Headlines this week - Jan 19, 2025
A look at how capital is being deployed across future opportunities
This week in the future:
Initial deployments of GenAI in businesses are being driven by interest to contain or reduce headcount. Companies are prioritizing investments in AI over hiring staff due to rising employment costs. AI is being used to automate tasks such as software development, content creation, and investment banking. Some analysts are showing concerns about the social and political disruptions that AI could create, as a result of this trend
Biden increases the pressure on China’s AI industry, just before leaving. The US is imposing more restrictions on China's access to advanced chips and AI technology. However, despite tensions, US-China AI collaborative research papers have actually increased in the last year
OpenAI published its blueprint for AI in America". The document outlines ways for policymakers to promote AI development, minimize risks, and maintain a lead over China.
Investor money keeps flowing to AI infrastructure projects. This week, Private Equity fund Macquarie announced a $5bn investment in a data center company. Meanwhile, governments in US and UK have announced initiatives to stimulate the build of local computing infrastructure.
Biotech is accelerating thanks to AI, but also creating new ethical and societal challenges. This week we learned about AI being used to design proteins that can block snake venom toxins and to develop better treatments for Huntington's disease. However, ethical concerns about some biotech applications, e.g.: options for parents to “screen” embryos before In Vitro Fecundation, which are starting to sound like eugenics
Nuclear energy is also accelerating, with “Small Modular Reactors” as a promise to shorten deployment times and reduce costs. Nuclear energy initiatives proliferate in different countries, driven by massive AI energy needs. A new technology, Small Modular Reactors (SMRs), is expected to reduce construction times and costs compared to large nuclear power plants, and could play a significant part in the “second nuclear age”
Fossil fuels still have a future, but China could be a problem. The energy demands of AI are already driving growth of fossil fuel power plants in the US. Trump has plans to use fossil fuels as a tool for the US to dominate the energy sector. However, China’s shift to renewables (e.g. with electric cars on the way to dominate the market) represents a threat for oil companies
The space industry is growing fast and attracting investors, but at the same time subject to challenges/risks. Funding for space startups is expected to increase in 2025 due to growing competition between the US and China. However, the delay in the Blue Origin mission this week highlights the challenges of developing new large rockets. Later in the week, a SpaceX accident confirmed this.
Neuralink has big plans (and challenges) for 2025. Neuralink has already implanted brain-computer interfaces in three individuals, with plans for more, but faces challenges in improving the technology and ensuring long-term reliability, They are also developing a robotic arm and a vision implant.
China viewed as the leader in green technologies. China is leading in green technology due to early investment and government support. As a collateral effect of this (and also of EU regulations), European car manufacturers may have a negative financial impact form having to purchase carbon credits from Chinese rivals, to meet EU emissions targets.
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1 - Population & natural resources
Biotech
Progress in biotechnology accelerates, but new ethical dilemmas appear:
AI is a key catalyst for project in biotechnology. AI has been used to design proteins that can block snake venom toxins. This demonstrates the practical application of AI in to catalyze progress in biotech applications. Researchers use AI to design proteins that block snake venom toxins
DNA sequencing leads to better treatments of Huntington’s disease. A new understanding of Huntington's disease is shifting the focus of potential treatments from suppressing the “hungtintin” protein to preventing the expansion of a “stutter” it induces in DNA. A better understanding of Huntington’s disease brings hope
Is this startup building a real Jurassic Park? Colossal Biosciences has raised $200 million to use DNA and genomics to attempt to resurrect extinct animals like the woolly mammoth, dodo, and Tasmanian tiger, with a goal of producing a mammoth by 2028. Startup Raises $200 Million to Bring Back the Woolly Mammoth
Does the market see an opportunity in eugenics? A diversity of companies are offering tests for parents to screen embryos for risks of developing conditions such as heart disease and diabetes, despite the scientific consensus that these scores are not yet reliable. Aspiring Parents Have a New DNA Test to Obsess Over
“Leftover” embryos from in-vitro fertilization processes create ethical challenges. Emotional and ethical challenges are faced by individuals when deciding whether to store, donate, or discard their remaining embryos. Deciding the fate of “leftover” embryos
