Here come the IPOs
SpaceX filed for an IPO last week, and now Anthropic is out too, but unlike SpaceX it filed confidentially, so for now we can’t see the data. LINK
Meanwhile, with the upcoming giant IPOs of SpaceX, Anthropic and (presumably) OpenAI, there’s been debate about whether stock market indices should change their rules (around things like float size, profitability, and waiting period from listing) to include them. Index funds tracking these indices are now over half of the US market (it depends a bit on how you count this), so if the rules had been changed, this would have provided a base of support and put a sliver of all of our pensions into this. In the end, the Nasdaq says yes and S&P says no, and S&P is the important one. LINK
Alphabet capital
Anthropic and OpenAI don’t have massive legacy cashflows to pay for AI capex and the giant tech incumbents do… but no longer enough: as I pointed out in my latest presentation, Meta, Microsoft and Alphabet all plan to spend close to half of total revenue on capex this year. They’ve been doing debt and SPVs since last year, but this week Alphabet startled everyone by raising equity - $85bn, including $10bn from Berkshire Hathaway. $30bn of this will be used to pay taxes on the vesting of stock options. People have been complaining that options aren’t properly allowed for in the P&L for a while now - the best expression of this is in fact from Warren Buffett, who said “If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it?" LINK
Following this, the FT reported that Meta may also be planning to raise ‘tens of billions’. LINK
The SpaceX neocloud
One footnote in the SpaceX S1 was that in May this year Anthropic agreed to pay $1.25bn/month to rent the xAI data centre capacity - now this week, Google has rented more capacity for $920m/month, which seems to mean that well over half of the xAI compute is now rented out.
On one level, this means SpaceX has ‘annualised revenue’ from renting AI compute of over $26bn, which is almost as much as OpenAI’s total revenue, and SpaceX’s entire revenue last year was only $18.7bn. And if you have unused infra and someone will pay for it, then well done.
On the other hand, there’s a difference between a neocloud reselling Nvidia compute and a foundation model lab, and which are SpaceX investors being sold? We already knew that the entire xAI founding team has quit and Elon Musk admitted he’d have to rebuild, and this reflects that - it has no AI business today, and has nothing better to do with all that compute than to rent it out. LINK
Anthropic calls pause again, again
Anthropic released another long piece in which it 1: points out and describes the enormous breakthrough of agentic coding, 2: suggests that this points to a step change in the speed with which we can improve these models due to ‘recursive self-improvement’ (the model can suggest ways to make itself better and then build them), 3: observes that if you think these models can scale to AGI, that means we’ll get there faster, and 4: argues that there should be some kind of ’option’ for ‘the world’ to slow down such development.
Of course, the problems here haven’t changed since the last few times people said this: we don’t have a good theoretical understanding of how these models work or why and how they scale and so cannot predict future scaling except to say that it’s worked so far, and we have no good theoretical understanding of ‘intelligence’ (human or any other kind) and so cannot say when models scaling at a given rate would reach that. Equally, we lack any realistic and practical ‘option’ for ’the world’ to ‘slow down’ anyway, short of someone unilaterally firing ICBMs at data centres, which does not align very closely with generally accepted norms of regulatory best practice.
The cynical view of all this is to say that this is just marketing and a push for regulatory capture by people who can’t possibly believe any of these claims. I don’t think that’s right - there are plenty of people very deep in the science who really do think this could scale to AGI, and there are plenty of others, just as deep in the science, who don’t. We don’t know. But meanwhile, Anthropic keeps working really hard to build it. LINK
Microsoft’s post-OpenAI reset
Microsoft held its developer conference this week, with three stories to note. First, the renegotiated deal/breakup with OpenAI means it’s free to build its own frontier models, and the quote is that “there are three relevant labs, and we want to be the fourth”. That’s a clear ambition, but I'm not sure that the dozen or so labs that are a few months behind the frontier are entirely irrelevant, especially given that the second story from Microsoft is to address soaring token usage (and hence bill shock) by running older/smaller ‘good enough’ models on the edge, where the user buys the compute and it’s a fixed cost. This will probably be part of Apple’s AI relaunch at WWDC on Monday, and Microsoft announced a new line of Surface laptops starting at $3k, with an NVIDIA SoC (instead of Intel) to run models locally, plus a development stack around that. Look for hardcore dev people to think about the intersection of developer tools, CUDA, and Windows here. Then, the third story is that Microsoft wants to be the everything shop: your models, our models, their models, edge, cloud, agentic platforms, an OpenClaw clone - we’ve got it! The thesis seems to be that this is a commodity tech layer where the hyperscalers will compete to provide the best platforms and tooling. That’s all fine up to a point, but important new technologies are rarely ‘the old thing but more.’ LINK, SURFACE, MODELS
Also, there was a new quantum chip. LINK
More Meta ad automation
Google and Meta’s ad revenue is surging as they push AI through their recommendation and optimisation systems (Meta was up over 30% last quarter). But the structural problem for SMB advertising (a large share for both and especially Meta) has always been mapping the sophistication and potential of the product against busy small business-people who aren’t ad-tech experts. This week Meta launched a new set of agentic tooling to try to automate all of this, building the campaigns for you. A while ago, Mark Zuckerberg said he wanted advertisers to be able to give Meta a business objective and a budget and have his systems do the rest - this is one step. LINK, EVENT
AI hacking
It turned out to be not just possible but really easy to get Meta’s AI chatbot to give you control of someone else’s Instagram, bypassing all security controls including 2FA: over 20k accounts were affected before Meta fixed this. LINK
Meanwhile, someone used Anthropic’s Opus 4.8 (not even Mythos) to spot a major bug in the Zcash crypto token: it had a $10bn market cap and promptly fell by a third. Someone once said that all cryptocurrencies are self-funded bug bounty schemes. LINK
AI versus the web
Google’s ‘IO’ event signalled a structural shift in search from links to answers, synthesised and summarised from everything published on the web. For publishers, that gives you no traffic, so you might want to block it, but Google didn’t let you block AI overviews etc without also blocking search. Now that’s changing: Google will let publishers opt out of AI summarisation features affecting search, driven by pressure from the CMA in the UK. GOOGLE, CMA
Codex for X follows Claude for X
Following Anthropic’s ‘Claude for X’ products (or templates, perhaps), OpenAI has launched ‘Codex for X’. As with ‘Claude for X’, a lot of the output comes as micro sites, and I hear from friends in professional services that this is replacing PowerPoint with extraordinary speed for tasks like ‘take this ten-page memo and turn it into an interactive status update.’ LINK
The week in AI
Trump’s AI regulation executive order was signed this week, much reduced in scope after a strong reaction from Silicon Valley: most of the important parts are optional. As ever, there’s such a big gap between what Trump says (or signs), what execution is then attempted, and how that works out, that there’s little one can predict at this stage. LINK
Continuing the chaos theme, the White House has picked up a suggestion, apparently originating from Sam Altman, that the US government should take strategic stakes in ‘AI’ companies. Um, isn’t that going to be most big tech companies? And also, um, isn’t that what MAGA people call ‘socialism’? LINK
JP Morgan worked out that 60% of US data centres planned for completion in 2027 haven’t started construction yet, mostly because of difficulties in getting power. LINK
Bloomberg says that China now has foreign travel restrictions on top AI talent at private Chinese AI companies, extending its reaction to the Manus deal. Not only is ‘Singapore-washing’ over - you can’t even get on a flight there. LINK
Apparently, Deepseek is in talks to raise $7.5bn at a $50-60bn valuation. Cheap models aren’t cheap anymore, and agentic is profitable but needs capital. LINK
AI trust & safety
Getting its backlash in early, Florida is suing OpenAI and Sam Altman personally over mass-shooters’ use of ChatGPT. Some of this is about guardrails or the lack of them, but some is also about the nature of an information tool - if you ask an AI system whether a shooting at a school would get more press than a shooting at a factory and it says “yes”, is that really ‘advice’ that should have been blocked? LINK
The return of autonomy
The autonomy winter is over, with dozens of Chinese companies deploying things, and BYD is now making its own chips to power this, in rivalry with Huawei. Meanwhile, Uber continues its return to the space: Reuters thinks it’s invested $500m in Nuro. BYD, UBER
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