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Twijfels over AI, Zuckerberg in opspraak en droomstad Neom nog fata morgana

Het is niet duidelijk of het aan de wisselende prestaties ligt van techbedrijven of aan de wereldwijde onzekerheid over handelstarieven en de tegenstellingen tussen de VS, Europa, Rusland en China, maar er is een abrupt einde gekomen aan de hosanna-stemming in de techwereld.

De vriendelijke AI-agent voor kinderfeestjes. Beeld gemaakt met Midjourney.

Gedreven door een stroom aan AI-toepassingen hoopten beleggers op een nieuwe innovatiegolf, vergelijkbaar met de opkomst van de pc in de jaren tachtig, de doorbraak van internet in de jaren negentig en het wereldwijde gebruik van de mobiele telefoon begin deze eeuw: baanbrekende technologie die nieuwe markten creëerde en tegelijkertijd de productiviteit verhoogde.

Groeiende twijfel over AI

Er ontstaat steeds meer twijfel of de belofte van kunstmatige algemene intelligentie (AGI) de komende jaren zal worden ingelost, terwijl de enorme verliezen van AI-ontwikkelaars zoals OpenAI de vraag oproepen of er een winstgevend business model voor dit type bedrijven bestaat.

‘De enorme investeringen in opschaling, zonder gepaard te gaan met verdere innovatie, hebben mij altijd al zinloos geleken,’ zegt Stuart Russell van de Universiteit van Californië, Berkeley in New Scientist. ‘Ik denk dat ongeveer een jaar geleden voor iedereen duidelijk werd dat de voordelen van traditionele opschaling hun plafond hadden bereikt.

Met opschaling doelt Russell op het gooien met meer hardware naar het probleem, waarvan mede door de opkomst van DeepSeek wordt betwijfeld of het de beste aanpak is. Desondanks zijn technologiebedrijven van plan om de komende jaren gezamenlijk naar schatting een biljoen dollar, duizend miljard, uit te geven aan datacenters en chips om hun AI-ambities te ondersteunen. De hype rond AI-technologieën verklaart wellicht waarom liefst tachtig procent van de respondenten in een recent onderzoek onder AI-experts aangaf dat de huidige percepties van AI-capaciteiten niet overeenkomen met de realiteit.

‘What the hell are AI-agents?’

De meest recente hype die de AI-industrie probeert op gang te krijgen zijn AI-agents, een term die wordt misbruikt voor robot-stofzuigers tot “intelligente agents in AI die de besluitvorming veranderen en het situationeel bewustzijn binnen organisaties verbeteren door snellere data-analyse en voorspellende intelligentie.” Aldus iemand die rapporten over AI verkoopt, waarschijnlijk ook geschreven door AI.

In werkelijkheid heeft bijvoorbeeld Salesforce de omzetprognoses uit het product met de prachtige naam Agentforce bij lange na niet gehaald. De Wall Street Journal concludeerde dan ook: ‘AI Agents zijn overal – en nergens.’ Techcrunch, doorgaans positief over nieuwe technologie, kopte deze week zelfs: ‘No one knows what the hell an AI agent is.’

In hetzelfde artikel zeg zegt Andrew Ng, oprichter van het AI-platform DeepLearning.ai en gerenommeerd AI-expert, dat marketing een grote rol speelt bij het veroorzaken van het definitie-probleem. ‘De termen AI agents en agent-gebaseerde workflows hadden vroeger een technische betekenis, maar ongeveer een jaar geleden zijn marketeers en enkele grote bedrijven ermee aan de haal gegaan.’ Het wordt interessant om te volgen of er dit jaar nuttige en winstgevende toepassingen van AI-agents uitkomen. Wall Street lijkt niet van plan om fantasieverhalen te blijven financieren.

Woestijnstad van de toekomst nog fata morgana

Niet alleen de AI-wereld heeft het moeilijk, ook een ambitieus smart city-project als Neom, de Saudische stad als een streep van 170 kilometer lang ‘zonder wegen, auto’s of emissies,’ kampt met forse tegenslag.

De kosten zijn enorm gestegen, er zijn veel bouwvertragingen en een besluit om de eerste fase van Neom te verkleinen betekent dat de kritische massa aan inwoners ontbreekt, die nodig is om Neom tot het beoogde moderne zakencentrum te maken.

Het is jammer als Neom de enorme ambities zou terugschroeven, omdat het een fantastisch testbed leek te worden voor de beste technologie op het gebied van energie, watervoorziening, vervoer en stedenbouwkundige planning; allemaal gebieden waar de rest van de wereld grote belangstelling voor heeft.

Achter de problemen van Neom schuilt ‘een dans van wederzijdse zelfmisleiding‘, waarbij de kroonprins aandrong op fantastische plannen, volgens de berichtgeving tenminste, ’terwijl anderen daarin meegingen’. Dat lijkt verstandig, het is immers geen land dat bekendstaat om grote waardering voor tegenspraak. 

Pijnlijk boek over werken bij Facebook

Een ander geval van ‘wederzijdse zelfmisleiding’ lijkt de houding van de directie van Meta (Facebook), als reactie op een onthullend boek van voormalig medewerker Sarah Wynn-Williams, getiteld: “Roekeloze mensen: een waarschuwend verhaal over macht, hebzucht en verloren idealisme.” Uitgeverij Macmillan steunt de voormalig Meta-medewerker en weigert het boek uit de handel te halen, ondanks een gerechtelijk bevel daartoe.

Zuckerberg vestigt door de juridische acties juist meer aandacht op het boek, waarin hij wordt afgeschilderd als een emotioneel onderontwikkeld, wereldvreemd wezen. Een citaat:

‘Zuckerberg vraagt (tevergeefs) om naast Fidel Castro te worden geplaatst tijdens een diner. In 2015 vraagt hij Xi Jinping of deze hem “de eer wil bewijzen om zijn ongeboren kind een naam te geven”. (Xi weigert.) Hij onderhoudt een vriendschappelijke relatie met Barack Obama, totdat die hem op zijn plaats zet over nepnieuws.’

In 2016 plaatst Facebook medewerkers in de campagne van Donald Trump, “naast Trump-campagneprogrammeurs, tekstschrijvers voor advertenties, mediakopers, netwerkingenieurs en dataspecialisten”, waarmee ze Trump helpen winnen. Dit inspireert Zuckerberg om zelf een gooi naar het presidentschap te overwegen, waarna hij in 2017 door de Amerikaanse swing states reist.

Wynn-Williams beschrijft Zuckerbergs toespraken “zoals een kind zich voorstelt hoe een president zou klinken”. Een van Zucks uitspraken luidt: “De situatie is vol uitdagingen, en wij moeten boven de situatie uitstijgen. Omdat onze zaak nieuw is, moeten we nieuw denken en nieuw handelen.” Mocht iemand er nog aan hebben getwijfeld: Zuckerberg is geen John F. Kennedy.

‘Ik lag een deel van de tijd in coma’

De beschrijving van de werkcultuur bij Meta is misschien het meest schrijnende onderdeel uit het boek. Wynn-Williams komt tijdens een bevalling bijna om het leven, maar tijdens haar herstel wordt ze steeds lastiggevallen door haar leidinggevende. Wanneer ze terugkeert naar kantoor, krijgt ze van haar mannelijke baas een ongunstige evaluatie. “Je was niet responsief genoeg,” zegt hij. “In mijn verdediging,” antwoordt ze, “ik lag een deel van de tijd in coma.” Zuckerberg gaat nog veel last krijgen van dit boek.

2025 rampjaar voor Tesla

Ook de aartsvijand van Mark Zuckerberg, Elon Musk, beleeft zakelijk gezien zware tijden. Het aandeel Tesla blijft dalen, deels door tegenvallende resultaten in China, deels door Musk’s controversiële gedrag. Terwijl de Nasdaq Composite al een slecht jaar beleeft met een daling van 8%, krijgt Tesla in 2025 een enorme klap met een daling van liefst 38%. En het is pas maart.

2025 is een rampjaar voor Tesla, maar over de laatste twaalf maanden gezien is Tesla nog steeds een grote winnaar met 53% stijging

Tesla in laatste jaar: 53% stijging

Die -38% klinkt rampzalig, maar over een langere periode bezien, de laatste twaalf maanden, blijkt Tesla van de Big Tech-aandelen onverwacht één van de grote winnaars. Net als Broadcom (58%) heeft Tesla het laatste jaar een bijzondere stijging doorgemaakt: 53%. Dat is twee keer zoveel als het aandeel Meta van vrind Zuckerberg, de man die het bedenken van een naam voor zijn kind aan de president van China probeerde uit te besteden.

