Tag: Apple

AI forces Microsoft and Google to revise climate goals and stock market in Great Rotation?

Message author By Michiel
Message date August 4, 2024

Switching to a monthly frequency of this newsletter over the summer in anticipation of a newsless summer did not prove to be the smartest decision, so in last month's avalanche of tech news, I try to make sense of the two most important developments. First, the massive energy consumption of AI forcing Microsoft and Google to rethink their climate goals. And fears of recession seem to be ushering in a "Great Rotation" in stock markets, with investors fleeing tech funds into more conservative stocks.

Greenpeace and Amnesty against Microsoft?

It seemed like agreed-upon work: on July 2, as many as eighty nonprofit organizations including Greenpeace and Amnesty International declared that the use of carbon offsets (carbon credits) by companies, actually undermines rather than supports climate goals. The objection is that companies are buying virtually worthless carbon credits and not reducing their emissions.

Companies in sectors ranging from technology to mining, on the other hand, argue that carbon offsets are actually crucial to reducing corporate emissions and moving toward net zero emissions. How can the parties be so opposed when they claim to be pursuing the same goal?

Need for high-quality and reliable carbon removal assets

At its core, this is a confusion of concepts. Opposition to useless carbon credits, issued for, say, forest areas that are never threatened, is justified. But companies such as Microsoft, on the contrary, are voluntarily focusing, without legal requirements, on carbon credits based on actual removal of carbon from the atmosphere. And that removal is crucial: annual global greenhouse gas emissions are about 50 gigatons, but as much as 2,200 gigatons must be removed to stay below one and a half degrees of warming. Simply turning off the tap will not have sufficient effect.

Reducing all emissions to zero will save 50 Gigatons - but there are still 2,200 Gigatons to be removed from the atmosphere.

"It's about creating a market for high-quality, reliable and sustainable carbon removal assets," Melanie Nakagawa, chief sustainability officer at Microsoft, said in a recent interview. "Think about sequestering carbon in the soil through accelerated weathering of rocks or stones that absorb carbon and are turned into concrete. Or Mombak, a large forestry project in Brazil." Another example of carbon sequestration is 280 Earth, nota bene once spawned by Google.

AI threatens climate goals, but there is hope

On July 3, the day after the 80 organizations shared their objection to bad carbon credits, the very club magazine of business, the Wall Street Journal, reported that Google's total emissions had increased 13.5% from 2022 to 2023.

In fact, since 2019, emissions have increased by nearly half, Google reported deep on page 31 of its sustainability report. Competitor Microsoft's total emissions increased 29% between 2020 and 2023.

Google stopped carbon offsets and focuses on removal
source: Bloomberg

Google had just promised to reduce emissions by 50% from 2019 levels, and Microsoft has been saying for years that it will be carbon-negative by 2030.

To cost-effectively combat climate change, it is crucial to find the most cost-effective methods to reduce greenhouse gases (GHG). A fascinating study published in Nature estimates the cost per ton of CO2 for two reforestation methods: natural regeneration and plantations. By creating new maps of costs and carbon storage, it shows that natural regeneration and plantations are cheapest in about half of the suitable areas for reforestation.

Together, at less than $50 per ton of CO2, these methods can reduce 44% more emissions than natural regeneration or plantations alone. This is far more effective than previous estimates by UN research organization IPCC showed. In short: there is hope for effective, affordable carbon removal.

OpenAI loses $5 billion a year

The AI craze is largely responsible for the increasing energy consumption and associated emissions of tech giants. Large language models (LLMs) such as ChatGPT are powered by energy-intensive data centers.

Training, maintaining and using LLMs consumes processor power and thus energy. It therefore came as no surprise that OpenAI is on track to lose $5 billion a year. The question of how all the investments in AI will ever be recouped is becoming more pressing. The gap between investment and market value is now $600 billion.

The quality of LLMs is also being questioned in increasingly wider circles, raising the question of whether other forms of AI do not offer better solutions. Professor Deepak Pathak thinks that not understanding physical environments structurally limits the quality of LLMs.

An LLM can read thousands of reports on gravity without understanding what happens when you drop a ball from your hand. That's why Pathak is trying to develop AI with "sensory common sense.

Spotlight 9: carnage in the stock market

Last Friday, August 2, the stock market experienced its worst day since 2022. This after, to say the least, a turbulent month in the stock market for the technology sector. Initially stock prices were still rising on expectations of a Federal Reserve rate cut in September, but weak economic data, including a drop in manufacturing activity and rising unemployment, caused a stock market sell-off.

The only gainer in the month of July was Bitcoin. Apple also remained steady.

Chip stocks were hit particularly hard, market leaders such as Nvidia and AMD fell sharply but the once proud Intel was hit the hardest: falling sales led to mass layoffs and a 32% drop in Intel shares!

Crowdstrike lost nearly half of its stock market value after the global outage, but the entire AI sector took substantial hits.

The sell-off was not limited to U.S. markets, as investors worldwide were gripped by fears of a global recession. In recent years, larger exchange traded funds such as Apple, Microsoft and Amazon, have far outperformed smaller ones. Still, reports of a "Great Rotation" of large tech funds into lower-market and undervalued "value stocks" seem as exaggerated as the conspiracy theory of a Great Replacement.

Link Tips

Elon Musk gives update on second human with Neuralink implant

Politically, Musk has been on the lookout for what is beyond the far right for a while, but as soon as he talks about technological advances, he remains fascinating. By the way, Musk himself always appears to play podcasts at twice the normal speed. Nicest quote from his latest appearance on Lex Fridman's podcast: "If your vocabulary is larger, your effective bitrate is higher."

PayPal mafia's love for Donald Trump explained

Another interesting podcast, More or Less by the couples Morin and Lessin, tried to explain why people like Elon Musk, Peter Thiel and David Sacks are such ardent Trump supporters. A disconnect between intelligence and empathy can be observed.

How crypto affects U.S. presidential election

Investors Marc Andreessen and Ben Horowitz are donating to Trump, to the annoyance of The Verge, but LinkedIn founder Reid Hoffman and other top investors are rallying behind Kamala Harris. Crypto regulations are proving to be a divisive issue. I expect Harris to propose a different crypto policy before the election than President Biden implemented with the SEC during his presidency.

XRP had an amazing July, but Solana also held its own while the rest of the crypto world processed corrections.

How do you hire a CEO?

Top investor Vinod Khosla, who was at odds with Elon Musk just a few weeks ago over his support for Donald Trump, explains how to hire a CEO. Khosla is certainly no supporter of Trump and shared in his familiar clear terms what to look for when choosing a CEO. What's nice is that the way he shares it differs on Medium and on X.

Small, delicate drone

The HoverAir X1 drone is the first interesting drone not made by DJI in years. Small problem is that the drone will land on its own, including over water. I'm sure there will be a solution to that soon.

Apple Vision Pro on sale in Europe and Asia

Totally overlooked by the media and by consumers: the Apple Vision Pro is now on sale in most countries but no one cares. Too bad the beautiful device is alarmingly expensive and too little good content remains available for it. When will Apple dare to lower its margin and create a market by, for example, offering substantial discounts on the Vision Pro, say to buyers of a Mac or an iPhone?

Dr. Sachdev lectured and we listened especially attentively. The entire webinar is here.

Five, no yet six, tips for successful Web3 projects

Dr. Nisheta Sachdev and Gert-Jan Lasterie discussed the success and failure factors when introducing new projects in the Web3 world. Together with the webinar participants, I asked the questions. It is especially interesting to see which tactics for quickly building a real community are also applicable to other products and services.

Nice finale for hot days

Even one glass of alcohol a day can lead to serious consequences for your health. But there is also good news: "It is healthier to be social without the need for alcohol, but the benefits of spending time with others are still likely to outweigh the risk of consuming one to two units of alcohol." In other words: raise a glass together, otherwise don't.

Cheers, and see you next month!

Tags AI, Apple, crypto, Elon Musk, Google, Microsoft, Nvidia, OpenAI

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Billions hunt on Wall Street due to AI gold rush

Message author By Michiel
Message date June 16, 2024

It was the week of AI on Wall Street. After Apple presented its AI plans on Monday, things remained quiet for a while, but after a day's respite, the stock market hit a complete snag on Wednesday: Apple briefly overtook Microsoft as the world's most valuable company, while just last week it had lost the second spot to Nvidia. What is wrong with these investors? Why the absurd price swings of hundreds of billions?

The market value of Apple (orange), Microsoft (blue) and Nvidia (green) last week in trillion dollars. Source: ChatGPT 4.o

Billions of dollars

As of June 14, Apple, Microsoft and Nvidia have all passed the milestone of a $3 trillion market value, making them an exclusive "trillion-dollar" club. Due to enthusiasm among investors about the upcoming introduction of AI applications and ChatGPT in the iPhone, Apple briefly regained the title of the world's most valuable company with a market capitalization of $3.283 trillion, just slightly higher than Microsoft's at $3.282 trillion.

