September 29, 2024: Tech Market Showing Positive Signs Despite More OpenAI Drama

Cerebras Systems, is targeting raising US$750 million to US$1 billion in an IPO, potentially valuing the company between US$7 to US$8 billion. Fintech Chime has reportedly hired Morgan Stanley to lead its IPO. Cyberecurity startup Wiz is reportedly in share sale talks at up to a US$20 billion valuation. Anthropic is discussing a new funding round aiming for a valuation between US$30 to US$40 billion, projecting US$1 billion in annualized revenue for this year. OpenAI is raising up to US$6.5 billion in its latest funding round, which could value the company at US$150 billion. Apple is reportedly no longer participating in the round. Hours after OpenAI’s CTO announced her departure, two more research leaders at the ChatGPT maker said they also planned to leave. New data from payments group Stripe suggests AI groups are making revenues at an unprecedented rate, scaling to over US$30 million in annualised revenue in 20 months — 5x faster than SaaS companies. Nvidia shares climbed as much as 5% on Tuesday as Barron’s reported CEO Jensen Huang is done with planned sales of stock. In Canada, Lightspeed is reportedly exploring a sale. Propel Holdings announced a $95.9 million acquisition of UK-based QuidMarket to expand its online lending platform. Propel is funding this with a $100 million equity offering led by Canaccord Genuity Corp. and Scotia Capital Inc. Kneat announced a $35 million bought deal led by Cormark Securities. Scribenote, an AI startup from Kitchener-Waterloo, raised $8.2 million in seed funding led by Andreessen Horowitz (a16z). Sophic Capital, Client Intermap in partnership with CACI has been selected by the National Geospatial-Intelligence Agency (“NGA”) as one of 10 qualified vendors for the Luno A program. The Luno A contract, valued at up to $290 million over five years, marks a substantial increase from the initial EIM budget of $29 million. Sophic Client, Intermap Technologies was selected by the National Geospatial-Intelligence Agency (NGA) for the Luno A program, a US$290 million contract over five years, to leverage AI-driven geospatial intelligence for real-time insights. Sophic Client, Kraken Robotics received $3 million in orders for its AI-enabled synthetic aperture sonar systems for naval use, indicating increased demand in mine countermeasure operations.

Propel Holdings (PRL-TSX) to acquire UK-based QuidMarket for $95.9 million.

Toronto-based FinTech firm Propel Holdings has entered into an agreement to acquire United Kingdom-based FinTech lender QuidMarket to the tune of $95.9 million. Based in Nottingham, England, QuidMarket offers an online lending solution that Propel said has originated over 310,000 loans to UK consumers since 2011. The all-cash deal is aimed at advancing Propel’s growth strategy and provide a foothold in the British market. The existing management team at QuidMarket will continue to operate the business going forward, according to Propel. Founded in 2011, Propel offers an online lending platform that caters to consumers who are underserved by traditional financial institutions. The company says it uses artificial intelligence (AI) to assess customers’ creditworthiness and enable more informed lending decisions by analyzing vast amounts of data. Propel went public on the Toronto Stock Exchange in 2021, raising $70 million through its public offering. On its website, the company claims it has given out over one million loans and facilitated over $1 billion in credit in the last 12 years. Since going public in October 2021, Propel has expanded both its products and the areas it serves. It launched Fora Credit in Canada, formed partnerships in the United States to offer lending services through other companies, and recently teamed up with fellow Toronto-based FinTech company Koho to provide a new line of credit in Canada. Propel has performed well on the TSX since its debut relative to other tech companies that went public during the pandemic. The company, which trades under the symbol ‘PRL’ traded at $27.89 at press time, up over 160 percent since October 2021. Alongside the acquisition announcement, Propel disclosed that it has entered into a bought deal equity offering with a group of underwriters led by Canaccord Genuity Corp. and Scotia Capital Inc. The underwriters have agreed to purchase 3.64 million subscription receipts at a price of $27.50 each, generating gross proceeds of about $100 million CAD for the company. Propel said it plans to use the net proceeds to help fund the acquisition. According to Propel, the acquisition’s purchase price reflects a multiple of about 740 percent of QuidMarket’s net income for the twelve months ending June 30, 2024. The acquisition is expected to close in the fourth quarter of 2024 or early in the first quarter of 2025. https://tinyurl.com/t3h7hn9k

