Finimize - 🤖 AI is winning

What’s going on here?

Perplexity, an AI-driven search engine startup that’s looking to challenge Google, is in talks to raise up to $1 billion.

What does this mean?

Perplexity has some heavy hitters in its corner, with backing from AI chipmaker Nvidia and Amazon founder Jeff Bezos. And that’s adding to the AI startup’s allure: the latest funding round would value the firm at a whopping $8 billion – more than double where it sat just a few months ago during its previous run. All this money-raising comes as investors continue to fall head over heels for AI – as evidenced by OpenAI’s rise to a staggering $150 billion valuation. Mind you, the steepness of these climbs may hint at a potential AI valuation bubble, but Perplexity's taking that in stride. Its own aggressive growth – including a leap in revenue, from $5 million in January to $35 million in August – suggests, at least, that it’s got reason to rocket. Search queries are also on the rise: Perplexity reported 250 million search queries in July – about half what it saw in all of 2023.

Why should I care?

Zooming out: All aboard the hype train.

It won’t be news to anyone that folk are excited about AI. And that helped Nvidia hit another record high on Monday. But it’s not just tech companies enjoying the good times: demand for power-hungry data centers has pushed shares of nuclear-energy firms higher recently. That’s because a handful of mega-cap tech companies have announced agreements to source carbon-free energy – potentially from small modular reactors.

The bigger picture: Smiles, hugs, pats on the back.

Everyone wants a piece of a good thing: and the AI revolution is already beginning to be felt across industries. Right now, the gains are biggest among this megatrend’s “enablers” – the firms building the infrastructure and components needed to get data centers up and operating. Next, they’ll give a boost to a wide swath of day-to-day AI “adopters” – improving their productivity, efficiency, and profit margins.

What’s going on here?

The People's Bank of China (PBOC) snipped the one-year loan prime rate a tad to 3.1% and the five-year rate to 3.6% on Monday.

What does this mean?

China's central bank is chipping away at borrowing costs, as it attempts to kick growth into a higher gear after a period of weak demand and other pesky economic challenges. Monday's move was expected after the PBOC hinted about rate cuts last week. And there are other rate reductions lined up for the near future too, including trimming the reserve requirement ratio (RRR) – the amount of cash that banks are mandated to have on hand. But analysts argue it won’t be enough: without real government spending support, they say, the central bank’s actions will struggle to raise the economic roof. So, they’re holding out for details about what steps the government might take when China’s top legislature convenes later this month. Fingers are firmly crossed that lawmakers will okay a stimulus plan that gets consumers spending and makes the economy’s glass half-full again.

Why should I care?

Zooming in: Cheap and cheerful.

Chinese stocks are currently dirt cheap, and that’s attracted huge amounts of money from investors over the past month. But a big government spending plan could reel in even more. And that might deliver a boost to companies and commodities around the world that rely on Chinese demand.

For markets: Getting back on the march.

Remember, China is still the world’s second-biggest economy – despite the rocky road it’s been walking for the past few years. So if China’s attempt to revive its economy goes according to plan, that may spell good news for economies everywhere. The sigh of relief might be loudest in Germany: it’s been wrestling with a recession, brought in part by weakness in China, one of its most important trading partners.