Meanwhile, Nvidia's stock price also rose steadily, driven by investor excitement over Nvidia's 10-for-1 stock split. Nvidia's market capitalization experienced a meteoric rise, from $2 trillion to $3 trillion in a record-breaking 96 days, faster than Microsoft (649 days) and Apple (718 days).

Nvidia's dominance in AI chips and strong earnings growth have fueled share price gains, with shares up more than 132% this year and 193% in the past year. But on Friday, Apple's share price fell slightly, Microsoft rose slightly and so Microsoft ended the stock market week as it began: as the world's most valuable company.

Everyone was buying iPods, not AAPL

Let's face it: if the so-called investment gurus understood anything about technology, they would have been buying Nvidia shares en masse years ago. But just as there was no one 21 years ago who, instead of buying an iPod at that price, $300, bought shares of Apple (which would be worth $137, 000 today), there is virtually no professional investor who has been in Nvidia for more than, say, five years.

Professional fund investors are as big amateurs as you and me. Why are Apple ($3.26 trillion), Microsoft ($3.29 trillion ) and Nvidia ($3.24 trillion) now worth almost as much? Ask any analyst or investor and they'll say in chorus: because of AI. That's like an artist manager saying, "Doesn't matter if I'm manager of Taylor Swift or Country Wilma, they're both singers.

The market does not seem to understand that these are totally different companies with different approaches to revenue, costs and possibly profits from applications of AI. But their perspective is totally different.

Apart from all the AI violence in the stock markets this week, with Nvidia still rising stronger than Apple, it is notable that Bitcoin and Ethereum fell while Bitcoin seemed to be heading for a new all-time high.

Nvidia makes pickaxes, Microsoft is mining

With AI, we can speak of pure gold rush, so let's keep that metaphor. In this gold rush, Nvidia makes the shovels and picks that every miner needs. Amazon, Meta, X, Tesla, Oracle, go down the list of tech giants: all, like Microsoft, use Nvidia's shovels and picks.

There is no alternative that delivers the same performance per dollar invested, which is why Nvidia's revenue growth and profit margins are already legendary. The question is how long Nvidia can maintain this position, but at least for the next few years.

Microsoft is the biggest miner, with worldwide data centers full of Nvidia stuff. At Microsoft, unlike Nvidia, the question is whether those billion-dollar investments will lead to sufficient margin. The first noises are already being heard that Microsoft's customers are not at all achieving the intended improvement in returns based on Microsoft's AI applications.

This will obviously lead to price erosion and lower sales and undermine investor confidence in Microsoft's AI plans because the costs are astronomical. These are not investments of billions, but tens of billions, and they will start to gnaw away at the profit margin.

OpenAI is goldsmith, Apple the jewelry maker

OpenAI sits just a layer above Microsoft: it uses Microsoft's data centers and cloud services to forge gold, demanding maximum power from Nvidia chips. Demand for OpenAI's technology, particularly its flagship ChatGPT, has been huge. Meanwhile, OpenAI is heading for annual sales of nearly $3.5 billion.

That's why shareholder Vinod Khosla remains unabatedly optimistic. No wonder, he stepped in at a valuation under a billion and has already seen his investment increase hundredfold in value. Then I would also smile affably at the criticism of OpenAI.

OpenAI, led by Sam Altman, likes to leak revenue figures; but we hear nothing about its burn rate, its losses. This is no wonder, because in fact OpenAI pays heavily to two suppliers: Microsoft and Nvidia. Both seek maximum profit, and so OpenAI burns billions a year. The billions it invests in OpenAI, it largely gets paid back by services provided.

No, then Apple, the jewelry maker of AI mining. It builds AI applications here and there into its operating system and applications, which they don't call AI but Apple Intelligence, but the cost of these, viewed in the big picture at Apple, is virtually marginal. And the partnership with OpenAI announced big Monday costs Apple nothing at all.

What Apple does is create elegant, easy-to-use products that improve everyday life, similar to turning raw gold into fine jewelry. Apple's ambition is to offer consumer products and services that seamlessly integrate AI to improve our daily lives. The only question is: Will those AI ambitions from Apple work this time?

Apple Intelligence is Siri 2.0?

Investor and former journalist MG Siegler rightly points to all of Apple's previous attempts to get Siri working properly. It's the same pain point Marques Brownlee pointed out in conversation with Apple CEO Tim Cook.

More than two billion iPhone owners will get an update before the end of the year that will allow them to enter the AI era - provided their iPhone can handle it and, as a result, Apple may well get a huge sales boost from the iPhone 15 and the new iPhone 16, while for years renewing your iPhone was virtually unnecessary.

By the way, it's remarkable how times have changed: just last week I pointed out a podcast with legendary Wall Street Journal reporter Walt Mossberg, who terrified the entire tech elite. Nowadays, it's YouTuber and professional frisbee player Marques Brownlee for whom the red carpet is rolled out at the introduction of a new product.

Traditional journalism is struggling to make sense of Apple's introduction of AI applications. This makes sense in itself, as it is all still future music and nothing can actually be tested yet.

This is now called the Apple Power Stance: legs (too) wide, toes at ten past three-thirty.

It's just sad that the Washington Post didn't get much further than to point out the hilarious pose with which all Apple employees are portrayed these days. It has since been flatteringly christened the "Apple Power Stance," but surely the Dutch know this position better as Bassie's spreading stance on his floppy shoes.

Too much focus on LLMs and Generative AI

Those who would have followed the technology sector from some distance this week would undoubtedly get the impression that Large Language Models (LLMs) such as ChatGPT and Google Gemini, are the only and most important form of AI.

But criticism of the hundreds of billions being thrown into this branch of AI is rightly growing louder. Martin Peers of the Information has a sharp analysis:

"Despite the ubiquity of AI in news reports, one issue does not get enough attention: Are the advances that society will gain from the new technology worth the cost? By cost, I specifically mean the impact on energy supplies. The energy demands of data centers threaten to deplete energy resources, pushing back efforts to switch from carbon-emitting energy sources.

And for what? Judging by how some technology companies market their AI-driven services, it's about helping consumers design a menu for dinner, plan a vacation or find a photo on their phone. (The idea, of course, is to get consumers to spend money on new devices or AI subscriptions.)

Or it's about helping companies improve employee productivity, including cutting jobs (great!). Despite the attention these applications have attracted, AI's real promise undoubtedly lies in its potential to solve existential challenges such as deadly diseases or dangerous drivers.

Efforts to use the new technology in those directions are already underway. Google, for example, has its AlphaFold project aimed at accelerating medicines for diseases. Elon Musk is making AI the centerpiece of his efforts at Tesla to develop fully autonomous driving. Microsoft, meanwhile, is using AI to improve cybersecurity, among other things - an effort that can't come soon enough.

Data breaches at large companies - including recently at Snowflake, which affected several of its customers - have become so commonplace that they attract little attention, despite the pain they cause. No one knows the problem better than Microsoft, whose chief executive, Brad Smith, was addressed Thursday in a congressional hearing about the company's cybersecurity shortcomings.

But fighting deadly diseases, solving autonomous driving and even improving cybersecurity are not cheap or fast ventures. Yet large technology companies are spending tens of billions of dollars to develop AI, so they need a return. The danger is that the need for quick returns from consumer and business services will distort investments, neglecting more important needs.

Unlike AI startups like Anthropic and OpenAI, large companies are not run by non-profits that require them to put the interests of humanity first. Let's hope that AI's greatest advances don't turn out to be trivialities, like saving consumers a little time while playing with their phones."

"LLMs suck oxygen out of any space"

Leading thinker on technology Jennifer Zhu Scott puts it this way: "LLMs suck all the oxygen out of any room I enter. Again, a reminder:

LLMs will eventually become commonplace
LLMs are the playing field for only a handful of firms in the world
LLMs are not the future of truly advanced AI; instead, a more efficient architecture that requires less data/calculating power/energy and is more like biological brains is the future.
LLMs cause a huge carbon footprint and water consumption, and much of the output is credible nonsense, meaningless "art," deep fake and massive privacy invasion
Praise to those who keep their LLMs open-source

OpenAI's release of ChatGPT3 in November 2022 set in motion this mad race of LLMs and has delayed the progress of advanced AI by at least five years."

Earlier, Jen Zhu Scott said, "It's simple. We won't get to Mars by building taller buildings on Earth. Where Mars stands for general artificial intelligence, or AGI."

LLMs, as clever as some applications are, remain advanced forms of the best player in a pub quiz or the scholar who always raises his finger trying to give the answer. Only the answer does not always turn out to be correct, and the facts that the diligent scholar spits out are based solely on learned knowledge.

Fundamental technology that advances society, e.g. helps eliminate disease, will not be developed on the basis of LLMs. This puts the billion-dollar investments and trillion-dollar valuations for companies engaged in the current form of AI, LLMs, in an increasingly questionable light.