Kneat (KSI-TSX) announces $35.0 million bought deal public offering.

kneat.com, inc. entered into an agreement with a syndicate of investment dealers led by Cormark Securities Inc. (the “Underwriters”) pursuant to which the Underwriters have agreed to purchase 7,368,500 common shares (the “Common Shares”) from the treasury of the Company, at a price of $4.75 per Common Share (the “Offering Price”) and offer them to the public by way of short form prospectus for total gross proceeds of $35,000,375 (the “Offering”). The Company has granted the Underwriters an option (the “Over-Allotment Option”) to purchase up to an additional 1,052,600 Common Shares of the Offering on the same terms exercisable at any time up to 30 days following the closing of the Offering, for market stabilization purposes and to cover over-allotments, if any. https://tinyurl.com/f97cu56p

Canadian payments software firm Lightspeed (LSPD-TSX) explores sale.

Lightspeed Commerce, a payments software maker with a market value of $2.8 billion, is working with a financial adviser to exploring options including a potential sale, according to people familiar with the matter. The sale talks come months after the Montreal-based company replaced its CEO Jean Paul Chauvet and brought back founder Dax Dasilva at the helm, as investors raised concerns over the company’s plan to prioritize growth over profitability following disappointing quarterly results in February. Lightspeed has tapped investment bankers at JPMorgan Chase to evaluate its options and solicit interest from potential buyers, which could include private equity firms. Lightspeed’s U.S.-listed shares jumped as much as 17 per cent on Wednesday after Reuters reported on the sale talks. https://tinyurl.com/mvtj7eu3

Crypto miner truce leaves open the possibility of RIOT (RIOT-NASDAQ) taking over BITFARMS (BITF-TSX).

While Bitcoin miner Bitfarm has brokered a truce with Riot Platforms over a months-long takeover fight, the agreement still leaves open the possibility for an acquisition. Under an pact unveiled Monday, Bitfarms’ Andrés Finkielsztain has stepped down from its board and been replaced by a Riot-backed nominee. Riot agreed that, during the term of the agreement, it will not acquire over 20% or more of the company without the approval of the board, “other than for the sole purpose of or in connection with making a take-over bid,” according to a filing with the Canadian government. Riot’s unsolicited US$950 million offer to buy Bitfarms was rebuffed by the smaller rival in April. Bitfarms ended up adopting a “poison pill” defense strategy to prevent hostile takeovers as Riot continued to buy up its shares. Bitcoin mining is an energy-intensive process in which miners spend billions of dollars on specialized computers and electricity to validate encrypted transactions on the Bitcoin blockchain and earn rewards in the form of the token. The sector has seen increasing consolidation as revenue for such companies plummets due to an April software update in Bitcoin. Called the halving, the blockchain is preprogrammed to reduce Bitcoin rewards by 50% every four years to maintain its hard cap of 21 million. Shares of Riot have dropped around 50% this year, while Bitfarms is down about 30%. Bitcoin has increased 50% during the same period. https://archive.ph/M7ImC

Sophic Capital Client Intermap’s (IMP-TSX, ITMSF-OTC) team chosen for major NGA data contract.

Intermap Technologies, announced that, in partnership with CACI, Inc. – Federal (“CACI”), its team has been selected by the National Geospatial-Intelligence Agency (“NGA”) as one of 10 qualified vendors for the Luno A program. Luno A, a new NGA initiative, focuses on providing continually updated, low-latency foundation data to support critical national security indicators. This program represents a significant advancement from the previous Economic Indicator Monitoring (EIM) effort, which began in 2021. Luno A aims to enhance U.S. National Security Community (NSC) insights by leveraging commercial satellite data to monitor a range of factors, including economic activities, military capabilities and environmental conditions. With recent advancements in computer vision and AI-driven geospatial intelligence, Luno A will integrate these technologies to provide real-time, actionable intelligence directly into NSC’s analytic workflows. The Luno A contract, valued at up to $290 million over five years, marks a substantial increase from the initial EIM budget of $29 million and the previously planned $60 million ceiling. This growth underscores the expanding role of unclassified computer vision capabilities within U.S. government operations. Further to the previous announcement on June 16, 2021, Team CACI’s next-generation platform will combine Intermap’s patented IRIS™ processing suite with CACI’s Feature Trace software. This integration will leverage advanced geospatial AI/ML models to deliver precise, near-real-time feature datasets, reflecting dynamic changes in land usage and infrastructure. This award builds on Intermap’s strategic partnerships with U.S. government agencies and their key suppliers, including NGA, the Pentagon, U.S. Air Force, U.S. Geological Survey, National Oceanic and Atmospheric Administration Affairs and NASA. https://tinyurl.com/4euan399

