Good morning. Scale AI very quietly trimmed its remote headcount by about 1,000 contractors.

The Wall Street Journal also reported that OpenAI is in talks to raise more money, now at a valuation in excess of $100 billion.

And yes, Nvidia reported earnings last night. And the stock is in the red.

— Ian Krietzberg, Editor-in-Chief, The Deep View

In today’s newsletter:

AI for Good: (Tracking) Twisters 

Scientists don’t yet know how, why (and when) tornadoes form, something that makes them extraordinarily difficult to forecast — in examining identical storm systems, “one will produce a tornado and one won't. We don't fully understand it,” according to James Kurdzo, a principal investigator on MIT’s TorNet project. 

Artificial intelligence — specifically deep learning — might lay the foundation for an answer. 

The details: Earlier this year, MIT researchers open-sourced a dataset called TorNet, in addition to several AI models trained on that dataset. (TorNet contains hundreds of thousands of radar images of storm systems and tornadoes). 

Why it matters: Kurdzo hopes the advancement will help forecasters make better predictions, something that could return trust in tornado warnings and increase evacuation time. He also hopes the system can help unravel the science behind why tornadoes form. 

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Advocates accuse Elon Musk’s xAI of adding to Memphis’ smog problems

The Southern Environmental Law Center (SELC), in a letter sent this week to the EPA and local health department, accused Elon Musk’s Memphis-based xAI data center of adding to Memphis’ air pollution problems by operating gas-powered turbines without a permit. 

The details: The letter says that xAI “has installed at least 18 gas combustion turbines over the last several months (with more potentially on the way).”

The context: xAI — which has achieved a $24 billion valuation — opened the center in June and started training a new model on 100,000 Nvidia GPUs there in July. 

The advocates added at the time that “the environmental impacts of providing power to the xAI facility, including air pollution, water and environmental justice impacts, have not yet been studied as required by the National Environmental Policy Act.”

Further, the letter said that it would require $760,000 for the local power company, MLGW, to increase power to service xAI, plus $24 million to build a new substation. According to the letter, the power company plans to allow xAI a “marginal allowance” to recoup those costs, meaning local ratepayers would be subsidizing xAI’s power needs. 

MLGW told CNBC that it started supplying xAI with 50 MW of power at the beginning of August. 

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California passes AI protection bill 

A bill that would protect performers from unauthorized AI replicas this week passed California’s state Senate. It will soon head toward the governor’s desk. 

The details: The bill, AB 2602, requires employers to explicitly bargain for the rights to use a performer’s AI replica in the initial contractual agreement. The employer’s intentions with the replica must be specifically outlined –  and agreed to — or else the contract is unenforceable. 

The context: 

At the same time, the infamous SB 1047 passed the state Assembly and now moves back to the Senate before making its way to the governor’s desk.

Nvidia stock takes a dive despite earnings beat

Chipmaker Nvidia reported earnings Wednesday night. Wedbush analyst Dan Ives called it the “most important earnings report” of the year. In the leadup to the report, the stock closed the day down about 2%, then went on to fall another 7% in after-hours trading. 

Here’s how Nvidia performed this quarter: Nvidia posted revenue of $30.0 billion, above expectations of $28.7 billion (that’s an increase of 122% from a year ago). The semiconductor reported adjusted earnings of 68 cents per share, above expectations of 64 cents. 

This marks Nvidia’s narrowest revenue beat in six quarters, something that could well have contributed to the market’s immediate negative reaction. 

“Hopper demand remains strong, and the anticipation for Blackwell is incredible,” CEO Jensen Huang said in a statement. 

In response to analyst questions about whether the Big Tech companies buying Nvidia chips will see a return on their enormous capital expenditures, Huang said: “It’s the best ROI on a computing infrastructure investment you can make today.”

What the analysts are saying: Global X’s ETFs research analyst Ido Caspi said that, despite the deceleration in revenue growth, “122% growth at Nvidia’s scale is still significant and speaks to a robust AI investment environment. Big Tech's capital expenditure remains exceptionally high given how early we are in the generative AI investment cycle.”

Ives said that the negative stock reaction is “just noise” given Nvidia’s numbers. The AI Revolution, he said, has begun. 

The broader impact: Even with the dip, Nvidia is still among the three largest companies in the world. The impact of this stock is therefore pretty broadly felt, both visibly in the markets and less tangibly as a bellwether for the reality of the AI boom. 

Earlier this week, we talked about Nvidia as a beacon for the AI investment. What this beacon is indicating is simple: expectations are way too high, and patience is wearing thin. 

That hasn’t happened, but it seems to be on investors’ minds. 

Munster nailed it — the Nvidia debate absolutely depends on how transformative you think AI will be. I’ll answer his question with a skeptical one of my own: what happens to the pick-and-shovel companies when everyone else realizes there is no gold? 

🤔 Your thought process:

Selected Image 2 (Left):

Selected Image 1 (Right):

“I don't believe you.”

💭 A poll before you go

Thanks for reading today’s edition of The Deep View!

We’ll see you in the next one.

Here’s your view on OpenAI’s Strawberry:

More than a third of you said it sounds powerful now, but in reality, it won’t be. 20% said it’s straight hype and 15% said it’s another path on the road to AGI. Another 15% said, hype or not, OpenAI shouldn’t be allowed to release it.

Sounds powerful now, but in reality, it won’t be: