😮Elon Musk Sues OpenAI

ALSO: Nvidia crosses the $2 Trillion valuation mark

Estimated Read Time: 9 minutes

Several lawsuits and record profits highlight today’s news. Elon Musk is suing OpenAI, but it’s not as black and white as it might seem. And Nvidia is now a $2 Trillion company… and they’re going to grow even more. 

Today’s Horizon

• Elon Musk sues OpenAI, meanwhile they claim Elon tried to merge them with Tesla. 

• Star Trek speech improves ChatGPT’s math skills. 

• Nvidia is now the third most valuable company in the world at $2 trillion. 

• Business CEOs are still cautious of AI until the “hype” blows over. 

• What are the stock market’s “Magnificent Seven”? 

• Microsoft claims to have made a breakthrough in LLMs. 

News 

(3 minutes)

🧑‍⚖️Elon Musk sues OpenAI over their relationship with Microsoft

What happened: Everyone’s favorite trigger-happy billionaire Elon Musk has filed a lawsuit against OpenAI (the company who makes ChatGPT) for abandoning their non-profit mission of creating AI for the benefit of humanity. OpenAI has fired back by explaining their reason to and moving to have the case dismissed. 

The details: 

• Musk was one of the founding investors of OpenAI in 2015. 

• The idea was to create an AI that was free and open source for all of humanity. One that would not be controlled by big companies and organizations. 

• In 2019 OpenAI moved from being a pure non-profit to now having a for-profit subsidiary controlled by the main non-profit branch (suspicious but okay). 

• Microsoft invested over $1 billion dollars into OpenAI in 2019.

• Microsoft invested around $10B into OpenAI in January of 2023. Some of that investment was in infrastructure, not money.  

• The numbers are fuzzy, but reports indicate Microsoft has invested over $13B into OpenAI in total.

• Musk claims Microsoft’s billions “set the founding agreement aflame”.  

• Sam Altman, the CEO of OpenAI, was fired last year before being brought back a month later. 

• The day after Altman’s firing, Microsoft said it would hire Sam Altman and anyone working at OpenAI. 

• Musk claims OpenAI is now more focused on creating AGI (Artificial General Intelligence) for the benefit of Microsoft. 

• The lawsuit focuses on OpenAI’s relationship with Microsoft and how it goes against their founding principles of free AI for the benefit of humanity. 

• OpenAI is moving to dismiss the lawsuit. 

Why it matters:  If you care about the risks of powerful AI, then you care about the transparency of AI’s development. None of us want to live in a world where the most powerful AI tools are controlled by a few powerful organizations who have the rest of us at their mercy. Everyone’s trying to gain an upper hand in the future of AI, and these developments may someday prove to have been more important than who was elected into political office. 

Further Details: 

• Musk started his own AI company last year, xAI (everything needs an X, eh Elon?). 

• OpenAI claims that Musk himself said they needed more funding (billions per year), and that they wouldn’t get enough as a non-profit. 

• Musk's lawsuit is for breach of contract, breach of fiduciary duty, and unfair business practices. 

• The lawsuit wants OpenAI to return to its original non-profit roots (that’s asking for a lot). 

• In 2015 Musk told OpenAI they’d need $1B in funding and that he’d cover whatever the other investors didn’t put in. Apparently he provided “less than $45 million.” 

• By 2017 OpenAI’s funding situation was dire. 

• According to OpenAI, Musk wanted to merge OpenAI with Tesla. 

• OpenAI refused the merger idea and Musk left OpenAI by the end of February 2018. 

Takeaway: We don’t know whose side of the story is “right” or entirely true. I personally think Musk and OpenAI (Sam Altman in particular) are both selfishly motivated, but I don’t think Musk’s lawsuit will get very far. Keep these developments in mind so you understand the landscape you’re standing in. AI will be one of the most important developments in history, and these big players are writing the future of that story right now. 

Stocks

📈AI Company Stocks Today

As of 03.06.2024 market close.

Headlines

🚄SILVER BULLETS

Asking an AI to speak as if it were on Star Trek dramatically improves it’s math performance according to study. AI is weird. Of course, if you use AI right now you should know that role playing is the best way to get results. 

Microsoft claims to have a 70x more efficient LLM. Energy consumption is a critical limiting factor in LLMs, so this breakthrough could allow for way more intelligent AI systems. This approach matches the performance of traditional LLMs while significantly reducing computational demands, thereby addressing key challenges in scalability and environmental impact.

Twitter ex-employess are suing Elon Musk for $128 million unpaid severance payments. (The guy’s involved in a lot of lawsuits huh?) Most of the employees suing him are senior executives. Musk bought the company for $44 billion, or $54.20 per share, taking control in October 2022, after which he went on a firing spree, getting rid of most of the senior staff. (I wish he just called it Twitter again…)

Future of AI 

(2 minutes)

💰Nvidia crossed $2 Trillion in valuation, and they’ll keep going 

What happened: Nvidia is officially worth over $2 Trillion as of March 1st. This makes them the third more valuable company in the world behind Microsoft and Apple. This is nearly double their $1 Trillion valuation as of June 14th, 2023. The growth is due to AI companies using Nvidia’s chips to power their processing. 

Why this happened:

• Nvidia is one of the largest GPU chip makers in the world. 

• AI development is better run on high performing GPUs rather than CPUs. 

• AI companies and large data centers are using Nvidia’s GPU chips.

• AI companies have seen a huge surge since ChatGPT’s triumphant public reveal last year. 

• The AI boom is pushing Nvidia’s profits skyward because they need Nvidia’s GPUs.

• Nvidia was worth around $1 Trillion in June of 2023. They’ve doubled in less than a year. 

• This makes Nvidia one of the cornerstones of AI development and large data centers since their GPUs are necessary for faster processing. 

