Headlines this week - Jan 12, 2025
A look at how capital is being deployed across future opportunities
Artificial Intelligence (AI)
Massive investment in AI infrastructure is making investors nervous, despite big tech companies' ongoing race for AI dominance, and their increasing commitments for new data center deployments. Short term returns are uncertain, and recent data about OpenAI’s profitability contributes to this uncertainty
AI agents are already being adopted across various sectors, aiming for increased efficiency and reduced labor costs. Concerns remain about cybersecurity risks and the need for human oversight of AI agents.
Energy
The massive energy demands of AI data centers may require increased reliance on fossil fuels:
In the short term, nuclear energy alone will not be enough to complement renewables for these needs.
Constellation Energy (a leader in nuclear energy) is expanding its fossil fuel portfolio, They just acquired Calpine (a leader in gas power plants) for $16.4 billion.
Autonomous vehicles
Robotaxi fleets are seen as the future of ride-hailing, with Uber and Lyft preparing for this through partnerships with autonomous vehicle companies and other initiatives.
Robots
Nvidia's CEO sees robots as a major opportunity but investors are skeptical about short-term financial impact, with the company still relying on sales to data centers.
Quantum Computing
Expectations for quantum computing have cooled down after Nvidia's CEO predicted (in his CES keynote) a longer than expected (but mostly realistic) timeline for commercialization.
Space
The space industry is accelerating, with a growing number of rocket launches and new commercial applications.
Satellite broadband connectivity is emerging as a key application, with recent major deals involving SpaceX in Italy and (potentially) Amazon in UK.
Geopolitics and Technology
The internet is showing signs of fragmentation, with potential implications for access to information and geopolitical tensions. E.g. Meta blocking some features in Europe, and local players emerging in South East Asia and Latin America
Competition for critical materials, essential for space and clean energy technologies, is intensifying geopolitical tensions.
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1 - Population & natural resources
Biotech
AI accelerating progress in genomics. An AI model trained on data from over 1.3 million human cells can accurately predict gene activity in any human cell, offering insights disease mechanisms.. AI Reveals Gene Activity in Human Cells
The UK is moving forward with gene editing legislation to develop crops that are more resistant to pests, disease, and climate change, despite warnings from the EU. UK presses ahead with gene editing plans despite EU warnings
E-health
AI is on the way to automate healthcare administrative tasks, The expectation is that this could reduce the workload for healthcare professionals and improve patient care. Healthcare turns to AI for medical note-taking ‘scribes’
Space
The business of space missions is accelerating. The growing number of rocket launches in the US signals the increased activity in space exploration and commercialization. There’s a Traffic Jam Forming at U.S. Rocket Launchpads
Blue Origin enters the competition for heavy-lift launch capabilities. Everyone expects the company founded by Jeff Bezos to become a big competitor of SpaceX. Blue Origin to launch its 1st New Glenn rocket on Jan. 10
Autonomous robots could be at the center of space exploration. NASA is planning to use them in some of its planned missions. NASA Wants to Explore the Icy Moons of Jupiter and Saturn With Autonomous Robots
Connectivity emerges as an early “killer app” for space missions, with SpaceX’s Starlink as the leading company for these solutions:
They’ve signed a deal with the Italian government, including military connectivity. Italy Plans $1.5 Billion SpaceX Telecom Security Services Deal
This is seen as a negative sign for Europe’s ambitions to build its own alternative to Starlink (Iris). Italy’s plan to buy Starlink data deals a serious blow to European space network
The deal is creating political controversy. with some European officials claiming that it undermines the EU's efforts for sovereignty in telecoms. Giorgia Meloni in hot water over government talks with Elon Musk’s SpaceX
The UK could close a similar deal with Amazon. Amazon’s Project Kuiper wants to launch a service competing with Starlink, and they’re also talking with the UK Ministry of Defense. Amazon’s satellite project pushes ahead with UK broadband plans
Eventually, all this activity could reach the Moon… More than 50 applications from private companies have already been filed at the ITU to exploit radio spectrum on or from the Moon. Private sector stakes claim to Moon’s airwaves
Space remains a hot theme for VC. Eric Schmidt (ex Google CEO) is apparently investing in a startup that wants to make 3D-printed rockets. Ex-Google CEO Eric Schmidt Said to Be Relativity Space Investor
Materials
Access to critical materials (one of the drivers of space exploration) is also the source of new geopolitical competition:
Indonesia wants to exploit its quota-monopolistic position in nickel, and they want to build a complete EV supply chain on its own soil, similar to China. Indonesia nearly has a monopoly on nickel. What next?