See you next week!

Tags AGI, AI, Apple, generative ai, Microsoft, OpenAI

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Nvidia has passed Apple, so what will Tim Cook do tomorrow?

Message author By Michiel
Message date June 9, 2024

So much happened in the tech world last week that I briefly discuss ten news items that stood out to me the most.

If Nvidia maintains the revenue and profit growth of recent quarters, and it looks like it will, it will be the world's most valuable company before the end of the year.

1. Nvidia worth more than Apple

The day you knew who was coming was Wednesday: Nvidia passed Apple in stock market value and became the world's most valuable company after Microsoft. There are legitimate reasons why Apple's sales are stagnant, with limited access to the Chinese market in particular preventing Apple from realizing its full market potential.

But there is more behind Nvidia's impressive run. Because while Nvidia had been investing heavily in the development of AI technology for over a decade, with all the risks of such a relatively one-sided strategy, Apple waited no less than nine years since the iPad in 2010 and the Apple Watch in 2015, until 2024, before introducing a new category of products with the Apple Vision Pro.

Meanwhile, Apple did buy back hundreds of billions of its own shares.Investors were happy about it, but buying back its own shares remains a weakness. Apple could have bought all sorts of useful companies, but Beats. the maker of flashy headphones, was the largest acquisition in Apple history ten(!) years ago at a cost of three billion dollars. That seems like a lot, but put it in perspective: Apple makes that amount in net profit every two weeks.

Apple could have purchased content (like Disney, and then divested the channels like ESPN), content aggregators (Netflix, Spotify), a completely new product category (Tesla) or valuable sports rights (World Cup, NFL, Olympics, Premier League). But none of that. No, to satisfy shareholders Apple kept doing huge stock buybacks.

Beats only fun for Dr. Dre

Meanwhile, it hobbled along behind Spotify with Apple Music, and those ostentatious headphones from Beats by Dr. Dre pleased mostly Mr. Dre himself - and according to rumors, he's not even a real doctor. More than half of Apple's profits come from products, particularly the iPhone, that are more than a decade old and under pressure from cheaper competitors.

Apple, at its core, sells too few products to still grow sales independently, although it still managed to increase its profit margin by cleverly optimizing its sourcing, like replacing Intel as a chip supplier with Apple's own top-quality Silicon chips.

Nasdaq Composite beat Apple

Investors are punishing mediocre growth due to Apple's lack of innovation and are sprinting toward Nvidia. NVDA shares are up more than 150% in 2024 (AAPL: 6%), 214% in the past year (AAPL: 9%) and over 3,200% in the past five years (AAPL: 314%).

By comparison, during those same periods, the Nasdaq rose 14%, 29% and 126%, respectively. It was unimaginable a few years ago: the Nasdaq Composite rose more than three times as much as Apple last year .

For those looking for more background on Nvidia's growth, I previously wrote this piece. Why the Apple Vision Pro is technically fabulous but from a business perspective merely a drop in the bucket for Apple, is described here.

TikTok bypasses U.S. export restriction

Nvidia is so unique and crucial that all other major tech companies are clutching their hats to be allowed to buy chips from it. From Microsoft to Google, Meta and Amazon: without Nvidia hardware, they can't develop AI applications, especially processor-guzzling Large Language Models (LLMs) like ChatGPT, Google Gemini or applications on Amazon Bedrock.

ByteDance, the parent company of TikTok, also needs Nvidia to develop AI and has cheekily circumvented U.S. export restrictions: it rents cloud capacity from U.S. cloud services, including those of Oracle. Officially, none of these developments seep into China, but for those who believe that, I also have a nice used car for sale from a half-blind widow, barely used.

2. Tim Cook's AI moment

Tomorrow morning, 10 a.m. California time, Tim Cook will take the stage at Apple Park in Cupertino at a pivotal moment in his career. Cook has been through a lot in his more than 12 years at the helm of Apple, but never this. He must convince the world that Apple has an AI strategy.

It has already been leaked that Apple will not launch a single AI app, but will apply AI across the breadth of its product spectrum. With one crucial difference here, compared to Microsoft: everything at Apple is opt-in, so users have the choice to turn AI applications on or off.

In contrast to the fiasco at Microsoft this week, which, with the feature Recallunsolicited searched through a user's activities, including files, photos, emails and browsing history and taking screenshots of the user's computer every few seconds to search through as well. Well that's not creepy at all.

3. Elon Musk sent Tesla's Nvidia chips to X and xAI

"Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead,” an Nvidia memo from December said. “In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla.” according to a leaked Nvidia memo from December.

By directing Nvidia to prioritize X (also known as Xitter, because formerly Twitter) over Tesla, Musk ensured that the automaker would receive more than five hundred million dollars worth of Nvidia GPUs months later. This likely caused additional delays in setting up the supercomputers Tesla says it needs to develop autonomous vehicles and robots.

A more recent email from Nvidia, from late April, said that Musk's comment at Tesla's first quarterly meeting "conflicts with bookings" and that his April post on X about ten billion dollars in AI spending also "conflicts with bookings and FY 2025 forecasts."

There is growing criticism of Musk's many hats, who, after all, is also CEO of aerospace company SpaceX, founder of brain-computer interface startup Neuralink and tunneling company The Boring Co. He additionally owns X, which he acquired in late 2022 for forty-four billion dollars, and AI startup xAI. Now Musk is even in danger of losing a fine bonus of fifty-six billion dollars.

The nice thing about Musk is that he often responds to critical reports on X, including now. His response is that Tesla had no capacity to do anything with those much-needed Nvidia H100 chips and they would have been stored in a warehouse. Hence the change of receiving address for this multi-million dollar order. Musk also says Tesla will install fifty thousand H100s at the Tesla Giga Factory in Texas to develop fully self-driving cars (FSD).

Nvidia Blackwell: no discounts

Just a quick calculation: an H100 reportedly goes out of the store for at least thirty thousand dollars, so Tesla alone buys one and a half billion dollars worth of goodies from Nvidia. Then consider that the new Nvidia chip, the Blackwell, has a higher base price and is quickly heading toward seventy thousand dollars, and it is clear that it is a matter of months, not years, before Nvidia also overtakes Microsoft in market value and becomes the world's most valuable company.

4. Wall Street Journal's Walt Mossberg on Jobs, Gates and Bezos

No one had the network of Walt Mossberg, the legendary tech journalist who built deep relationships with the founders of the world's biggest technology companies, including Steve Jobs, Bill Gates and Jeff Bezos.

In this podcast, the now-retired Mossberg talks about how Steve Jobs dealt with moments like Tim Cook is experiencing tomorrow, what Jobs focused on (everything was about the consumer) and how much Jobs cared about the stock market (not much, at least that's how Jobs made it look).

5. Majority of companies halt acquisitions because of ESG concerns

Sustainability considerations are becoming increasingly central to the M&A process, with more than seventy percent of M&A leaders saying they have abandoned potential acquisitions because of ESG concerns. An overwhelming majority say they are willing to pay more for targets with strong ESG characteristics, according to a new survey by professional services firm Deloitte.

The question is how Environment, Social and Governance is measured. Unlike traditional accounting, there are hardly any measurable criteria for ESG. Therefore, I hereby tell you: this newsletter is hugely social and is written by an almost elderly man with a dark complexion. A newsletter cannot be much more ESG.

6. OpenAI CEO Altman's weekly scandal

Sam Alman's opaque personal investment empire makes him rich and raises questions about conflicts of interest. For although Altman has no shares in OpenAI and earns only a modest income there, out of the goodness of his heart, meanwhile he appears to be awarding all kinds of companies in which he is a private shareholder good deals with OpenAI. Especially good for his own investment portfolio.

7. OpenAI with another weekly scandal

"I’m scared. I’d be crazy not to be." So says a former OpenAI employee to Vox about the open letter from a group of AI experts from OpenAI , Google DeepMind and Anthropic
" warning against the potentially humanity-threatening consequences of large-scale AI use.

Vox rightly states, "It can be tempting to see the new proposal as just another open letter from "doomsayers" who want a break from AI because they fear it will get out of control and wipe out all of humanity. That's not all this is. The signatories share the concerns of both the "AI ethics" camp, which is more concerned about current AI harms such as racial prejudice and disinformation, and the "AI security" camp, which is more concerned about AI as a future existential threat. These camps are sometimes played off against each other. The goal of the new proposal is to change the incentives of leading AI companies by making their operations more transparent to outsiders - and that would benefit everyone."

At the same time, we should be aware that a large group of AI experts believe that the current generation of LLMs will not lead at all to the dreaded introduction of "Artificial General Intelligence"(AGI), the AI form that will be able to perform all human functions better than us and could replace us. Investor Benedict Evans wrote an excellent piece on this last month.

8. The AI elections instead of the U.S. elections?

Until AGI makes us humans obsolete, we had better worry about how AI affects democracy. Regulators can't decide whose problem it is. A federal power struggle in the U.S. and inaction by the U.S. Congress could leave voters largely unprotected prior to the 2024 election.

The chairman of the Federal Communications Commission (FCC) last month announced a plan to require politicians to disclose AI use in TV and radio ads. But the proposal is receiving unexpected opposition from a top Federal Election Commission (FEC) official, who is himself considering new rules on AI use by campaigns. But when?

The dispute - along with inaction at the FEC and Congress - would leave voters unprotected from those using AI to mislead the public or hide their political messages during the final phase of the campaign for the U.S. presidency.

9. BBC: audio deepfakes are worse than video deepfakes

The BBC believes that audio deepfakes are worse than video deepfakes because they are harder to spot and few people realize they are listening to a bot. This article did lead X to delete a number of accounts on which fake messages were shared.

Finfluencer of the century: Keith Gill aka Roaring Kitty

10. GameStop shares fall despite Roaring Kitty

It remains highly recommended: the movie Dumb Money about how YouTuber and Reddit user Keith Gill, better known as Roaring Kitty, propelled GameStop stock up and turned a few billionaires back into millionaires.

After disappearing from the face of the earth for a few years, Gill made his comeback on YouTube this week to over two million viewers. For GameStop stock, Gill's return was to no avail, but it is still extraordinary to see a grown man in sunglasses and a sling tell of his love for a dying retail chain while making hundreds of millions in the process.

*"Blue eyes. Finance. Trust fund."* Singfluencer Megan Boni.

In conclusion: in nineteen seconds to world fame

27-year-old Megan Boni asked on TikTok for remixes of her nineteen-second video that said, "I'm looking for a man in finance. Trust fund. 6' 5" ((1m96). Blue eyes. Finance. Trust fund."

Forty million views and a remix with David Guetta layer, she was offered a record deal by Universal and is invited to perform in Ibiza. The impact of going viral on TikTok is unprecedented.

See you next week!

Tags AI, Apple, Elon Musk, Microsoft, Nvidia, OpenAI, Sam Altman

AI invest technology

Nvidia catches up with Google

Message author By Michiel
Message date June 2, 2024

Mostly declines in tech and crypto this week, with Nvidia and Tesla (once) on the positive side

Nvidia is about to overtake Apple and become the second most valuable company in the world as the biggest beneficiary of the surge in AI application adoption that has made the iPhone maker the biggest Wall Street company by market value for years.

The reliance of virtually all artificial-intelligence applications, such as OpenAI's ChatGPT, on Nvidia's high-performance chips has helped Nvidia's stock value nearly triple in the past year to $2.7 trillion ($2.700 billion). By comparison, Apple has a market value of 2.9 trillion.

Even Microsoft's market value is closing in on Nvidia. At the close of Wall Street on Friday, Microsoft was worth $3.09 trillion. Bizarre but true: Microsoft shares rose 12.06% this year, barely more than the S&P 500 (11.27%).

But while Apple's P/E ratio is 30 and Microsoft's is 36, Nvidia is estimated by investors to be as much as 64 times annual earnings. Nvidia posted revenue of $26 billion in the first quarter of fiscal 2025, up 18% from Q4 and up 262% from a year ago. Net profit was $14. 88 billion, up $2 billion from the previous year.

It is hard to imagine, but with even slightly sustained growth and continued P/E ratios above 60, Nvidia will have passed both Apple and Microsoft and become the world's most valuable company before the end of the year. That is the economic reflection of the global AI wave.

Recommended: webinar on AI applications

Every reason to learn more about what AI can do for your organization. For those interested in learning more about how AI and especially custom GPTs can be used to generate leads and improve services, NXTLi is hosting a webinar on Friday, June 7, at noon, for which you can register here.

Tags Apple, Microsoft, Nvidia, S&P 500

AI invest crypto technology

Nvidia baffles investors, but crypto beats AI with ease

Message author By Michiel
Message date May 27, 2024

The reason this newsletter appears later than ever is due to the fact that I spent hours calculating, because I didn't trust my math. Walked the dog and then calculated everything again. But the result remains the same: those who bought the biggest tech stocks last year did worse in terms of returns (up 34%) than those who focused on AI stocks (up 96%). Yet even AI stocks, even if you pick the best performing ones, lag far behind the big winner over the past year: crypto. And then we didn't even have to choose critically. Anyone who bought the nine largest crypto tokens at the end of May 2023 would now have earned a return of 189%.

My Spotlight 9, consisting of the largest tech stocks and two leading cryptos, Bitcoin and Ethereum: average +71% in the last year

Nvidia: technical marvel and stock market miracle

Exactly one year ago, I first wrote about Nvidia, which then posted 64% revenue growth compared to the same quarter in 2022. This week, Nvidia presented jubilant quarterly results, with a 262% increase in revenue and an eye-popping 462% increase in earnings. It seemed like a good time to compare Nvidia to other tech stocks, AI companies and the biggest cryptos.

Anyone who looks at Nvidia with an even slightly longer lens, for example, at the stock since Nvidia's IPO in early 1999, will be astonished, as I am, that the shares have risen from a split price of $0.25 to over $939, representing an unimaginable gain of 375,500%. Three hundred seventy-five thousand percent. And a half.

Many investors found Nvidia overvalued last year, with price-earnings ratios above sixty. Most tech investors also have little use for crypto. So the presumption is that very few investors followed "my" Spotlight 9. Admittedly, neither have I myself! The 10-for-1 stock split (buy 1, get 10 shares) announced this week makes NVDA stock much more accessible to retail investors.

Remove Nvidia, Bitcoin and Ethereum from my (obviously very arbitrary) Spotlight 9, the returns of Alphabet, Amazon, Apple, Meta, Microsoft and Tesla are only 34%. Many so-called insiders often talk about FAANG (Facebook/Meta, Apple, Amazon, Netflix and Google/Alphabet), but I really don't understand why Netflix is in that so-called basket of digital market leaders and Microsoft is not? It is the largest company in the world by market value and also a 49% shareholder in OpenAI.

I digress. The 34% price gain of Spotlight 9 shares without Nvidia, Bitcoin and Ethereum is obviously not at all wrong. But those who had simply bought an S&P 500 tracker also made a very fine 26.14% gain. With lower costs and less hassle.

The basket of stocks I compiled as 'AI stocks': 96.33% return in the last year

AI stocks beat Big Tech

Early this year, I tried to create a sort of counterpart to Big Tech with the AI Spotlight 9, to quickly compare their performance. Only: Nvidia and Microsoft are the biggest players in AI and thus belong in the AI Spotlight 9, alongside AMD, Broadcom, Crowdstrike, Gigabyte, Palantir, Snowflake and Super Micro.

It is striking that Super Micro has outperformed Nvidia, with a whopping 303% share price gain, by "only" 173%. Simply because Super Micro was undervalued, more unknown and now probably a touch overvalued.

Just how hot the market is for AI companies is evidenced by the fact that anyone who bought this basket of nine very subjectively chosen by me on January 1, stocks that I believe are benefiting from the AI wave, would have made a whopping 64% return. (I know that at least one reader bought the entire month's basket, but again: it's not me myself).

To put this 64% in perspective, that's a return within five months, compared to 34% in an entire year from the Big Tech stocks in my "old-fashioned" Spotlight 9: Alphabet, Amazon, Apple, Meta, Microsoft and Tesla.

Not AI, but crypto eats the world

For a while, that's why I felt smart, until I started on the third "basket": crypto. It turns out to be the old song. If you're playing poker and you don't know who the fool at the table is, it's you. Note:

The nine largest cryptos measured by market value in the last year: +189% and Solana as the outlier with 750% increase.

These are the performance of the nine largest cryptocurrencies, measured by market value, over the last 365 days. Granted: it helps that this measurement takes place within 48 hours of the unexpected approval of an Ethereum ETF by U.S. monetary watchdogs, after which prices rebounded.

But even without this recent tailwind, the crypto market has skyrocketed in the last year. To be honest, I didn't see it coming. But all that reading of white papers, annual reports, interviews with top people and clients notwithstanding; I should have just bought a basket of the ten biggest cryptos and made 189% price gain without thinking. Pay particular attention to Solana, which rose 750% in one year!

Biden discontinues fight against crypto

The crypto market has the wind in its sails from all sides. Interest rates are not doing anything crazy and Donald Trump has already announced that under his reign the crypto market will not be given a leg up, much to the irritation of the Democratic camp.

The problem for the Democrats is that the continued backlash against the crypto market does not generate votes, but costs votes. Politically, this is a futile strategy. So Biden is bound to cave and the sudden approval of an Ethereum ETF cannot be separated from the new political winds.