Sophic Capital Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) receives $3 million in orders for synthetic aperture sonar systems.

Kraken Robotics received several orders totaling approximately $3 million for Miniature Synthetic Aperture Sonar (MINSAS) systems from three separate customers. “In the current geopolitical environment, we are seeing an increased need for synthetic aperture sonar systems to be used in mine countermeasure operations,” said Greg Reid, President and CEO of Kraken. “We’re increasing our inventory to be able to more quickly respond to this need, enabling navies worldwide to collect critical data for accurate and efficient decision-making.” The Man-Portable SAS (MP-SAS) and MINSAS 120 systems have been ordered for integration on uncrewed underwater vehicles for international naval customers. Kraken has been selling MINSAS systems since 2015 to defense and commercial customers in more than 15 countries worldwide. https://tinyurl.com/4crkb8h6

a16z leads Scribenote’s $8.2 million seed round to boost AI-powered writing tool for vets.

Kitchener-Waterloo-based artificial intelligence (AI) startup Scribenote has closed $8.2 million in seed funding as it looks to advance the capabilities of its scribe tool for veterinarians. The round was led by Andreessen Horowitz (a16z), with participation from Inovia Capital, the Velocity Fund, and undisclosed angel investors. https://tinyurl.com/yyspwevw

Cerebras Systems targets raising up to US$1 billion in IPO.

The Silicon Valley firm startup, which makes semiconductors optimized for artificial intelligence uses, is planning to file to go public with the US Securities and Exchange Commission ahead of launching an investor roadshow in the coming weeks, according to the people. It is targeting to raise US$750 million to US$1 billion in a listing, the people said, asking not to be identified discussing confidential information. That could value the company at US$7 billion to US$8 billion, they said. Deliberations are ongoing and details on the size and timetable for the listing could still change, depending on market conditions and investor demand, the people said. A representative for Cerebras declined to comment. Citigroup Inc. has been picked to lead the Cerebras IPO, with Barclays Plc also working on the listing, Bloomberg News reported previously. Cerebras’ products are used by corporations, research institutions, and governments to develop proprietary models and train open-source models. Its flagship CS-3 system is optimized to handle AI computing workloads and can be clustered together to power AI supercomputers. Cerebras raised US$250 million in a series F financing round in 2021, valuing it at more than $4 billion, according to a statement at the time. The round was led by Alpha Wave Ventures, Abu Dhabi Growth Fund and G42. Cerebras’ existing investors include Altimeter Capital, Benchmark Capital and Coatue Management. https://archive.ph/61GEf

Chime hires Morgan Stanley to lead IPO.

Fintech banking startup Chime has hired Morgan Stanley to lead its planned initial public offering next year, Bloomberg reported. The company was last valued at US$25 billion in 2021, at a time when fintech valuations soared amid low interest rates. Those valuations have since reduced. Chime launched a new cash advance product in May that allows customers to access up to US$500 of their wages before they are paid, as it looked to bolster its customer ranks ahead of its IPO. Chime CEO Chris Britt said that the company had 7 million active users at the time, and that it was profitable in the first quarter of 2024. https://tinyurl.com/42rxnyjc

Wiz in share sale talks at up to US$20 billion valuation.

Cybersecurity startup Wiz is in talks to let existing shareholders cash out between US$500 million and US$700 million worth of shares at a price that could value the company between US$15 billion and US$20 billion, Bloomberg reported. The talks follow Wiz’s rejection of a US$23 billion bid from Google to acquire the company, which would have given employees the opportunity to cash out. The company has previously told staff it plans to pursue an initial public offering. Wiz has raised more than US$1.8 billion from investors including Index Ventures, Sequoia Capital, Lightspeed Venture Partners and Israeli venture firm Cyberstarts. https://tinyurl.com/5c5avd3d

Anthropic discusses new funding at US$40 billion valuation.

San Francisco-based Anthropic has begun talking to investors about raising a new round of capital, which could value the company between US$30 billion and US$40 billion. Anthropic’s discussions are early, and it is not clear investors will agree to such a high valuation, which would amount to 50 times its projected annualized revenue of US$800 million this year. The deal would nearly double Anthropic’s valuation from earlier this year. The funding talks come as OpenAI, Anthropic’s largest startup rival, is in the middle of its own fundraising effort, which could value the ChatGPT-maker at around US$150 billion. https://tinyurl.com/vj9phjhf

Anthropic reportedly projected to reach US$1 billion in annualized revenue this year.

Anthropic, OpenAI’s largest startup competitor, projected it would generate US$1 billion in annualized revenue by the end of this year, CNBC reported, implying monthly revenue of around US$83 million. That’s a higher projection than what the company shared with investors at the beginning of this year, when it believed it could reach US$800 million in annualized revenue by the end of 2024. The news comes as Anthropic looks to raise additional capital in a deal that could value it at $30 billion to $40 billion, roughly doubling its valuation from a funding that closed early this year. The majority of Anthropic’s revenue—between 60% and 75%—comes from the fees that developers pay to access its conversational AI through cloud providers such as Amazon and Google, which resell the startup’s models to their customers, while 10% to 25% comes from Anthropic’s direct sales, the CNBC report said. The Information has previously reported that, in these cases, Anthropic must share a sizable portion of the sales with the cloud providers, making it a less lucrative sales channel. Due to the high costs of developing and running conversational AI, Anthropic also has gross profit margins of 38%, which is far lower compared to traditional software businesses, CNBC reported. That implies that Anthropic’s gross margin has declined since last December, when it had margins between 50% and 55%, The Information reported. An Anthropic spokesperson declined to comment on the financial figures. https://tinyurl.com/3b3na3yk

Apple no longer in talks to invest in OpenAI.

Apple is no longer involved in talks to invest in OpenAI during the company’s next funding round, The Wall Street Journal reported, citing a source familiar with the matter. The ongoing funding round, which could close as soon as the first week of October, could value the AI startup at as much as US$150 billion. OpenAI is expected to raise up to US$6.5 billion from interested investors, The Journal noted. Other tech titans are still negotiating to invest in the artificial intelligence company. Citing sources familiar with the matter, The Journal reported Microsoft is planning to invest US$1 billion, adding to the US$13 billion it has previously invested. Chip maker Nvidia is also considering an investment of around US$100 million, Bloomberg previously reported. https://tinyurl.com/4sv4v3zp

Two more OpenAI leaders departing.

Hours after OpenAI’s chief technology officer Mira Murati announced her departure, two more research leaders at the ChatGPT maker said they also planned to leave. Chief research officer Bob McGrew and head of post-training Barret Zoph are leaving OpenAI, leaders told staff late Wednesday. CEO Sam Altman later posted on X about the departures. The exits are the latest in a series of high-profile departures and leaves of absence from the company, including three cofounders, a safety leader and a product leader over the past five months. They come as the ChatGPT maker looks to raise between US$5 billion and US$7 billion in new capital in a round that could value it at US$150 billion. “Mira, Bob, and Barret made these decisions independently of each other and amicably, but the timing of Mira’s decision was such that it made sense to now do this all at once,” Altman wrote on X. Mark Chen, previously the head of frontiers research, will assume McGrew’s former role to lead OpenAI’s research organization with chief scientist Jakub Pachocki, Altman wrote. Research scientist Joshua Achiam was named the head of mission alignment and will be “working across the company to ensure that we get all pieces (and culture) right to be in a place to succeed at the mission,” Altman posted. https://tinyurl.com/56nbx6yy

Sam Altman tells OpenAI staff there’s no plan for him to receive a ‘giant equity stake’ in company.

At an al-hands meeting Thursday, OpenAI CEO Sam Altman denied that there are plans for him to receive a “giant equity stake” in the company, calling that information “just not true,” according to a person who was in attendance. Altman and finance chief Sarah Friar both said at the meeting, conducted by video, that investors have raised concerns about Altman not having equity in the high-valued artificial intelligence company that he co-founded almost nine years ago, said the person, who asked not to be named because the gathering was only for employees. Regarding his potentially attaining an equity stake, Altman said, “There are no current plans here,” the person said. OpenAI Chairman Bret Taylor told CNBC in a statement that while the board has talked about the matter, no specific figures are on the table. The meeting late Thursday followed the board’s decision to consider restructuring the company to a for-profit business, according to a separate person with knowledge of the matter. Should the change occur, the nonprofit segment would remain as a separate entity, said the person, who asked not to be named because no plan has been finalized. https://tinyurl.com/ymrws7xy

AI start-ups generate money faster than past hyped tech companies.

New data from payments group Stripe suggest artificial intelligence groups are making revenues at an unprecedented rate. AI start-ups that have scaled to more than US$30 million in annualised revenue achieved the milestone in 20 months — five times faster than past SaaS companies. Artificial intelligence start-ups are making revenues more quickly than previous waves of software companies, according to new data that suggests that the transformative technology is also generating strong businesses at an unprecedented rate. According to an analysis of payments information from fintech group Stripe, top AI groups are reaching millions of dollars in sales within a year — far faster in a start-up’s life cycle than comparable non-AI tech groups. The findings come as investors raise questions about the economic benefits of generative AI and likely returns on Big Tech’s projected trillion-dollar investment in computing infrastructure to support the technology over the coming year. The AI start-ups in the cohort took a median 11 months to hit US$1 million in annualised revenue after their first sales on Stripe, compared with 15 months for the previous generation of SaaS companies, the data showed. AI start-ups that have scaled to more than US$30 million in annualised revenue achieved the milestone in 20 months — five times faster than past SaaS companies. However, a report by Goldman Sachs this month has raised concerns about the profitability of AI businesses given “the AI winners of today are no longer capital-light businesses”, referencing the significant costs required for computing infrastructure to run and train AI models. ChatGPT, OpenAI’s AI chatbot which was launched in November 2022, became the fastest-growing consumer application in history, when it hit 100mn users within two months of launch. https://tinyurl.com/2ebye5k9

Nvidia stock jumps on report CEO Jensen Huang is done selling shares after US$713 million windfall.

Nvidia shares climbed as much as 5% on Tuesday as Barron’s reported CEO Jensen Huang is done with planned sales of stock. Huang has reached the 6-million-share maximum threshold he’s permitted to sell under a prearranged plan adopted in March. The trading plan, known as a 10b5-1, enables company insiders to trade a firm’s stock in a predetermined manner. Huang remains the company’s largest Nvidia shareholder. According to an SEC filing from September 18th, the executive holds over 75 million worth of Nvidia common stock; that’s aside from another 785 million held through various trusts and partnerships. The stock has rallied 150% year-to-date. Nvidia has become a Wall Street favorite in recent years, as that its semiconductor hardware has become a core component of the artificial intelligence boom. Its top customers include other big tech names, such as Microsoft, Meta, Alphabet, and Amazon. https://tinyurl.com/cfzyzs9f

Hedge funds snap up US tech stocks amid falling rates, says Goldman Sachs.

Hedge funds bought U.S. tech and media stocks at the fastest pace in four months last week, said a Goldman Sachs prime brokerage note to clients seen by Reuters on Monday, spurred by the Federal Reserve’s anticipated 50-basis point rate cut. Falling rates are expected to rejuvenate industrial spending, making it easier for companies to borrow money at lower costs and for consumers to buy tech products, all of which might benefit the stock prices of these companies. Hedge funds placed almost three times as many long positions on the bet that information technology stocks would rise, compared to those with bets against them, said the prime brokerage note. Buying in semi-conductor and related equipment companies outweighed selling in tech hardware, like computer, monitor and hard drive manufacturers, the Goldman Sachs note said. Hedge funds also ditched their short position and added long bets on interactive media and entertainment companies, the note said. Gross leverage, or total hedge fund borrowing and investments, reached roughly 278%, among the highest levels seen this year, it said. https://tinyurl.com/7w4fvjcs

Justice Department probes server maker Super Micro Computer.

