Headlines this week - 3 Nov 2024

A look at how capital is being deployed across future opportunities

Nov 03, 2024

Hi. It’s been a long time, no see. This is an experiment with the news this week (almost 2 years after the last time). with a fully different scheme, more adapted to the emerging Tech Strategy landscape.

At the basis of the new framework, we’re trying to identify trends that will make it possible to catalyze economic growth in the future, classified in two different growth levers:

The first one is about increasing the available resources for growth. People is an obvious one (although one may say that AI is making this not so clear). Technology can help extend our (productive) lives, and make new space available for humans (through interplanetary exploration, as Mr. Musk uses to say). Space can also be the source of critical raw materials to build the infrastructure that leads to progress
The second one is about using these resources in a more productive way. We need to generate energy in an efficient way, and use it to power a computing infrastructure that will make us more productive. We will be more productive if we connect our intelligences, among ourselves and with the machines that will help us think

So the idea here is to explore, through the news every week, what are the trends in technology that are contributing to these two effects. And in particular to try to understand how is capital being allocated to the initiatives that will make these contributions possible

So here is the MVP this week:

1. Population & Natural Resources

Biotech

The WSJ reviews the future of healthcare, including “spare parts for the human body”, robots, and vaccines as a therapy for cancer - What’s Ahead for Health

Medical devices are getting more sophisticated, including the use of AI, so they pose an increasingly big challenge to regulatory agencies that must approve them - From AI to Musk’s Brain Chip, the F.D.A.’s Device Unit Faces Rapid Change

A biotech company with a therapy for Alzheimer has been acquired for $1.4bn - AbbVie to Acquire Aliada Therapeutics for $1.4 Billion

Space

SpaceX’s success with the Starship rocket is just a step towards cheap, frequent and reliable rocket launches, an enabler for the new space age - SpaceX has caught a massive rocket. So what’s next?

Uncertainties surround the future of Boeing’s Starliner spacecraft, amid rumors that the company will sell its space business unit - What is happening with Boeing’s Starliner spacecraft?

Materials

Lithium prices continue to fall, due to a softening growth in demand from Electric Vehicle vendors. Chinese producers are suffering - Lithium Woes Leave Top China Producers With Year-to-Date Losses

Tech & Geopolitics

Many people think that American efforts to sustain their advantage in high technology vs. China are not working so much:

It is interesting (and will be the object of intense debates) to see the role that Open Source is playing in this - Exclusive: Chinese researchers develop AI model for military use on back of Meta's Llama

Also, China’s dominant position in key raw materials for advanced technologies (computing, biotechnology) also threatens’ Western progress

2. Efficiency / Productivity

Energy

Investors see the opportunity. A couple of funds, including KKR, are raising $50bn to fund projects to power AI infrastructure - Exclusive | Wall Street Giants to Make $50 Billion Bet on AI and Power Projects

Nuclear

A “nuclear energy renaissance” is under way, driven by the needs of AI models. Big Tech companies like Microsoft, Google and Meta, are talking about this:

Renewables

Data Centers could be used as a source of heating - Excess heat produced by data centers emerges as a solution for cities’ heating needs - Data centres could be source of heat for European cities, says Danfoss boss

New transport technologies

Electric Vehicles

Chinese EV vendors keep winning market share, and the growing perception is that China has also won the battle for industry domination

BYD is beating Tesla - BYD Revenue Eclipses Tesla for First Time as EV Giants Go Head to Head

And the EU is reacting with import tariffs, which are already provoking a backlash from China. Let’s see if this benefits the local industry. For now, expect a deceleration

For Western vendors, a key challenge with EVs is profitability. GM seems to be doing better than Ford, in the US - G.M.’s Electric Vehicle Sales Surge as Ford Loses Billions

In Europe, the local industry is struggling. A battery startup that was deep in crisis (Northvolt) is now being fully acquired by Volvo (until now a partner in the Joint Venture) - Volvo to Take Ownership of Northvolt Battery Joint Venture