Meanwhile, though, the question remains as to which applications are actually innovative and of any use. Web3 games are still getting a lot of attention, but are still in incubation stage.

Those delving into blockchain developments often come across the term RWAs: Real World Assets, which BlackRock seems to have great interest in. Think of tokenizing, for example, bonds, real estate or, as the Tracer project aims to do: carbon removal credits.

Last Thursday, I spoke with Chief Business Officer Gert-Jan Lasterie and Chief Technology Officer Philippe Tarbouriech in an approximately 45-minute webinar, which can be seen here.

Tags AI, Apple, bitcoin, crypto, ethereum, Microsoft, Nvidia, OpenAI

technology

Apple says sorry, Microsoft closes carbon megacontract

Message author By Michiel
Message date May 12, 2024

What's the reason an oompa loompa went off on Apple CEO Tim Cook?

In the latest commercial for the iPad Pro, titled Crush, virtually every expression of human creativity is crushed by a huge vise until what remains is an iPad Pro that has survived the slaughter. A ridiculous idea in terms of content, and also an almost exact copy of a 2008 commercial for an LG cell phone. Apple imitating LG, the company actually called "Lucky Goldstar". How the mighty have fallen.

Since Crush debuted on Tuesday, Apple has been getting hammered daily in leading publications such as AdAge and Variety, but even the usually cautious BBC eagerly quoted actor Hugh Grant, who I adored in his role of Oompa Loompa in Wonka, responding to Apple CEO Tim Cook on X: 'The destruction of the human experience. Thanks to Silicon Valley.' A brief anthology of other headlines:

A crushing blow

Apple doesn't understand why you use technology

Apples also rot

Apple's 'Crush' ad is disgusting

Oops.

Afrojack versus Apple

Afrojack found it "maybe not such a good campaign. When the man, who parked a new Ferrari in the guardrail within an hour after picking up from the dealership and who fathered a daughter named Vegas with a contestant from a reality tv-show called The Golden Cage, when that man is concerned about your brand, we may speak of a crisis situation.

Apple has since announced it will no longer air the commercial and even apologized. A revealing report on how things could have gone so wrong at the company behind the most legendary TV commercial of all time, 1984's Superbowl commercial for the Macintosh, will surely appear at some point.

The Crush commercial is better backwards.

'Marketing is about values'

It has now been thirteen years since Steve Jobs passed away, and it's cheap to shout at every Apple mistake that it never would have happened under his leadership. But it is interesting to revisit this internal presentation Jobs made in 1997 just after his return to Apple. Introducing the campaign around the new slogan "Think Different," which was even grammatically incorrect, Jobs told the Apple employees:

"For me, marketing is all about values. The world is very complicated. It's a noisy world. We don't get many opportunities to make sure people remember us. No company gets that chance. That's why we have to be very clear about what we want them to know about us."

What impresses regardless of the content is that throughout the 15-minute presentation, Jobs never reads anything aloud, doesn't look at any screen or uses cheat sheets; the man lives this text, he means it. That's the only reason he can convey it so clearly. Even while wearing cargo shorts.

Apple was: help dissenters

The crux of the Crush commercial's failure lies in the fact that its creators seem to have forgotten Apple's values. Apple in the 1980s stood for the slogan "the power to be your best.Apple wanted to provide the tools that allowed people to be their best. So in 1997 it became "think different," an ode to people who think differently and follow their dreams.

In Crush, iconic symbols of creativity are literally crushed to introduce a new iPad, in a tragic unintentional metaphor for Apple's current identity crisis. The clumsy attempt to equate technological progress with the total destruction of artistic expression underscores how far Apple has strayed from its original mission.

Instead of unveiling revolutionary products, Apple is now focusing on licensing technologies such as OpenAI's ChatGPT. Such collaborations illustrate the shift from innovative leadership to reliance on external sources for innovation. The lack of appealing new products is the reason behind steadily declining sales. The Apple Vision Pro is beautiful, but a drop in the bucket in terms of sales.

It's high time Apple remembered the lines from its own Think Different TV commercial:

"Because the people who are crazy enough to think they can change the world, are the ones who do."

Webinar on Tracer on May 22 and 23

Speaking of the kind of optimists who think they can make the world a better place: I've been getting a lot of questions about the blockchain project Tracer and how to participate in the emerging gigaton industry of CO2 removal, which I wrote about last week.

I share the amazement of many readers at the downright gigantic expectations expressed by firms like McKinsey, Morgan Stanley and Boston Consulting Group in their reports about the huge market of carbon removal.

The team at Tracer is therefore kindly hosting a webinar next week, especially for the readers of this newsletter, on the latest developments in carbon removal, how blockchain plays a role in it and how you can support this initiative. The webinar will be given in Dutch on May 22 and in English on May 23. Register for the obviously free webinar here.

On May 22, I talk with Gert-Jan Lasterie, Chief Business Officer of Tracer. While studying business administration, he started the weblog Flabber, which grew into a site with millions of visitors per month, partly due to successful series such as New Kids and Buitenbeeld. Lasterie sold Flabber to the American media conglomerate Vice, after which he headed social media at Coolblue with the lovely self-titled "chatty boss" and held various management positions at Telegraaf/Mediahuis.

In addition, Lasterie wrote the book "Bitcoin and other crypto currencies," which is considered the Dutch standard work on crypto investing. If only for the amusing subtitle: 'How you thought you were late getting into crypto but became more successful than people who didn't read this book.'

On May 23, in the English-language webinar, Chief Technology Officer of Tracer Philippe Tarbouriech joins us. Tarbouriech held technical positions at startups and large tech companies in Europe and the U.S., with his time as a Technology Fellow at Electronic Arts (EA) including working on the gaming classic SimCity. In a transition from virtual city builder to real life world savior, Tarbouriech has in recent years focused on blockchain applications such as the Carrot smart contract, which creates and tracks carbon removal tokens .

During the webinar, Lasterie and Tarbouriech will, of course, also discuss Tracer's funding and how you can still participate in the project during the seed round this month.

Microsoft signs largest ever contract for CO2 removal

The day after my last newsletter, which was devoted almost entirely to the carbon-removal industry (high word value in Scrabble), the New York Times published an article about it with the headline, 'Will there be a carbon market? A huge amount of work is being done to remove carbon from the atmosphere, but who is going to pay for it?'

Coincidence makes sense, to paraphrase Johan Cruijff, so it was nice that less than a day later Microsoft and Swedish energy company Stockholm Exergi announced a 10-year off-take agreement, under which Stockholm Exergi will supply Microsoft with more than three million tons of carbon removal certificates from its planned bioenergy plant with carbon capture and storage (BECCS) in Stockholm.

It is the largest carbon removal contract in history.

In an effort to be not only carbon-neutral but even carbon-negative by 2030, Microsoft has in recent months announced a series of carbon removal agreements covering a wide range of technologies and approaches, including reforestation, direct air capture (DAC), ocean carbon removal and biochar-based projects.

On Thursday, Microsoft also announced the purchase of three million tons of removal credits in Brazil over a 15-year period. With this, the world's most valuable company gives a clear answer to the New York Times as to who will pay for carbon removal. No amounts were disclosed with either purchase, but I estimate that Microsoft is setting aside at least three billion dollars for these six million tons; an average of five hundred dollars per removal credit.

As if it were agreed work, the world's largest CO2 vacuum cleaner also opened in Iceland on Wednesday. Everything about Mammoth, from Climeworks, is impressive, as is seeping from the report CBS made. From nearly a thousand dollars per ton of CO2 removed, the price of removal credits produced by Mammoth should drop to less than three hundred dollars by 2030.

Companies give sustainability higher priority

It is striking that while in the political arena many conservative parties are in power around the world, with lackadaisical policies on climate, it is precisely companies that are taking the lead on carbon removal. It seems as if companies better understand that in order to make annual sales and profits, it is quite convenient if there is still a livable planet thirty years from now. Politicians tend to view the world through a lense with a 4 year view, at most: until the next election.

The rosy forecasts from McKinsey, BCG and Morgan Stanley are obviously based on information coming directly from their clients' boardrooms. More than half of CEOs indicate that sustainability is a higher priority now than it was a year ago and that carbon removal is considered the top long-term strategic priority, according to a new survey by EY.

Tags Apple, Marketing, Microsoft, Steve Jobs

crypto technology

Spotlight 9: Apple shares rise despite revenue decline

Message author By Michiel
Message date May 5, 2024

Apple's magic: revenue down, profit margin up, stock gains

"The lines at Apple's flagship store in Union Square and other locations around the world used to be endlessly long, with hordes of eager customers camping out for days to be among the first to get their hands on the latest products. Ten years ago, the Apple hype seemed unstoppable as the company unveiled a steady stream of gadgets.

Today, however, Apple is at a crossroads. As the Cupertino, California-based company struggles to revive consumer enthusiasm for its products from the past decade, Apple reported its biggest quarterly revenue decline in more than a year."

Both Reuters and the Washington Post are wringing their hands to explain how it can be that Apple shares rose, after it was announced at the quarterly earnings call that revenue fell again; by four percent even from a year earlier, to $90.75 billion. Net profit, however, fell only two percent, to $23.64 billion. Analysts inferred that Apple increased profitability is because the company has become more efficient. Still, the question for Apple is, "What's next?

Crypto crawls upright

Bitcoin seems to be missing from the chart above, but the change in price was less than one percent, which is imperceptible to the naked eye. Ethereum fell harder, but over the entire week, crypto enthusiasts will be pleased that Bitcoin climbed back above $60,000 and Ethereum rebounded to above $3,000.

Some technical analysts are convinced that altcoin season is upon us, but less optimistic souls worry about the U.S. SEC's attempt to classify Ethereum as a security, an investment. That's nonsense, but more on that later in the podcast, scheduled for launch in June.

Tags Apple, bitcoin, earnings report, ethereum, X

AI technology

Musk and Zuckerberg swap roles and BlackRock and Temasek invest in decarbonization

Message author By Michiel
Message date April 28, 2024

What conservative investors think climate technology investments look like.

Elon Musk had a fantastic week and Mark Zuckerberg saw two hundred billion in market cap evaporate as shareholders doubt his billion-dollar investments in AI. Costs are high and potential returns still completely unclear as Meta AI, powered by their latest language model Llama 3, is offered free and open source.

The sentiment that returns are unclear was also often heard about investments in climate tech, yet the world's largest investor BlackRock and Singaporean sovereign wealth fund Temasek are investing heavily in this crucial sector through a new fund: Decarbonization Partners.

Those considering investing in the rapidly developing sector of climate tech and decarbonization as well, I look forward to meeting you in May when I am in the Netherlands and Singapore. But first: the surprising week of Elon Musk and Mark Zuckerberg.

After 52 editions, here it is: Tesla is the best-scoring stock of the week. What happened?

Musk wins despite gas pedal glue - yes, glue

It was, as is often the case in the tech sector, a tale of two extremes this week: Tesla soared, while Meta plunged. This is especially notable because Tesla shares had slipped to $138 after reaching an all-time high of $409, while Meta was one of the biggest risers in the stock market over the last year. What happened?

After the recall of all Tesla Cybertrucks sold due to possibly glued gas pedals and unclearstories about robotaxis
were received with deafening silence from the investor side, Tesla almost hid this sentence at the bottom of page ten of its quarterly report:

"We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025."

In other words, Tesla's long-awaited Model 2, the cheapest Tesla ever, which is supposed to be Tesla's version of the Volkswagen Golf, the car for the masses, comes to market earlier than expected. Promptly, TSLA shares rose 12%.

Meanwhile, Musk' s intended opponent in a cage fight between what would have been the two palest fighters in the history of martial arts, Meta's Mark Zuckerberg, had one of those moments when your confidence overrules your sanity.

Zuckerberg punished for candor

During Meta's quarterly earnings presentation, Zuckerberg let slip that it will take "a number of years" before investments in AI will translate into profits. Zuckerberg added truthfully that once Meta has found a revenue model, it will be very good at monetizing it.

Only nobody heard it anymore, much like when a party runs out of drinks and snacks, then the sound system breaks down but the host happily suggests that we all hold hands and sing together. Result: a 16% collapse in Meta's share price and a loss of two hundred billion dollars in market cap.

Meta lost as much as forty-five billion dollars since 2020 via its Reality Labs division on investments in smart glasses and not-yet-existing Metaverse business. No shareholder wants Zuckerberg to lose that kind of money on his investments in AI, while meanwhile the good ole' ad business is doing spectacularly well: also because Chinese discounters Temu and Shein advertise for billions via Facebook and Instagram, ad revenue rose 27% to over $35 billion in the first quarter.

Shareholders think about today, investors think about tomorrow

Shareholders would rather grab dividends than invest. Google owner Alphabet became worth two trillion dollars (two thousand billion) this week after it announced it would pay twenty cents per share in dividends and buy back its own shares for seventy billion dollars. This makes Alphabet the fourth most valuable company in the world after Microsoft, Apple and Nvidia.

This ignored the fact that Google's revenue growth, like Microsoft that presented outstanding quarterly numbers, was also driven by substantial growth (thirty percent) in cloud services, in which AI played a major role.

Yet Google, like all other tech companies, should be valued more on long-term vision and making the right choices in the process. Cloud services, with nine billion in revenue, are almost seven times smaller than ad revenue (62 billion), because for too long there was too little focus on cloud services and AI. Since then, Google has been playing catch-up.

Elon Musk is often ridiculed, sometimes rightly so, but anyone who looks a little longer at his activities has to admit that he possesses the rare combination of skills in being able to analyze the market correctly and subsequently position his own companies in them.

It is no coincidence that Musk, despite OpenAI's late start and dominance with ChatGPT and Google's huge competition with Gemini, managed to raise six billion dollars from investors for his AI company xAI. Last weekend that was supposed to be three billion dollars on a valuation of $15 billion, but then potential investors received an email to this effect:

"We all received an email that basically said, ‘It’s now $6B on $18B, and don’t complain because a lot of other people want in."

Now that is an email I would like to send around sometime, only with a happy smile emoticon at the end.

Elon Musk's pitch for xAI boils down to the company's ambition to connect the digital and physical worlds. Musk wants to do this by pulling training data for Grok, xAI's first product, from each of his companies, including X (formerly Twitter), Tesla, SpaceX, his tunneling company Boring Company and Neuralink, which develops computer interfaces that can be implanted in the human brain. It's a worldview that will generate a lot of resistance, but at least it shows long-term vision.

Decarbonization Partners: no website, but business cards that appear to be made of old tofu

BlackRock and Temasek raise $1.4 billion for climate tech

Countering the world's biggest challenge, climate change, also requires a long-term vision combined with a willingness to invest billions. The world's largest investment firm BlackRock and Singaporean sovereign wealth fund Temasek have therefore raised $1.4 billion to invest in technologies that reduce emissions.

Predictably, the Wall Street Journal, widely read by Republican "ho-ho-not-so-fast-it-was-always-hot" investors, does not write about investments but about "wagers": a term used in a casino when putting your chips on red or black.

Greenhushing as bad as greenwashing

Knowing that the capital market looks with suspicion at the results of risky investments in unproven projects, making more and more companies guilty of greenhushing rather than greenwashing, Decarbonization Partners rushes to say that it invests only in "late-stage, proven decarbonization technologies."

It is unfortunate that investing in startups is avoided because there is much need for capital for start-ups, unproven companies; after all, how else will companies ever get to the stage of having proven themselves? It's a bit like saying as a parent that you love your kids as soon as they can walk well; but how they learn to walk, those kiddies figure that out for themselves.

In total, more than thirty institutional investors from 18 countries have invested in the fund, including pension funds, sovereign wealth funds and family offices, and at $1.4 billion it has raised even four hundred million dollars more than targeted.

Investments have already been made in seven companies developing various innovative decarbonization technologies, including low-carbon hydrogen producer Monolith that I wrote about last week, biotechnology company MycoWorks and electric battery material producer Group14. These are developments that are hopeful.

Carbon credit exchange in ... Saudi Arabia

Other hopeful news that has been snowed under in all the stock market turmoil, a rare word in connection with Saudi Arabia, is that the world's largest oil state will open a carbon credit trading exchange at the end of this year in partnership with market leader Xpansiv, which will provide the infrastructure for the exchange.

The announcement of a carbon credit exchange in this region quickly resembles a chicken breeder announcing he is going vegan, but should be seen as part of Saudi Arabia' s larger plan to move to a sustainable economy. It is looking more and more like it is serious, so it will be fascinating to follow what market share the Saudis can capture in the global carbon credit market, which Morgan Stanley estimates to be $100 billion by 2030.

Finally: I'm in May in the Netherlands and Singapore

In closing, a personal note in the fifty-second edition of this newsletter. Looking back over last year, one notices that I write a lot about market developments and investments, whereas thirty years ago I just started as an entrepreneur in the tech industry, launching the first national wide available internet service provider in the Netherlands.

Because I am no longer running a business, which for me always resulted in running with blinders on toward a dot on the horizon, I have the opportunity to mentor various entrepreneurs and help them invest where possible.

Since I started this newsletter, I have regularly received friendly invitations from readers to catch up on possible joint investing. I plan to do that next month; I'll be in the Netherlands and Singapore in May. If you're interested in hearing more about the projects I support, always focused on sustainability and a large international market, I'd love to hear from you.

Have a great Sunday and see you next week!

Tags Apple, carbon credits, ChatGPT, cloud, Decarbonization Partners, Elon Musk, mark zuckerberg, Microsoft, OpenAI, Saudi Arabia, tesla, xpansiv

AI crypto technology

Smart tips, tricks and hacks for a better life

Message author By Michiel
Message date April 7, 2024

Not what is meant by the Eisenhower Matrix, but I like it. Image created with Midjourney.