Europe possesses about 5% of the world's lithium reserves, but currently produces very little of it. There is a strategic aspiration to change this, but local communities and environmental groups are opposed to mining operations. Europe has lots of lithium, but struggles to get it out of the ground
2 - Efficiency & Productivity
Energy
Nuclear
Radical changes happening in the industry, pushed by the massive expected energy demands from AI operations:
“Lighter” regulation: The US Nuclear Regulatory Commission (NRC) is working to streamline the approval process for new reactors, aiming to reduce the time to get a license. US Nuclear Regulator Pursues ‘More Efficient’ Reactor Approvals
New, smaller and more modular reactor designs: The industry is moving towards smaller, more modular reactors. These are designed to be transportable, like large batteries, and can be deployed to a variety of locations, including data centers. Nuclear energy groups race to develop ‘microreactors’
Renewables
Liquid air could offer a solution to the intermittency issues associated with solar and wind power. Is liquid air the new gold in energy storage?
Fossil Fuels
There isn’t enough green energy around the world to power data centers, according to industry insiders, so operators need to look elsewhere for a solution to powering AI. Data Centers Need to Look Beyond Green Energy, Siemens Executive Says
A big M&A deal was announced this week in the US, which is consistent with this view: The leading nuclear energy company in the US (Constellation, which also owns gas and hydroelectric facilities) is acquiring Calpine, the firm with the biggest US gas plant portfolio, for $16.4bn. Constellation Energy to Acquire Calpine for $16.4 Billion
Betting for fossil fuels still pays off. L. T. Kwong, a 76-year-old businessman, has become one of the world's richest people by betting on the continued demand for coal, particularly in Asia. The Billionaire Mining Magnate Who Bet Coal Had a Future—And Won Big
New Transport Technologies
Electric Vehicles
Traditional car companies have a “software problem”. For modern EVs, it is critical for vendors to manage “smooth” software updates. And traditional brands (including leading European ones) are not good at this. Car companies have an infuriating software problem
Pressure against subsidies grows in the US. A WSJ columnist argues that current EV policies have been driven by political agendas rather than sound economic or environmental reasoning. He advocates for a hands-off approach, letting consumers and carmakers decide how to adapt and develop the technology. Opinion | The Global EV Calamity
Autonomous Cars
Uber and Lyft see robotaxi fleets as the future of ride-hailing. Having abandoned their own self-driving car development, both companies are preparing to become the dominant platforms for robotaxi services by partnering with autonomous vehicle companies, developing new app features, and building infrastructure to support these vehicles. How Uber and Lyft Are Gearing Up for the Robotaxi Revolution
Artificial Intelligence
AI is currently the number 1 priority for VCs. In 2024, AI startups in the US received a record $97 billion in funding, representing almost half of all startup investment in the country. AI Startup Funding Hit a Record $97 Billion in 2024
AI: Apps
B2B / Agents
Are AI agents the killer application? Companies from different industries have already started to integrate autonomous AI agents across various functions like drug discovery, customer service, and code writing. They are aiming for increased efficiency and reduced labor costs. AI agents are being treated as “digital employees”. In general, the mood is positive, but concerns remain on cybersecurity risks and the need for human oversight. How Are Companies Using AI Agents? Here’s a Look at Five Early Users of the Bots
AI agents increasingly seen as a big disruption for Google’s business model. Perplexity (a chatbot startup) is discussed in this Bloomberg article. But any Ai agent (including Google’s own ones) could work in this way. Google’s Most Serious Rival Isn’t Microsoft. It’s a Startup.
