CW 29: AI and Semiconductor Highlights
Week in Review (Calendar Week 29)
AI Developments
Overview of Investments in the AI Race:
OpenAI has projected it will spend $320 billion on computing and development expenses between 2025 and 2030.
xAI is also in the same boat, with the company seeking cash from all corners of Elon Musk’s empire. It is reported that Musk’s SpaceX would invest $2 Bn in xAI as part of a bigger fundraising round.
Meta Spending
72 Bn Capex for FY 2025
Zuckerberg is the main controlling shareholder; hence, it is easier to pledge huge amounts of money on AI infrastructure without worrying about shareholder pressure.
The Meta stock is trading at a premium at a multiple higher than that of Google’s stock price.
US DOD awards contracts worth up to $200 Mn: The U.S. Department of Defense has awarded contracts worth up to $200 Mn to AI developers xAI, Google, and Anthropic to “address critical national security needs”. The Pentagon said OpenAI won a similar $200 million contract last month.
Meta AI Vision: Zuckerberg, in an interview with The Information, mentioned that his vision for AI was different and that he does not want Meta to chase after services that automate work and improve productivity. But rather develop "Personal SuperIntelligence", which people could use in their lives every day, from improving personal relationships to keeping track of what one is doing every day. (Source)
Anthropic major updates:
Claude for Financial Services was launched, aiming to help analysts conduct market research and handle due diligence, with data from FactSet and others.
A major update to Claude AI was released that integrates with popular productivity tools like Notion, Canva, Figma, and Stripe, allowing users to access these platforms directly through the AI assistant.
Usage limits for Claude Code users were tightened without warning, causing confusion and frustration among subscribers who are hitting unexpectedly restrictive caps on their $200/month Max plans.
OpenAI major updates:
OpenAI plans to add e-commerce checkouts to ChatGPT and take a cut of online shopping purchases made within the chatbot. The move is a way for OpenAI to make money from people using AI for shopping inspiration and product recommendations. (Source)
OpenAI is launching a new general-purpose AI agent in ChatGPT, which the company says can complete a wide variety of computer-based tasks on behalf of users. OpenAI says the agent can automatically navigate a user’s calendar, generate editable presentations and slideshows, and run code. (Source)
Former OpenAI CTO’s company raises $2 Bn: Thinking Machines Lab, an AI startup founded by former OpenAI CTO Mira Murati, has raised $2 Bn at a $10 Bn pre-investment valuation. The company that is yet to showcase the product that it is working on has been making the rounds of the investment circuit with a lot of pomp and show. Another instance of a company without a live product but with valuations in the tens of billions of dollars. Is the bubble going to pop or do investors know something the commoners don’t?
Semiconductor and Cloud Computing Tidbits
Nvidia to resume selling previously banned AI chip to China: Earlier this year, during the initial months of the Trump administration, export controls were put in place to curb the rapid development of China’s AI advancements. Nvidia, as a result, could not sell its H20 chips to China. During this period, Huawei was able to make significant inroads in the development of their own AI chips. Thereby, making the Trump administration rethink its export control strategy. As part of the rethink, the export control has been reversed and Nvidia will resume selling the H20 chip to China.
Nvidia is set to “accelerate the recovery” of its AI chip sales in China, thanks to improved U.S.-China relations, is the opinion of Nvidia CEO Jensen Huang when asked during a press conference in Beijing.
Google Cloud proves to be competitive with Amazon Web Services: GCP (Google Cloud Platform) was proving surprisingly competitive with AWS (Amazon Web Services) in attracting AI startups, largely because of Google’s Gemini AI technology, which isn’t available to AWS.
GCP (12%) has been trailing both Microsoft Azure (30%) and AWS (21%) in the battle for cloud computing market share. However, the Thomas Kurian-led GCP has been making steady inroads into the startup space, leveraging the suite of tools available at GCP’s disposal through its parent company Alphabet Inc.
EU and its lagging cloud story: The EU is to forego more than €1.2 Tn in economic gains over the next six years unless it overhauls its digital cloud policies. (Source)
The European Commission is currently working on legislation to address Europe’s gap in cloud capacity.
Europe’s lack of choice for customers buying cloud space leads to high switching costs and less capacity to effectively integrate artificial intelligence tools, which use cloud services.
The EU’s lag on cloud computing limits not only efficiency gains but also hampers AI deployment, public service modernisation, and Europe’s broader digital competitiveness.
Meta to build massive AI data center: Meta is reportedly building a massive 5GW AI data center called Hyperion in Louisiana, along with a 1GW facility called Prometheus, as part of the company's aggressive push to compete in the AI race. This is potentially already incorporated into the planned $72 Bn Capex as mentioned in the overview at the beginning of this post.
AI Startup Arena
AI vibe coding startup becomes Europe’s latest unicorn: Fast-growing Swedish AI vibe coding startup Lovable has become Europe’s latest unicorn. Only eight months since its launch, the startup has raised a $200 million Series A round led by Accel at a $1.8 billion valuation. The company currently has more than 180,000 paying subscribers and reached an ARR (Annual Recurring Revenue) of $75 Mn in seven months. (Source)
AI coding assistant company Windsurf gets acquired: Following a frenzied week for Windsurf, with its CEO and top researchers making their way to Google in a $2.4 Bn licensing deal. Initially, it was suggested that the rest of the employees still at the company would miss out massively on their payday. However, some stories still do have a happyish ending with AI Coding assistant company Cognition having entered a definitive agreement to acquire the remaining staff and assets of Windsurf. Cognition CEO Scott Wu mentioned that each remaining employee will still stand to make some money from the recently concluded deal with Google.
New Startup Spotlight: SandBoxAQ- A B2B company delivering AI solutions that address some of the world’s greatest challenges. Spun out of Alphabet Inc., the chairman of the company is Eric Schmidt (Google Founder).