April 20, 2025: Another Down Week

Last week, Dow Jones fell 2.7%, S&P 500 lost 1.5%, Nasdaq declined 2.6%. U.S. startup funding surged 116% Y/Y to US$91.5 billion in Q1 2025, dominated by AI startups including OpenAI, Anthropic, and Grok. Figma confidentially filed for an IPO after its failed acquisition by Adobe, boasting an annual recurring revenue of US$900 million. Autonomous trucking firm Kodiak Robotics announced a SPAC merger, valued at US$2.5 billion, backed by investors ARK and Soros Fund Management. Nvidia anticipates a US$5.5 billion charge due to new U.S. restrictions on AI chip sales to China, creating uncertainty despite earlier tariff exemptions. ASML missed quarterly order expectations amid similar tariff uncertainty, although demand for AI-driven chipmaking remains robust. TSMC reported strong Q1 revenues and profits, seeing no immediate impact from U.S. tariffs but cautioned future clarity. Tesla’s California EV market share dipped below 50%, impacted by political controversies surrounding CEO Elon Musk. Palantir secured a significant AI software contract with NATO for military intelligence processing. California considered legislation lifting its nuclear power moratorium to support energy-intensive AI data centers. Google faces potential dismantling of its ad-tech monopoly following an antitrust ruling. Meta Platforms’ share of the amount of time people spend on social media apps has “declined…potentially meaningfully,” Meta Platforms CEO Mark Zuckerberg testified on Wednesday afternoon. In Canada, in news pertaining to Sophic Capital clients, Kraken Robotics was highlighted as a hot pick in Canadian small caps by a portfolio manager. Plurilock provided a corporate update, emphasizing a strategic shift towards high-margin software solutions and expanding commercial markets for cybersecurity.

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC): Hot picks in Canadian small caps.

Kim Bolton, portfolio manager at Black Swan Dexteritas, shares his hot picks in the Canadian small cap space: Firan Technology Group, Magellan Aerospace and Kraken Robotics. https://tinyurl.com/3zwcctk9

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) provides corporate update.

Plurilock Security continues to execute on its business plan. Strategic Progression Toward Software and Commercial Markets. The cybersecurity sector remains a critical area of focus for both public and private sector organizations. Against this backdrop, Plurilock continues to make progress on its core initiatives, including a measured shift toward software-driven engagements and commercial business segments. These efforts are designed to support longer-term margin improvement by diversifying revenue streams and deepening re-occurring service relationships. “Cybersecurity is not a discretionary expense, it’s a core requirement, and our customers continue to rely on us to deliver,” said Ian L. Paterson, CEO of Plurilock. “Our focus on high-margin solutions, strong partner relationships, and strategic expansion into commercial markets positions us well for continued stability and long-term success.” https://t.co/Dx4hcyIwfF

U.S. startup funding hits highest level since 2021.

U.S. startups raised US$91.5 billion in the first quarter, up 116% from the year ago to the highest level since the fourth quarter of 2021, near the height of the low interest-rate funding boom, according to research firm PitchBook. For the second straight quarter, investments in artificial intelligence startups made up more than half of total funding, rising to a record 71% in the first three months of the year. While investments rose, the number of deals fell 25% to 3,003 as more money went into fewer very large rounds. These included Anthropic’s US$4.5 billion raise, AI chipmaker Groq’s US$1.5 billion financing and OpenAI’s planned US$40 billion funding. The ChatGPT maker has raised US$10 billion of that SoftBank-led round from investors including Thrive Capital, Microsoft, Altimeter Capital Management and Coatue Management, according to a person with direct knowledge of the matter. https://tinyurl.com/3juwfump

Design software maker Figma files confidentially for IPO.

Figma, a 13-year-old developer of design and collaboration software, has filed confidentially with the Securities and Exchange Commission for a potential initial public offering, it announced in a blog post. Companies that make such filings can take months or longer before listing their shares. Still, the plans signal to employees and investors that it’s committed to going public, a process expected since its US$20 billion sale to Adobe in late 2023 failed over competitive concerns from European regulators. Figma’s product has caught on with developers because it lets them complete multiple different parts of the design process in one place. Figma was valued at US$12.5 billion after a secondary stock sale last July. Its annual recurring revenue, the value of its contracts over the next 12 months, grew from about US$600 million at the end of 2023 to roughly US$900 million at the end of last year, and the company was also generating cash. https://tinyurl.com/skym4rmd

Autonomous truck company Kodiak Robotics to go public via SPAC.