Super Micro Computer, the server maker that saw its business take off with the artificial-intelligence boom, is being probed by the Justice Department following a critical report by an activist short-selling firm, according to people familiar with the matter. The probe is at an early stage, the people said. A prosecutor at the U.S. attorney’s office in San Francisco recently has contacted people potentially holding relevant information. The prosecutor asked for information that appeared to be connected to a former employee who accused the company of accounting violations. The former employee filed a whistleblower lawsuit in April against Super Micro and its chief executive. Shares of Super Micro surged with the bull market in AI-themed stocks. The company, commonly known as Supermicro, makes specialized servers that use the chips Nvidia designs for generative AI. The stock rose 14-fold from the start of 2023 through March and has since tumbled 59%. At its peak, the company was worth US$66 billion. https://archive.ph/RloOu

Vista Equity Partners and Blackstone offer to buy Smartsheet for US$8.4 billion in cash.

Vista Equity Partners and Blackstone have agreed to acquire Smartsheet, the software-as-a-service (SaaS) workplace collaboration platform, for US$8.4 billion in cash. The private equity firms say that the deal values publicly traded Smartsheet’s shares at a 41% premium over its 90-day average closing share price. Should regulators and shareholders approve it, shareholders would receive approximately US$56.50 per share. Under the agreement with Vista and Blackstone, Smartsheet will have a 45-day “go-shop” period to solicit alternative M&A offers. https://tinyurl.com/2jyks654

Salesforce to buy data management firm zoomin.

Salesforce said Tuesday that it agreed to buy Zoomin, which sells software for businesses to manage their data. The deal is Salesforce’s third acquisition in recent weeks after announcing it would buy Tenyx and Own earlier this month. Salesforce didn’t disclose the acquisition price. The deal, which Salesforce expects to close in its fiscal quarter ending in January, shows how CEO Marc Benioff has resumed acquisitions after slowing dealmaking last year following pressure from activist investors. Salesforce said Zoomin’s technology would boost its new artificial intelligence-powered agents product, which lets businesses build custom chatbots for purposes such as customer support by helping them make use of data such as call transcripts. Salesforce said Zoomin will also help its growing data-storage business, which approached US$400 million in annual recurring revenue as of May. https://tinyurl.com/2snh5m2b

Visa bolsters financial crime prevention portfolio with Featurespace deal.

Visa agreed to buy AI-driven payments protection firm Featurespace on Thursday, marking the payments giant’s latest effort to strengthen its financial crime and fraud detection product portfolio. Fintechs, particularly those in the payments sector, have been exploring AI-driven use-cases for fraud prevention tools amid rising cases of sophisticated financial crimes including hacks and ransomware, many of which are powered by generative AI. While the world’s largest payments processor did not reveal the value of the acquisition, a Sky News report, opens new tab last month, citing sources, had pegged it at £700 million (US$935.06 million). Britain’s IP Group – Featurespace’s largest shareholder and its first institutional investor – said it expects to receive £134 million in cash from the takeover. It has invested a total of £22.9 million in the company over seven financing rounds. Cambridge, UK-based Featurespace was founded in 2008. It counts high-profile banking companies such as HSBC, NatWest and Worldpay among its clients. Visa said Featurespace’s AI-enabled solutions will help its clients manage fraud in real time. In July, Visa said it prevented 80 million fraudulent transactions worth US$40 billion globally last year thanks to investments in AI. Earlier in September, Mastercard also struck a US$2.65 billion deal for threat intelligence company Recorded Future. https://tinyurl.com/45wu4wya

Intel gets multibillion-dollar Apollo offer as Qualcomm circles.

Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp., people familiar with the matter said, providing the chipmaker with a vote of confidence in its turnaround strategy and an alternative to a potential takeover by larger rival Qualcomm Inc. The alternative asset manager has indicated in recent days that it would be willing to make an equity-like investment in Intel of as much as US$5 billion, one of the people said, asking not to be identified discussing confidential information. The development comes after San Diego-based Qualcomm floated a friendly takeover of Intel, which has been working to reinvent itself amid the most difficult period in its 56-year history. Qualcomm’s move has raised the prospect of one of the biggest-ever M&A deals, as well as other bidders entering the fray. Broadcom Inc., at least for now, is on the sidelines. Intel’s shares rose as much as 4.2% in early trading on Monday. The stock was up 2.7% at 9:43 a.m. in New York, giving the company a market value of about US$96 billion. https://archive.ph/GSMV1

Microsoft to spend US$1.3 billion in Mexico on data centers, AI.