Autonomous Vehicles

Momentum is growing. Waymo (ex-Alphabet) has raised $5.6bn at a $45bn valuation

Flying Cars

Is winter coming? After an air-taxi boom a few years ago, startups might be starting to collapse - Electric Air Taxis Are Already Coming in for a Hard Landing

Artificial Intelligence

AI: Apps

Andreessen-Horowitz’s Martin Casado believes there are three big areas of opportunity: (1) content creation, (2) consumer-oriented agents / “companions”, and (3) coding - A Venture Capitalist on Where the AI Opportunities Are for Investors

OpenAI’s ChatGPT already has 250m weekly active users, of which 5-6% pay for a subscription. Most of these are consumers, which represent 75% of the company’s current revenues. In corporate, there are around 1m paid accounts - OpenAI CFO Says 75% of Its Revenue Comes From Paying Consumers

The plan seems to be to increase loyalty of these subscriptions and attract new customers through adding more services to ChatGPT - OpenAI plans to offer its 250 million ChaptGPT users even more services

Search is an example of this. And also an emerging threat to Google (the incumbent) and to Perplexity (the current AI-based alternative) - OpenAI brings online search to ChatGPT

Meta also seems to be developing its own (AI-powered) search - Meta is reportedly working on its own AI-powered search engine, too

Meanwhile, Google is not inactive: They’re also bringing (their best-in-class) search to their LLM-based chat app (Gemini) - Google brings grounding with search to Gemini in AI Studio and API

For now, all this activity around AI and search is not having any negative impact on Google’s numbers. Quite the opposite, according to the company’s 3Q24 results this week - Google is winning the AI search wars

AI Agents are the big hype of the moment:

Gartner believes they have great potential, but the company’s analysts are skeptical about the short term - Gartner predicts AI agents will transform work, but disillusionment is growing

The example of Whisper, an OpenAI agent specialized in speech transcription (e.g. for medical environments) seems to confirm that there is still plenty of work to do, before these things can go mainstream - OpenAI’s Whisper transcription tool has hallucination issues, researchers say

In any case, announcements proliferate. This week we have Google talking about an agent that can control a computer (their version of what Anthropic announced last week) - Google is reportedly developing a ‘computer-using agent’ AI system

We also have Linkedin (Microsoft) with a solution to (potentially) bypass head hunters LinkedIn launches its first AI agent to take on the role of job recruiters

And Amazon, reportedly developing an “agentic” Alexa, but apparently struggling to do so (again, there is a gap between what’s described and what’s delivered)

Many startups seem to be active in this “AI Agent” space. An example of this is Sierra, a company that is working on agents specialized in customer service, that has just been valued at $4.5bn - Bret Taylor’s AI startup Sierra raises funding at $4.5 billion valuation

Consumer apps are being redesigned with AI at their core:

Google is injecting AI in Google Maps and Waze

And Meta claimed this week that they already have 500m users of Meta AI (most probably through the family of apps) - Meta AI has more than 500 million users

Apple released Apple Intelligence this week… - Why Apple’s AI Success Hinges on the iPhone

… but not yet in Europe, where clever and innovative regulation is protecting users :-) - Apple Intelligence Rolling Out in the European Union Starting in April 2025

We might see more and more AI agents playing a role in smartphones too. A Chinese company claims they’ve developed one that can operate users’ phones - China’s Zhipu AI says its app can operate your smartphone for you

AI for content creation (supporting Martin Casado’s point above) is another hot topic:

The New York Times sees a big opportunity for Hollywood - What if A.I. Is Actually Good for Hollywood?