Het valt steeds meer op hoe de financiële media worden gedreven door de waan van de dag, of beter gezegd: het zapgedrag van kijkers en het (weg)klikgedrag van lezers. Uiteraard is het nieuws als een aandeel zoveel daalt als Tesla dit jaar, zeker als de CEO met een kettingzaag op een podium goochelt, maar vanuit beleggingsperspectief is een raadzaam om een langere horizon dan een paar weken te hanteren. Tesla is geen meme coin.

NFA Podcast: Beleggen in crypto vs. speculeren en Abu Dhabi investeert $2 miljard in Binance

In aflevering 7 van de NFA Podcast bespreken Nisheta en ik Ripple’s verrassende goedkeuring voor crypto-betalingen in de Emiraten, de opvallende investering van twee miljard dollar door Abu Dhabi’s MGX-fonds in cryptobeurs Binance en de bredere verschuiving in de cryptomarkt van speculatieve meme coins naar substantiële beleggingen met onderliggende waarde.

Daarnaast bespreken we het verschil tussen beleggen in crypto voor de lange termijn, versus korte termijn speculeren. We verwachten allebei nog een nieuw All Time High voor Bitcoin in 2025. Aflevering 7 van de NFA Podcast met Nish & Frackers is nu beschikbaar:

Shownotes Aflevering 7:

Bedankt voor de belangstelling, tot volgende week!

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technology

Is the end of an independent OpenAI near?

This week some long-standing trends in the technology sector surfaced more emphatically. First, the growing influence of large technology companies on politics and governance, and second, the question of whether AI models are economically sustainable, with even "life-threatening" market conditions for AI startups such as OpenAI. In the crypto market, it was complete chaos.

Big Tech and Political Influence

Leaders of technology companies are increasingly trying to gain influence over social and political processes. It is no longer just Elon Musk, who last month, as a born South African with Canadian passport and naturalized to American, tried to emerge as an expert of German society and openly called for support for the AfD, now Germany's second party with 21%.

Amazon founder Jeff Bezos is suddenly also a political activist. The surely not typically leftist Wall Street Journal is merciless to Bezos, delicately pointing out that Amazon recently paid $40 million for an authorized documentary on Melania Trump entirely by accident, "three times as much as any other bid." The WSJ continues:

"There were the flattering tweets with which Bezos applauded Trump's victory and his prominent presence alongside other tech leaders at the inauguration-Zuckerberg, Musk, Tim Cook of Apple and Sundar Pichai of Google, among others. Their seats on stage, directly behind Trump and in front of the cabinet, could be interpreted in two ways: as a historic gathering of new economic and tech powerhouses showing their support for the new administration, or as a hostage video of billionaires held captive by a menacing strongman.

Another shock followed this week when Bezos announced that the opinion pages of the Washington Post (bought by Bezos in 2013, MF) would henceforth be devoted to defending the principles of "personal liberty and free markets." This shift to the right led to the resignation of David Shipley, the section's editor-in-chief. Critics condemned the move as an attempt to suppress liberal opposition and criticism of Trump, while others noted that such views are widely represented in other publications."

Bezos is now working on his PR by shooting singer Katy Perry in space, with Oprah's bestie and his own fiancée, a more original way to test your relationship than Temptation Island.

New macho tech-bro: Alex Karp

Now the formerly media-shy Palantir CEO Alex Karp is surfacing, openly advocating a system in which democratically elected leaders are replaced by an AI-driven bureaucracy in a new book. His argument is that AI can make decisions more efficiently than human administrators. Bloomberg, also rarely accused of leftist leanings, judged Karp's book harshly:

"It’s a major complaint of the authors of The Technological Republic (Crown Currency, Feb. 18) that people today shrink from saying what they think. Too many of us, they insist, give mealy-mouthed, wishy-washy answers when asked. We have become uncomfortable with making moral and aesthetic judgments, they say.

I agree, and I'm going to break the taboos. The Technological Republic is a terrible book: badly written, boring and-when the ideas can be picked up between the jargon, clichés and repetitions-full of bad ideas ranging from questionable to reprehensible and disturbing. This book is abysmal in both form and content. It sketches a dark and depressing future." 

Not a review that will make the back cover of the book, which should be seen primarily as a brochure for Palantir.

Big Tech cries out for government intervention

The founders of Big Tech companies Meta, Amazon and Tesla position themselves as indispensable to economic and social progress and argue that their success is the result of technological and market superiority. At the same time, Meta, with click-happy algorithms, is largely responsible for sharing disinformation and sowing social discord, Amazon is the pinnacle of consumerism with a history of sad working conditions, and Tesla enjoyed as much as $38 billion in government subsidies. Thus the Washington Post in an article that still dared to spout some criticism of Tesla's success based ons o-called 
free market forces.

With the imminent introduction of artificial general intelligence (AGI), technology is playing an increasing factor in society. Whereas at the end of last century politicians were often scornful of what was mostly described as nothing more than automation, it is only now being understood that the ongoing digitization of the world is spilling over into AGI systems that, without democratic control, run the risk of a small number of technology company leaders amassing disproportionate power.

Big Tech's interests do not parallel societal values such as privacy, democracy and public participation. The tech-bros think first and foremost about quarterly earnings.

The focus at OpenAI is not yet on making revenue. Just try updating your credit card.

The missing business model of AI

Speaking of quarterly earnings pressure; within the technology sector, there is an ongoing debate about the effectiveness of different business models. A major issue is always whether companies should bundle technologies or offer them as separate products. An example of this is Microsoft's acquisition of Skype for $8.5 billion, a sum that was probably never recouped due to ambiguity about the pricing model and lack of integration into MS Office.

Om Malik delightfully cynically concludes at the announcement that Microsoft is shutting down Skype: "Skype's demise is a good lesson in how ineffective middle management can destroy good acquisitions. I have never met a Skype manager on Microsoft's side who had any imagination. Most were such "drones" that next to them even a red clay brick would come across as a genius work of art.

Microsoft Teams is a terrible product-and I hate using it. In the simplest terms, Teams is the perfect summary of a bureaucratic, outdated and archaic 50-year-old company trying to reinvent itself as a leader in AI."

If the relatively straight forward product Skype, which already had millions of users worldwide, is so complex to be profitably exploited by a giant like Microsoft, it will be especially interesting to see if opaque billion-dollar investments in AI are ever going to deliver the intended returns. The quarterly earnings reports of Microsoft, Meta and Amazon are being increasingly scrutinized by analysts for their spending on AI. Although these companies are investing tens of billions in AI, Nvidia is the only one consistently benefiting from this trend, and it remains unclear whether the Big Tech companies will ever turn a profit on their AI investments.

Big problems for AI startups

For leading AI startups, it's all hands on deck this year. In recent weeks, Grok 3 (from x.ai, owned by Elon Musk), Claude 3.7 Sonnet (Anthropic) and ChatGPT 4.5 (OpenAI) have been launched. Analyses show doubts about the quality and efficiency of this latest generation of AI applications. "It's a lemon," headlines Ars Technica about ChatGPT-4.5.

Gary Marcus points out several problems with OpenAI:

  • GPT-4.5 is expensive and offers no significant advantages over competitors.
  • Initial interest in OpenAI is waning.
  • There is no clear business model that guarantees profitability over time.
  • OpenAI currently makes a loss on every transaction.
  • Microsoft is distancing itself more from OpenAI.
  • There is high turnover among key staff, including Sutskever, Murati and Karpathy.

Ethan Mollick, on the other hand, remains positive about advances in AI: "The intelligence of AI models is increasing, and costs are falling." But people like Mollick are now a minority among investors.

The problem for AI startups such as Elon Musk's X.AI, Sam Altman's OpenAI and competitors such as Anthropic (with Claude) and Mistral, is the increasing doubt about real technological advances relative to rising development and operating costs. Investors are increasingly questioning the long-term profitability of AI companies.

The discussion is no longer about the beliefs of AI proponents, who regard AI development almost as a religion, or the objections of the non-believers, let me call them "AI-theists," but about economic reality. The key question is not whether AI can continue to grow and fundamentally improve, but whether it can do so profitably. In the investment world, there are serious doubts about two things:

  1. Whether the costs of AI development will ever outweigh the benefits and whether a sustainable business model is possible in which companies like OpenAI become profitable,
  2. Whether AI models actually deliver the expected improvements that allow the end users of AI applications, the customers of OpenAI, Microsoft, Google etc, to operate more cost-effectively.

For OpenAI, this is an urgent problem. Companies like Microsoft, Google, Meta, Oracle and Salesforce invest tens of billions in AI every year, but can absorb losses with profits from other activities. OpenAI, on the other hand, is completely dependent on AI and remains heavily loss-making.

Legendary investor Vinod Khosla, among other early backers of OpenAI, openly says that he expects most investments in AI to be loss-making. Of course, that does not apply to his own investment in OpenAI, because he was in it so early that any sale of OpenAI will be a hit for Khosla.