Kodiak Robotics, a self-driving truck startup founded in 2018, said Monday it will go public later this year via merger with special purpose acquisition company Ares Acquisition Corporation II. As part of the transaction, Kodiak will receive US$551 million in cash from the SPAC trust, assuming no redemptions. Investors including ARK Investments and Soros Fund Management have committed an additional US$110 million to support the transaction, which will value Kodiak at US$2.5 billion before the new money. The company sells autonomous trucking hardware and software. It has generated a small amount of revenue by charging customers a per mile or per truck licensing fee. Kodiak burned about US$20 million as of the fourth quarter, the companies said in a presentation. The Mountain View-based company had US$49.4 million in cash on hand by the end of March. It has raised US$243 million to date, according to PitchBook, from investors including Lightspeed Venture Partners and CRV. https://tinyurl.com/4seu38kh

Nvidia to take a US$5.5 billion charge after U.S. restricts its chip sales to China.

Nvidia said Tuesday it expects to incur a US$5.5 billion charge in the current fiscal quarter after the U.S. government told the company about new restrictions on the sale of artificial intelligence chips and other related equipment to China. The disclosure prompted investors to push down Nvidia shares 6% in after-hours trading. The company said the charge is related to “ inventory, purchase commitments, and related reserves” of H20 chips, which it designed specially for Chinese customers. Chinese firms placed at least US$16 billion of orders for H20 server chips in the first three months of the year, in part due to concerns about new U.S. restrictions on the chips. Nvidia books revenue after a customer receives its chips, so it is unclear how the new restriction will impact these orders. Nvidia’s disclosure comes after a week of whiplash for the firm in D.C. Last week NPR reported that Nvidia won a momentary reprieve when President Donald Trump decided to pause new restrictions on H20s chips following a dinner he attended with Nvidia CEO Jensen Huang. This week, Huang also made an announcement about investing in manufacturing its AI server chips in the U.S. https://tinyurl.com/4wjn27ks

Critical chip firm ASML misses order expectations amid tariff uncertainty.

Dutch semiconductor equipment firm ASML reported net bookings of 3.94 billion euros (US$4.47 billion) for the first quarter, versus analysts’ forecast of 4.89 billion euros. Dutch semiconductor equipment giant ASML on Wednesday missed order expectations and said that uncertainty from new U.S. trade restrictions may affect demand for its critical chipmaking machines. In comments accompanying the results, ASML CEO Christophe Fouquet said that the demand outlook “remains strong” with artificial intelligence staying as a key driver. However, he added that “uncertainty with some of our customers” could take the company into the lower end of its full-year revenue guidance. Last week, the U.S. administration announced smartphones, computers and semiconductors would be temporarily exempted from his so-called “reciprocal” duties on counterparties. But on Sunday, Trump and his top trade officials created confusion with comments that there would be no tariff “exception” for the electronics industry, and that these goods were instead moving to a different “bucket.” On Tuesday, a federal government notice announced that the U.S. Commerce Department was conducting a national security investigation into imports of semiconductor technology and related downstream products. The probe will examine whether additional trade measures, including tariffs, are “necessary to protect national security.” https://tinyurl.com/528eu7mz

TSMC: no customer behavior changes yet after tariffs.

Taiwan Semiconductor Manufacturing Co., the largest chip manufacturer in the world, said on Thursday that it had not observed any changes in customer behavior with regards to new U.S. tariffs. The company maintains a revenue growth target of mid-20% for this year. “We might get a better picture in the next few months,” chief executive C.C. Wei said on an earrings call. TSMC’s revenue soared 42% to US$25.5 billion in the first quarter from a year ago, thanks to strong demand for artificial intelligence silicon. Net profit rose 60% to $11 billion during the same period. The company said the planned US$100 billion investments in chipmaking facilities in Arizona will dilute its overall gross profit margin by up to 4% in the future, due to higher cost of labor and the cost to build the factories. Eventually the Arizona plants will be responsible for 30% of the company’s currently most advanced 2-nanometer chip production capacity, Wei added. The company declined to comment on impact of the U.S. government’s recent ban on the sale of more of Nvidia’s AI chips to China. https://tinyurl.com/ycyns56u

OpenAI in talks to buy AI coding assistant windsurf for US$3 billion.

OpenAI is in discussions to buy Windsurf, the maker of a popular AI coding assistant formerly known as Codeium, for US$3 billion, according to a person with knowledge of the discussions. The deal could help the ChatGPT-maker make inroads with developer customers who use conversational AI tools, such as Anysphere’s Cursor or ChatGPT itself, to help them code. If it closes, this deal would also be the largest in OpenAI’s history. OpenAI declined to comment, and Windsurf didn’t immediately respond to a request for comment. In recent months, VC firm Kleiner Perkins has looked to lead an investment round into Windsurf at a nearly US$3 billion valuation, including the capital, just months after the company raised at a US$1.25 billion valuation. Founded in 2021, Windsurf has also raised capital from General Catalyst and Greenoaks. https://tinyurl.com/4zmx5na7

Activist investor Elliott takes US$1.5 billion stake in HPE.

Activist investor Elliott Investment Management took a stake worth more than US$1.5 billion in Hewlett Packard Enterprise and plans to push for changes at the server designer to boost its share price, which has declined around 30% this year, a person familiar with the matter said. Bloomberg first reported on the investment. HPE shares traded more than 4% higher Tuesday. It is unclear what changes Elliott wants at the company, which also sells cloud services and software to businesses. Elliott’s investment makes it one of the top five shareholders in HPE, which has a total market capitalization of around US$20 billion. The company has failed to capitalize on the artificial intelligence boom as much as rivals such as Dell, and it said in March that tariffs and weak margins for its server unit would hurt profits this year. https://tinyurl.com/2ud6kkv3

Intel sells control of Altera chip unit to Silver Lake.

Intel is selling a 51% stake in its Altera chip unit to Silver Lake in a deal that values Altera at US$8.75 billion, the companies announced. The valuation is about half the price that Intel paid to buy Altera in 2015. Altera makes reprogrammable chips, used in some AI applications. The deal will allow Altera to become operationally independent of Intel, the companies said in their statement, although Intel will retain a 49% stake. Intel CEO Lip-Bu Tan said the move “reflects our commitment to sharpening our focus.” The companies said Altera had revenues last year of US$1.54 billion and a gross profit of US$361 million. https://tinyurl.com/r9hz9x9e

NATO, Palantir strike deal on warfighting AI.

The North Atlantic Treaty Organization said Monday that it had struck a deal with Palantir to buy artificial intelligence software that will improve the organization’s ability to process intelligence for military operations. Palantir stock rose 4.6% after the announcement Monday, compared with less than 1% for the Nasdaq Composite index. Contracts with public sector clients like military departments and intelligence agencies have been an important driver of Palantir’s growth. U.S. government revenue rose 30% to $1.2 billion in 2024, compared to 29% growth overall. https://tinyurl.com/4uft3979

Tesla’s market share in California falls below 50%.

Tesla’s stake as the dominant electric vehicle vendor in California is slipping. Tesla registrations fell 15% in the first quarter from a year earlier, according to the California New Car Dealers Association, while registrations for all other EVs shot up 35%. Tesla’s market share dropped to 43.9% from 55.5% in the first quarter of 2024. The New Car Dealers Association, which cited data from Experian Automotive, attributed the downturn to Tesla’s “aging product lineup and backlash against Elon Musk’s political initiatives.” Since January, the Tesla CEO has overseen cost cutting initiatives at the Department of Government Efficiency and served as a close advisor to President Donald Trump, spurring protests at Tesla showrooms around the country and sending the carmaker’s stock price plummeting to half what it was in December 2024. Tesla’s decline reduced overall adoption of electric vehicles in California in the quarter, according the industry report, undercutting the state’s mandates that 35% of new 2026 car models be zero-emission. California accounts for more than a third of all electric vehicle sales nationwide, per the Department of Energy. Tesla’s top competitors in the state are Toyota, which makes the Camry and the RAV4 models, as well as Honda, which makes the Civic, though none of these are fully electric, a spokesperson for the dealers association said. No pure electric competitors come close to Tesla’s registration numbers. https://tinyurl.com/4yf5x62k

California considers bill to allow nuclear power plants.

California lawmakers are considering overturning a decades-long moratorium on new nuclear power plants in the state to allow “small modular reactors,” which could help power projects such as artificial intelligence data centers. The bill doesn’t call out specific use cases for the reactors, but the official who introduced it has spoken about how the bill could help California attract more AI companies. A state assembly panel on Monday will discuss a bipartisan bill introduced in January that would allow reactors that generate less than 300 megawatts apiece, which would be enough to power a data center filled with tens of thousands of Nvidia AI chips. Nuclear power became taboo after several meltdown incidents decades ago, but proponents have said the technology is much safer now, and such energy is necessary to satisfy the growing power demands of AI. It’s unclear whether specific corporations are pushing for the legislation change. https://tinyurl.com/5xs7tjp5

Perplexity AI in talks to integrate assistant into Samsung, Motorola phones.

