CrunchBase : Eye On AI: The Never-Ending AI Valuation Escalation

Eye On AI: The Never-Ending AI Valuation Escalation

It really never stops.

It’s only been a few weeks since OpenAI announced its long-awaited raise of $6.6 billion at a post-money valuation of $157 billion. The Thrive Capital-led raise nearly doubled the San Francisco-based AI giant’s $80 billion valuation from its secondary offering in February.

The value seemed lofty for a company that loses a lot of money and now has a 46x revenue multiple. But OpenAI is OpenAI. It is ChatGPT and Sam Altman. It is a headline maker, a soap opera and a worry for regulators. It is what ushered in the gold rush to AI that began just a couple years ago and still has yet to let up.

And while there were skeptics of OpenAI’s raise, that gold rush it caused seems ready to push even more AI startups’ valuations to heights rarely seen in venture.

In the last few weeks reports have surfaced that xAI, Perplexity and perhaps Anthropic all are raising new cash (hey, AI isn’t cheap) at exploding valuations.

Just this week, it was reported Elon Musk’s Burlingame, California-based xAI is in early talks with investors for new $5 billion funding round that would value it around $45 billion — a billion dollars more than what he bought Twitter for.

xAI just closed a $6 billion round at a $24 billion post-money valuation in May, meaning if it does raise the new round, its value would have nearly doubled in five months — to the point where it would now be the 9th most valuable VC-backed startup (per our Unicorn Board), just in front of Databricks.

Of course, xAI is not the only generative AI company looking to get into that rarified neighborhood. Just a couple weeks before OpenAI officially announced its raise, it was reported competitor Anthropic had just started to chat with investors about raising at a $30 billion to $40 billion valuation.

Just in February, the San Francisco startup raised $750 million in fresh capital that valued it around $18.5 billion — again, meaning it is looking to double its valuation and become one of the 15 most-valuable startups in the world.

On a smaller scale, it also was reported just more than a week ago that AI search startup Perplexity — which in June reportedly received between $10 million and $20 million from SoftBank at a $3 billion valuation — is in talks to raise new funding that would nearly triple its valuation to $8 billion.

The fact that a 167% valuation jump to $9 billion can be considered “smaller scale” says a lot about the current state of venture funding and AI.

At some point, the crazy valuation hikes — seemingly monthly — have to stop and investors have to ask themselves how they are going to make money on these deals. While that may not be a concern for large corporations who get other benefits from these deals, it certainly has to be a consideration for VCs who have often talked about the lack of liquidity they face thanks to a slow IPO and M&A market.

However, that seems to be another problem for another day when it comes to AI — where the AI valuation escalation never stops.

WSJ : China Manufacturing Activity Gauge Adds to Tentative Signs of Recovery

China Manufacturing Activity Gauge Adds to Tentative Signs of Recovery
The reading was in line with a competing official gauge

A private gauge of China’s manufacturing activity signaled that the sector returned to growth in October, in a potential sign that Beijing’s more aggressive efforts to boost the economy are having an effect.

The Caixin manufacturing purchasing managers index rose to 50.3 in October from 49.3 in September, according to data released by Caixin Media Co. and S&P Global on Friday.

A reading below 50 suggests that activity is shrinking and one above indicates that it is expanding.

The reading was in line with an official gauge on Thursday that also signaled a pickup in October, ending a five-month run in contractionary territory. A separate official index for China’s construction and service activity also returned to expansion lastmonth.

“The surveys point to an improvement in October, with an acceleration in manufacturing and services activity more than offsetting a further slowdown in construction,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

The hard data show that manufacturing output has been growing rapidly in recent months and the latest PMIs hint at a further pickup in October, he said in a note.

Since late September, authorities have unleashed a torrent of measures aimed at restoring growth and confidence in the economy. The unprecedented effort has involved policy rate cuts, mortgage relief, home buying incentives, and massive liquidity injections for the financial system.

Policymakers have pledged more support in the form of a fiscal package set to include trillions of yuan of extra debt. The fiscal stimulus is expected to be approved next week at meeting of China’s top legislative body.

