AI Cost Pressures and Economic Outlook

Are roll batteries the same? That's like asking ev soccer players are the same Take Messi, the most decorated player ever Is there any other player who has achieved that? No, just him. Now take Duracl. Is there any other battery with power boost ingredients inside? No, just Duracl. Remember, goats only trust goats because they're built different. and Messi only trusts Duracl Welcome to the Tech Werite homeome for Friday june twelfth, twenty six. I'm Bran Mella. Today, SpaceX had the biggest IPO ever with a one point nine trillion dollars valuation. Shiny hunters exploited an unpatched people soft flaw hitting more than one hundred organizations. Mistrel is still in the AI race. Mr. Beast hits five hundred million subscribers And of course the weekend long range suggestions. Here's what you miss today in the world of tech Think you have to build your own search engine scraping infrastructure. Thank again, folks. SRP API can take care of all your search engine scraping needs. It lets AI products access real time web search data programmatically No scraping infrastructure required Their APIs offer structured JSON data from all the top search engines, including Google, Amazon, and YouTube Tech companies already use SERP API to power their AI agents, their market intelligence tools, and their automated research workflows See how it can help you and your team SRP API provides two hundred and fifty free searches per month Go check it out at SRPapPi dot com That's SRP SRpapPi dot comot There's only one big story today drowning out all the others, quoting Bloomberg. SpaceX has made history with the biggest ever IPO, sending it into the top ranks of the largest public companies and making Elon Musk the world's first trillionaire SpaceX made its NAazDAQ debut at one hundred and fifty dollars after pricing its shares at one hundred and thirty five dollars giving it a market cap of one point nine trillion. The company raised seventy five billion dollars in the IPO pricing five hundred fifty five point six million shares at one hundred and thirty five dollars each, according to a statement on its website Thursday SpaceX's IPO is more than double the size of Saudi AramCo's twenty nine point four billion dollars listing in twenty nineteen Space Exploration Technologies Corp, as it is officially known has given the underwriting banks an overallotment option to buy an additional eighty three point three million shares at the IPO price the statement shows, which would increase the size of the deal to about eighty six billion dollars if fully exercised The IPO drew demand for more than four times the available shares, Bloomberg News reported Elon Musk's fan base in the retail trading community is a crucial component of the deal. They have placed more than one hundred billion dollars in orders for the stock. People familiar with the matter said on Thursday far more than the twenty percent of shares that had been reserved for them, end quote So Elon is humanity's first ever trillionaire, but there are others who are seeing their bank accounts bulge today, quoting Bloomberg. Founders Fund, a venture firm led by Musk's longtime associate Peter Thial, owns a roughly three percent stake in SpaceX after investing six hundred million dollars in the company over several rounds dating back nearly twenty years At the company's one hundred thirty five dollars per share IPO price, that stake was worth more than fifty billion dollars, according to a person familiar with the matter Andreon Horowitz will get the biggest return in its history from SpaceX, according to a person familiar with the matter. The venture firm's stake in SpaceX would be worth more than ten billion dollars, the person said And Sequoia Capital, which first backed SpaceX at the end of twenty nineteen, owns about one point a half percent of the company according to a person familiar with the matter That's worth more than twenty billion dollars. Sequa invested some two billion dollars in SpaceX, including by putting eight hundred million dollars into X, the social media network formerly known as Twitter. that Musk acquired in twenty twenty two The Wall Street debut offers virtually unprecedented returns for venture investors at a time when many syrups are choosing to stay private longer. It also serves as validation for those who've bet early on Musk's ambitious plan to build a rocket company more than two decades ago, as well as his other ventures that have since been folded into SpaceX The core lesson that everyone has learned from this experience is never bet against Elon. It's just a bad idea, said Trace Stevens, a general partner at Fers Fund in a recent interview with Bloomberg Tech. quote Not everyone is sold on SpaceX, according to the Times. Some investors question the valuation citing its four point three billion dollars in losses on four point seven billion dollars in revenue in Q one as well as concerns over space data centers. Qote It really does feel very much like a don't look at the man behind the curtain situation, said Jim Chenos, the founder of the investment firm Chenos and compompany, who predicted the two thousand one collapse of Enron, the energy company that was found to have engaged in accounting fraud. Mr. Chenos and others say they were concerned with SpaceX's finances. The company lost four point three billion dollars in the first three months of the year alone and is spending heavily on AI development. Revenue was four point seven billion dollars and growing, but it was far lower than that of tech giants like Meta, which brought in fifty six point three billion dollars in the same period and has a stock market valuation of one point four trillionars At the same time, SpaceX has promised that its total addressable market, which is its revenue opportunity if it captured all the demand across its various industries, is the largest in quote human history at twenty eight point a fivef trillion dollars. The figure, which depends on SpaceX proving that it can put AI data centers in space and develop factories on the moon, dorsse China's annual gross domestic product by more than eight trillion dollars. Michael Burry, a hedge fund investor featured in the book, The Big Short for his predictions on the two