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- š° Musk Raises $500M for AI Startup... or not?
š° Musk Raises $500M for AI Startup... or not?
Plus, is the Vision Pro Enough to Get Apple Out of Slump?
š The Buzz This Week
TOP STORY
š¤ Musk just raised $500M for xAIā¦ or did he?
On Friday, Bloomberg reported that Elon has secured $500M of a $1B funding goal for his AI company xAI, but Elon is calling this āfake newsā.
According to Bloombergās report from an unnamed source, xAI is discussing a valuation of $15B-$20B with terms expected to be finalized in the next couple of weeks.
With Elon denying the claims, Iām not sure how much weight to give to these reports, so letās instead recap what we do know about xAI and whether it poses a real threat to Microsoft & OpenAIās ChatGPT and Googleās Bard š
š Muskās falling out with OpenAI
In February 2019, Elon left OpenAI (a company he co-founded) over disagreements about the companyās development, and also saying he needed to focus on Tesla & SpaceX.
Elon has frequently and publically criticized OpenAI since leaving, saying the start-up is effectively controlled by Microsoft.
š¤ Elon Unveils Grok and xAI
In November 2023, Elon unveiled Grok which he describes as a chatbot designed to āanswer questions with a bit of wit and a rebellious streakā.
Many wrote off Grok as an unserious attempt designed to poke fun at ChatGPT, but some reports have said Grok excels in certain areas such as summarizing news in real-time, and that it poses a serious threat to ChatGPT.
š¤ Elon Seeks to Raise $1B for xAI
While the āsecuring $500Mā part of the Bloomberg report may or may not be fake news, the fact that Elon is raising $1B for the start-up is true, with an SEC filing in December clearly stating the $1B target and that ~$134M had already been secured.
š° X investors will own 25%
Elon has stated that X Corp investors will own 25% of the new xAI company and that members of X Premium+ will get access to the Grok chatbot.
š Corp investors will own 25% of xAI
ā Elon Musk (@elonmusk)
9:56 AM ā¢ Nov 19, 2023
š³ Elonās AI Reservations
Elon has repeatedly expressed deep reservations about AI technology, being among a group of researchers who called for a pause on the training of AI models in March 2023.
Elon was also suspicious of the ousting of Sam Altman from OpenAI saying he ādoesnāt think it was trivialā and might have something to do with the dangers of AI.
š¤Æ Spread thin?
Musk now oversees 6 different companies including Tesla, SpaceX, X, Neuralink, Boring Co, and xAI. I have a hard enough time overseeing oneā¦ š
Do you think xAI is a serious threat to ChatGPT or Bard? Join the community discussion here!
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Coinsquare balances safety with forward-thinking, especially now with big players from the U.S. making waves with their Bitcoin ETFs. But hereās the thing ā Coinsquare has been doing this all along.
Coinsquare has been setting the bar high for safe, regulated crypto investments for years. For them, itās always been about more than just investing; itās about doing it wisely and securely.
If youāre looking for a platform to get some exposure to the crypto markets, definitely check out Coinsquare!
BIG TECH
š Appleās Vision Pro shows early promise with pre-orders
Apple stock is up 3% this week after the company began taking pre-orders for the highly anticipated Vision Pro headset this Friday. The pre-sale has reportedly already sold out.
At $3,499 USD a set, the headset isnāt cheap, but still isnāt Appleās most expensive product to date (that award goes to the āgoldā Apple watch which sold for as high as $17,000 š¤Æ)
š Some analysts say the Vision Pro will be insignificant
Analysts at UBS Group expect Apple to ship 300,000 - 400,000 units this year. While that equates to $1.4B in revenue, compared to Appleās $383B 2023 revenue, itās a drop in the bucket.
š Bank of America Upgrades Apple from Neutral to Buy
Others are more bullish on the new device, with the Bank of America upgrading Apple from a neutral rating to a buy rating, saying that the product ācould surpass iPad revenue over timeā.
BofA analyst Wamsi Mohan also believes that AI will be a strong driver for the business, as the need for the latest hardware to run GenAI features will drive a faster iPhone upgrade cycle.
š« Falling revenue & Apple Watch ban
Despite Bank of Americaās rating, Wall Street is overall more cautious about Apple compared to the other megacaps, with only 62% of analysts rating it as a buy, compared to 85% for Microsoft, Amazon, Alphabet, Nvidia, and Meta.
This is likely driven by the companyās four-quarter streak of revenue declines, its longest in more than two decades.
The Apple Watch, which makes up ~10% of Appleās revenue, is also currently banned in the US over a patent dispute.
š Apple loses its crown to Microsoft
With Apple losing its crown as the most valuable company to Microsoft last Friday, eyes will be on the Vision Pro to bring Apple back to the #1 spot.
MORE BIG TECH
š Meta Reaches All-Time High, Breaking Slump
From Sept 2021 to Nov 2022 Meta plummeted, losing 76% of its value while the overall market fell only ~16%.
Now, 14 months later, Meta has recovered all these losses and some, with a 167% return over the past year and sitting at a new all-time high.
What factors have led to this rebound?
šŖ The Year of Efficiency
In 2023, Zuck ushered in the āyear of efficiencyā for Meta. Between Nov 2022 and May 2023, the company slashed over 20,000 jobs in four rounds of layoffs, decreasing the total number of employees by over 20%.
Meta also flattened the management system and cut projects and infrastructure costs.
š Decreased focus onā¦ wellā¦ the META-verse
In October 2021, Facebook officially changed its name to Meta, saying the metaverse was the future of the company, but after losing around $46.5B on his metaverse ambitions, the metaverse has gone from being Zuckās obsession to rarely being mentioned.
Many of the layoffs in the āyear of efficiencyā hit the metaverse-focused Reality Labs division as Meta reigned back in spending on metaverse pursuits.
š¤ Bye-bye Metaverse, Hello AI
So what took the metaverseās place? You guessed it, AI.
AI-recommended content has reportedly driven a 7% increase in engagement on Metaās platform and has also improved the targeting capability of its core advertising business.
Zuck says AI is being built "into every one of Metaās products."
Letās hope this doesnāt mean another name change is on the horizonā¦ (AI-Book? AI-Gram?) š
šļø What else you mightāve missed!
š The S&P 500 closed at an all-time high on Friday, showcasing a surprisingly stable economy. The index is up 20% over the past year and up 82% over the past 5 years.
š« Spirit Airlines stock rose 17% on Friday after raising Q4 guidance, recovering from losses after a proposed merger with JetBlue was blocked. The stock is still down 56% in the past week.
š¤ iRobot stock is down 44% this week after Amazonās proposed $1.4B buyout was blocked by the EU anti-trust regulator.
š¤ PayPal stock is up over 6% this week despite early pessimism on Tuesday when Mizuho analyst downgraded the stock. The gains were driven by a mysterious āinnovationā to be announced next Thursday.