Friday’s PMI data indicated that supply and demand in China’s sprawling manufacturing sector both grew in October. A subindex measuring output notched a 12th straight month of expansion, Caixin said. Another bright spot was the barometer for total new orders, which returned to positive territory and reached its highest level since June, Caixin said.

External demand remained weak, however, with the gauge for new export orders languishing in contractionary territory for a third month, it said. Lukewarm appetite for Chinese products overseas reflected sluggish global economic conditions, Caixin said.

Another weak spot was employment, which continued to fall as businesses remained cautious about hiring due to uncertainty about the outlook, the data showed. The gauge for employment fell to its lowest since May 2023, reflecting widespread job cuts among companies that produce investment goods, according to Caixin.

Overall, the survey data suggests that market demand stabilized and optimism improved, said Wang Zhe, senior economist at Caixin Insight Group. That suggests early signs that the series of policies officials have rolled is having an impact, Wang said.

“However, the labor market remains under pressure, and price levels are still subdued,” the economist said.

The effectiveness of policies in improving domestic demand, employment and people’s livelihoods merits close monitoring, Wang said.

Looking ahead, Wang said achieving China’s 2024 economic growth target of around 5% will depend on engineering sustained recovery in consumer demand.

“That means policy efforts should focus on increasing household disposable income more effectively,” Wang said.

WSJ : OpenAI Adds Search Engine to ChatGPT, Challenging Google

OpenAI Adds Search Engine to ChatGPT, Challenging Google
The latest version of the AI chatbot will allow users to search up-to-date information from across the internet

OpenAI has embedded a search engine into its popular ChatGPT chatbot, entering a space long dominated by Alphabet’s GOOGL -1.92%decrease; red down pointing triangle Google as technology companies compete to use artificial intelligence to improve search results.

The San Francisco-based company on Thursday announced what it calls “ChatGPT search.” The latest version of the AI chatbot will allow users to search up-to-date information from across the internet, such as sports scores, stock prices and weather, powered by real-time third-party search providers and content partners.

The search tool will summarize the information found on websites, including news sites, and let users ask follow-up questions, just as they can currently with ChatGPT.

ChatGPT can automatically search the web based on what the user asks, it said. Users also can manually choose to search by clicking the web search icon. OpenAI said it plans to improve the search function in areas like shopping and travel and add voice capabilities.

Skeptics have raised concerns about the reliability of AI-based results, as the machines don’t always explain their recommended answers. The machines can sometimes hallucinate by making up answers or misattributing information. OpenAI’s new search engine will include links to sources, such as news articles and blog posts, to provide context for the results.

The function will be rolled out gradually over the coming months, starting with some paid users on Thursday. The search function will be available on its website and desktop and mobile applications.

ChatGPT Plus users can install a Google Chrome extension to make ChatGPT the default search engine within the web browser.

OpenAI said it collaborated with news partners such as the Associated Press, Financial Times, Reuters, News Corp, Time and Vox Media.

The new technology positions the AI startup to compete with search engines by other U.S. tech companies. Google this year widely rolled out its own AI search feature that synthesizes information from multiple web sources. Other AI companies are also entering the search battle, including Perplexity, which is backed by Jeff Bezos and founded by a former OpenAI employee. OpenAI’s biggest investor, Microsoft, has also added AI to its search engine, Bing.

News Corp, owner of The Wall Street Journal and Dow Jones Newswires, has a content-licensing partnership with OpenAI.

FT : British aerospace pioneer Reaction Engines collapses into administration

British aerospace pioneer Reaction Engines collapses into administration
Group’s demise is a challenge for several F1 racing teams which use its cooling technology in engines supplied by Mercedes-Benz

British aerospace pioneer Reaction Engines has collapsed into administration after failing to secure new funding, ending ambitious hopes of revolutionising air travel by making hypersonic flight a reality.

PwC, which was already on standby, was appointed as administrator on Thursday. The firm said Reaction, which had been developing a hybrid rocket-jet engine, had been “pursuing opportunities to raise further funds, but unfortunately these attempts were unsuccessful”.

