In today’s issue:
- Money, money, money, moooney… moooooonney!
- $1.2 million per year in AI royalties
- Shrek’s looking for a date
Editor’s note: Today, we bring you a guest piece by Sam Volkering from his publication AI Collision which was first published on Tuesday 8 October.
You can hear from Sam more often at AI Collision and learn more about the latest developments in AI by simply clicking here to sign up for free.
Welcome to AI Collision 💥,
Here comes the money 💸💸💸
Actually, I say “here comes” but in reality, the money has been steadily flowing into AI for well over a year now.
But what’s fascinating about this particular boom compared to previous technology booms is who’s driving the spending.
Until now, a lot of money has been coming from the biggest companies in tech, such as Microsoft, Alphabet, Amazon, Meta and Nvidia – not the typical higher risk, venture capital money that pumps into smaller startups.
My take is that’s because these tech giants are spending up big because this is a foundational change to how they will operate in the future. In other words, if they don’t spend up big now, the chances they sink into irrelevance in the future is remarkably high.
So yes, they have to take trillion-dollar bets (when all is said and done) on “future proofing” their existence.
And I don’t use trillions lightly there. That’s the bill they’ll each rack up over time to get themselves sorted. Already Mark Zuckerberg is on record saying they’re taking big bets, hundreds of billions of dollars, on the rollout of AI taking a long time – and as I wrote last week, even possibly scaling to infinity.
Just a reminder too, if you think AI can scale to infinity, what do you think that’s going to do to the energy markets? Do you seriously think we’ll have enough energy to meet the demand of the trillions of invested capital these tech giants are pumping into the AI system?
Not. A. Chance.
If we’re seeing the big tech giants spending up big, then it’s fair to expect that VC money and all global investment capital is going to find its way into AI opportunities.
In fact, I would suggest this second wave of AI is going to blow the roof off what we’ve already seen so far.
To give a little bit of insight as to how that starts to shape up, according to forecasts from the International Data Corporation (IDC) in its “Worldwide AI and Generative AI Spending Guide,”
Worldwide spending on artificial intelligence (AI), including AI-enabled applications*, infrastructure, and related IT and business services, will more than double by 2028 when it is expected to reach $632 billion
Maybe that should be $638.6 billion. Or perhaps we can expect $625.4 billion more to come.
That’s because OpenAI, the for-profit, then not-for-profit, now for-profit AI company and creator of ChatGPT, has just gone to the well for a cash injection.
And boy did it load up.
OpenAI just raised an easy $6.6 billion dollars, giving it a valuation of…
Wait for it…
Wait for it…
157 billion dollars.
Not bad for a company that only really released a public-facing application (almost) two years ago.
Reports are saying the round was led by investment firm Thrive Capital, but also that Microsoft (already a big owner) and Nvidia dipped in to this round too.
As OpenAI explained in the announcement,
The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems.
We aim to make advanced intelligence a widely accessible resource.
This falls very much in line with what I’ve been saying about “infinite scaling” of AI. You should remember that the more a company like OpenAI increases “compute capacity” they’re really talking about buying more hardware.
That’s not coming from just any random chip maker either… there’s a reason Nvidia was an investor here too. And if it’s buying up more AI chips, then it’s also buying up data centre racking, space, connectivity, cooling, memory and everything else needed to make AI work.
So, as I say, follow the money and when you do you, very quickly see that the AI boom is on a trajectory in one direction, and it’s going to drag up a whole host of companies with it. Those that level up their AI will be the kinds of companies you’ll want to hold in the future and build your wealth on. Those that are ignoring this trend or aren’t flexible and fast enough to adapt, will be the trash of the market, so make sure you’re on the right winners.
AI gone wild 🤪
Imagine being able to use an army of AI bots to generate $1,207,128 in annual royalties.
Not working a single day more of your life, kicking back and just letting AI make you money hand over fist.
Sounds ridiculous, impossible, so far-fetched that it’s almost like AI made the story…
Well, sort of.
The story is very true, and it was certainly made by AI. Apparently, Michael Smith from North Carolina was in cahoots with the CEO of an AI music generation company to generate those massive royalties from streaming music.
In short, they uploaded their own AI-generated music, and they used an “army of bots” to generate 661,440 streams per day.
As artists are paid by the number of times their music is streamed, this very quickly added up the dollars on the royalty statement. So many dollars that it’s estimated they made more than $10 million dollars from their AI bot activity.
He is now under arrest with the charges of wire fraud and money laundering levelled at him. I reckon it sounds like the FBI has a pretty robust case to send him to jail for a while.
But what is interesting is that these are already the kinds of ways in which AI can be used. Sure, it’s illegal in this case, but it gives a bit of insight as to what can be done with AI, AI agents and AI bots. I’m sure someone will figure out a legal way to do it soon enough.
Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week.) [Figures correct at time of writing.]
Boom 📈
- Brainchip Holdings (ASX:BRN) up 18%
- WiMi Hologram Cloud (NASDAQ:WIMI) up 16%
- Bigtincan Holdings (ASX:BTH) up 12%
Bust 📉
- Predictive Oncology (NASDAQ:POAI) down 18%
- Symbotic Inc (NASDAQ:SYM) down 7%
- Samsung Electronics (KOR:A005930) down 6%
From the hive mind 🧠
- I think that one of the biggest winners from the AI boom just might be Meta. In fact, it probably will be Meta. It’s gone hard at AI from the outset. And it’s injecting it into every aspect of its operations. Its latest release is now doing AI clips that are getting closer and closer to movie quality – maybe Meta AI Studios is next on the cards?
- And just like that, Microsoft is passed and Nvidia is on track for the number one spot…
- This has been a hot topic of discussion at Southbank Investment Research – should we use it, should we shy away from it? I am interested in your thoughts on it which you can add below. I’m talking about Google’s new AI wizardry that allows you to feed AI information and then have it create a podcast for you. Maybe this works when looking to summarise a lengthy recommendation or article. Or maybe it’s too detached from reality. I don’t know yet. As I say, I’m very keen to get your thoughts, so check it out.
Artificial Polltelligence 🗳️
We’re looking back to our poll from last week about whether or not Nvidia would be the kind of stock you’d want to profit from now, or whether you’d buy it for generations long after you’re gone from this earth.
After all, if AI scales to infinity and spending never ends, and Nvidia maintains its technology lead, is there really a cap on how high it can go?
It’s worth a deep think about, which is why we asked the question…
And here’s what you said:
It was close – close enough to think that maybe the third answer should have been, some for now, some for later.
Weirdest AI image of the day
What if [Character] have a Tinder account – r/weirddalle
ChatGPT’s random quote of the day
“Sometimes the best way to solve a problem is to stop participating in the problem.” – Anonymous Tech Industry Saying
Thanks for reading, see you next time!
Sam Volkering
Editor-in-Chief, AI Collision
PS Editor’s note: It is no secret that AI is taking over businesses and jobs – and it’s an unstoppable force. Instead of ignoring it, Sam suggests investors learn how they could potentially profit from it. Find out more here.
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