Microsoft will spend US$1.3 billion in Mexico over the next three years on data centers to support demand for artificial intelligence, as well as AI-related training programs in the country, CEO Satya Nadella said on Tuesday during an event in Mexico City. The announcement follows Microsoft’s disclosure of similar multibillion-dollar plans for new data centers across the U.S., U.K., Europe, Asia and the Middle East in recent months. Separately, Microsoft and BlackRock announced last week that they’re planning a US$30 billion fund to build new data centers and power plants to support AI demand. Microsoft is building so many data centers to meet booming demand for cloud servers that customers use to build and run AI applications. The company has discussed building a US$100 billion supercomputer meant to run OpenAI’s models, which Microsoft has the rights to reuse in its own products, The Information previously reported. Microsoft’s capital expenditures, which include the costs of building data centers, are on track to exceed US$50 billion this year. https://tinyurl.com/4wshwkmv

Meta updates AI products, introduces new headset.

Meta Platforms announced updates to its artificial intelligence products and introduced a cheaper mixed-reality headset, Quest 3S, at its Connect developer conference on Wednesday. The updates include the option to speak with Meta AI on Meta’s social media apps and image-recognition capabilities for Meta’s flagship open-source large language model, Llama. The Information previously reported on Meta’s plans for Connect. Meta also demonstrated a prototype of its Orion augmented reality glasses, as well as the ability to video chat with AI versions of creators. “We can start to see how the future of computing and the future of human connection are going to look, and it’s pretty awesome,” Meta CEO Mark Zuckerberg said in a keynote speech at company headquarters in Menlo Park, Calif. People using Meta AI will be able to select voices in which the assistant will answer their questions, including AI-generated ones of celebrities including comedian Awkwafina, wrestler John Cena and actress Judi Dench. Meta recently scrapped chatbots, introduced at Connect last year, modeled after celebrities such as Tom Brady and Charli D’Amelio. Meta also released Llama 3.2, a new version of its LLM, which will be available in four sizes; the two largest sizes will be able to recognize and understand both text and images. Meta said it would start shipping its Quest 3S headset, which will cost about $300 and has lower resolution and less storage than the Quest 3 headset, on October 15. The company also said software updates to its Ray-Ban smart glasses—including live language translation, as well as video capabilities that allow for real-time responses from Meta AI—would be available later this year. https://tinyurl.com/5d98p97m

TikTok to shut down its Spotify competitor.

TikTok is shutting down its music streaming app TikTok Music on November 28, according to a notice on its website. The service wasn’t available in the U.S., but in other countries including Indonesia, Brazil and Australia. The company said users’ account information and personal data would be automatically deleted following the closure of TikTok Music. ByteDance executives had envisioned a future in which artists could distribute their content through its music distribution service SoundOn, use TikTok to promote the music and grow a fan base, and then stream the content on Resso, ByteDance’s stand-alone music-streaming service, which was later renamed to TikTok Music, The Information previously reported. The closure is “in order to focus on our goal of furthering TikTok’s role in driving even greater music listening and value on music streaming services, for the benefit of artists, songwriters and the industry,” Ole Obermann, the company’s global head of music business development, told the Wall Street Journal. https://tinyurl.com/26mj832b

The DOJ sues Visa for locking out rival payment platforms.

The Department of Justice has filed an antitrust lawsuit against Visa, alleging that the financial services firm has an illegal monopoly over debit network markets and has attempted to unlawfully crush competitors, including fintech companies like PayPal and Square. The lawsuit, which was first rumored by Bloomberg, follows a multiyear investigation of Visa, which the company disclosed in 2021. Visa makes more than US$7 billion a year in payment processing fees alone, and more than 60 percent of debit transactions in the United States run on Visa’s network, the complaint claims. https://tinyurl.com/ydvrap2t

Online shoppers to spend record US$241 billion this holiday season.