The majority of Reaction’s 208-strong staff — 173 people — have been made redundant. The remaining staff will be kept on to complete a “number of existing orders and support in winding down operations,” according to PwC.

Reaction’s collapse could prove a challenge for several Formula One racing teams which use its innovative cooling technology in their engines supplied by Mercedes-Benz.

A spokesperson for Mercedes F1 said the company was in “active dialogue with the administrators to ensure the necessary hardware supply for the 2025 season”.

Reaction’s technology is part of the cooling system in the engines used by Mercedes F1 and supplied to McLaren, Williams and Aston Martin to help optimise performance.

The company’s demise could also trigger a battle over the ownership of the intellectual property of its cutting-edge technology, which PwC is expected to assess, according to people familiar with the situation.

Sarah O’Toole, joint administrator and partner at PwC, said it was with “great sadness that a pioneering company with a 35-year history of spearheading aerospace innovation has unfortunately been unable to raise the funding required to continue operations”.

Reaction had been locked in talks with shareholders, including the UAE-based Strategic Development Fund, over a £20mn cash injection for several weeks. Some of its strategic backers, which include FTSE 100 groups BAE Systems and Rolls-Royce, had been reluctant to commit to more funding, several people familiar with the talks had confirmed.

Rolls-Royce said on Thursday it was “saddened” that Reaction had gone into administration. BAE said it was “keen to explore potential employment opportunities which may be of interest for those affected”.

Founded in 1989, Reaction’s Sabre technology — short for Synergetic Air Breathing Rocket Engine — was designed to combine the fuel efficiency of a jet engine with the power of a rocket.

Key to Sabre was the company’s pre-cooling technology which dissipates heat and prevents engines from overheating. At hypersonic speeds, the temperature generated inside a conventional gas turbine would start to melt components unless they were cooled in some way.

Under chief executive Mark Thomas, the company had in recent years pivoted to licensing the technology to commercial customers such as Mercedes, as well as US aerospace group Honeywell. Honeywell was not immediately available for comment.

Reaction had already warned investors earlier this year that it needed to raise additional money. The company had previously raised £150mn, including £40mn in January 2023 through a fundraising led by SDF. Key financial investors, including Artemis and Schroders, subsequently wrote down the value of their stakes in August this year.

The company’s collapse raises questions over a UK-led military project to pursue reusable hypersonic air vehicle technologies.

Along with Rolls-Royce, the Royal Air Force and the defence research agency Defence Science and Technology Laboratory, Reaction was part of the consortium behind the project, which had hoped to fly a demonstrator vehicle as early as the middle of this decade.

The government said that it “closely monitors all of its supply chains to ensure the secure and continued delivery of key capabilities”.

FT Lex : Why simulation software is such hot property for Siemens

Why simulation software is such hot property for Siemens
But whichever way you cut it, Altair is an expensive purchase

Being late to a hot investment trend never comes cheap. So it has proved for Siemens. The German conglomerate is shelling out about $10bn for Altair, valuing the US industrial software maker at nearly 70 times this year’s expected ebitda. Throwing money about is rarely a recipe for a successful acquisition. But this deal could stack up for Siemens’ investors if it leads to a bigger rejig.

Altair’s high pricetag reflects its scarcity. It is one of a dwindling number of assets in a rapidly consolidating market. Earlier this year, Synopsis announced the $35bn acquisition of Ansys, while Cadence bought Beta for $1.24bn. That helps explain why Altair traded at 58 times ebitda prior to the potential deal being leaked.

A closer look at Altair’s prospects should mitigate — although not eradicate — valuation concerns.

Industrial software is a growth spot. Making things, whether headphones, watches, cars or fridges, used to be a nuts and bolts affair. As products have become more complex and data more abundant, manufacturers now want to build a ‘digital twin’ first and simulate how it will perform in different circumstances — when the product is hot or is used heavily. This is the service industrial software companies provide.

This deal is one of those rare occasions in which the concept of ‘cross-selling revenue synergies’ should not immediately send investors running for the hills, despite the tongue-twisting jargon. Siemens has a lot of software clients, but it lacked very specific capabilities in mechanical and electromagnetic simulation which Altair has. Conceptually, at least, the conglomerate group should now be able to sell its customers a more complete product.