thousand eight financial crisis, said in a substack discussion last month that any increase in SpaceX's stock after its IPO would be on hype and technicals. Nothing in that S one suggests it is worth one trillion dollars, let alone two trillion Mr. Burry wrote, referring to the company's IPO filing Even some SpaceX shareholders have doubts. Russ Gerber, the chief executive of Gerber Kawasaki, an investment firm that owns SpaceX stock, said the company's projections reminded him of unverified information that young startups used to woo investors. He said he was alarmed by SpaceX's valuation of one point seven seven trillion, which would be more than four times the four hundred billion dollars that the company was valued at justust thirteen months ago. invvestors are paying an extremely high price for the stock, mr. Gerber said, and quote Oracle is warning customers of a critical people soft flaw after shiny hunters claimed breaches of more than one hundred organizations using PeopopleSoft At the time of this writing, Oracle has not issued a patch oting Tech Rrunch. Mandient, the Google owned security unit that investigates cybertacks warned in a blog post that the new Oracle flaw is the same bug that the Shiny Hunters group is abusing in its hacking campaigns, targeting people soop customers. Oracle said in the advisory that the bug can be exploited over the internet without needing any authentication, such as a password The tech giant recommended that customers who use Peopleoft software apply its mitigations to prevent exploitation. On Wednesday, a shhiny Huntersmber told Techcrunch that the gang compromised the companyiess by abusing an unpatched flaw in PeopleSoft servers. The bug is known as a zero day because the company effffected, in this case, Oracle had no time to fix it before it was discovered and exploited Mandiant confirmed that it has also notified more than one hundred global organizations, most of them in the United States in an effort to restrict access to the potentially vulnerable systems. The cybersecurity group said that about two thirds of these organizations are in higher education, which aligns with what Shiny Hunters previously claimed While several organizations successfully blocked the ability or remediated the vulnerabilities, others experienced compromise resulting in stolen data being published on the Shiny Hunters Data leeak website, Mandiant wrote The Shiny Hunters member told Techcrunch this week that some of the hacked organizations are universities and colleges. The hackers shared a message they said was sent to one of the victim schools in which the hackers claimed to have stolen hundreds of thousands of student records containing full name, home address, phone, email, date of birth, gender, ethnicity, enrollment status, GPA, major, and student ID across all campuses ammong other data, and quote There's still one big dark horse in the AI race, and we haven't spoken about them in a while. sources tell Bloomberg that French startup Mistrel AI is in talks to raise around three billion euro at around a twenty billion euro valuation. It was last valued at eleven point seven billion euro during a funding round in September of twenty twenty five founded in twenty twenty three by researchers from Google Deepmind and Metap pllatforms Mistrel has sold itself as Europe's answer to Silicon Valley's dominance in AI The company has focused on serving as an infrastructure provider for European governments and companies building cloud computing facilities that it will manage in France and Sweden Recently, Mistrel has pitched its AI services as tailor made for engineering and manufacturing processes, signing deals with large European industrial firms such as Airbus and BMW. Still, the French startups, models, and chatbot have gotten far less traction with businesses and consumers than those from O AI and Anthropic as well as Chinese competitors Misrell has discussed offering European banks and other institutions its alternative to anthropics Mhos, an AI model adept at finding cybersecurity vulnerabilities. Mistrell Chief Executive Officer Arthur Mench has described this capability as a national security risk. We must have control over this technology, he said last month Misrels earlier backers include Franis's State Bank BPI France, and prominent U.S venture firms including light spepeed venture partners, genereneral Catalyst, and Andreresa Horowitz, and quote. AI is uncharted territory, and many leaders are trying to navigate through without a guide to help them. That's why Morning Bw created the Intelligence Shift, a new podcast with PWC. It's all about how AI is fundamentally changing different industries host Dan Priest sits down with people who work with AI on a daily basis. Together, they discuss real stories, real strategies, and real takeaways for leaders. Get guidance from industry experts. listen to the intelligent shift Whver you get your podcast. Spring has sprung folks. As the weather warms up, it's a great time to take your routine outside. 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That's why you rack And a couple of dudes we also haven't spoken about in a while Sam Bankman Freed has lost his bid to overturn his fraud conviction and a twenty five year prison sentence over the collapse of FTX Qoting Reuters. In a unanimous decision, a three judge panel of the Manhattan based Second U. S. Circuit Court of Appeals said prosecutors' evidence against Mcam Freed, quote, was conservatively stated and robust. While he was publicly reassuring customers, investors, and regulators that FTX customer funds were safe He was simultaneously using FDX as his own personal piggy bank. spending customer funds on real estate, political contributions and investments, Circuit Judge Barrington Parker wrote on behalf of the panel. Bankman Fried's lawyers did not immediately respond to a request for comment. They may next ask all the active judges on the Second Circuit to hear the case or ask the US Supreme Court to take up the case. Bankman Fried is also seeking a pardon from President Donald Trump, according to the Justice Department's Office of the Pardon attttorney. Neither the White House nor the Justice Department immediately responded to requests for comment end quote And we haven't spoken about Mr. Beast in a while, quoting the rap Mr. Beast has broken yet another record. Jimmy Donalson, AKA Mr. Beast. hit five hundred million subscribers on YouTube on Friday becoming the first creator ever to reach that milestone Naturally, Donaldson live streamed the moment on his channel. Over six hundred thousand people watched the stream, which ran for about an hour and a half Donaldson previously live streamed his channel when he was on the verge of hitting one hundred million subscribers Just like when he crossed that threshold in twenty twenty two, Donaldon's fans messed with him a bit on suubbscribing from his channel when he was close to hitting this accomplishment before resubscribing a few minutes later When the Mr. Beast channel surpassed half a billion subscribers, Donaldon released confetti and celebrated before getting a bit more serious with his followers I shouldn't have half a billion subscribers. like statistically, I shouldn't. I didn't grow up with much, Donaldson said. Both my parents were in the military and we ended up going bankrupt back in two thousand eight in the financial crisis. When I started this channel, I couldn't afford equipment. I would have to save up money from my adsents to buy a microphone or computer. I really shouldn't be where I am today. Donaldson went on to emphasize that he didn't grow up in New York or Los Angeles, but instead grew up in a very small town I found what I loved at a really young age. I found YouTube at the age of eleven and gave it my all. I woke up every day and I asked myself, how can I make the best videos possible? Donalson continued. I just want to take this moment to inspire some of you because if you don't like the position you're in, hopefully this could give you the fire to try something out. It was a lot of work to get to this point. They say it takes ten thousand hours to master something. I think ten thousand hours is too little. I think it takes one hundred thousand hours to master something And I'm like probably sixty thousand to seventy thousand hours deep on making YouTube videos. Go chase your dreams and you can do it. I'm grateful for every single one of you that is subscribed to this channel. Donaldson also teas that he will be releasing a five hundred million subscriers special at noon Eastern timee on Saturday, end quote First up in the longong Reads this week, what I said was going to happen is starting to happen As companies are hit by rising AI costs, they are increasingly using tools that tap cheaper models, including some from China. thereby putting price pressure on open eye and anthropic Coting the journal The ecosystem allows autonomous AI systems or agents to use cheap models, including those made by Chinese companies like Alibaba and Deepseek for many functions. The agents only tap the most capable versions of open eyees, Chat GPT and Anthropics Claud for more complex tasks That can reduce costs for some AI assisted work by as much as ninety five percent, according to executes using the tools Once we find something that is working well and engineers love, we find ways to make it cost effective. Dan Robinson, founder of Detail, a startup that identifies bugs There's really an embarrassment of riches right now coming out of the open source labs. Robinson shifted ninety percent of details workload from Claud and Google's Gemini to custom models and GLM, a family of models developed in China The shift to cheaper models appears to have played a role in a recent decline in a widely followed index that tracks AI spending, Citadel Security said in a report this week Even the most powerful technologies must pass through the prosaic discipline of cost curves, capacity constraints, and marginal returns, the report said Open AI is considering drastic cuts to the prices it charges AI users ahead of Similar cuts to the company expects atthropic, the The Wall Street Journal reported The company sees itself as having an advantage in such a scenario because it's spent massive sums in the past year to secure access to computing resources at far lower prices than what's available now Pressure on AI prices is also a new data point in the longstanding debate over whether lower cost competitors will commodify AI models in coming years. or if the biggest AI compananyiess fast pace of improvements, will'll keep them ahead. Both Op AI and Anthropic also offer cheaper models to which they can steer customers to lower costs You don't need a model that knows quantum gravity, said Vichal Mizra the vice deean of compomuting and AI at Columbia University's Engineering schoolchool. These open source models are very capable and the ability to charge a big premium for AI is going to diminish Open source Chinese models have been rising in popularity across American businesses. Deep Seak's share of AI usage rose from one percent in April to seventeen percent in May on the startup Versselles platform. The company said Open Router, another startup that processes AI queries, Deep Sk has been the most used AI company since mid May. Among their highest spending customers, open source token usage grew four times faster than closed source between Fall of twenty five and spring of twenty six, open Router said. The company has also seen more than five hundred organizations swap from proprietary to open source models, end quote And the only other longread for you this weekend, the definition of a longread really is also from the journal who sat down with sixteen economists and asked them in great detail what AI will mean for the U.S economy US. workers and workplaces. Their bottom line, they believe AI will boost productivity in the near term, but only two of the economists expect AI to actually create more jobs No bonus episodes for you this weekend. Come on, Ns Are you one of those media strategy people clicking through slides, scrolling spreadsheets? Yes, goodood. This is for you. Because on Spotify, there's an audience that's different. locked in Loyal, invested. They're called fans Fans don't just listen to music, they feel seen by it, like it belongs to them. So when your brand shows up on Spotify, that's who you're talking to. And you're right next to artists like me, Lizzo. 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