The "disaster month" for Nvidia, compared to the Dow, S&P and Nasdaq Composite...

For now, Nvidia is benefiting from the confidence within Big Tech that increasingly powerful and expensive chips are the solution. The company again achieved record results, although profit margins are declining. Gross margin nevertheless remained at an impressive 72%. Not surprisingly, Nvidia rose another 4% on Friday and still ended February with a 7% gain, while the major stock market indices recorded losses. Barron's therefore half-jokingly called Nvidia a value stock.

DeepSeek with bad news for OpenAI

DeepSeek, OpenAI's Chinese nemesis, claimed yesterday on X to have a much more efficient cost structure: "Our cost-benefit ratio is 545 percent." A more detailed explanation later followed on GitHub, to which Techcrunch sharply concluded:

"The company (DeepSeek, MF) wrote that if it looked at the usage of its V3 and R1 models over a 24-hour period, and if all that usage had been billed at the R1 prices, DeepSeek would have already generated $562,027 in daily revenue. At the same time, the cost of leasing the required GPUs (graphics processing units) would have been only $87,072.

The company admitted that actual revenue is significantly lower for several reasons, including discounts during nighttime hours, lower prices for V3 and the fact that only a portion of services are monetized, while access via web and app remains free.

If the app and website were not free and other discounts did not exist, usage would presumably be much lower. Therefore, these calculations seem largely speculative-more an indication of potential future profit margins than a realistic representation of DeepSeek's current financial situation.

But the company is sharing these numbers amidst broader debates about AI’s cost and potential profitability."

Surely every investor now has the idea that DeepSeek has a much better chance of becoming profitable than OpenAI, which no longer has a substantial technological edge, dubbed in Silicon Valley as a "moat," nor does it have the financial capabilities needed to eliminate the competition. Consider how, for example, Mark Zuckerberg once bought fast-growing competitor Instagram with Meta. Sam Altman does not have that option.

The next few months will be decisive for OpenAI. The company desperately needs capital. It is now at the mercy of Softbank's Masayoshi Son, who is already raising $16 billion in loans with his cap in hand, indicating that the industry's biggest financiers are cautious. Even if all the money Softbank is now raising in loans were to go into OpenAI, which is doubted, the question is how far OpenAI will get with that money.

Savior from Abu Dhabi or a mirage?

Another possible investor is Tahnoon bin Zayed al Nahyan, an influential Abu Dhabi financier, irreverently dubbed the "Spy Sheikh" by the Wall Street Journal . As manager of several Abu Dhabi sovereign wealth funds, including MGX, he could turn out to be the financial decision maker on OpenAI's fate.

The question, meanwhile, is whether OpenAI can survive another year without rapid funding. If there is no urgent injection of billions, a takeover lurks. Microsoft already owns 49% of the shares, is the main provider of cloud infrastructure and could cough up as much as $100 billion to buy out the existing shareholders in OpenAI. That's a very different reality for OpenAI CEO Sam Altman than it was a few months ago, when he still thought he could raise $30 billion against just 10 percent of the shares.

Dr. Sachdev lost the bet on price predictions, but did buy crypto.

Blood bath in the crypto market

In episode 5 of the NFA Podcast (for Nish, Frackers and Anyone Else, and, of course, for Not Financial Advice), Nish eats an Indian green chili because she had lost the bet on a rising or falling market. She was dressed in red to symbolize the carnage in the crypto market.

In more relevant news: we discussed the drop in new token launches on Pumpfun, BlackRock's Bitcoin sales and the SEC's ruling that meme coins are not securities. That would normally be positive news for the speculative crypto market, but it didn't matter last week: almost everything plummeted.

The Bybit hack, which was linked to North Korean attackers, was also discussed in detail and showed vulnerabilities in multi-signature transactions. Finally, we discussed whether Bitcoin will still reach an all-time high this year and how its correlation with traditional markets is developing. We agreed, which is not the intent of the format.

Episode 5 of the NFA Podcast. "Crypto bloodbath, the Bybit hack fall out and will Bitcoin 'go rogue' to hit an ATH?" is available to listen to now or watch here on YouTube and also here on Spotify. 

You can subscribe to the special NFA Podcast newsletter, which will keep you informed of each new episode, here on LinkedIn. Thanks for your interest and see you next week!

Categories
AI invest technology

Unexpected winners and losers after the week of DeepSeek

How DeepSeek would like the world to think about the youthful team. Image created with Midjourney.

It was the week of DeepSeek's CEO Liang Wenfeng, who seemed to appear out of nowhere to scare the hell out of everyone from Silicon Valley to Washington to Wall Street.

Apparently, not everyone has noticed that China is making the leap from an agricultural to a post-industrial society in record time. What chuckles there must have been in Beijing and Shanghai when Chinese New Year was celebrated last week.

Last week I wrote that Silicon Valley was rudely awakened by DeepSeek, and on Tuesday I added that Wall Street had overreacted. Today an attempt to chart the winners and losers, short- and long-term, of the rise of DeepSeek.

Who is Liang Wenfeng?

But first: who is Liang Wenfeng, the founder and CEO of DeepSeek? What is special about Wenfeng, as a startup founder, is his background as the founder of a hedge fund: High Flyer. 

"When we first met him, he was this very nerdy guy with a terrible hairstyle talking about building a 10,000-chip cluster to train his own models. We didn’t take him seriously" one of Liang's business partners told the Financial Times.

During his time at High Flyer, Liang began buying Nvidia equipment and learned the various ways to develop algorithms for AI applications, lessons he now applies at DeepSeek. More remarkably, DeepSeek's sudden success is driven by Gen Z newcomers from diverse backgrounds. Liang likes originality and creativity from young smart people and values experience a lot less.

Liang also talked about hiring literature buffs on the engineering teams to refine DeepSeek's AI models. "Everyone has their own unique path and brings their own ideas, so there's no need to direct them." This is especially interesting to read in the week that Mark Zuckerberg boasts that he is getting rid of all diversity programs at Meta, in an effort to appease the Trump administration.

OpenAI worth $300 billion after all?

According to the Wall Street Journal, Japan's SoftBank would lead a $40 billion investment round in the ChatGPT maker, part of which is to be spent on its Stargate AI infrastructure project. With a valuation of $300 billion, OpenAI would become the second most valuable startup in the world, behind Elon Musk's SpaceX, the major rival of OpenAI CEO Sam Altman.

It would be downright amazing if Altman manages to raise money for his money losing company at that stratospheric valuation, in the week when its vision and technological architecture are being doubted worldwide. But let us not overestimate SoftBank: it is the same club and the same man, Masayoshi Son, who burned tens of billions in WeWork; all the way to bankruptcy. The question is: why won't anyone but SoftBank step in at this valuation?

Is Stargate science fiction?

Both OpenAI and SoftBank have declared they will invest tens of billions in Stargate, the $500 billion budgeted AI infrastructure project that is supposed to seal American hegemony in technology. The crazy thing is that OpenAI doesn't have that money at all, and neither does SoftBank. So when SoftBank invests in OpenAI, which thereby invests in Stargate, it's basically filling one hole with another one.

The Verge published a lucid analysis of the Stargate project. If Stargate fails, it would not simply be the end of a startup. It would be an expensive reality check for an entire industry that claims to transform the world through pure computing power.

Altman likes to present himself as the protagonist in a classic science fiction story: the visionary who promises to transform society through technological power. 

In say a year, we will know whether Stargate was the beginning of America's AI revolution, or just a techno-optimistic fantasy that could not survive in the real world.

DeepSeek's actual costs

Then to a much-discussed topic: the costs allegedly incurred by DeepSeek to develop the acclaimed R1 model. The wildest stories are circulating about this, while DeepSeek itself has been fairly transparent about it:

"Finally, we again highlight the economic training cost of DeepSeek-V3, as summarized in Table 1, achieved by our optimized co-designs of algorithms, frameworks and hardware.

During the pre-training phase, training DeepSeek-V3 on every trillion tokens requires only 180K H800 GPU hours, or 3.7 days on our cluster with 2048 H800 GPUs. This completes our pre-training phase in less than two months and takes a total of 2.664M GPU hours. Combined with 119K GPU hours for context length extension and 5K GPU hours for post-training, DeepSeek-V3 costs a total of only 2.788M GPU hours for full training.

If we assume that the rental cost of an H800 GPU is $2 per GPU hour, our total training cost is only $5.576M. Please note that the above costs include only the official training of DeepSeek-V3 and not the costs associated with previous research and tear-down tests of architectures, algorithms or data."

I highlighted the crucial part: all previous costs are not included in the cost calculation. It's like calculating the cost of a bodybuilder's meals on competition day without including how many meals it took to get to the competition. 

Cheaper AI: who benefits?

Even more interesting than the cost aspect, DeepSeek offers the ability to install the model locally and develop on it. Microsoft CEO Satya Nadella pointed directly to Jevon's Paradox.