Siemens is making some heroic assumptions, though. Adding together cost cuts of $150mn and mooted revenue synergies of $500mn (on Altair’s current margin), yields $260mn of extra ebitda, or 1.8 times that forecast for this year. Whichever way you cut it, Altair is an expensive buy.

But Siemens’ investors could find the acquisition useful. Their key problem is that, stripping out the conglomerate’s 75 per cent stake in Siemens Healthineers — the medical equipment maker spun off in 2018 — the group trades at a roughly 30 per cent discount to peers, reckons Nicholas Green at Bernstein.


Adding to core growth areas such as software might help reduce this, especially if acquisitions are financed by selling down other assets. Already, Siemens has flogged Innomotics, its large motors division, for $3.5bn. It has suggested it may sell 5 per cent of Healthineers to manage leverage. If the Altair bet prompts the group to tidy up its corporate structure, investors will be generous in judging its merits.

FT : EssilorLuxottica bets on glasses replacing smartphones as value hits €100bn

EssilorLuxottica bets on glasses replacing smartphones as value hits €100bn
Eyewear giant chief Francesco Milleri says wearable technology developed with Meta will fuel growth

Glasses equipped with artificial intelligence helped EssilorLuxottica achieve the final goal of its late founder Leonardo Del Vecchio last week — a €100bn valuation — capping its transformation from a workshop in the Dolomite mountains to the world’s biggest eyewear manufacturer.

His successor is betting that smart eyewear developed with social media giant Meta will one day replace the smartphone in customers’ pockets, and fuel future growth.

On an earnings call this month, the maker of Ray-Ban and Oakley sunglasses said glasses integrated with tiny cameras and Meta’s AI assistant were one of the strongest drivers of quarterly sales, helping to push up shares and taking it to a market capitalisation of €101.5bn last week.

“The merger between Luxottica and Essilor was the evolution of our initial vision which had optics at its core. Then technology positively disrupted our plans,” chief executive Francesco Milleri told the Financial Times.  

“The next step with our Meta partners is to become leaders in the wearable computing space . . . [creating] glasses we think will one day replace most other technology devices,” he added.

His comments come as EssilorLuxottica last week hit a record valuation, but was also forced to respond after chief strategy officer Leonardo Maria Del Vecchio was placed under investigation by Milanese prosecutors as part of a sprawling probe into the alleged trafficking of illegally acquired private information, alongside dozens of others.

EssilorLuxottica expressed its “full support” to its late founder’s son over the weekend. A spokesperson for Del Vecchio declined to comment on Sunday. The company is not part of the probe.

EssilorLuxottica was created in 2018 through a complex €50bn merger of Italian billionaire Del Vecchio’s eyewear group Luxottica and French lens manufacturer Essilor. Luxottica started out in 1961, crafting parts for frames from Del Vecchio’s small workshop in the Italian village of Agordo.

The combined company has since grown into a global group with an annual revenue of over €25bn last year, making frames for designer houses such as Prada, Coach, Giorgio Armani and Chanel and pushing into wearable technology and healthcare.

Shares dipped slightly this week, leaving it hovering just below a €100bn market capitalisation, but are up by almost 25 per cent over the past 12 months.

EssilorLuxottica’s latest generation of Ray-Ban Meta glasses enable users to livestream what they see directly on to Facebook and Instagram and take pictures and videos that are automatically saved to their phones. In the US, the glasses are integrated with Meta’s AI assistant, giving owners the ability to ask the glasses for more information about what is in front of them. 

“These new technologies will one day replace smartphones, like streaming services replaced music CDs and electric vehicles will substitute combustion engines,” Milleri added.

EssilorLuxottica said this month that its Ray-Ban Meta smart glasses and a brand of photochromic lenses that react to sunlight, had both been “key” drivers of growth in the third quarter. Its smart glasses, which sell for over €300, were popular on the group’s ecommerce channel, and the best sellers in most Ray-Ban stores across Europe, the Middle East and Africa.

The group does not share sales figures for single products, but revenues for its direct-to-consumer segment grew by 3.2 per cent to €3.4bn over the quarter, while total revenue rose by 2.3 per cent year on year to €6.4bn.

EssilorLuxottica and Meta are now planning to deepen their partnership, announcing a new long-term agreement in September to develop “multigenerational smart eyewear products”. Meta is also in discussions with the group over a multibillion-euro investment, with chief Mark Zuckerberg confirming last month that Meta plans to take a “symbolic” 5 per cent stake in EssilorLuxottica. 

Together, Meta and the Franco-Italian group have the potential of “becoming the Samsung of Europe”, Zuckerberg said.


Over the past few years, Meta has spent billions of dollars on entering the wearable technology market, including creating virtual reality headsets.

Zuckerberg first approached Luxottica founder Del Vecchio in 2019 to explore a potential partnership, visiting the late billionaire in Agordo, where the company still has a factory. Milleri said that meeting sparked negotiations about how to develop a transformational product.

Smart glasses, says Milleri, are scalable unlike other wearable devices. “Momentarily cool but essentially extraneous devices previously launched by tech platforms [have] limited appeal,” he says.

“The strength of glasses is that billions of people already wear them and many more will in the future . . . they are part of our everyday lives, whether these are sunglasses or prescription ones.” 

Under Del Vecchio, who died in 2022 aged 87, Luxottica made a first attempt to develop frames with an embedded technology, which ultimately failed to sell due to low demand. “The mistake we made 15 years ago, in the early stages of developing smart eyewear, was to think that people would simply buy the technology,” said Milleri.


Early versions of smart eyewear developed by Luxottica and others, including social media platform Snapchat, came in large and unattractive designs.

“The reality is that consumers always want great-looking accessories and that’s why the iconic brands at the core of our strategy are more important than ever,” Milleri said.

EssilorLuxottica now has eyewear licences for numerous global luxury fashion brands, giving its Meta partnership significant expansion potential, according to Milleri. He said “luxury branded smart eyewear” would eventually become “part of our daily lives” as the technology becomes invisibly embedded into frames.

The technology is promising, but EssilorLuxottica and Meta may come up against stumbling blocks in the form of privacy regulations around the world including in important markets such as China and the EU.

Meanwhile, under Milleri, the eyewear group is also pursuing deals in sectors including medical technology, this year taking an 80 per cent stake in Heidelberg Engineering, a German company specialising in diagnostic and surgical technology for ophthalmology.

It has also built a stake in Nikkon, which specialises in precision optics and photographic equipment, and in 2022 acquired Israeli hearing technology start-up Nuance Hearing to develop glasses fitted with its acoustic beamforming technology.

“We’re pursuing new objectives, investing in eye trackers and health monitoring systems which will help in the prevention of certain diseases,” said Milleri.

The company also acquired US streetwear label Supreme for €1.5bn in July, expanding its portfolio beyond frames and lenses in a bid to target younger consumers.

“We began as eyewear makers but we [ultimately] realised that glasses will be an AI, cloud computing vehicle,” Milleri said.

>>> US After Hours Summary: Some high profile names report earnings -- INTC +8%,

After Hours Summary: Some high profile names report earnings -- INTC +8%, AMZN +5.8%, AAPL -1.8%; others reporting include TEAM +16.7%, TREE +5.2%, CUBE +4.6%, ASUR -19.9%, BJRI -8.3%, FOXF -8.3%

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: TEAM +16.7% (also authorizes new $1.5 bln share repurchase program), CDXC +15.5%, HALO +12.5%, MTZ +9%, INTC +8%, AMZN +5.8%, TREE +5.2%, CUBE +4.6%, DORM +4.1% (also authorizes new $500 mln share repurchase program), SON +2.7%, GDYN +2.4%, CON +2.1%, LOCO +2%, X +1%, LNT +0.9% (also expects to increase dividend in FY25), JNPR +0.8%, SKYW +0.8%, SPNT +0.8%, ARDX +0.2%, SEM +0.2% (also authorizes new $1 bln share repurchase program), ZYME +0.2%, CPT +0.1%, RGA +0.1%