• Nvidia has skyrocketed past the rest of the “Magnificent Seven” in terms of pure growth. 

• Nvidia is expected to keep growing as demand for AI applications and data centers grow. 

• Nvidia accounted for more than a quarter of the benchmark S&P 500’s year-to-date gains.

• The five most valuable companies in the world are in this order: Microsoft, Apple, Nvidia, Saudi Aramco, and Amazon. 

Why it matters: Nvidia is one of the fastest growing stocks among major tech companies. They’ve doubled their valuation in less than a year. And they are the cornerstone upon which all of the major data centers and AI companies build their infrastructure, making Nvidia one of the largest players in the world of AI. 

All of this attention is bringing in more brand recognition and partnerships for Nvidia as well. For investors, Nvidia is one of the companies to watch. 

On the Horizon: Chinese company Huweu is trying to compete with Nvidia in the GPU market and with sources saying  saying it won a sizeable AI chip order from Chinese tech giant Baidu. Still, it will be hard for anyone to topple Nvidia’s reputation and brand at this point. I expect continued growth from Nvidia. 

Business 

(2 minutes)

🛑Most business execs are putting the brakes on AI

What happened: Around 70% of business say they are “exercising restraint” regarding AI. The motto seems to be “wait and see how useful it really it.” They’re trying to not fall for the hype, while simultaneously exploring what AI is really capable of so they don’t fall behind the competition. Adoption is slow and cautious. 

The details: 

• Most executives are concerned about low initial return on investment when using AI. 

• Most companies are not even ready for widespread AI adoption. 

• AI chatbots are predicted to have a massive effect on company architecture within the next three years. 

• 40% of respondents (source) consider AI a threat to cybersecurity in 2024. 

• Businesses struggle to identify the most valuable applications of AI. 

• Companies are not spending big on AI yet, but are expected to do so within the next few years. 

Why it matters: If you’re expecting AI to replace you, it isn’t happening yet. AI tools are such a radical shift in technology that some companies will grapple with implementing AI for years to come. AI will allow bigger companies with smaller headcounts (good for entrepreneurs), but the technology is still so new that nobody knows what security and practical applications AI has yet. 

If you work for a larger company: Being the guy/gal that knows how to use AI and make their systems more efficient is a massive advantage and can keep you around for years to come. Just because your company doesn’t use AI right now doesn’t mean it won’t in the coming years. 

For entrepreneurs: You have the opportunity to use your size and mobility to your advantage and create a larger company with a smaller-than-normal headcount, and to do this years ahead of bigger companies. 

For investors: Companies are going to spend big on AI implementation in the next few years. 

For executives: AI should be experimented with. But take cyber security into concern. We’ve already seen vulnerabilities in LLM systems develop, so it’s unwise to base too much architecture on a system that isn’t secure yet. 

Stocks and Key-Concept

(1 minute)

🧠Who are the “Magnificent Seven?” 

The Magnificent Seven is a term from the stock market (oh boy). 

In plain English: It’s used to describe seven big tech companies who have high market capitalizations, innovative products, and are in the lucrative tech sector. 

This chart shows their performance last year compared to the rest of the S&P 500. 

Who they are: 

• Alphabet (GOOG): the parent company of Google, one of the largest search engines and online advertising platforms globally.

• Amazon (AMZN): a leading e-commerce giant offering online retail, streaming services, cloud computing, and more.

• Apple (AAPL): a multinational technology company known for its popular iPhones, Mac computers, and other electronic devices.

• Meta Platforms (META): formerly Facebook, a social media and technology conglomerate known for its Facebook, Instagram, and WhatsApp platforms.

• Microsoft (MSFT): a multinational technology company with a wide range of products and services, including software, cloud computing, and gaming platforms (Xbox).

• NVIDIA (NVDA): a leading developer of graphics processing units (GPUs) used for gaming, artificial intelligence applications, and other demanding computing tasks.

• Tesla (TSLA): an electric vehicle and clean energy company known for its innovative electric cars and solar energy products.

Yes, we all know who they are. They’re performance often influences the entire stock market. They are the big heavies of the technology world, and you read about them everyday in this newsletter. 

Some additional details: 

• Combined they make up around 30% of the S&P 500’s market capitalization (total market value of all companies in the index). 

• Much of the stock market has been held up in these last few years by these large tech companies and their AI projects. 

• There’s been concerns about the affect the AI “bubble” will have on the stock market should the bubble burst. 

• The day after Nvidia released their quarterly earnings, the S&P 500 jumped 2.5%; while the tech-heavy Nasdaq rose nearly 3%. 

• Michael Burry, of the “Big Short” fame (he’s the guy who betted against the housing market before the 2008 crash), has betted $1.6B against the NASDAQ 100, claiming they are overvalued. 

Headlines

🪙Loose Change

The poor headlines who didn’t make it.

• California has given Waymo permission to expand its autonomous robo-taxi operations to highways in Los Angeles and the Bay area. 

• Motorola teased a new video of the company’s first AI-powered Android phone to challenge Samsung’s current ‘AI phone throne’.

• Someone mapped out all the name changes of Google’s AI. Pretty cool. 

• A new study explores presence of racial bias in LLMs (Large Language Models like ChatGPT) and could have negative consequences if LLM developers don’t take racial stereotypes into consideration. 

Productivity

🛠️AI Tools

• GenWebBuilder. A web builder that helps you change images into stunning websites effortlessly 

• B12. Another web builder, this time using AI to generate a website near instantly. 

• Quuu. A tool to grow your audience on LinkedIn, X, and Facebook. 

• Spoke, a productivity tool to summarize and optimize workflows. 

AI Generated Images

🚗Cars, cars, cars!

Source: Motortrend

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