In short, precisely because of the reduced cost, the use of an innovationwill increase. It looks like Nadella is going to be right about that. In the long run, the "commoditization" of AI models and cheaper inference as demonstrated by DeepSeek will benefit Big Tech. Microsoft, for example, needs to spend less on data centers and GPUs, while benefiting from increased AI utilization through lower inference costs.

Amazon is also a big winner: AWS has not developed its own high-quality AI model, but that doesn't matter when there are high-quality open-source models available that it can offer at much lower cost.

Apple also benefits

Drastically reduced memory requirements for inference make AI on iPhones much more feasible. Apple Silicon uses a unified memory architecture, with the CPU, GPU and NPU (neural processing unit) accessing a shared memory pool, argues Stratechery in an excellent piece. This effectively gives Apple's hardware the best consumer chip for inference. Nvidia's gaming GPUs, for example, reach a maximum of 32GB of VRAM, while Apple's chips support up to 192GB of RAM.

Meta the biggest winner

AI is central to Meta's long-term strategy, and one of the biggest obstacles to date has been the high cost of inference. If inference and training become much cheaper, Meta can accelerate and expand its AI-driven business model more efficiently. 

Sensibly, Zuckerberg has reportedly set up several war rooms to determine how Meta will react to the introduction of DeepSeek. Whereas in the short term DeepSeek is thought to be a threat to Meta's AI strategy with its Llama LLM, a structural reduction in AI development costs will actually lead to a huge advantage for Meta, which is on track to invest $65 billion in AI development this year alone.

Most of that is spent on hardware and data centers. If that kind of investment can be minimized by imitating DeepSeek's approach, Meta will see its net profits increase substantially without weakening its competitive position.

Google the loser?

While Google also benefits from lower costs, any change from the current status quo is likely to be a net detriment to Google. Every search in OpenAI, DeepSeek or a Meta agent, comes at the expense of a search on Google's search engine.

Despite all its efforts and hundreds of acquisitions over the last few decades, Google still depends largely on the search engine for revenue and profits. It remains to be seen whether Google will succeed in "redirecting" that traffic from the AI agents and chatbots the world so eagerly uses, back to Google's AI tools.

Nvidia not defeated by DeepSeek

Despite DeepSeek's breakthrough, Nvidia has two moats, according to Stratechery:

  • CUDA is the preferred programming language for anyone developing these models, and CUDA works only on Nvidia chips.
  • Nvidia has a huge lead when it comes to the ability to combine multiple chips into one large virtual GPU.

These two lines of defense reinforce each other. As mentioned earlier, if DeepSeek had had access to H100s, they probably would have used a larger cluster to train their model simply because it was the easiest option. The fact that they did not and were limited by bandwidth dictated many of their decisions in terms of model architecture and training infrastructure.

DeepSeek has shown that there is an alternative: heavy optimization can achieve impressive results on weaker hardware and with lower memory bandwidth. So paying more to Nvidia is not the only way to develop better models.

However, there are three factors that still work in Nvidia's favor.

  • First, how powerful would DeepSeek's approach be if applied to H100s or the upcoming GB100s? Just because they have found a more efficient way to use computing power does not mean that more computing power would not be useful.
  • Second, lower inference costs are likely to lead to wider use of AI in the long run. Microsoft CEO Satya Nadella recently confirmed this in his late-night tweet about Jevon's paradox.
  • Third, reasoning models such as R1 and o1 derive their superior performance from using more computing power. As long as AI's strength and capabilities depend on more computing power, Nvidia will continue to benefit.

Also, with a larger market, Nvidia will benefit from revenue growth in cheaper chips, although it will be hampered in that market by competitors such as AMD. 

My subjective "Spotlight on AI" basket took relatively few hits last month.

DeepSeek thought 28 seconds about a hot dog

Joanna Stern of the Wall Street Journal did a funny test of DeepSeek and discovered how it differs from OpenAI's ChatGPT and Anthropic's Claude. Unlike OpenAI's reasoning models, DeepSeek shows its full thought process. When asked if a hot dog is a sandwich, DeepSeek thought about it for 28 seconds and responded with: "First, I need to understand what the definition of a sandwich is." It illustrates that there is no specific form of AI that works best for all issues.

The advance of AI throughout society is irreversible and with DeepSeek's approach, which will be copied frequently, the market will only grow larger. Therefore, despite all the doom-and-gloom news last week on Wall Street, it is fascinating that over the entire month of January, the performance in what I consider to be AI stocks has been better than one would expect. 

ARM's 29% rise is remarkable and is largely based on ARM's participation in Stargate. The remarkable thing is that SoftBank owns ARM and therefore there is a good chance that Masayoshi Son will use the shares in ARM as collateral when raising loans, which SoftBank can then use to pay for investments in OpenAI and in Stargate. Time will tell whether this approach leads to a skyscraper, or a house of cards.

This is how the main parties of the DeepSeek crash closed on Wall Street yesterday

What did America's tech billionaires buy from Trump?

President Trump has often expressed hostility toward major technology companies and their leaders, calling Facebook an "enemy of the people" and labeling Jeff Bezos as "Jeff Bozo," for example. Yet these gentlemen were in the front row at the inauguration, having lapped up significant sums of money. This was obviously no coincidence, and the technology sector wants something back from Trump soon. Bloomberg looked at each of them and mapped out what they each want to accomplish.

As we take stock of the performance of Big Tech stocks in the month of January at the end of the second week in Trump's second reign, it appears that the short-term results are not yet what Trump's new tech pals had hoped for. Despite all of Trump's presidential decrees and appointments, stock market results have been rather mixed, to say the least.

What is particularly striking is that investors are sharply divided over the tech sector as a whole. Meta rose mainly due to good quarterly earnings, but how could Microsoft fall while Google rose? Did Apple fall in January due to the possibility of a trade war with China? It is strange that the financial media was mostly focused on last week's results and ignored what happened in terms of price swings earlier in the month. Consider, for example, Palantir, up nearly 10% in January and already up 385% in the last year.

Huang at Trump, Liang at Li Qiang

President Trump and Nvidia CEO Jensen Huang discussed the impact of DeepSeek and possible restrictions on AI chip exports to China during a meeting at the White House on Friday. Huang will certainly have been thinking about the possible impact on Nvidia's stock price.

DeepSeek's Liang Wenfeng also met with an important politician this week: as the sole representative of the AI industry, he met with Premier Li Qiang, China's second most powerful man. Both meetings underscore the importance of technology to economic power in the new world order defined in part by AI.

Palantir CEO Alex Karp told CNBC that the rise of DeepSeek is a sign that the U.S. needs to work faster to develop advanced AI. "Technology is not necessarily good and can pose threats in the hands of adversaries. We need to recognize that, but that also means we need to run harder, go faster and make a national effort."

Boring: success begins with homework

Europe is no longer a consideration in the geopolitical shuffling between continents; how can it be, with so much talent among half a billion people?

Malaysian comedian Ronny Chieng summed up the West's problem perfectly: people are willing to die for their country, but they don't want to do homework for it. Chieng is talking about America, but it applies just as well to Europe.

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Tech stocks boring in Trumps first week

Tech bros were looking forward to Trump's first week in office, but the stock market was boring.

BATMMAAN shares, comprising Broadcom, Apple, Tesla, Microsoft, Meta, Alphabet (Google), Amazon and Nvidia, have shown a mixed picture in the stock market over the past week. While some companies saw slight increases in their value, others experienced declines, underscoring the volatility within the technology sector. Thus, the first week of tech and crypto-franchise Trump ended somewhat tepid.

Apple and notably Tesla, one of the companies of Trump's hypeboy Elon Musk, both fell sharply. The rest of the tech bros had no cause for great celebration either. Meta shares rose six percent, but Meta in particular, with its open source project Llama, is being hit hardest by the launch of DeepSeek. In fact, there is already talk of "panic mode" at Meta.

While you would think that Nvidia would benefit greatly from Stargate's announcement (because who else is going to supply the chips for its intended high performance computing), many investors seem to think that Nvidia is threatened by Stargate. I offer no advice and make no predictions, but with Nvidia's next quarterly earnings report, there is a good chance that investors will want to join the Nvidia party once again. 

As General Magic experienced almost thirty years ago, the right timing is crucial when introducing mass-market technology. The question is how soon it can be determined whether all the billions invested in AI will yield the intended financial and social returns. For now, we live in a reality in which Stargate's announcement seems as credible as the U.S. annexation of Greenland. 

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Forget FANG, it's all about BATMMAAN now - or is it crypto after all?

Once upon a time, the acronym FANG (for Facebook, Apple, Netflix and Google) was the symbol for tech stocks. But almost unnoticed, Broadcom snuck into the club of trillion-dollar companies, and now there is a new acronym: BATMMAAN (Broadcom, Apple, Tesla, Microsoft, Meta, Amazon, Alphabet, Nvidia). Barron's came out with an excellent analysis including a price comparison. What does it show? Nvidia is the cheapest stock of the bunch.

BATMMAAN stock performance in the last year: up 66% on average.

Forget FANG, here's BATMMAAN

This is especially noteworthy since Nvidia was already by far the best-performing stock among the tech giants over the last year. Propelled by the AI hype, Broadcom (symbol AVGO) is also coming on strong, while Tesla is mostly driven by members of Elon Musk's cult.

The entire BATMMAAN club made an average return of 66% last year. In fact, Apple and especially Microsoft are doing substantially worse than the S&P 500, which has proven to be a solid investment at 25%. Both icons are suffering from the AI hype: Apple because it derives no identifiable revenue or profit benefit from AI and Microsoft because it is making tens of billions in additional investments in AI, the long-term returns of which investors doubt.

Return of top cryptocurrencies: 174%

Investors with a strong stomach have had a wonderful year in the crypto world, where the average rise of the largest crypto currencies measured by market cap, has been a whopping 174%.

The most frequently asked question in crypto remains: which coin should I buy? But the largest crypto currencies were already doing 174% year-to-date.

In addition to the rise of memecoin Dogecoin, carried in part by Doge fan Elon Musk, it is particularly notable that XRP, a Stone Age token by crypto standards, rose over 450%. Trump's upcoming presidency ensures that a new SEC boss will be appointed, following notorious cryptohater Gensler. The hope of XRP holders is that under the new administration, the SEC will end the ongoing legal proceedings against XRP.
 

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technology

Gamble: TikTok only goes black temporarily in the U.S.

 Mark Zuckerberg's dream comes true: his major competitor TikTok no longer works in the U.S.

The new year has barely begun and, especially on social media, there is already a lot going on. Mark Zuckerberg declared in a video dressed as some kind of pimped-up Joardy that racists and other goofballs are allowed to go wild on his Facebook and Instagram as usual. Of course, this is to please the MAGA universe, because anything goes to sell ads in the world of Zuckerberg and his famous rubber backbone.

TikTok no longer works in the U.S.

In the US today, TikTok is no longer operating, although Trump has signaled tomorrow on his first day in office that he will give the popular app 90 days to comply and sell TikTok's US operations.

From the fact that the CEO of TikTok was invited to Trump's inauguration, it can be inferred that a permanent ban on TikTok in the U.S. will not be too bad. It is more likely that Trump will force parent company ByteDance to sell TikTok, for example to his new hypeboy Elon Musk. It is highly questionable whether Trump will actually start a trade war with China, the country that is a crucial market for American giants such as Tesla from friend Musk, as well as Apple, Intel and Boeing.  

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AI investing crypto NFTs technology

Bitcoin over $100,000, but still beaten by Ethereum and Nvidia

Please participate as happily as this reader and complete the short survey about this newsletter. Who knows, maybe it will help! Image: generated with Midjourney.

This week I'm asking for your help via a survey about this newsletter. Also: a look at Bitcoin's jump above the $100,000 mark, Ethereum and the start of altcoin season, Hawk Tuah girl is in trouble, AI applications to watch out for and crypto gifts for the holidays.

You ask, we deliver 

Well, maybe 😉 After almost two years and eighty newsletters with what I used to send to friends and colleagues completely subjectively, it's time to gauge which topics are found most and least interesting. Therefore, I invite you to fill out this short survey, which takes less than two minutes. The main results will be shared next week. The last question allows for suggestions, comments and statements. The survey is anonymous, but if you appreciate it, I am happy to include your name and LinkedIn profile in valuable feedback.

Bitcoin over the $100,000 mark and back again

It is always enjoyable when something huge happens in an area that the BBC heartily dislikes but has to report on. Think of Max Verstappen winning the world title and thwarting Briton Lewis Hamilton's record.

With the face of a spoiled child being served Brussels sprouts and chicory, the reporter filed this report, about the moment Bitcoin became worth more than $100,000 this week. Most media only report the investment risks, but have been completely overlooking some crucial elements of Bitcoin for years.

What is unique about Bitcoin is that it is a completely decentralized network with no central party controlling the number of coins in circulation, so unlike a system with a central bank. As a result, there is also no "crypto-bank account", but you have complete control over your own assets.

How important that is, Netscape founder and investor Marc Andreessen explained in Joe Rogan's podcast through a detailed explanation of the concept of being "debanked;" what happens when you lose your bank accounts and credit cards as a person or company without any explanation. This has happened to many entrepreneurs in the fintech and crypto world in recent years. More and more people worldwide, and not just in undemocratic countries, therefore value self custody of their assets.

Big difference between 2018 and 2024

The often-quoted brilliant Jennifer Zhu Scott recalled last week a panel she participated in at the 2018 World Economic Forum in Davos, when Bitcoin first took its place on the main stage. Zhu Scott debated with Nobel prize winner Robert Shiller and a top executive from Sweden's central bank:

"At the time, coming out openly for Bitcoin was a career risk. But I believed in the ideal. I understood its powerful implications for the world and chose to champion it. Many of the ideas I shared six years ago have become reality.

  • Bitcoin has disrupted gold more than the dollar.
  • Smaller countries have begun to include Bitcoin in their national reserves.
  • Bitcoin wasn't going anywhere-it embodied the ideal of decentralization, and that ideal remains incredibly powerful.

While the rise of Bitcoin has been extraordinary, the ecosystem has evolved in ways I had not fully anticipated:

  • Decentralization vs. Centralization: Bitcoin was born from the ideal of decentralization. Today, however, the ecosystem is becoming increasingly centralized, with figures like Michael Saylor exerting excessive influence.
  • The Obsession with Price: Six years ago, I argued that price was the least important aspect of Bitcoin; its real strength lay in decentralization. Yet Bitcoin is now seen as an asset and the conversation is almost entirely about price movements.

I am proud to have been one of the early pioneers in this field. Thanks to Satoshi Nakamoto's revolutionary vision, we have witnessed the birth of countless breathtaking projects aimed at enabling scalable decentralization. In an era where AI is consuming our data, creating deepfakes and undermining trust, I am grateful for the emergence of Web3 technologies-those offering solutions such as data sovereignty, immutability and authentication. These tools provide a counterbalance in a world increasingly defined by unchecked digital power.

To those who rejected the picture I painted eight years ago: I smile today. Bitcoin's journey is far from over, and this milestone is just the beginning of what is possible."

From Davos to Hong Kong

The debate, in which things got especially feisty between Zhu Scott and Schiller, can be seen here. In retrospect, it is downright scandalous to see how crypto was portrayed in a certain light at this conference, where supposedly free exchange of ideas takes place.

First of all, the panel was called "The Crypto Asset Bubble." That is especially hilarious when you consider that the price of Bitcoin at that time was $11,000; so anyone who had bought Bitcoin at that time would have seen that investment increase in value nearly tenfold within seven years. Do me a bubble like that more often!

But the text with which the moderator introduces Bitcoin really defies all standards of decency: "Bitcoin emerges from the world of nerds and criminals." As a half nerd, I then always think, "what if you replace the word 'nerd' here with Jews or Asians?" Suddenly the same sentence is a lot less acceptable.

By the way, 2018 was the last time I attended the World Economic Forum. Next month, the media will again report in full on the party in the mountains, which I wrote about earlier:

"Participants reported that the number of women they encountered in Davos was as high as the number of MMA fighters at the annual Women's Hairdressing Day. Women are almost as rare during WEF as dark-skinned people. Like motorcyclists on a Sunday ride or penguins in a zoo, I caught myself in Davos politely waving back or nodding to other fellow pigmented people.

A week later, no WEF participant can remember what else was discussed or agreed upon, because unlike the COP climate conferences, for example, Davos is not about jointly formulating measurable goals. There is old-fashioned networking and job hunting.

Because I am sorry to disappoint the conspiracy thinkers, but there is no talk at WEF of world domination by a small, ruling elite at the expense of the common people; there is not much thought about the future at all. WEF excels mainly in zizagging into the future, looking in the rearview mirror - with glasses dipped in the cheese fondue."

In fairness, the "Swiss network effect" was very useful to me personally. I got to know Zhu Scott just before WEF at a crypto conference in St. Moritz, after which I concluded through her appearance on the panel with Schiller that she has a special gift of being able to position her immense knowledge of even the most intricate technical details, within global trends and developments.

Zhu Scott was kind enough to spend a few hours in Hong Kong a few months later to tutor this rather useless Dutchman on decentralization and blockchain. In my experience, this accessibility and willingness to share knowledge is more often seen in the crypto world than in the traditional IT sector, not to mention the financial world.

No one expects it to happen again, but over the last five years Ethereum has been a much better investment than Bitcoin and even better than Nvidia.

Ethereum did much better than Bitcoin

By investors worldwide, including those from the traditional financial industry, Bitcoin has been accepted this year as an investment product that is best compared to investing in gold: it is not used as a means of payment, but as a long-term investment. That is why it remains striking that if you look at the market with a view over five years instead of five minutes, Ethereum has appreciated more than twice as much as Bitcoin.

Indeed, if we compare the performance of the two largest crypto currencies with that of the three most valuable companies in the world, it appears that Ethereum has even outperformed stock market darling Nvidia. That's not saying it will be the case again in the next five years, but it's still interesting to keep in mind.

Christmas season? It's altcoin season

When Bitcoin's price rise has been very rapid, as it has been in recent months, it is usually a matter of time until some profit taking happens and the proceeds from that sale of Bitcoin are invested in other cryptocurrencies: altcoins.

That happened last week, when many altcoins peaked, including BNB, Dogecoin (DOGE), XRP and Chainlink (LINK). In the previous cycle, in 2021, altcoins outperformed Bitcoin for nearly five consecutive months.

In the crypto world, it's not Christmas, but altcoin season. Source: Coinmarketcap.

The question, of course, is which sectors within cryptocurrencies will benefit the most from the upcoming altcoin season. To the frustration of all sincere blockchain developers, at the moment it seems especially all meme coins, all crazy coins without any underlying value, will benefit the most.

Hawk Tuah Girl goes crypto

She was world famous for a few days this summer: Haliey Welch, better known as hawk tuah girl. Last week she was accused of involvement in large-scale scams by releasing a coin called HAWK that became worth nearly half a billion dollars in a short period of time, after which it collapsed completely(91% drop).

Now, few will have expected the same stringency of monetary policy from Ms. Welch as from Alan Greenspan, but this was pretty ugly. Stephen Findeisen, better known as YouTuber Coffeezilla, was quick toexpose the so-called  rug pull. But also completely unknown or random people can issue tokens, even kids.

Teenager makes meme coins

"On the evening of November 19, art adviser Adam Biesk was finishing work at his California home when he overheard a conversation between his wife and son, who had just come downstairs. The son, a kid in his early teens, was saying he had made a ton of money on a cryptocurrency that he himself had created.

At first, Biesk paid little attention to it. He knew his son was experimenting with crypto, but the thought that he had made a small fortune before bedtime seemed far too unlikely. "We didn't actually believe it," Biesk says. But when the phone started ringing incessantly and his wife was inundated with angry messages on Instagram, Biesk realized that his son was telling the truth-albeit not quite the full story."

In an excellent article, Ars Technica explains how and why Pump.Fun appears to be a new home for anyone looking to quickly release their own meme coin. The method is simple: the potential profits with meme coins are always coupled with immeasurable risks. Only suitable for the gambler with a strong stomach.

Interesting crypto categories

As every week, I want to emphasize that I am not providing investment advice, but these appear to be interesting categories of cryptocurrencies:

  • Real world assets (RWA): These are cryptoprojects that represent tangible, physical objects, such as gold, real estate, art or commodities that are "tokenized." By converting these into digital tokens, they can be more easily traded and managed, while ownership is transparent and verifiable in the blockchain.
  • AI tokens (which may or may not actually have anything to do with AI): This refers to crypto projects that capitalize on the theme of artificial intelligence, but do not always actually incorporate substantial AI technology. Some projects attempt to actually integrate AI applications, such as "smart contracts" with machine learning functionality, while others simply use the term "AI" from a marketing standpoint.
  • DePin or DePIN (Decentralized Physical Infrastructure Network): This is a blockchain-based model for decentralized management of physical infrastructure. This could include networks for Internet access, energy or mobility, in which the infrastructure is not controlled by one central body. Imagine: Uber with only drivers and customers, with no central organization taking 20-30% of revenue.

Venture capital firm Andreessen Horowitz published a nice overview yesterday of what it believes to be promising sectors in 2025.

Short news

Tesla is buoyed by Musk's bromance with President Trump, but Ethereum also rose strongly this week.
  • Tesla, Ethereum, Amazon and Meta are the winners of the stock market week, which actually had no losers. Yes, the S&P500 lagged behind tech stocks and crypto stocks, but the risk profile is also lower. At 28% up, the S&P500 is having a phenomenal year. Especially compared to savings accounts...

It's a funny contest run by AI experts and scientists: get an AI bot to declare its love to you and win thousands of dollars.

"It can be helpful to agree on a 'proof of humanity' word that your trusted contacts can ask you," Near wrote. "Should a strange and urgent voice or video call from you come in, this can help them confirm that they are really talking to you and not a deepfake/deepcloned version of you."

When someone suggested this on X last year it may have seemed far-fetched, but now the FBI advises  families to put together their own secret password, or security phrase. When scammers and criminals then try to impersonate a member of the family over the phone, for example a supposedly lost child asking her parents to send her money quickly, the family password or security phrase can be used to verify who is on the line. My guess is that many families will choose to use phrases from popular movies as security phrases, such as from Harry Potter or Home Alone.

As many as 87% of all startups that participated in Y Combinator's program, which ends with a pitch to investors, were AI-related in some way. But while the focus is mostly on consumer applications, the greatest use of AI is actually taking place within enterprise environments. Techcrunch advises companies to look closely at CTGT, Galini, Raycaster and HumanLayer.

Most analysts overestimate energy demand and underestimate technological advances. That is the gist of an argument by The Economist, which has looked at estimates of the global cost of an energy transition to a carbon-free world made by various economists, consultants and other researchers-the kind of estimates that are routinely used as the basis for policy.

These estimates range from about $3 trillion a year to nearly $12 trillion a year, huge sums. But these figures are grossly exaggerated. The good news, according to The Economist, is that the energy transition is going to be many times cheaper.

I don't claim to put all of the suggested products on my wish list myself, but you'll agree that this description of a Christmas gift does grab attention: "the Chipped Social Nail Set includes NFC-equipped nails that can connect to blockchain experiences and crypto wallets, creating an interactive way to show off your crypto style. It's the perfect gift for the bold, stylish crypto fanatic in your life." How did we ever live without NFC nails connecting to your crypto wallet?

I close with once again the kind request to complete the short questionnaire about this newsletter. Thank you very much in advance!

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The big trends of 2024: AI, crypto and carbon removal

There are currently three major trends in technology driven by technological, as well as sociological and political currents: AI, crypto and carbon removal. These groundbreaking developments, like any major innovation, are received with skepticism, a pattern that has been evident for decades.

PC: "too expensive and useless"

In the 1980s, when the personal computer emerged, personal computers were mostly seen as too expensive for a device without many relevant applications. That quickly changed thanks to price reductions and standardization of software, after MS-DOS became the world standard thanks to a sophisticated licensing model by Microsoft. The word processor and spreadsheet quickly made the PC indispensable in the office.

Internet: "too difficult and dangerous"

In the 1990s, this pattern repeated itself with the Internet. The personal computer was seen as a work tool, not a potential mass medium. Bill Gates even declared that the Internet suffered from lack of standards, it was insecure and far too complicated, which is why he did not use the word Internet even ten times in his book The Road Ahead.

Bill preferred to talk about the information super highway, which he was going to build himself with the closed MSN, which we never heard anything more about. Yet within a few years, email, the Web browser and applications such as eBay, Amazon and Google made the Internet accessible to consumers.

In the Netherlands, it took until late 1996 for the NOS Journaal to understand that the Internet was about to become a serious mass medium, although Joop van Zijl still compared computer penetration to that of the microwave oven.

Smartphones: "only for representatives"

When the iPhone hit the market in 2007, the Blackberry reigned supreme in the business market. Although most of the population in developed countries already had a cell phone, often a Nokia, criticism of the iPhone was not muted. "Too expensive, only useful for sales representatives," was the verdict of a friend from the world of IT. Incidentally, the same chap who ten years earlier judged the cell phone as "only useful for drug dealers," a common sentiment.

Microsoft CEO Steve Ballmer laughed off the iPhone in a video in which, as he was taught by PR people, he quickly switched to promoting the company's own Windows Mobile which we also never heard anything more about. It makes CEO Satya Nadella's feat of completely revitalizing Microsoft after Ballmer all the more galling, but about that another time.

AI, crypto and carbon removal on the turn

Right now we are seeing the exact same patterns as before, but now about AI, crypto and carbon removal:

  • AI is often dismissed as useful for work, but without useful applications for consumers.
  • Crypto is criticized with comments like, "Name an application." Meanwhile, the first application lies in something as basic as redesigning the banking system, with each user managing their own account and making banks obsolete. Apparently, the significance of this is missed by many. Tip: Never get into an argument with people who were too lazy to read the Bitcoin white paper but have an opinion.
  • Carbon removal is often characterized as a fraud, referring to familiar examples such as inefficient cooking ovens, without knowing or understanding the complexity and potential of projects that do actually remove carbon from the atmosphere, such as ocean fertilization. This kind of removal of carbon from the atmosphere is the biggest task facing the world in the coming decades. Tip: Never engage in climate change discussions with people who were too lazy to read the summary of recent IPCC reports.

Admittedly, I have a personal fascination with how innovations break through or fail. That's why both my 1993 graduate thesis and my 2001 book were both called "In Search of the Holy Grail," although some weirdo photoshopped the cover of my book which, by the way, is still on sale in large numbers. And not because of its great success.

I learned more from Megamistakes than Megatrends. Everyone knows Rodgers' adoption curve, but it remains mysterious why one innovation catches on and another flops mercilessly. For carbon removal, crypto and AI, there are several key success factors, some of which I want to highlight.

CO2 success was not during COP29

Breakthroughs in carbon removal require political will. All media were focused on the COP29 climate summit in Baku, but in the meantime, successes were being made in Brussels and Washington in the fight against climate change.

In Brussels, the European Council approved the creation of the first EU-wide certification framework for permanent carbon removal, carbon farming and carbon storage in products. This voluntary framework is intended to create a certification system that can quantify, monitor and verify carbon removals and counteract greenwashing; carbon farming. The EU's adoption of the new rules marks the last major legislative step to give the green light to the creation of the new certification framework for carbon removal.

Now in Dutch: standards are being introduced that will allow companies and citizens to actually offset their carbon emissions, and not by planting or preserving flimsy forests, but by measurably reducing CO2 emissions or even better, removing CO2 from the atmosphere.

Democrats and Republicans together for carbon removal

In the United States, a bill was introduced by Senators Lisa Murkowski (Republican, Alaska) and Michael Bennet (Democrat, Colorado) seeking to expand carbon removal subsidies for a wide range of technologies intended to permanently remove carbon dioxide from the air and seas.

The bill is unlikely to be passed by the current Congress yet due to time constraints, but its introduction indicates that subsidies for carbon removal will be expanded even under President Trump. The fact that the bill was introduced by senators from both parties, a rarity these days, is hopeful.

AMCs for CO2

In coming years, watch for the term Advanced Market Commitment (AMC), explained here by the Economist: no matter how the political winds blow, the pressure from society for decarbonization is so great that smarter companies are independently seeking to remove or minimally offset their own carbon footprint, by funding techniques that remove carbon for the long term; preferably forever. Salesforce, Google, Meta and Microsoft are just the first from a long list of companies that will fund AMCs.

As another example, it was announced last week that Planetary Technologies has removed 138 tons of CO2 through "Ocean Alkalanity Enhancement (OAE)," which, by adding minerals or substances, increases alkalinity, the ocean's capacity to absorb CO2e, with the goal of sequestering CO₂ and combating climate change. Buyers of the associated carbon removal credits were Shopify (96 tons) and Stripe (42 tons) under a "pre-purchase agreement. In Scrabble, you don't put it easily, but it really exists and will be used a lot.

Old school tech compared to AI and crypto

Stock market valuations are a reflection of market expectations, and the enthusiasm around AI and crypto shows that investors have confidence in their longer-term potential. I have created four virtual "baskets" that I have posted about before:

  • 'MANAAM': the old school tech companies
  • Spotlight 9: the nine I believe to be leading tech investments
  • AI Spotlight 9: nine companies benefiting from AI
  • Crypto Spotlight 9: the biggest nine cryptos measured by market value

Old school tech MANAAM: +36%

In the broader tech sector, established players continue to dominate. At one time investors were fans of the term FANG (for Facebook, Apple, Netflix and Google, as if Microsoft meant nothing), but let's take the "MANAAM" group consisting of Meta (formerly Facebook), Apple, Microsoft, Amazon, Alphabet (formerly Google) and Netflix. The average increase in shares of this now classic little club this year is a whopping 35.9%. That's phenomenal from an investment perspective, until you consider that the S&P 500 is also up 27.19% this year.

Spotlight 9: +63%

Microsoft(14%), Alphabet(22.28%) and Apple(27.84%) are not even outperforming the index. While investors buy tech stocks for the higher price appreciation, compensating for the higher risk.

Not a buy recommendation, but indicative: the Spotlight 9 is +63%

However, those who had bought the Spotlight 9, which consists of the major tech companies and the two largest crypto currencies Bitcoin (+119%) and Ethereum (+57%), would have already seen their investment portfolio rise 63.37% this year. Compared to the MANAAM, Netflix is missing from the Spotlight 9, while Nvidia (+187%) has obviously been added as the world's most valuable technology company.

AI Spotlight 9: +76%

The valuation of AI-driven companies such as Nvidia, which play a key role in the development of AI infrastructure, has reached record highs. This shows that the market recognizes the speed at which these AI-powered companies are seeing their results soar.

Despite AMD, Gigabyte and Super Micro, the AI Spotlight 9 does as much as + 76%

Since Nvidia is already included in the Spotlight 9, I left out the market leader in my also completely arbitrary "AI Spotlight 9," consisting of nine companies that I suspect AI will allow them to grow faster than the leading large tech companies (the MANAAM group) and perhaps even faster than the Spotlight 9.

With 76.11% growth, that is certainly the case this year, with it being entirely remarkable that this increase came about despite Super Micro (which saw the auditor go the distance), AMD (-1%) and Gigabyte, hardware parties that did not keep up with the growth of the rest. Software company Palantir (+305%), which I wrote about in early November, more than makes up the difference.

Crypto Spotlight 9: +191%

Since the approval earlier this year of Bitcoin ETFs, tens of billions have already flowed from the traditional investment world toward crypto. The wait was for the moment when the "alt rotation" would begin, the moment when more money flows into other cryptocurrencies than Bitcoin, which counts as the unofficial kickoff of "altcoin season. That moment occurred yesterday, when the Ethereum Spot ETF net inflows, outpaced those to Bitcoin.

Crypto Spotlight 9: +191% and this does not include memecoin.

So the real daredevil is now stepping big into the craziest coins that often have no underlying value at all, but that is as risky as putting everything on red or black in a casino. A less risky strategy, insofar as that is possible in crypto, is to spread out in the biggest cryptocurrencies and take advantage of overall sentiment.

The "Crypto Spotlight 9" consists of the largest crypto currencies measured by market value, excluding stable coins, memecoins (crypto giblets) and tokens linked to crypto exchanges such as BNB.

That group, listed alphabetically as Avalanche, Bitcoin, Cardano, Ethereum, Solana, Stellar, Toncoin, TRON and XRP, achieved a 191% increase so far this year. So is this a buy recommendation? Absolutely not.

What I do recommend to anyone active in technology and innovation is to look into AI, carbon removal technology, blockchain and crypto-currencies. Just like in the 1980s with the personal computer, the Internet in the 1990s and the smartphone 15 years ago, these are developments that are unstoppable worldwide.

A practical way to stay informed is to then invest a bit in those sectors, with my advice being to do so only with money you don't need for rent, mortgage or other daily concerns. Even within technology and crypto, it certainly pays to look closely at what the intended investments actually involve; what does Palantir actually do, is Ethereum threatened by Solana and SUI; and isn't it funny to take a small gamble on memecoins after all?

Anyone who puts in some money will start to inform themselves. The alternative is to write a weekly newsletter about tech and innovations, but that also requires a huge ego.

Warm regards, thanks for your interest and see you next week!

Categories
AI invest crypto technology

Secretive data company Palantir is the winner of the week

It was a remarkable week in the tech world. The US presidential election kept tech companies quiet on the PR front, while Trump's victory created speculation about what this means for technology and innovation policy. One thing is clear: Elon Musk has a new role as President Trump's tech supremo.

In this edition, I share the news items that stood out: from space cowboys and crypto to AI and an extraordinary story about cancer self-treatment. But most of all: lots about Palantir, the absolute winner of the week.

Is Trump for nuclear-powered data centers, crypto and AI?

From fairly unexpected quarters, because we don't usually have to be in the conservative data center sector for a broader view, came this excellent analysis from Data Center Dynamics on what the tech and innovation sector can expect under Trump. From AI to crypto, chips and space; pretty much everything is covered.

Trump leads to 4 billion tons of additional CO2 emissions

Add up the annual emissions of the EU and Japan, or take all the emissions of the one hundred and forty least emitting countries in the world, and you have the additional emissions the US will produce in 2030 from Trump's election, Carbon Brief calculated earlier this year. It's twice as many emissions as all the savings from renewable energy worldwide in the last five years.

Science editor at the Volkskrant Maarten Keulemans nevertheless hopes for an alternative climate course that is not based on the Paris climate agreement, for example through initiatives that do not come from the government. That's an interesting thought also espoused by Blue City Solutions, the independent group of freethinkers I support in developing private initiatives against climate change.

