🎂 Buffett's birthday, but OpenAI's gift

What’s going on here?

OpenAI has been chatting up investors to snag some more billions, eyeing a valuation past the $100 billion mark.

What does this mean?

Venture capital firm Thrive Capital is reportedly leading the latest funding round with a planned cash injection of around $1 billion. And Microsoft is looking to get in on the action too. Although the details are yet to be hashed out, the multi-billion-dollar round is anticipated to push OpenAI’s valuation up from $86 billion to over $100 billion. And it’d be the biggest fund injection the company’s seen since Microsoft’s last investment of $10 billion in January 2023.

Why should I care?

For markets: The race is on.

To fuel its grand ambition of creating machines that can outsmart us at most jobs, OpenAI needs to rake in some serious cash. Remember, this is tech that guzzles data, fired up by supercomputers with really hefty chips – and all of that costs money. Case in point: OpenAI dropped over $100 million on GPT-4, its most powerful model so far, and the next one looks like it’ll be even pricier. So as costs mount, investors have to ponder whether all this cash being pumped into AI will reap the rewards. And that’s not the only pressure OpenAI’s feeling: it’s got competition, with everyone from Anthropic to Google and Elon Musk’s xAI nipping at its heels.

The bigger picture: The big leagues.

Tech companies can reach sky-high valuations, but they’re not the only ones. On Wednesday, Warren Buffett’s Berkshire Hathaway broke into the $1 trillion club, making it the first publicly traded US company outside of the tech world to do so. Sure, lower interest rates might nibble away at the returns on Berkshire’s mountain of cash. But unlike some flashy tech names, this old-school powerhouse has cash – and solid profit – to justify its trillion-dollar status.

What’s going on here?

After spending months funding a relationship with India’s stock market, foreign institutional investors seem to have a case of the jitters.

What does this mean?

India’s economy is picking up fast: it’s forecast by the International Monetary Fund to grow 7% this year alone. No wonder, then, that global investors have pushed the country’s stocks up 40% in the past year. But all that attention has left them looking expensive. The MSCI India index’s forward price-to-earnings ratio – a key valuation metric – is currently 24, roughly 25% above its ten-year average. What’s more, the valuation gap between the index and its Asian counterparts is at a record high. And that seems to have spooked foreign investors: Bloomberg revealed this week that global institutional investors took $1 billion more out of India’s stock market than they put in this August.

Why should I care?

Zooming in: Never skip history class.

At least domestic investors seem eager to make up the gap. The younger generation of investors in India has been putting more cash into stocks, rather than traditional stores of wealth like gold or real estate. In fact, adjusting for withdrawals, Indian retail investors have poured $70 billion into the country’s stocks since 2022. But it might not just be that this generation’s risk-tolerant: some experts doubt that younger investors fully understand the repercussions of putting so much of their money on the line. They’ve never seen a market crash first hand, after all.

The bigger picture: China’s handing India an opportunity.

Trade barriers between the US and China are mounting faster than you can say, “tariff”. That’s encouraged international companies to move supply chains from China to other developing nations, like – you guessed it – India. And as businesses set up shop, the country should see more investment and jobs as a result – a surefire way to keep the economy moving forward.