📣 OpenAI seeks $6.5B funding at $150B valuation

US home sales dip 2.5%

Author

Techonomy Barista
September 20, 2024

This is the Techonomy Barista, and we’re distilling the essence of tech and economy, without the bitter aftertaste. 🧪

Looking outside of an Apple office at the Calaveras mountains in California.

What we’re covering today:

  1. US home sales dip 2.5% in Aug.

  2. Global stocks rally to record after Fed cut.

  3. OpenAI’s $6.5B funding round is oversubscribed.

  4. AI bots causing pain to small websites.

  5. Google's ad tech monopoly case hinges on executives' words vs. actions.

We’re excited to announce we have launched a podcast for our top stories because we heard some of you like to listen on the move, so please give this a try and let us know what you think! 🙂

Markets

Economic Calendar

Calendar shows important economic events for the top five economies of the world. All times US EST.

1. OpenAI's $6.5 billion funding round oversubscribed, valuation soars to $150 billion 🚀

Estimated investments by large investment firms in OpenAI.
Source: Bloomberg, The Information, Techonomy Barista research.

Key takeaways:

  • OpenAI's latest funding round of $6.5 billion is oversubscribed, with excess demand in billions.

  • The AI startup's valuation has increased to $150 billion, as reported in our recent newsletter.

  • The startup is asking for a minimum check size of $250M.

  • Thrive Capital leading the round with $1.25 billion with others including Microsoft, Nvidia, Apple, Tiger and MGX - the Abu Dhabi AI investment firm.

  • Sequoia Capital, a notable existing investor, is not participating in this round mostly since it funded a rival business, Safe Superintelligence Inc.

What this could mean for the AI industry:

  • With tech giants like Microsoft, Nvidia, and Apple jumping on the OpenAI bandwagon, expect your devices to get a lot chattier. Soon, your toaster might be offering life advice along with your morning bagel. 🍞

  • OpenAI's soaring valuation could spark a race in the AI world, pushing companies to innovate fast to stay in the game. 💡 Expect regulators to dive in too, with talks about ethical AI and rules to keep things in check.

2. U.S. home sales dip 2.5% in August despite lower mortgage rates 🏠

Source: WSJ

Key takeaways:

  • Existing home sales fell 2.5% in August to 3.86 million.

  • Average 30-year fixed mortgage rate dropped to 6.09%, lowest in over a year.

  • National median existing-home price rose 3.1% year-over-year to $416,700.

  • Housing inventory increased 22.7% from August 2023 to 1.35 million homes.

  • Typical home sold in August was on market for 26 days, up from 20 days a year ago.

How it could impact you:

  • With inventory rising, you might have more options if you're house hunting. But don't expect sellers to be desperate - it's still a seller's market.

  • If you're a homeowner, your property value likely increased. Great news, unless you were planning on upgrading to a bigger place. 🏰

  • Thinking of selling? You might need to be patient - homes are sitting on the market longer than last year.

  • For renters, the housing market's struggles could mean continued high rental prices. Maybe it's time to embrace that minimalist lifestyle you've been considering?

3. Global stocks rally to record after Fed cut 📈

The MSCI All Country World Index (ACWI) is a comprehensive global equity index measuring performance across developed and emerging markets.
Source: Bloomberg

Key takeaways:

  • S&P 500 reached its 39th record high of 2024, surging about 20% year-to-date.

  • Tech sector led gains while defensive industries underperformed.

  • Asian stocks extended the global equity rally following positive US jobs data.

  • US jobless claims dropped to lowest since May, signaling a healthy labor market.

  • 57% of surveyed investors believe rotation into value stocks likely to accelerate after Fed rate cut.

How it could impact you:

  • Your tech-heavy portfolio might be partying like it's 1999. Just remember, what goes up must come down... eventually. 🎢

  • If you're job hunting, the healthy labor market could mean more opportunities and potentially better wages.

  • Value stocks gaining popularity could impact your investment strategy. Might be time to diversify beyond just chasing the latest AI hype.

  • Keep an eye on your variable-rate loans, as future rate cuts could mean lower monthly payments. More money for...investing in stocks?

4. AI bots devour small websites, leaving creators with hefty bills 🤖

Key takeaways:

  • In a bid to stay ahead, AI companies scrape all sorts of data available on the web. 🌐 

  • OpenAI's bot caused a game UI database to slow down, transferring 60-70 GB of data in 10 minutes.

  • Website owners face increased cloud computing costs due to AI bot traffic scraping their website for AI training data.

  • 5% of all online data and 25% of high-quality data now have robots.txt restrictions for AI botnets.

  • AI bot traffic can disrupt website metrics, affecting advertising effectiveness and conversion rates.

What this could mean for you:

  • If you're a website owner, prepare for surprise parties in your server room, courtesy of AI bots crashing your bandwidth limits.

  • Get ready for a new internet pastime: "Spot the AI" as you browse, because those “other” viewers on your favorite site might just be bots in disguise. 🕵️‍♀️

  • Your go-to sources for specific information might become less reliable or even go offline due to increased hosting costs courtesy AI bot traffic. 🤖 

  • Privacy concerns may rise as more of your online activities and data could be swept up in the AI training frenzy. Example, LinkedIn collects all member data for non-EU countries by default unless manually turned off.

Key takeaways:

  • Justice Department alleges Google built and maintained a monopoly in online ad-buying and selling technology.

  • Google instead claims broader competition in the form of social media companies and streaming TV.

  • Case relies heavily on internal emails and documents from Google executives, who have often disavowed their own written statements when testifying.

  • When at Google, Ex Director of Product, Jonathan Bellack, compared Google’s monopoly by writing “The analogy would be if Goldman or Citibank owned the NYSE”, yet dismissing his email as “late night, jet-lagged ramblings” during the trial.

  • Judge criticized Google's document retention policies as "absolutely inappropriate and improper" in the context of the case.

What this could mean for the advertising industry:

  • If Google loses, it could mean more competition and innovation in the ad tech space. Translation: You might see ads that are slightly less creepy because they're not powered by an all-knowing tech giant. But don't worry, they'll still know you need new socks. 🧦

AI

Apple aims to make Siri smarter through new AI software testing.

GPT-4 consumes up to 3 bottles of water for every 100 words generated.

Apple Intelligence available through public betas.

Tech

YouTube to revamp TV app and offer cinematic “immersive previews” for creators.

Startup

Ex-Google exec startup to use AI to forecast weather.

AI startup, Statt Inc., raises $2.8M to demystify public policy.

Nikesh Arora, CEO of Palo Alto Networks, refers to cybersecurity business as an arms race.

Business

Elliot Hill has replaced John Donahoe as Nike’s new CEO.

Disney will stop using Slack after it was hacked.

US Politics

Top Economies (non-US)

India’s expanding role in global economic growth.

Bank of Japan maintains the country’s interest rate.

China eyes fresh stimulus due to 2024 stagnation.

Interesting

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