Perplexity AI Inc., an artificial intelligence startup vying with Google and OpenAI, is ramping up efforts to get prime placement for its virtual assistant on smartphones. The company is in discussions with Samsung Electronics Co. about integrating its assistant on the smartphone giant’s devices and has already reached an agreement with Lenovo Group Ltd.’s Motorola for a similar arrangement, according to people with knowledge of the matter. https://tinyurl.com/yc5afzwd

OpenAI develops X-like social feature in ChatGPT.

OpenAI is developing an X-like social feed within ChatGPT in part so that people can share how they’re using the chatbot to solve problems or create images, according to a person who has seen a prototype for employees. ChatGPT has more than 500 million weekly users but some people still struggle to understand how to fully utilize the chatbot in their personal and professional lives. While some ChatGPT users post anecdotes about the chatbot on X and other social apps, some OpenAI employees see the new feature as a way for people to get a better handle on what they can do with ChatGPT, this person said. Posting on the prototype ChatGPT social feed is called a “yeet,” this person said. The Verge earlier reported on the OpenAI effort. It would put OpenAI in a more direct competition with X owner Elon Musk, who started his own rival to OpenAI, xAI, in 2023. OpenAI also is competing with Tesla, another Musk-run company, to develop a humanoid robot. https://tinyurl.com/4sh4xbnn

OpenAI releases new reasoning models, open-source coding assistant.

OpenAI on Wednesday released two new models, o3 and o4-mini, in its line of “reasoning” artificial intelligence, which uses more computational resources to solve more complex problems and come up with new ideas. These two models are the first in OpenAI’s line of reasoning AI to understand images and be able to use external tools and applications, such as searching on the web or writing and running code. Such tools have helped scientists working in areas like nuclear fusion and pathogen detection come up with hypotheses to test and designs for experiments, The Information has previously reported. OpenAI also released Codex CLI, an open-source coding assistant that runs directly on users’ terminals. https://tinyurl.com/34zmjzc4

Microsoft researchers say they’ve developed a hyper-efficient AI model that can run on CPUs.

Microsoft researchers claim they’ve developed the largest-scale 1-bit AI model, also known as a “bitnet,” to date. Called BitNet b1.58 2B4T, it’s openly available under an MIT license and can run on CPUs, including Apple’s M2. Bitnets are essentially compressed models designed to run on lightweight hardware. https://tinyurl.com/3mnyzkbm

Court rules google breached Antitrust law in ad tech.

A court in Virginia ruled that Google had violated antitrust law by “wilfully acquiring and maintaining monopoly power” for the sale of ads on independent websites across the internet. In tandem with the ruling in August that Google has an illegal monopoly in search, the decision increases the likelihood that Google will be drastically reshaped by court decrees in the next year or two. Google will likely be forced, as a result of Thursday’s decision, to dismantle much of its ad tech business which dominates both how advertisers buy ads on independent websites, and how web publishers sell their ad space. The government claimed in its case that Google used its power on both sides of the market to raise prices and squeeze out rivals. “We won half of this case and we will appeal the other half,“ said Lee-Anne Mulholland, Vice President, Regulatory Affairs at Google in a statement, noting that the ruling found that Google’s acquisitions and advertising tools don’t harm competition. “We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.” https://tinyurl.com/mrysubtu

Meta attempted negotiations to settle Antitrust lawsuit.

Meta Platforms CEO Mark Zuckerberg last month offered to pay US$450 million to settle an antitrust case brought by the Federal Trade Commission—far less than the US$30 billion demanded by the FTC—The Wall Street Journal reported Tuesday. That case went to trial on Monday in Washington, where Zuckerberg has thus far testified for about nine hours and is expected to continue testifying on Wednesday. FTC chair Andrew Ferguson considered the offer not credible and would not settle for less than US$18 billion and a consent decree, the Journal reported. As the trial approached, Meta made an offer of close to US$1 billion and Zuckerberg lobbied President Donald Trump to settle the case. Trump at some point appeared more open to striking a deal with Zuckerberg at Meta, the Journal reported. But last week, Ferguson discussed the matter with Trump, who blessed the case going to trial. Gail Slater, the head of the Justice Department’s antitrust division; Mike Davis, a key antitrust adviser to Trump; Susie Wiles, the White House’s chief of staff; and Gary Barnett, Ferguson’s chief of staff also attended that meeting. “We haven’t been shy about explaining why it doesn’t make sense for the FTC to bring a case to trial that requires it to prove something every 17-year-old in America knows is absurd — that Instagram doesn’t compete with TikTok,” a spokesperson for Meta said in a statement. “We are prepared to win at trial.“ https://tinyurl.com/8hxxbjn9