M&A deals (again) becoming a driver for progress in biotech. Johnson & Johnson's $14.6bn acquisition of Intra-Cellular, along with other pharma deals totaling $18.5bn, signals a potential surge in M&A within the biotech sector. This could help accelerate investment biotech R&D (including AI applications to the field). Johnson & Johnson in talks to buy $10bn neuroscience drugmaker Intra-Cellular
Space
BlueOrigin joins SpaceX as a player in commercial space missions. The New Glenn rocket, launched on Thursday, has a similar carrying capacity to SpaceX’s Falcon Heavy and is intended to transport cargo to space, including satellites for Amazon's Project Kuiper. Blue Origin successfully launches its SpaceX rival
But a (previous) delay in the mission highlights the challenges of developing new large rockets. Blue Origin had previously delayed the launch date (initially expected for Monday), due to an icy vent line and auxiliary power unit issues. An icy vent line may have caused Blue Origin to scrub debut launch of New Glenn
Later in the week, a SpaceX accident confirmed this. A SpaceX Starship rocket exploded during a test flight, which resulted in a disruption of air travel due to falling debris, although the booster did successfully return to the launchpad. SpaceX Ship Explodes During Test Flight
SpaceX has been forced to pause its launches, while the Federal Aviation Administration investigates the issue. SpaceX faces US regulatory probe after Starship rocket explodes
In spite of all these risks, funding for space startups keeps growing. Funding for space startups is expected to increase in 2025 due to growing tensions between the U.S. and China, with the space sector having received $8.6 billion in investments in 2024. Space startup funding set for boost from US-China rivalry in 2025, report says
Space could help address the emerging massive energy needs on Earth. China plans to construct an enormous space-based solar array, using heavy-lift rockets like the Long March-9. Other nations (US, Europe, Japan) are also exploring similar technologies. China plans to build enormous solar array in space — and it could collect more energy in a year than 'all the oil on Earth'
2 - Efficiency & Productivity
Energy
Nuclear
The nuclear energy industry has a brilliant future, driven by AI energy needs. The MIT Tech Review describes a global push to expand nuclear capacity, the development of advanced reactor designs, and renewed interest in extending the life of existing plants and reopening shut-down facilities, under the influence of tech companies seeking reliable power sources. What’s next for nuclear power
Innovative “Small Modular Reactors” could play a significant role in this. small modular reactors (SMRs) are expected to reduce construction times and costs compared to large nuclear power plants, and could be a significant part of the future of nuclear energy, even if they’re initially more expensive. Small nuclear reactors are coming, but big is still better
Renewables
The idea that companies could prioritize climate goals over profits might not work. No surprise here :-) According to this FT columnist, the need for a more urgent response to climate change could then lead to potential tensions between economic drivers and environmental imperatives. The truth about green business
China is leading in green technology due to early investment and government support, and while the rest of the world needs China's low-cost tech to meet climate goals, there are also concerns about over-reliance and security risks. China is winning the race for green supremacy
Fossil Fuels
Trump has plans to use fossil fuels as a tool for the US to dominate the energy sector. President-elect Trump is planning to enact executive orders to boost the fossil fuel industry by reversing Biden's policies on drilling, emissions, and renewable energy. Exclusive | Trump Plans ‘Energy Dominance’ Executive Orders After Inauguration
The energy demands of AI are already driving growth of fossil fuel power plants in the US. New gas-fired power plants are on the way to be built in the US, driven by the energy demands of the AI industry and a political environment favoring fossil fuels (see above). AI set to fuel surge in new US gas power plants
The expected IPO of Venture Global, a natural gas producer, confirms the industry’s optimism. The potential for increased natural gas demand due to the rise of AI, as well as the support of the new Trump presidency for fossil fuel expansion, would be key drivers. One of the biggest energy IPOs in a decade could be around the corner
Meanwhile, the deceleration in China's oil demand could create stress in the fossil fuel industry. Oil demand in China may be plateauing sooner than expected due to a slowing economy and the rise of electric vehicles. This could have major implications for global oil markets and potentially accelerate the transition away from fossil fuels. Has China already reached peak oil?