B2C
Elon Musk’s xAI is trying to catch up with OpenAI’s ChatGPT, Google’s Gemini, Antrhopic’s Claude, among others. So they’ve just launched their own “Grok” chatbot app. Elon Musk’s xAI Launches Stand-Alone Grok App
Coupling AI with specific devices was a hot topic at CES this year:
Nvidia’s AI-centric “personal supercomputer”: Nvidia’s $3,000 ‘Personal AI Supercomputer’ Will Let You Ditch the Data Center
Google’s AI-powered TV sets. Google unveils an AI-powered TV that summarizes the news for you at CES 2025
LG and Samsung are partnering with Microsoft (to install Copilot in their TVs) LG and Samsung are adding Microsoft’s Copilot AI assistant to their TVs
Omi, a startup, is launching a (very) creepy AI wearable that is supposed to be able to spontaneously help you, by interpreting your context. Omi, a competitor to Friend, wants to boost your productivity using AI and a 'brain interface'
A startup has presented an AI app that helps gamers get better results. You need to let it capture screenshots of your play (so it might be a bit intrusive for some people) Razer Project Ava: would you pay an AI to help you get good at games?
Microsoft is rolling back an image creating model. Users were complaining about it’s quality, perceived to be much worse than OpenAI’s DALL-E’s. Microsoft rolls back its Bing Image Creator model after users complain of degraded quality
AI: Robots
Robots confirmed to be at the center of Nvidia’s diversification plans. At CES this week, Jensen Huang discussed robots as a huge opportunity, and a priority for his company. Nvidia chief calls robots ‘multitrillion-dollar’ opportunity
Investors weren’t so much impressed. As discussed in this WSJ article, Nvidia’s shares dropped $7.63, or 5.1%, to $141.80 on the day of the presentation, one day after reaching their highest-ever level with a value of $3.66 trn. Nvidia CEO Pitches Robotics, Cars as Growth Areas to Consumer-Electronics Audience
Nvidia is still perceived as a (chip) supplier for data centers, and convincing investors of the long term potential of the new industries they want to enter will not be easy Why Nvidia Needs to Appeal to a Bigger Crowd
It is true that robots could be great for Nvidia, even if the company would not directly enter the market. Just considering the chips inside of all these robots would massively expand Nvidia’s Total Addressable Market. Nvidia could get a bionic boost from the rise of the robots
But significant challenges are expected for a large-scale adoption of robots. Initial deployments of robots for automation are leading to labor disputes and concerns about job displacement, as well as the need for negotiated contracts that protect human workers and address the impact of automation. So all this could take time… The fight over robots threatening American jobs
AI: Foundational Models
Investors remain excited about Foundational Models: Anthropic has now reached a $60bn valuation. Exclusive | AI Startup Anthropic Raising Funds Valuing It at $60 Billion
OpenAI’s Sam Altman started the year with a blogpost that everyone is discussing: In the post, Altman reinforces OpenAI’s commitment to building beneficial and safe AI. He is confident that his team now knows how to build AGI as they have traditionally understood it, and he claims that they are now focused on building “Superintelligence”. Reflections
Sam Altman also gave a long interview to Bloomberg Business Week:
In the interview, he confirms his points about AGI and “Superintelligence”, and defends OpenAI’s operational model. He also talks about the opportunity in nuclear energy. Sam Altman on ChatGPT’s First Two Years, Elon Musk and AI Under Trump
Critics did not like Sam Altman's "doublespeak" in the interview, and there have been comments claiming that he is mixing admissions of past errors with speculative predictions to deflect attention from pressing AI safety and regulatory issues. Be Wary of Sam Altman’s AI Doublespeak
Elon Musk wants to force an auction of OpenAI’s “non-profit” stake. This could turn into an opportunity for Musk to become a key shareholder… Elon Musk calls on California and Delaware to force auction of OpenAI stake
Also, Musk aligns with the view that we don’t have any more training data, so models now rely on “synthetic data” produced by other models… Elon Musk agrees that we've exhausted AI training data
AI: Infrastructure
Large investment needs for AI infrastructure are starting to scare investors. Robert Armstrong from the FT talked this week about how capital will be heavily deployed into AI infrastructure by major tech companies in the coming years, and about how this is likely to significantly impact their financial performance as the costs of these investments start to be reflected in their earnings. The AI arms race costs money