It's tempting to get swept up in news about gadgets, apps and gimmicks that the technology sector pours out on us daily. So this time we turn our gaze beyond the delusion of the day in search of insights that can improve our lives. With fewer links, but references to longer articles, videos and podcasts: in short, less to more. Starting with the most important problem: how do we spend more time on the important things and less time on nonsense?

On a typical workday, it can feel like everything needs to be done immediately. The Eisenhower matrix helps us categorize the onslaught by organizing tasks by importance and urgency. If revisited regularly, the matrix can help us clarify our goals and values as well as how we should spend our most valuable resource — time. President Eisenhower never seems to have literally phrased it that way, but this way of thinking named after him leads to very effective productivity gains. A real productivity hack, in millennium speak.

Laugh and learn about tech

The mainstream media, even the comedy shows, have discovered technology as a subject on which there is much to report and, not insignificantly in the era when Google and Meta are gobbling up hundreds of billions of advertising money worldwide that used to be reserved for media companies; it's clicking like crazy. The Daily Show (Comedy Central) and Last Week Tonight (HBO) devoted extensive airtime this week to the impact of technology on our lives. With relevant warnings and tips.

Jon Stewart is back on Monday night on the Daily Show, tackling the AI revolution. Not so much the technology as the annoying habit of tech leaders to promise everyone a better future, while at the same time building technology that plays a major role in our lives in an opaque way.

Watching the item one wonders if the gentlemen at the top of the tech companies would pass the neighbor test: would you appreciate it if this guy (Zuckerberg, Altman, Pichai) moved in next door?

John Oliver describes meal delivery services as "the milennial lifestyle subsidy." He rightly concludes that many restaurants and delivery drivers suffer because of the delivery services, which nevertheless barely make a profit. So who wins? The consumer, but there are raw edges to that victory. Something to think about when the next delivery guy is at the door. Oliver calls for a five-star rating by default, including a nice tip.

Elad Gil may not be a familiar name but he has invested in and advised over forty unicorns, companies with a market value of over a billion dollars, including Airbnb, Coinbase, Pinterest and Stripe. In this video, Gil provides insight into his method of analysis from which we can all learn something.

Writing is better than talking

Stewart, Oliver and Gil clearly have a knack for conveying their opinions on complex topics simply and clearly to the public. The Basecamp software creators shared in a blog post how they "keep everyone in the company informed, without interfering with everyone else."

It's a long piece, but worth reading, especially if you're working with people in different locations. Things I take from it: writing beats talking and asynchronous communication (not live) is more effective than live.

Those who follow the advice and write more while working than talking will benefit greatly from these tips for editing yourself. Everyone has a colleague, especially a manager, who should follow these tips.

GaryVee deserves all the attention

This newsletter also appears in English on LinkedIn, and the gifted conversationalist Gary Vaynerchuk explains in his podcast why LinkedIn is crucial for your organization in 2024. Vaynerchuk struggled to finish high school and then worked in his father's liquor store, where he began making videos about wine that he posted on a then-unknown site: YouTube.

That experience formed the basis for a lightning career as a marketing guru, after which Vaynerchuk revealed himself as a successful investor (Facebook, Twitter and Uber, among others) and a kind of life coach avant la lettre. The writings of "GaryVee" sometimes seem clichéd but are actually thought-through, on any medium. Especially in the US, a cry like "how you make your money is more important than how much you make" is an extraordinary thought, especially as the son of poor immigrants from Belarus.

Learning from failure

Sometimes you learn more from a blunder than a success, which is why this article about how Hertz blundered with its transition to electric cars is downright fascinating. Customers barely charged cars after use, leaving too few available, and in addition, Tesla cars were found to be as much as four times more likely to be involved in accidents than traditional cars running on dinosaur blood.

When everything goes wrong, this is the article to have around. Useful in times with more extreme weather and for me, living in an area of Asia with several possible natural disasters, it's useful advice to keep the go bag better packed with practical tech gadgets.

Spotlight 9: warranty until the corner!

To my no small shock, a reader reported yesterday that she was disappointed "in my tip to buy Snowflake stock, as it had fallen significantly." Therefore, I want to emphasize again that I do not give investment advice.

Reader in question turned out to have purchased my entire AI Spotlight 9. When I came up with that completely arbitrary AI index, I wrote the following:

"These companies are either a driver of AI developments like Nvidia and Super Micro, or a big 'profiteer' of AI technology, think Palantir and Snowflake, for example. AMD, Broadcom, Crowdstrike, Gigabyte, Microsoft, Nvidia, Palantir, Snowflake and Super Micro were up an average of 48% this year already!

Note: I do not give investment advice, I just try to follow developments and if I'm feeling bright eyed and bushy tailed on Sunday morning, I interpret them as well. These are emphatically not buying recommendations. So much for my public service announcements."

Incidentally, the rest of these stocks appeared to have outperformed the Nasdaq Composite and the S&P 500, but again, think of it as a match analysis of a football game. If I were to write that a certain wide receiver scores remarkably easily, that is not an incentive for any team to go out and buy that player. Please only invest with money you don't need to live on and realize that you can lose on investments. And never listen to me.

Notable: Ethereum was a better investment than Nvidia

Every day I am bombarded with questions about crypto and tech stocks, whether Solana is better than Ethereum and which memecoins I hold myself. Precisely because people tend to blame you when something goes down, and congratulate themselves every time something goes up, I never respond to these questions.

I am, however, working with a friend to create a sort of investment section where people can follow our investment portfolios, but like this newsletter, we will do so "for the sake of learning and entertainment" and not as investment advice. (By the way, I am curious to see how Weglot, the translation module I use, will translate the last sentence).

That being said, Grandpa Frackers especially wants to point young readers like my smart nephews to the performance of the biggest crypto versus the biggest tech stocks in the world over the last five years.

Even Nvidia stock, the absolute smoking hot stock among tech companies, has underperformed Ethereum. I don't know anyone who predicted in 2019 that Ethereum and Nvidia would dominate this list, so what lesson can be drawn from this? In any case, not that ETH and NVDA will experience the same rise in the coming years.

The mistake often made is trying to predict the future based on the past. I used to get the comment in the 1980s as a water sports reporter (water both in liquid and frozen form), 'Who does snowboarding? Nobody knows about that weird gadget, people like skiing.'

In the 1990s I started as an Internet entrepreneur and for five years I heard, 'Who has a computer and what do you want with the Internet? You can already fax.' I had to listen to the same rant from small minds about cell phones ('only drug dealers use cell phones') and for the last ten years about crypto: 'what can you buy with crypto?'

So once and for all: the average person does not need to buy anything with crypto. Just as the average person does not throw an Nvidia Hopper GPU into their basket at the super market on Saturday afternoon.

But those who can withstand the delusion of the day and have a slightly longer investment horizon than the next summer vacation, are not shocked by a downturn more or less like last week.

I am convinced that in the long run, and I mean years and not weeks or months, Bitcoin, Ethereum and Solana are lucrative investments. Just as I expect Microsoft, Apple and Nvidia to remain solid investments. The main question is which other crypto and tech companies will break through in the next five years. To that end, before you invest with your wallet, I recommend investing in lots of reading and listening. And not to base your investments on solicited or unsolicited advice from others.

Tags AI, Apple, bitcoin, crypto, ethereum, Microsoft, Nvidia

AI technology

Microsoft and OpenAI have the upper hand, will Google and Apple join forces?

Message author By Michiel
Message date March 24, 2024

The U.S. Department of Justice takes on Apple. Image created with Midjourney.

Microsoft embeds Inflection.ai and attracts a lot of top talent for its AI-strategy; do Apple and Google answer by bundling Gemini into the iPhone?

Consolidation wave in AI started

Meanwhile, in the AI market, what happened slowly in search engines some 20 years ago seems to be happening at lightning speed: the small ones quit or are acquired, until there is one dominant player left with eighty percent market share. The rest share the crumbs. Microsoft wants to avoid that happening with AI and has therefore acquired Inflection.ai, maker of the incomprehensible chatbot Pi. An odd move since Microsoft is already major shareholder of market leader OpenAI, so how and why did this happen?

"Anonymous sources tell The Information that Microsoft is netting about $650 million: $620 million for non-exclusive licensing fees for the technology (meaning Inflection is free to license it elsewhere) and $30 million so that Inflection agrees not to sue over Microsoft's hiring, which includes co-founders Mustafa Suleyman and Karén Simonyan."

Wait: So Microsoft is paying some kind of compensation for taking over staff from a company it invested in itself?

