Deals for AI deployment
How do big complex companies with thousands of people and workflows, and thousands of applications, work out how LLMs will be useful for them. The dumb answer is to give everyone CoPilot and wait for them to work it out, which is rather like giving everyone a web browser in 1997 and saying “There you are! Be more productive!” A better answer is that it’s slow, hard and complicated, and they tend to rely on professional services for help, whether it’s for the tech itself (Accenture, Deloitte etc) or the deeper strategic question of what the code should actually be doing (Bain, BCG, McKinsey). They often also lack the margins to experiment with Claude for millions of dollars, and would rather pay someone who’s worked it out (as much as anyone has so far). But the other side is that many PE investors are an intermediate layer of go-to-market, management support and, of course, relentless and focused shareholder pressure for efficiency, all of which means that the big AI labs have announced partnerships with both BBM and, this week, PE. Anthropic announced that it’s forming an AI Series company in partnership with one group of PE firms plus Goldman Sachs, with something over $1bn of funding, while OpenAI is apparently working on a $10bn venture to do the same, to be called ‘the Deployment Company’. As the name suggests, for the labs this is a GTM plan; for PE, their model rests on delivering increased operating efficiency at their portfolio companies, and if AI can’t do that, what else is it? ANTHROPIC, OPENAI
Meanwhile, Long Lake Capital, another PE fund, bought out American Express Global Business Travel for $6.3bn aiming to use AI, again, to transform the operating efficiency of a complex product full of friction and manual systems. LINK
The White House swings back to AI caution
Trump’s administration came to office full of loudly-expressed contempt for ‘AI Safety’ and the doomers, seeing their concerns as mostly nonsense that would serve only to slow down US competition with China. Now, though, they’re shifting to a more cautious approach, as a bunch of much more specific concerns are tangible, around things like energy consumption, education, privacy and (in a few edge cases) mental health. The cyber threat discussion around Anthropic’s Mythos perhaps catalysed the change - this is real and important, and also has geopolitical implications. What if AI is an order of magnitude change in how many countries can cyber to cripple their opponents infrastructure, and how far does that expand beyond nation states? More cynically, this is clearly emerging as an issue in US local politics: there are votes in attacking data centres. Meanwhile, David Sachs, the Silicon Valley scenester who was ‘AI Tsar’ and strongly opposed to regulation, left the White House. So, now there are rumblings of new executive orders, oversight of new models, and perhaps more. LINK
Anthropic and the SpaceX shuffle
Anthropic’s CEO Dario Amodei says that the company is running at 80x annual growth, having planned for ’only’ 10x growth, leaving it (as everyone can see) very short of compute capacity to serve Claude Code. The FT reports that it’s raising at a $1tr valuation and expects to hit a $45bn annualised revenue run rate imminently, compared to $9bn at the beginning of the year.
Part of Anthropic’s scramble for more capacity, it took a lease on the 300 megawatt ‘Colossus’ datacentre that Elon Musk’s xAI (now part of SpaceX) built in huge haste last year. Cue general puzzlement: it’s obvious why Anthropic is buying, but why is xAI selling? The Information claims that shortcuts in the hasty construction, and the mix of different chips used, mean the centre isn’t very useful for training, but remains useful for inference (which is what Anthropic needs). More cynically, this is more revenue to load into the SpaceX IPO filing, as it presents itself as a cloud AI company as much as it is about buckets. Certainly, xAI itself is flailing, with all the founders quitting and Elon Musk saying he needed to start again from scratch. But what else? DEAL, SHORTCUTS, REVENUE
Meanwhile, SpaceX itself filed to build a semiconductor fab in Texas for an initial $55bn and potential up to $119bn. The plan has been reported previously at $20bn. This is part of an overall ambition to manufacture a terawatt of compute annually that Musk has suggested previously (though that would probably require trillions rather than billions of coax). Someone needs to make the chips for the orbital data centres, after all… LINK
Indexing AI
Back on Earth, one of the mechanics of this year’s proposed IPOs of OpenAI, SpaceX, and perhaps Anthropic is whether these companies would be included in the stock market indices used by index funds to determine their investment. As a reminder, OpenAI and Anthropic are both valued at (say) $1tr in private markets, and SpaceX is reportedly looking at a $1.75tr valuation. If they are, index funds by definition will have to buy the stock proportionate to the company’s share of the overall market, and index funds are now around 25% of US ownership by market cap, so that would be a significant support for the share price. The S&P 500 used to require a one-year wait and profitability, but suggests that if all three companies are excluded on that basis then the index wouldn’t really be tracking the market since (at probably over a trillion dollars each) they’ll be such a large share of it.
It’s also worth noting that in 1999 and 2000 combined, total VC investment was only about $150bn and venture-backed IPOs only raised about $45bn at a valuation of $270bn (both in real terms) - each of these three IPOs is presumably looking for more than that. LINK
Apple partners with Intel
Part of Intel’s turnaround is a foundry business, and Apple likes to have two sources but relied on TSMC for the SoCs that drive its devices. So far, TSMC has a generational lead in process, and Intel’s foundry is unproven… but now the WSJ reports that Apple and Intel have reached a preliminary agreement, though it’s not clear for what or how much. Intel stock went up 10%, either way. It seems a long time since the days when ‘WinTel’ ruled the tech industry - now Intel is jumping when Apple calls. LINK
Remember Boston Dynamics?
Boston Dynamics, home of those viral/terrifying robot dog videos, never found an actual business and was bought by Hyundai back in 2021. Now with ‘physical AI’ exploding, you’re thinking this would be their moment, but most of the leadership is bailing. LINK
The week in AI
OpenAI continues to build out its ad product. LINK
DeepSeek is raising $5-10bn (from Chinese investors - cf Manus) at a $50bn valuation. LINK
Google continues to improve and iterate AI overviews. LINK
Amazon opens logistics
Amazon is opening its US logistics operation, competing directly with FedEx, UPS, and the USPS. You no longer need to be selling on Amazon for Amazon to deliver your package— now the full stack of freight, warehousing, and last-mile delivery is open to any other company. Just on last-mile, according to ShipMatrix Amazon is already the largest single carrier at 28% of US volume, and this looks like a pretty obvious move to load up the asset base with more volume and liquidity. LINK, SHIPMATRIX
In other news
IAC is renaming itself People Inc and focusing aggressively on using its brands and content to drive products and services, as AI changes what the content itself is worth. LINK
The meme stock GameStop made an unsolicited offer to buy eBay for $56bn. It has a line of credit for $20bn, and the rest would have to be in stock. Ebay is certainly very wilted, and due for a turn-around of some kind, but no-one can really see why this deal would make sense, though, of course, that may not be the point. LINK
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