Universal Music has announced a strategic partnership with an “AI music” specialist - Universal Music Strikes Strategic Deal With “Ethical AI Music Company” Klay Vision

Meanwhile, a classic use case of AI in media, the recommendation engine, seems to be falling in disgrace. Interestingly, there might be space for human curators, again - The Banality of Online Recommendation Culture

Coding seems to be a quick win in the enterprise space (also supporting Martin Casado’s point). Both Google and Amazon talked about this in their results calls this week:

AI: Robots

Physical instantiations of AI models, i.e. good old robots (now using Large Language Models, of course…) are becoming a focus for innovators right now, partly because of their obvious military applications. This could contradict the current narrative about AI being a bigger risk for white-collar (vs. blue-collar) jobs

Could robots substitute workers at car factories in the future? The leading startup in the field (Boston Dynamics) is demonstrating prototypes that make you think about this - Boston Dynamics’ electric Atlas humanoid executes autonomous automotive parts picking

Should the army use robots? Eric Schmidt thinks so - Ex-Google CEO Schmidt Urges US Army to Replace Tanks with Drones

Finally, a robot-housemaid. Wired talks about a startup that is building robots that could help with basic home chores This Is a Glimpse of the Future of AI Robots

AI: Foundational Models

AI commercial wars? In their results this week, Google showed early signs of monetization of the massive investments in AI, but this FT comment perceives risks of more commercial aggressiveness in the industry, driven by “winner takes all” visions at key LLM competitors - Google and peers weigh an AI prisoner’s dilemma

Will Microsoft and OpenAI divorce? Amid increasing tensions between Microsoft and OpenAI, people are already openly discussing potential “separation scenarios” - What if Microsoft let OpenAI go free?

Elon Musk’s xAI: a $45bn company. Elon Musk is the new entrant in the foundational model industry, with its xAI startup, which has been able to deploy a massive amount of computing power in a record-time. The company is in talks with investors to raise funds, and the valuation seems to be around $40-45bn

“World models”, the next frontier? Meanwhile, the next frontier for AI researchers could be the creation of models capable of “understanding / modeling the world”, just like humans do. This is seen as a key step towards “Artificial General Intelligence” - What are AI 'world models,' and why do they matter?

AI: Security

Cyber security is becoming an “essential good” for companies, even if they cannot aspire to be fully protected - Cyber security companies are thriving — even when they fail

Beware the “Quantum Computing” hype. Yes, Quantum Computing could threaten cryptographic keys, and this could have a massive impact. But, as this article says, no one knows if this will happen in the next couple of decades or later in the future… - Here’s the paper no one read before declaring the demise of modern cryptography

AI: Infrastructure

Investors validate the “neocloud” concept (small-ish cloud companies fully specialized in AI / GPU computing) - Peter Thiel’s Founders Fund leads $500mn fundraising for AI cloud group Crusoe Energy

AWS expects to win in the battle to support Generative AI. In an interview, the CEO mentions data as the key differentiator for enterprise customers, so the clouds storing the data will have the best position to train the models, too. And AWS is the leader in storage - Inside Amazon’s AI Cloud Strategy

A new boom for corporate real estate? The massive needs of data centers for training and inference suggests so - The AI Boom Rests on Billions of Tonnes of Concrete

AI: Chips

OpenAI still wants its own chips, but won’t manufacture them. As their main competitors (Google, Amazon, Microsoft), they will focus on chip design. This is Apple’s approach too - Exclusive: OpenAI builds first chip with Broadcom and TSMC, scales back foundry ambition

Softbank is bullish about Nvidia. Masa Son believes the leading chip company will play a key role to enable “Super AI” - Softbank’s Son Says Nvidia Is Undervalued as Super AI Looms

Masa Son also wants Arm (a Softbank company) to build its own AI chips - How Arm could be the unexpected winner of the AI investment boom

Intelligence Augmentation

Augmented Reality

Siemens is spending $10bn in a specialist in “digital twins” - Why simulation software is such hot property for Siemens

The owner of the RayBan brand has reached a €100bn valuation, partly driven by the success of the Meta sunglasses (and the expectations around them) - EssilorLuxottica bets on glasses replacing smartphones as value hits €100bn

Human-Computer Interfaces

Enabling people with disabilities to work with computers will be one of the initial applications of brain-computer interfaces. This is already starting to be possible - Unlocking the Potential of Brain-Computer Interfaces

Another emerging use case could be restoring vision in blind people - A Neuralink Rival Says Its Eye Implant Restored Vision in Blind People