"Saddle up, space cowboys" 

Chances are that Elon Musk is going to make major reorganizations and cutbacks at his great adversary NASA, in his role as presidential adviser. That his company Space X is profiting from this is, of course, entirely coincidental.

OpenAI has a hardware bazin

Caitlin Kalinowski is the former head of augmented reality glasses projects at Meta. On Monday, Kalinowski, CK for intimates, reported in a post on LinkedIn that she will lead robotics and consumer electronics at OpenAI.

In late September, OpenAI leaked that CEO Sam Altman would be working with Apple legend Jony Ive on an "iPhone for AI," whatever that might be. With Kalinowski starting at OpenAI, the question is how her work will relate to OpenAI's project with Ive. Kalinowski and Ive know each other well, as she previously worked at Apple on Macbook hardware during the time Ive was Chief Design Officer there under Steve Jobs. Will OpenAI come with glasses, a mobile device or something entirely new?

Palantir beats Nvidia

Almost silently, Palantir snuck into the S&P 500 last month. The software company of Peter Thiel and Alex Karp, always surrounded by a fog of secrecy, rose a whopping 252% on Wall Street this year, even more than Nvidia. 

Nabeel Qureshi, former developer at Palantir, wrote a fascinating story about his time at the data analytics company. It is highly recommended for anyone working in the field of innovation. It starts off right away, when Qureshi quotes an interview with CEO Karp about his unique approach to job interviews:

"I like to meet candidates without any information about them: no resume, no preliminary interviews or job description, just the candidate and I in a room. I ask a fairly random question, something that has nothing to do with what they would do at Palantir. Then I watch them parse the question and see if they recognize how many different ways there are to look at the same thing. I like to keep interviews short, about ten minutes. Otherwise, people move on to their learned answers and you don't get a good picture of who they really are."

In ten minutes you won't go into depth about your time as praeses with the corps, your family life or your hobbies, so that already gives a pretty good indication of the atmosphere and focus at Palantir.

Not FTE but FDE

Interestingly, according to Qureshi, Palantir is organized around two types of developers:

  • developers working with customers, also known as FDEs, forward deployed engineers.
  • developers who work in the core product team on product development, PD-ers, and who rarely visit customers.

FDEs work "onsite" at customer sites three to four days a week, resulting in a tremendous amount of travel, highly unusual for software developers at a Silicon Valley company.

The goal of this approach is to gain in-depth knowledge of business processes in complex industries (such as healthcare, intelligence, aerospace, etc.) and then use that knowledge to design software that actually solves the problem.

The PD developers "productize" what the FDEs build. In other words, they convert the FDEs' custom work into standard products, developing the software that in turn helps the FDEs do their jobs better and faster on subsequent projects in the same industry. Qureshi spent nearly a year in France at Airbus, so Palantir learned what kind of products the aerospace industry needs.

It is an original approach that stands midway between the customization the big IT consulting firms claim to provide (cough) and the "one size fits all" approach of traditional ERP companies.

'Whatever you want Ben'

A piece of venture capitalism to the people: top investor Ben Horowitz donated money to the Las Vegas Police Department, which , at his request, used it to buy drones from a supplier in which his company invested. The manufacturer obviously made good money on this order, in a modern variation of vest-pocket-via-police-breast-pocket.

Companies want employees back in the office. What's really going on?

In a podcast, The Verge discusses with two experts the true reasons why many companies want their employees back in the office. It's not just cutbacks in disguise, hoping people will quit. Surely many companies value team building and expect higher productivity in the office.

Nvidia passes $3.6 trillion market value mark

Wall Street expects Trump to roll back the Biden administration's restrictions on AI development, which caused Nvidia to overtake Apple via the right as the world's most valuable company.

Nvidia past Microsoft and Apple; for how long?

The market values of the top three are now as follows:

  • Microsoft: $3.14 trillion
  • Apple: $3.43 trillion
  • Nvidia: $3.62 trillion

NVDA shares rose 206% this year. It is not a PLTR, but remains highly exceptional for a company of this size. In the last five days, Microsoft, Apple and Nvidia rose 3.1%, 2.6% and 7.6% respectively against a 41.8% rise for Palantir. With that, Palantir rose even much harder than the cryptos, of which so much was expected by investors and speculators.

The occasion was the excellent quarterly figures, which showed that Palantir's sales were up 30% compared to the same quarter last year. Profits even increased by 101%. Palantir achieves an operating profit of almost 20%, compared with 15% at Salesforce, for example, whose revenue grew by only 8%.

The nine largest crypto currencies by market value rose after U.S. election

Where cryptocurrencies were expected to go through the roof after Trump's victory, the rise for the volatile crypto world still remained relatively modest. Bitcoin established a new high but stabilized reasonably.

Cardano's rise stands out in this chart, but it is deceptive: ADA's share price rose "only" 28% over the last year so this was a correction rather than a breakout. On average, the largest crypto stocks rose 16% last week.

There is justice: memecoins did worse than a real company like Palantir

So were the biggest gains in those silly speculative coins of dogs (with or without hats), or frogs and other goofy things? No, because the biggest memecoins rose "only" 12% last week.

Anyone who unexpectedly ends up at a circle birthday party or in a soccer canteen this Sunday with bleating monkeys orating about bizarre price gains on memecoins can arm themselves with the knowledge that the largest memecoin, Dogecoin, rose 198% last year.

Nice and all, but the world's most valuable technology company, Nvidia, which unlike memecoins actually develops unique technology and is therefore much less susceptible to speculation, rose 214% in the last year. Stand there, with your pink cake or your cheese dice in your hand bragging about Dogecoin.

Palantir, up 252% this year, is on a huge rise; from $15 at the beginning of the year, the share price rose to $58 last Friday. This of course raises the question of whether, with a stratospheric P/E ratio of 295, the company will be able to maintain this appreciation.

Peter Thiel, co-founder of Palantir, could use some help in this regard from his friends in the White House; for Thiel has been so invited to not only follow Trump's lead early on, he is also a mentor and friend of new Vice President JD Vance.

Scientist treated her cancer with viruses she developed herself

Happy to end this week's newsletter on a positive note, with the extraordinary achievement of someone who did this entirely on her own: virologist Beata Halassy says in Nature that self-treatment worked and was a positive experience - but researchers warn that this is not something others should try.

Halassy, a virologist at the University of Zagreb, successfully treated her own breast cancer by injecting the tumor with laboratory-grown viruses, sparking a discussion about the ethics of self-experimentation.

Halassy discovered in 2020, at age 49, that she had breast cancer at the site of a previous mastectomy. It was the second recurrence at that site since her left breast had been removed, and she did not want to undergo another round of chemotherapy under any circumstances.

After an extensive literature review, Halassy chose an unproven treatment and administered herself a treatment called oncolytic virotherapy (OVT) to treat her own stage 3 cancer. She has now been cancer-free for four years.

Thanks for the interest and see you next week!

Michiel Frackers

The English version of this newsletter appears here on LinkedIn.

This newsletter does not contain investment advice but only a personal opinion based on knowledge, experience and self-aggrandizement.

The list of past newsletters is at Frackers.com.

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Categories
AI technology

Meta's glasses hacked into Terminator glasses

Sam Altman's Messiah behavior about AI is reminiscent of the way Mark Zuckerberg propagated the blessings of social media for society, before the negative effects became apparent and he was publicly keelhauled, including before the U.S. Congress. Zuckerberg has since argued that social media is a mirror for society rather than the enabler of evil, making him increasingly confident in his presentation to the outside world.

"Inside the bro-ification of Mark Zuckerberg" is the untranslatable headline above an excellent Washington Post article about Zuckerberg reinventing himself as a muscular version of ... Julius Caesar? Zuckerberg has switched from his familiar hoodie to t-shirts with self-invented lyrics quoting the Latin emperor, but apparently forgetting how Caesar met his end.

Zuckerberg is having a banner year: strong financial performance sees Meta shares rise sharply after a disastrous 2023, Apple's VR glasses flop while the new Ray-Ban Meta smart glasses get rave reviews. But once again, Zuckerberg seems blind to the problems his company's introduced technology could cause.

'Man sees unknown woman - including residential address.'

Creepiest glasses ever

Harvard students turned Zuckerberg's Meta glasses into "Terminator glasses" that allow them to do very creepy things simply by looking at someone:

"The technology, which combines Meta's smart Ray-Ban glasses with the facial recognition service Pimeyes and some other tools, allows someone to automatically go from a face to a name, phone number and home address."

The video published by the students on Tuesday paints a terrifying picture of a world in which, for example, any creep wearing such glasses could stalk any woman. The creators have shared all the information about this "I-XRAY" here.