The analyst consensus is that generating returns from these investments won’t be so easy. Analysts admit that the potential for AGI to generate enormous wealth exists, but the path to achieving it still looks uncertain and full of challenges. ‘Superintelligence’ will take time to generate super returns
OpenAI’s numbers with ChatGPT highlight the economic challenges of developing and maintaining advanced AI models. OpenAI is losing money on its pricey ChatGPT Pro plan, CEO Sam Altman says
Still, big tech firms keep making commitments about more deployments, in a race to dominate the industry. Examples this week:
Amazon: $11bn in the US. Amazon Plans to Invest at Least $11 Billion in Cloud and AI Infrastructure in Georgia
Microsoft: $3bn in India. Microsoft Plans to Invest $3 Billion on AI, Cloud Infrastructure in India
Energy costs to power all these data centers will increase the impact. E.g. in Malaysia, tech giants might be forced to pay premium prices for this energy. Tech groups to pay premium for energy for Malaysia data centres, says minister
In addition to all this, there is a risk that the “large data center” approach could be disrupted. A team at Google DeepMind is exploring a “decentralized” strategy for training models, which would make giant data centers unnecessary. Training AI models might not need enormous data centres
AI: Chips
Samsung's profit estimates fell short of expectations due to delays in supplying (as a foundry) HBM chips for Nvidia (crucial for AI applications) and decreased demand in the traditional chip market. So investors are now concerned about the company’s technological competitiveness Samsung’s profit estimates disappoint as it fights for Nvidia’s AI business
Samsung's revival now relies on winning Nvidia's AI business as the only way for them to capitalize on the growing AI chip market. This is key because the company is facing challenges in their traditional memory and mobile sectors. Samsung’s revival still hangs on winning Nvidia’s AI custom
Quantum Computing
Expectations cooled down for Quantum Computing. Again, courtesy of J. Huang in his CES keynote. He gave a (mostly realistic) message about when the technology will be ready for commercial purposes (he said 15-30 years, much longer than the mainstream media recent consensus), and then stocks from companies in the sector fell rapidly. Interestingly, Huang’s statement was not very far from what real specialists (i.e. top-class physicists in the field) had already said. Quantum computing stocks take a hit as Nvidia CEO predicts long road ahead
Intelligence Augmentation
Augmented Reality
Meta's discontinuation of its $1,500 Meta Quest Pro headset is raising questions about the viability of high-end VR in the consumer market and shifting focus to Apple's $3,500 Vision Pro. Meta discontinues its $1,500 Meta Quest Pro headset. What could this mean for Apple's VR dreams?
Human-Computer Interfaces
Neuralink is making progress. Their brain-computer device has been implanted in a third patient and the company has plans for about 20 to 30 more implants in 2025. Musk Says Neuralink Implanted Third Patient With Brain Device
3 - Economic / Business trends
Tech & Geopolitics
The global internet might have started to split. There is a trend toward a geographically fragmented internet, moving away from the once-shared, global experience. This is (initially) not as extreme as China's "Great Firewall", but signifies a decoupling of online experiences between different regions, particularly between the U.S. and Europe. Two examples this week:
Meta not deploying some functionalities in Europe (to avoid costly adaptations needed to comply with regulation) A New World for Facebook and Instagram: Zuckerberg’s Splinternet
Pressure against American “internet giants” in Latin America and South East Asia, with local players emerging and potentially winning. America’s internet giants are being outplayed in the global south
AI is at the center of the “Tech Cold War” under way:
In the WSJ, D. Amodei (Anthropic CEO) asks Trump to be active in policies to ensure the US leadership in AI. These include hard export limitations. Opinion | Trump Can Keep America’s AI Advantage
In the Financial Times, N. Zennstrom (Skype founder) argues that there is an opportunity for Europe, if companies here focus on developing applications on top of the large AI models. Europe can still win in AI despite US dominance, says Skype co-founder
More “Chinese Tech Giants” are added to the US “black list”: US adds Tencent and CATL to list of companies working with China’s military