Meta’s share of time spent has declined, Zuckerberg testifies.

Meta Platforms’ share of the amount of time people spend on social media apps has “declined…potentially meaningfully,” Meta Platforms CEO Mark Zuckerberg testified on Wednesday afternoon, saying that “a lot of the interaction” people have with friends directly has shifted to messaging apps. Zuckerberg was speaking on the third day of the trial of the Federal Trade Commission’s antitrust lawsuit against Meta. Earlier on Wednesday, Zuckerberg testified that TikTok and YouTube were both serious competitors to Meta’s Facebook and Instagram apps, although the FTC’s case defines the social media market dominated by Meta as excluding both firms. Under questioning from a lawyer for the FTC, Zuckerberg said that Facebook’s usage had not “collapsed” despite YouTube’s growth and size, adding that Facebook was “overall…reasonably healthy.” https://tinyurl.com/mw9sxmem

Shein and Temu announce plans to increase prices.

Shein and Temu separately told U.S. shoppers this week that they plan to raise prices starting April 25, blaming “recent changes in global trade rules and tariffs.” The China-founded online bargain sellers are facing the end of a U.S. trade provision known as de minimis, which they had used to ship goods to shoppers without paying tariffs. That provision is set to end in early May for goods from China, exposing both sellers to steep jumps in import costs. The two companies are the latest merchants to warn of price hikes in response to U.S. tariff hikes and trade changes. https://tinyurl.com/mr3am77z

China’s E-Commerce giants support exporters hit by Trump tariffs.

As Chinese exporters of consumer products face challenges due to President Donald Trump’s tariffs, some of China’s biggest e-commerce companies are launching new initiatives to help export-oriented merchants sell their goods in the domestic market. JD.com, a major online retailer, on Friday announced a new program to purchase at least 200 billion yuan (US$27.4 billion) worth of goods from Chinese exporters over the next 12 months and sell them to domestic consumers. Under the guidance of China’s Ministry of Commerce and other government agencies, JD.com will come up with various plans to support the country’s export-oriented businesses, the company said. Also on Friday, Freshippo, a fresh produce supermarket chain owned by Alibaba Group, said it is opening a new sales channel dedicated to Chinese exporters who want to sell their products domestically. Freshippo said it will simplify and speed up the registration procedures for exporters who want to join its platform. The new moves by Chinese e-commerce giants came after the trade war between Washington and Beijing flared up in the past two weeks as Trump kept increasing U.S. tariffs on Chinese imports to as much as 145%. The Trump administration on Friday said it would exempt smartphones, laptops and other electronics from the tariff increases. https://tinyurl.com/3e37br87

Nvidia says it will manufacture some chips, supercomputers in US.

Nvidia’s AI chips will be made in the US for the first time, the company announced on Monday as a result of deals struck by the chip designer with its manufacturing partners TSMC, Foxconn, Wistron, Amkor, and SPIL. Production will start at a TSMC factory in Arizona and a Wistron factory in Dallas within the next year and a half, Nvidia said. Nvidia expects the effort to generate US$500 billion worth of AI infrastructure in the next five years. The announcement comes as President Donald Trump imposes steep tariffs on almost all imports to the US, threatening to drastically increase costs for tech firms importing hardware from Asia. President Trump said in a social media post on Sunday that exemptions for semiconductors and smartphones, announced on Friday, were temporary. In his post, Trump said he is “taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN,” and he told reporters that he will announce a tariff rate for semiconductors in the coming week. Nvidia did not say whether its announcement was part of a deal with the Trump administration. However, CEO Jensen Huang may have scored a concession from Trump last week by convincing Trump to reduce its curbs on H20 chips that Nvidia sells in China after attending a $1 million-a-seat dinner with the president at Mar-a-Lago, NPR reported. https://tinyurl.com/3kun5hve