New Transport Technologies
Electric Vehicles
Tesla’s standard expanding for EV charging. Could this stimulate adoption? Major automakers in the US are adopting Tesla's North American Charging Standard (NACS) for their electric vehicles, albeit with some initial challenges (software delays, hardware shortages, adapter issues). Ideally, this will reduce some of the barriers currently limiting adoption. More EVs Migrate to Tesla's Chargers, With Some Bumps
European car makers… victims of EU’s emissions regulation? European car manufacturers may need to purchase carbon credits from Chinese rivals to meet EU emissions targets, potentially one more blow for the European car industry. Europe’s carmakers risk hefty bill for carbon credits from Chinese rivals
Autonomous Cars
Two business models emerging for autonomous cars: ride-hailing fleets vs. owned vehicles. Self-driving is already being sold as a feature in personal vehicles, with companies like Tesla, Ford, and others offering driver-assistance features, or as fully driverless taxis operated by ride-sharing companies like Waymo (and possibly Uber and Lyft in the near future). The Two Competing Futures of Self-Driving Cars
Initial applications for autonomous cars could be “narrower”: Applied EV, an Australian EV technology company, is focusing on developing autonomous vehicles for "dull and dangerous" jobs, like street sweeping and warehouse work rather than robotaxis. The company has a partnership with Japan’s Suzuki. Australia’s Applied EV develops robot vehicles for ‘crappy jobs’
Waymo’s (long) journey to develop a robotaxi could illustrate the challenges for the adoption of AI agents. T. Bradshaw at the FT discusses the challenges in moving from AI in controlled settings to "free range" AI in the real world, and compares this with a “journey” that Waymo has already made. Waymo’s journey shows the path ahead for AI agents
Artificial Intelligence
AI: Apps
AI apps are shifting from pure conversational interfaces to agents:
OpenAI is launching ChatGPT Tasks, a new feature that allows users to schedule actions, set reminders, and potentially act as a precursor to a more complex AI agent called "Operator" (sort of a personal assistant). OpenAI’s agentic era begins: ChatGPT Tasks offers job scheduling, reminders and more
Amazon is working to turn Alexa into e a more capable "agent”. They are facing initial challenges in overcoming technical issues like hallucinations and latency. Amazon races to transplant Alexa’s ‘brain’ with generative AI
As AI agents start to proliferate, risks of over-reliance on them are emerging. This article highlights the problem of using AI agents for personal interactions (e.g. with other family members). AI Agents Are Here. How Much Should We Let Them Do?
Big Tech companies are “injecting” AI into their “traditional” apps:
This can help with AI monetization. E.g.: Microsoft with 365. Microsoft is bundling its AI-powered Office features into Microsoft 365 Personal and Family subscriptions and raising prices by $3 per month. Microsoft bundles Office AI features into Microsoft 365 and raises prices
But it can also create some risks. E.g.: Apple Intelligence. Apple Intelligence: iPhone AI news alerts halted after errors
Solutions to automate many “white-collar” tasks are emerging. And investors are interested:
Software development: Anysphere, an AI coding software company, raised $105 million at a $2.5 billion valuation driven by its Cursor software, which uses AI to help programmers write code. Anysphere, a Maker of A.I. Coding Software, Raises $100 Million
Investment banking: The boss of Goldman Sachs believes AI can drastically speed up some tasks at the bank. E.g.: drafting an S1 / IPO prospectus, from 2 weeks for a 6-person team, to being done by AI “in minutes”. Goldman Sachs chief David Solomon questions start-ups’ need to list
Video / Video Game content creation: Synthesia, a UK-based AI startup creating realistic video avatars, achieved a $2.1 billion valuation after securing $180 million in funding. UK artificial intelligence start-up Synthesia hits $2bn valuation
For now adoption of business AI apps is being driven by need to contain or reduce headcount:
"Cost avoidance" is being mentioned as the justification for AI investments, with most companies aiming to reduce headcount and associated expenses. Why ‘Cost Avoidance’ Became an AI Buzzword for Holding Down Headcount
In the UK, companies are planning to prioritize investments in AI over hiring staff, due to rising employment costs. UK companies plan to invest in AI instead of hiring staff as costs rise
Ben Thompson insists: adoption of AI agents will be “uneven”. He claims that new companies will be first, as most traditional companies are not well-suited to integrate high-precision AI agents. AI’s Uneven Arrival
AI: Foundational Models
OpenAI has released an economic blueprint for "A.I. in America," outlining ways for policymakers to promote AI development, minimize risks, and maintain a lead over China. They are asking for a light regulatory approach in safety / security, tolerance from foreign investment from UAE and Saudi Arabia, and incentives to facilitate investment in data centers. OpenAI Courts Trump With Vision for ‘A.I. in America’
Leading AI companies move to secure real-time data from news agencies. This is a way to get access to new data (with existing data almost exhausted for the largest models). It also addresses the emerging need to “compensate” content owners for using this content for training models. Three examples this week:
Google with Associated Press: Google inks deal with The Associated Press to bring more real-time info to Gemini
Mistral (the French startup) with France Presse: Mistral signs AFP deal for fact-based chatbot in riposte to ‘free speech’ rivals
OpenAI with Axios: OpenAI to fund four new Axios Local newsrooms
There is a race to catch up with OpenAI, with Google and Meta among the front runners. This article. Inside Meta’s race to beat OpenAI: ‘We need to learn how to build frontier and win this race’
Google has launched a new model (“Titans”) with “long term memory”. This is supposed to make access to context (e.g. previous conversation that could be relevant for new answers) more efficient. Google’s New Titans AI Model: Long Term Memory For AI
