on the economy. You can say that this is fear-mongering. You can say that it'll never happen.

You can say, oh, that's the worst case. The job of regulators is to avoid worst case. It is to keep the system stable and functioning because, again, the system basically works. So this may not be fair. It may not be consumer-first friendly. It might mean that businesses still have to figure out what to do with credit card fees. All of that can be true, and it can still be the right decision in terms of financial stability and long-term financial stability. That's the point. And we can argue until we're blue in the face about fairness. We can argue about, oh, what are you

doing in that? But at the end of the day, the job of the regulator is to keep the status quo working because the status quo has gotten us 200 years in pretty well. And that's exactly what they're doing here. And I'll be on it. Maybe I'm just a, you know, old Luddite, but I appreciate that holding. And look, I think you put it really well, Lou. And I think, you know, the investors who are listening to this, who own maybe shares of banks, maybe shares of Visa or MasterCard, the credit card processing companies, or like myself, I own shares of Coinbase. think about that you know what sort of disruption is there what does disruption potentially look like and what is holding off that disruption because i think you laid it out that you're

arguing that the status quo is beneficial even if it's less efficient and less consumer friendly does that ultimately win you know that's something that the market is going to eventually figure out one way or the other but for now regulatory capture rules the day when we come back we're going to talk about amazon's latest robots you're listening to motley fool money new from nespresso blend wellness into your coffee routine with the coffee plus range infused with functional benefits choose the coffee you love with added b vitamins like coffee plus b12 to help support immune function and coffee plus b6 to keep your day moving or go with the flow and choose ginseng delight our new double espresso with ginseng extract whatever lies ahead don't

change your morning let your morning change you discover coffee plus on espresso.com welcome back to motley fool money with the hidden gems team amazon is one of the biggest employers in the world but it may not be for long if it keeps buying robotics companies last week they acquired a company called river that makes a kind of dog looking delivery robot this week it added fauna robotics a humanoid ish like a short like a four foot tall humanoid robot that's supposed to be quote capable safe and fun for everyone but also we've got zooks in the mix rachel what is going on here is this a company that's going to have a billion robots and no employees a decade from now i mean maybe that's the long-term vision right so river they're the swiss startup known for their

dog-like quadruped robots they're designed to like navigate stairs and drop off packages directly at your door and then fauna robotics makes this humanoid ish robot called sprout it's about three and a half feet tall. As you noted, when you add Zoox, obviously the self-driving robotaxi and delivery service to the mix, this picture starts to get kind of clear. You know, you think about could we be living in a world where a Zoox vehicle drives itself to your neighborhood, the river dog hops out the back to climb your porch steps, and a fauna humanoid potentially manages the human interaction or complex tasks in the warehouse. I mean, I don't think we're there quite yet, but I can't help but wonder if that's the long-term vision. Amazon, for their

part publicly maintains that these robots are designed to work alongside humans, right, to make jobs smarter, not harder. There's been some leaked documents that have suggested that they maybe plan to replace, you know, half a million or more human roles by the early 2030s to solve some of their labor supply shortages. So we'll see what the reality is in practice. But the other thing to note here is that from these acquisitions, I mean, Amazon's also competing with, say, Tesla's optimists, as well as other players in this race for general purpose, humanoid robots. So whether they plan to sell these robots to other businesses or simply use them in the logistics machine, I think remains to be seen. It's an interesting move to be sure.

I put out a memo to myself stating I want to be a trillionaire by mid 2030s. I mean, if they could happen, but we'll see. I don't think you should just assume it as fact. You know, similarly, I'm glad Rachel mentioned the word logistics, because I think about this in terms of logistics. And I think, not to say that this isn't important, but it's just Amazon is a different animal because of its scale, but really all Amazon is doing is what everybody's doing. In the case of logistics, Amazon was just the one company big enough to take it in-house when everybody else is still delivering stuff. They're just using UPS or whomever. Similarly, I could give you pages and pages of various retailers, logistics companies,

companies with warehouses that are partnering, experimenting with robotics. I can give you a trucking company that used to spend $500 million a year on tech related to warehouse tech. What Amazon is doing is what everybody is doing. It's just more, I guess, in the spotlight because they're buying companies. It's just this long-term trend towards automation that's been going on since the seventies. I doubt it ends with zero employees, but if nothing else, it is the path to greater efficiency and scaling the number of employees you have. Not that this has much to do about nothing because it does over time make these companies more profitable, but I don't know if there's anything Amazon is attempting that a lot of other companies can't do through vendors like

Honeywell or through their own internal efforts. Yeah, I think that's probably true. We are seeing this vision kind of come together with Amazon, especially with the Zoox vehicle, which I kind of left for dead for a long time but now that that's approved you can modify those and they're obviously designing those in-house so you could modify that to look you know the crews did this a few years ago instead of having people inside you just have you have a refrigerated area maybe for groceries you've got packages coming out maybe it's just one of these robots that parks on the corner in my block and a whole bunch of robots come out and deliver a handful of packages to different houses in the area the future is going to be wild i think that's what so we can probably

agree on at this point and there's going to be more robots than there are today well lots to think about for investors but we do want to pour one out for sora because that was one of those highly hyped products that uh kind of sad to see go away as always people on the program may have interest in the stocks they talk about and the motley fool may have formal recommendations for or against so to buy or sell stocks based solely on what you hear all personal finance content follows the molecules editorial standards and is not approved by advertisers advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and Christy

Waterworth behind the glass, I'm Travis Hoyum. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.