Companies trading higher in after hours in reaction to news: EOSE +9.6% (achieves all four of the second performance milestones), MYO +5.6% (MyoPro to be provided to patients covered by private insurance), ABT +5.4% (cleared of liability in latest preterm formula case, according to Reuters), CDZI +3.6% (enters into LoI with infrastructure fund), KRMD +2.1% (presents data), EE +2% (increases dividend), SUPN +1.8% (announces data in a poster presentation), REGN +1% (files mixed shelf securities offering), CCCC +0.9% (files for stock offering by selling shareholder; also files $400 mln mixed shelf securities offering), VSTM +0.3% (completes rolling NDAs for avutometinib/defactinib), MEC +0.3% (MEC and PTON resolve litigation), ESGR +0.1% (completes loss portfolio transfer with QBE)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ASUR -19.9%, BJRI -8.3%, FOXF -8.3%, RMAX -5.8%, CUBI -5.5%, KWR -2.8%, ALG -2.7% (also authorizes new $50 mln share repurchase program), SM -2.4%, AMCR -2.1% (also to sell its 50% interest in Bericap North America for $122 mln; also raises dividend), EMN -2.1%, AAPL -1.8%, CAR -1.8%, COHU -1.3% (also its Neon platform was selected by storage customer), TNC -1.1% (also increases dividend), EGO -0.9%, UNF -0.8% (also to delay 10-K), AES -0.7%, IR -0.5%, ACCO -0.3%, CTRA -0.1%, LMAT -0.1%, ONTO -0.1% (also acquires Lumina Instruments)

Companies trading lower in after hours in reaction to news: ARBE -19.8% (stock offering), ASPI -8.4% (stock offering), PTON -1.6% (MEC and PTON resolve litigation), CWST -0.9% (files mixed shelf securities offering), COF -0.5% (CFPB is considering an enforcement action), BMY -0.3% (presents data from the EMERGENT program), WCC -0.1% (to acquire Ascent), JPM -0.1% (to pay $151 mln to resolve SEC enforcement actions)

>>> Amazon conference call update: AWS's AI business continues to grow at a trip

Amazon conference call update: AWS's AI business continues to grow at a triple digit year over year percentage (186.19 -6.54)
  • Continuing to lower prices and ship more quickly; unit growth continues to be strong and outpaced revenue growth in the last few months.
  • In the process of significantly changing how to inbound items into fulfillment network and subsequently spread them to regional fulfillment nodes; already improved ability to spread inventory across fulfillment centers by 25% year over year.
    • Continue to roll out same day delivery facilities; same day delivery an increase of more than 25% year over year
    • Continue to innovate in robotics to speed delivery, lower cost to serve and further improve safety in fulfillment network.
  • Just entering first broadcast season for Prime Video advertising; generating a lot of advertising revenue today, there remains considerable upside.
  • In the last 18 months, AWS has released nearly twice as many machine learning and AI features as the other leading cloud providers combined.
  • AWS's AI business is a multi-billion dollar revenue run rate business that continues to grow at a triple digit year over year percentage and is growing more than three times faster at this stage of its evolution.
  • Second version of AWS Trainium is starting to ramp up. Will be very compelling for customers on price performance; seeing significant interest in these chips.
  • Able to deliver to 95% of first time Amazon Pharmacy customers in the US within two business days, and to 20% of US Prime members within 24 hours. Next year, plan to launch operations in 20 new cities, so nearly half the US will have the ability to have their medications delivered to their door within hours.

>>> Apple earnings conference call update: Q1 (Dec) revenue to grow low to mid s

Apple earnings conference call update: Q1 (Dec) revenue to grow low to mid single digits (Q1 FactSet consensus calls for +6.8% growth) (225.91 -4.19)
  • Q1 (Dec) revenue to grow low to mid single digits. Services revenue growth double digits. 46-47% gross margin. Q1 (Dec) FactSet consensus calls for +6.8% growth.
  • iPhone grew in every geographical segment, marking a new September quarterly record.
  • Services set all time record.
  • Operating cash flow had a September quarter record.
  • Paid subscriptions continue to grow.