AI: Security / Safety
Safety
AI systems make mistakes differently than humans, with errors occurring randomly and confidently. As a reaction to this, researchers are working to develop new safety measures beyond those used for human errors. AI Mistakes Are Very Different Than Human Mistakes
Security
Barcelona has become an unexpected hub for spyware companies due to factors like good weather, tax benefits, and an attractive expat community. How Barcelona became an unlikely hub for spyware startups
Privacy
AI being used to make decisions about travel visas: new privacy issues? Governments and companies are using AI-powered systems to analyze international traveler data, with limited transparency. This could potentially impact visa decisions, with implications on individuals' freedom of movement and privacy. Inside the Black Box of Predictive Travel Surveillance
AI: Infrastructure
The US and UK move to stimulate the build of local computing infrastructure:
The Biden administration is opening up federal land for AI data centers, requiring that companies use clean energy to power these facilities. Not clear what Trump will do with this initiative. Biden administration opens up federal land to AI data centers
The UK government plans to significantly increase the country’s AI computing capacity with a new supercomputer and other resources, aiming to establish a globally competitive AI sector. UK pledges huge increase in computing capacity to build AI industry
Investors money keeps flowing into data center projects. Macquarie (a Private Equity fund) is investing up to $5bn in Applied Digital's AI data centers, acquiring a 15% stake in their high-performance computing business. Exclusive | Macquarie to Invest Up to $5 Billion in Applied Digital AI Data Centers
AI: Chips
TSMC, the leading chip manufacturer, is under increasing geopolitical pressure (see below on chip restrictions), but FT’s Lex column is optimistic about the company’s ability to navigate these tensions. TSMC can weather geopolitical tensions
Intel continues restructuring. They just announced the spin-off of their corporate VC. Intel to spin off venture capital arm as chipmaker tries to cut costs
Quantum Computing
Microsoft wants the industry to be bullish. They reacted against the negative mood from Nvidia’s CEO’s CES keynote (that we covered last week)
They published a blog post promising big developments in the field for 2025. Let’s see what happens (but we -and others- are not so optimistic…) 2025: The year to become Quantum-Ready - Microsoft Azure Quantum Blog
This triggered a very positive reaction for Quantum Computing stocks, that partly compensated the fall from last week. The crazy ride in quantum computing stocks continues as shares rip higher on Microsoft's 'quantum-ready' directive
Intelligence Augmentation
Brain-Computer Interfaces
Neuralink has big plans (and challenges) for 2025. Neuralink has already implanted brain-computer interfaces in three individuals, with plans for more, but faces challenges in improving the technology and ensuring long-term reliability, They are also developing a robotic arm and a vision implant. What to expect from Neuralink in 2025
Powering bionic implants emerges as a key application for brain-computer interfaces. Researchers have enabled paralyzed individuals to experience a realistic sense of touch via a bionic hand controlled by their thoughts, using brain-computer interfaces with electrodes implanted in the sensory and motor regions of the brain. Neurotechnology study delivers ‘another level’ of touch to bionic hands
3 - Economic / Business trends
Tech & Geopolitics
Biden accelerates commercial restrictions against China, just before he leaves:
More firms are being added to a trade blacklist, in an effort to curb China's access to advanced chips and AI technology U.S. Further Tightens Chip Restrictions, Adds Chinese Firms to Blacklist
The blacklist includes AI startups. E.g.: Zhipu, a Chinese company working in AI models, has been blacklisted for allegedly advancing China's military capabilities. US targets China’s answer to OpenAI with trade blacklisting
The target is to limit China's AI advancements. For this, the US will require licenses for exporting AI models and setting up large overseas AI computing facilities. U.S. Targets China With New AI Curbs, Overriding Nvidia’s Objections
AI chips are also a key component. A three-tiered licensing system is being created, to restrict China's access to strategic chips, while granting allies unrestricted access. US imposes export controls on chips for AI to counter China
Meanwhile, AI collaboration between China and the US continues… More AI research papers with transnational collaboration have been published in 2023 than in 2022. Despite tensions, US-China AI research collaborations are alive and well
The British PM wants to make the UK a leader in AI. He published an article with his vision to do this by harnessing the technology to improve public services and boost the economy. He also defended a “third way” (not following the US or the EU). Britain doesn’t need to walk a US or EU path on AI
The Lex column responded claiming that the UK lacks the deep capital pools of the US to compete with American tech giants. UK has half of what it needs to be an AI hub
According to P. Olson (Bloomberg), this is not the best approach for the UK. She argues that the country should leverage its strength in AI safety instead (?) Britain’s Keir Starmer Needs to Curb His AI Enthusiasm
Emerging economic models
Productivity growth is more urgent than ever. According to McKinsey, if it does not happen, the decline in birth rates will drastically reduce our living standards. Falling birth rates raise prospect of sharp decline in living standards
AI may bring the required productivity expansion, but together with significant disruption. At least in the US, where AI is being rapidly adopted, the technology is expected to create significant social and political disruption due to unequal distribution of benefits and job market shifts. AI is taking the US in a strange new direction