Inflection was after Google Gemini, Anthropic, Mistral, Grok, then nothing for quite a while, a competitor to OpenAI. Founded in 2022, Inflection managed to raise over a billion dollars from investors, at a valuation of a whopping four billion dollars. Investors included Bill Gates, Microsoft itself, former Google CEO Eric Schmidt, Nvidia and a few more well-known players.

A good day, at least for Reid Hoffman

Microsoft's acquisition of Inflection was a clever game of speed chess by Reid Hoffman, who dryly reported on LinkedIn, which he himself founded (and sold to Microsoft), that it was a very good day for everyone. But if Inflection.ai was recently worth four billion and is now selling its crown jewels for six hundred million plus pocket change, how is that a good day for everyone?

A brief game analysis says that as a Microsoft board member, Hoffman obviously knew that the AI race cannot be lost by Microsoft and there is a huge talent shortage in the AI world. OpenAI is the magnet where most want to work, also because its shares have skyrocketed in a few years to the stratospheric valuation of $80 billion. As a result, Inflection.ai and Microsoft increasingly struggled to attract top talent.

Hoffman had founded Inflection.ai with Mustafa Suleyman, who was previously successful with AI company DeepMind, which he sold to Google. Probably Suleyman and Hoffman had come to the conclusion that Inflection.ai, despite the billion invested, wasn't going to make it against OpenAI and Google Gemini, which are throwing tens of billions at it.

The logical solution was for Suleyman to become head of Microsoft's AI division, responsible for all AI products and AI research from Copilot, Edge and Bing. Microsoft CEO Nadella is pleased with strengthening his team led by the new AI-CEO Suleyman, who was thus kept out of the grasping hands of Google DeepMind/Gemini.

The AI battle appears to be turning into a titanic struggle between Microsoft and Google, with the former having moved into the lead. With its stake in and partnership with OpenAI and its recent investment in Mistral, which will also use the Microsoft Azure platform, plus a rapidly growing in-house AI team led by Suleyman, Microsoft has the strongest line up in AI right now.

Google is certainly not hopeless yet, but at the moment it is the Manchester United of the AI competition: a big name, with a uncommunicative leader of a team that is getting inconsistent results. Hence the excitement this week when it looked like Google might team up with Apple.

Google and Apple, a forced marriage?

Google and Apple are each other's polar opposites in Silicon Valley. Apple is planned, meticulous almost, with a success rate per product released of nearly one hundred percent. Google was paradise for barefoot neo-hippies, known for moonshots, where a product was once introduced that was discontinued a few days later because senior management knew nothing about it.

So much fails at Google that websites have been dedicated to it: Killed By Google and Google Cemetery. That didn't matter, because the search engine makes so much money that all failures are decimal roundings.

The surprise in nerdland was great when this week a photo "leaked" of Apple CEO Tim Cook and Google CEO Sundar Pichai, together at the table, engaged in serious conversation.

Insiders, you know them, the former social media experts on Twitter and LinkedIn who had turned themselves into NFT gurus, then became life coaches and have recently become AI-crypto experts, those folks knew for sure: Google Gemini would be baked into the new iPhone 16. There's no way around it!

Until the photo turned out to be fake, at least: dating back to 2017. But by then the genie was out of the bottle. Apple has no AI product on the market and Google Gemini is struggling against Microsoft and OpenAI, so Cook and Pichai would do well to bury the hatchet in the iPhone versus Android war and go to war together against the Microsoft/OpenAI camp.

Sounds logical in itself, also because Google already pays Apple 36% of the revenue it generates from visits coming in through Apple's Safari browser, so the competitors already have a fruitful partnership. Only this week an uninvited guest appeared on the scene: Uncle Sam, in the capacity of the U.S. Department of Justice.

The United States versus Apple

It is not illegal to have a monopoly, but it is illegal to use that monopoly to prevent entry by potential competitors into new markets.

Of exactly that, keeping the iPhone closed to potential competitors, Apple is accused by the Justice Department and a host of states, in an indictment that is surprisingly easy to read. Page three looks like the opening of a John Grisham thriller, quoting an e-mail from a top executive to Steve Jobs, including Jobs' own response. It is as if the DoJ is trying to sue Jobs posthumously.

Techcrunch has summarized the case well, and The Verge explains why consumers have borne the brunt of Apple's actions, which itself was quick to respond with an explanation. Reuters correctly states that the result of the case may be that the iPhone becomes more user-friendly for consumers: more open, even if Apple wins or settles the case.

Indeed, it is not at all a foregone conclusion that Apple is going to lose: “The fundamental assumption DOJ seems to have is that Apple must cooperate with its rivals to allow rivals to compete with Apple," a legal expert said. "That has antitrust law backwards."

Is bad news driving Apple into Google's arms?

As if the lawsuit wasn't enough bad news, a research team concluded that Apple's phenomenal silicon chip, the flagship product that allowed Apple to jettison Intel, has a serious security flaw. While Apple has boasted for decades that it is so much more secure than the Windows architecture.

Fortunately, the potentially affected group is relatively small, since to access the leak you must first download and run specific software yourself on your Mac. Still, this made it a week of stain upon stain for Tim Cook and Apple.

Meanwhile, the genie is out of the bottle and won't go back, just watch:

Bloomberg: Apple in talks with Google to build AI into iPhone
CNET: Google Gemini on iPhone becomes the mainstream moment of AI

A possible partnership with Google to package Gemini along with the iPhone 16 and the new iOS 18 operating system could revive Apple's stock price. While the S&P 500 rose more than 10 percent in the last year, Apple's stock fell more than seven percent. Painful for the company that has long been the most valuable company in the world. More on that in Spotlight 9, which I have posted separately on my site so as not to turn this newsletter into a digital version of the Dead Sea Scrolls.

Conclusion: Gemini on iPhone = OpenAI in Windows

All possible lawsuits and investigations notwithstanding, any bundling of Google Gemini with iOS and the iPhone 16 would give Microsoft all the room it needs to do the same with OpenAI.

Because Windows Mobile was a spectacular failure,it means for Microsoft and OpenAI that on mobile devices they are virtually hopeless against the Apple-Google combination and their iPhone-Android devices.

Microsoft Windows is still the market leader in the desktop computer market with over seventy percent market share. In addition, a number of new, unusual players have been warming up around the AI playing field for some time: the sovereign wealth funds of Abu Dhabi and Saudi Arabia are expected to join in with at least several tens of billions, while Singapore also seems to be coming out of the dugout.

The question is which camp these country teams will join. Microsoft/OpenAI seems to be the most active club, working for years to build ties in those regions, with help from Ben Horowitz, co-founder of the powerful investment fund Andreessen Horowitz.

Any illusion that Europe can still play a significant role in the AI market is thus gone. It is likely that the high-quality European AI companies will all be gobbled up by the American giants, with or without the support of Arab and/or Asian money.

Spotlight 9: Apple stock price drop and the week of Nvidia and Reddit

More on Apple's disastrous stock price drop in the last year, not even compared to other tech companies but compared to the classic S&P 500, in the investment section Spotlight 9. In it also more about the unexpectedly successful IPO of the popular but loss-making website Reddit, a possible SEC investigation into Ethereum that depressed cryptocurrency prices and, of course, we focus on Nvidia, which last week had a spectacular developers conference where CEO Jensen Huang presented no less than two hours of innovations with only one conclusion: Nvidia's rise continues.

"*Blackwell is not a chip, but a platform,"* said Nvidia CEO Jensen Huang, who then showed two chips: the Blackwell on the left and the Hopper H100 on the right.

Super Mario update and my own theme song

Finally, an update on last week's newsletter. I expressed surprise at the fact that Google Gemini won't even say in which countries elections are taking place this year, especially to avoid providing political information, but did produce an educational pamphlet to my question about what Super Mario got into his head when he wanted to save Princess Peach.

Only I mistakenly linked to another answer, when this is what Google Gemini actually said about Super Mario. Yep: the Googlers whispered to Gemini that Super Mario is about teamwork and that the princess and Mario can also remain friends. Maybe Mario wasn't Italian after all.

Another thorny issue was General Motors' selling of its customers' driving habits to insurers. Those who loved a sport turn on their time could be served by their auto insurance company with a substantially higher premium at the end of the year. After a wave of criticism, GM announced it would immediately stop selling the driving records of its customers. Excellent!

Then this week's surprise, which is undoubtedly Suno, the baffling AI service that allows anyone to type in a piece of text and moments later a two-minute song spits out. Apparently, only paying subscribers retain the rights to their music, so that may cause some hassle with the free users. Thanks to Frank van Hoorn and to Michiel Schoonhoven who both tipped me off!

Especially for this Sunday morning, I composed - because this is the new composing - all by myself three variations of a real theme song of this newsletter:

Wake up quietly with the pop version.
My own favorite: the reggae version of Frackers On Tech.
For fans of arena anthems: shake that head.

I would love to hear your response here.

Enjoy your Sunday, see you next week!

Tags AI, Apple, Microsoft, Nvidia, OpenAI

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