📣 5 gigawatt data centers

Another day, another edition of the Techonomy Barista. Take a seat, we’re serving up a fusion of fiscal insights and digital disruptions. 🍲

Today’s soft serves to keep you smart:

1. OpenAI proposes building 5 gigawatt output data centers - a 100X increase.

2. S&P 500 rides high despite low U.S. consumer confidence data.

3. Uber striving for ‘everything app’ status.

4. Scale AI almost quadruples revenue in first half of 2024.

5. SpaceX cops a $633,000 fine.

Markets

Economic Calendar

1. OpenAI seeks 5 GW data centers to advance AI, rivaling city power use. 🏙️

Key takeaways:

• OpenAI proposes building 5 gigawatt data centers in the US to develop advanced AI models.

• Context: 

  • Current data centers produce 50 megawatts to 100 megawatts of power for high-density AI computing.

  • 1 gigawatt = 1,000 MWs, so OpenAI is proposing 5,000 MWs (5 GWs) of output per data center - 100 times the output than current output. 🤯 

• Each center would use power equivalent to five nuclear reactors or 3 million homes.

• The company claims these facilities would create jobs, boost GDP, keep the U.S at the forefront of global innovation, and make AI’s benefits accessible to all.

• OpenAI is seeking government support for this proposal, yet energy executives are skeptical about the feasibility of such large-scale projects.

What this could mean for the industry:

• The AI industry is entering an era of unprecedented resource demands, signaling a shift towards massive infrastructure investments. ⚡️ 

• The push for large-scale data centers may accelerate innovations in energy-efficient AI algorithms and hardware to mitigate environmental concerns.

• Collaboration between AI companies and the energy sector will likely intensify, leading to advancements in power generation and distribution technologies. 🤝 🔌 

• Government policies and regulations around AI development could evolve rapidly to address the environmental and economic impacts of these large-scale projects. ♻️ 

2. Consumer confidence plummets, stocks rally on Nvidia surge. 📊

Key takeaways:

• Consumer confidence index saw biggest drop since August 2021 due to slowdown in labor market.

• Despite this, the S&P 500 closed at its 41st record this year, up 0.3%, led by Nvidia stock that jumped 4%.

• China announced $114 billion stimulus package, boosting stocks with Chinese economic ties.

• Traders expect more Fed rate cuts by year-end following weak economic data.

• Gold hit a record high, trading above $2,662 an ounce amid economic uncertainty.

How it could impact you:

• Job market concerns may affect career mobility and wage growth, tightening household budgets.

• Expected interest rate cuts could mean lower mortgage rates. Maybe you can finally afford that dream home... or at least a slightly less nightmarish apartment. 🏠️ 

• China's stimulus might boost global trade, affecting prices of everyday goods and commodities.

• Rising oil prices could increase costs for daily commutes and travel. Road trip budget might need a tune-up! ⛽

3. SpaceX faces $633,000 FAA fine for safety violation.

Key takeaways:

• FAA proposes $633,000 fine against SpaceX for violating agency rules in two 2023 launches.

• Mike Whitaker, FAA Administrator, states SpaceX launched without a permit in June and July 2023.

• SpaceX strongly disputes Whitaker's comments, claiming every statement he made was incorrect.

• FAA delays Starship 5 launch, citing SpaceX's failure to complete timely sonic boom analysis.

• Whitaker emphasizes the need for equal oversight, including safety management systems and whistleblower programs, for all space companies.

What this means for the space industry:

• This high-profile case signals tighter oversight for all space companies, potentially slowing innovation but enhancing safety standards.

• The dispute may affect public trust in private space ventures, influencing investor confidence and government contracts.

• The industry faces pressure to maintain rapid development while adhering to evolving safety regulations, setting a precedent for future space exploration.​​​​​​​​​​​​​​​​ 👩‍🚀 

4. Uber achieves first annual profit, eyes 'everything app' status. 💰

Key takeaways:

• Uber reported $1.1bn in annual operating profits seven months ago, its first ever, after 15 years of operation.

• The company is expanding its services beyond ride-hailing to include food delivery, logistics, and various transportation options. 🚚 

• CEO Khosrowshahi envisions Uber becoming an "operating system for your everyday life" with three main apps: Uber, Uber Eats, and Uber Driver.

• The company faces fierce competition from rivals like Lyft, Bolt, DoorDash, and potentially Amazon.

• Uber's active monthly users have grown from 45 million in 2016 to over 150 million by mid-2024.

What this could mean for you:

• The concept of "super apps" or "everything apps" is gaining traction in Western markets, reshaping how consumers interact with digital services.

• With Uber expanding into local commerce, you might find yourself supporting your neighborhood businesses more often. Who knew your late-night burrito craving could be an act of community support? 🌯 

• As a consumer, you'll likely benefit from increased competition in the delivery space, leading to better service and lower prices.

5. Scale AI almost quadruples sales to $400M in H1. 🚀 

Key takeaways:

• Scale AI nearly quadrupled its sales to almost $400 million in the first half of 2024 compared to the same period in 2023.

• Company's growth driven by providing data labeling services for large AI developers like, OpenAI, Meta and Google.

• Scale's operating margin improved, spending $1.20 per dollar of revenue, down from $1.50 in the previous year.

• Gross margin decreased to just under 50%, lower than typical tech investor expectations.

• Scale raised capital at a $13.8 billion valuation in May, with $980 million in cash remaining at the end of H1 2024.

What this could mean for the industry:

• Increased demand for data labeling could lead to the emergence of more specialized AI training service providers.

• Tech giants could bring data labeling in-house to reduce costs and maintain control, potentially disrupting third-party service models like Scale.

• Low gross margins in data labeling services could push companies to develop automated, AI-driven labeling solutions.

Other stories:

AI

Google powering Volkswagen smartphone app with AI tools in bid to win enterprises. 🚘️ 

Spotify rolling out AI playlist features in US, CA, NZ and Ireland.

OpenAI launches advanced voice mode featuring more voices and a fresh design.

Hacker plants false memories in ChatGPT to steal user data. 🥷 

Tech

TikTok to shut down its music-streaming service after a year-long run.

Meta’s smart Ray-Ban glasses spark a Silicon Valley sensation—New version coming Wednesday.

JPMorgan eyes Apple credit card takeover from Goldman, seeks concessions.

Startup

Ujet, startup that makes software for call centers, raised $76M Series D.

Startup making millions using AI by automating mundane workplace tasks.

Longevity startups receiving funding but not as fast as we’re aging.

Business

China investigates Calvin Klein & Tommy Hilfiger over discriminatory measures of using Xinjiang cotton.

Salesforce expands portfolio with acquisition of knowledge tool zoomin.

Justice department accuses Visa of monopoly in debit networks.

Boeing boosts labor offer in best and final.

Commerzbank CEO steps down, finance chief Bettina Orlopp to take over.

US Politics

Will Trump and Vance’s dude influencer tour help them secure victory?

Young voter poll: Harris leads Trump by 31 points.

Trump promises to ‘steal’ foreign jobs in sweeping economic address.

Top Economies (non-US)

Sources reveal: German economy expected to shrink again in 2024.

China’s central bank cuts medium-term loan rates to boost economy.

India’s 2024 GDP forecast raised to 7.1% by Moody’s analytics.

Fascinating

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