Adobe forecast Wednesday that holiday e-commerce sales in November and December would grow more than 8% to US$240.8 billion this year, up from US$221.8 billion in 2023. Adobe also projected more retailers would turn to steep discounts this year to woo price-sensitive customers. Those discounts should encourage shoppers to “trade up” to higher-end goods in categories like electronics and sporting goods, Adobe said, driving between US$2 billion and US$3 billion in additional spending. Cyber Monday should be the biggest shopping day this year, but Adobe expects Black Friday and Thanksgiving sales will grow faster than Cyber Monday sales as retailers move sales earlier. Adobe also said more shoppers will likely use generative AI tools to find gifts this year, noting that traffic to retail sites from generative AI chatbots doubled between January and August. https://tinyurl.com/4cxt2yuc

Robinhood, Revolut reportedly explore launching Stablecoins.

Trading brokerage Robinhood and digital banking app Revolut are considering launching stablecoins, Bloomberg reported, moves that could take market share from Tether and other top stablecoin issuers. Stablecoins are a type of crypto token whose values are tied to government-issued currencies, such as a dollar. Used mainly by crypto investors, they have reached US$173 billion in market circulation collectively, of which Tether contributed US$119 billion. The firms could still choose not to proceed, Bloomberg reported. A Robinhood spokesperson says the company has no immediate plans to launch a stablecoin, while Revolut told the outlet that it plans to grow its crypto product lineup, without confirming the plan. The European Union is set to fully adopt its stablecoin rules at the end of this year, requiring stablecoin issuers to obtain licenses. Tether doesn’t have an EU license yet, prompting exchanges to partially delist the world’s largest stablecoin to comply with the regulation. https://tinyurl.com/4v2k788b

Chip Giants TSMC and Samsung discuss building Middle Eastern megafactories.

Top executives at Taiwan Semiconductor Manufacturing Co., the world’s largest chip maker, have visited the U.A.E. recently and talked about a plant complex on par with some of the company’s largest and most advanced facilities in Taiwan, according to people familiar with the interactions. Samsung Electronics also is considering major new chip-making operations in the country in the years ahead, according to other people with knowledge of its strategy. Under initial terms being discussed, the projects would be funded by the U.A.E., with a central role for Abu Dhabi-based sovereign development vehicle Mubadala, which is eager to develop a domestic tech industry. The broader goal would be to increase global chip production and help bring chip prices down without hurting chip-makers’ profitability, some of the people said. Projects on the scale being discussed in the U.A.E. involve complexes that could contain numerous factories and cost over US$100 billion in aggregate. Abu Dhabi has one of the world’s largest pools of sovereign wealth, and Mubadala said its portfolio of investments was valued at about US$300 billion as of last year. If TSMC and Samsung were to go forward, the projects could usher in a next wave of industry expansion following an era of manufacturing growth driven by government subsidies in the U.S., Europe and East Asia. Abu Dhabi has invested in the chip industry before, taking control of the former manufacturing operations of Advanced Micro Devices in 2008 as part of a spinoff. There were discussions then about a potential chip plant in the U.A.E. that never materialized. The spinoff, called GlobalFoundries, was listed in a U.S. initial public offering in 2021. https://tinyurl.com/72dfwha3

Google CEO says AI makes sustainability goals ‘challenging’.

Google CEO Sundar Pichai said the artificial intelligence boom is “challenging” to the company’s carbon emissions goal. Speaking at a Carnegie Mellon University event last week, Pichai said Google made a commitment to operate with carbon-free energy by 2030, but that goal was set before the “current AI moment.” He said the short-term race to develop new AI models, including “inefficiently pre-training these models,” makes meeting the energy goal “challenging.” In the long term, Pichai said he is optimistic that the energy demands of AI will help spur more investments in renewable energy projects. “We’re offsetting where we can, but I view this as an uncomfortable interim phase,” he said. The scale of Google’s plans, which Pichai said includes facilities that require 1 gigawatt of power, isn’t surprising. Rivals Amazon and Microsoft are also working on data center projects that could scale to 1 gigawatt of power or more, The Information has reported. Data centers of this size are more than 10 times larger than the facilities such cloud providers have historically built. https://tinyurl.com/mr8xtunj