Good morning. Nvidia clocked a bit of a volatile day yesterday as Wall Street digested its third-quarter earnings, finally ending the trading session up by about 1%.

The stock is up close to 200% for the year, a surge that has made Nvidia, valued at more than $3.6 trillion, the most valuable company in the world by market cap. This time two years ago, Nvidia’s market cap was only around $350 billion; this time two years ago, Apple was valued at $2.3 trillion …

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

In today’s newsletter:

AI for Good: Wildfire detection

Earlier this year, Google.org collaborated with the Environmental Defense Fund, Muon Space and the Moore Foundation to launch the Earth Fire Alliance, a nonprofit organization that will soon oversee a constellation of AI-powered, wildfire-detecting satellites. 

The details: The satellites that will make up this constellation have been equipped with custom-built infrared sensors that are better at detecting small-scale fires. 

Why it matters: Early detection of wildfires is vitally important; if local firefighters can be alerted in real-time to the exact location of a small — and therefore manageable — forest fire, they can prevent it from spreading. 

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World leaders endorse digital green action plan

More than 1,000 governments, corporations and other stakeholders last week endorsed a Declaration on Green Digital Action that was unveiled during the United Nations’ annual CoP-29 climate conference. 

The details: The Declaration claims that digital technologies and artificial intelligence play an important role in addressing a changing climate. 

The endorsement also comes amid mounting evidence that the enormous energy requirements necessitated by Big Tech’s recent push into generative AI are increasing electricity demand and carbon emissions in the data center, something that threatens grid destabilization could worsen climate change. 

This has become so prominent that Big Tech giants have acknowledged that their investments in AI have pushed them further away from achieving their carbon neutrality goals; several, including Microsoft, Amazon and Google, are instead pursuing nuclear energy to feed the enormous electrical appetite of generative AI. 

But as Stanford professor Mark Jacobson has said: “Every dollar spent on nuclear is one less dollar spent on clean renewable energy and one more dollar spent on making the world a comparatively dirtier and more dangerous place, because nuclear power and weapons go hand in hand.” 

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Poll: Voters want safety to accompany AI infrastructure push

President Joe Biden’s recent national security memorandum on AI, which called for an effort to “streamline” the approval process for the construction of AI-enabling infrastructure, remains at odds with public impressions and preferences regarding artificial intelligence. 

The details: A new poll conducted by the Artificial Intelligence Policy Institute (AIPI) found that American voters are skeptical of expedited infrastructure development if it does not come paired with mandatory safety requirements. 

“The data makes it clear that there's little to no appetite among the general public for a 'move fast and break things' approach to AI development,” AIPI executive director Daniel Colson said. “The public isn't interested in trading safety for speed, but they're open to a balanced approach that advances both objectives together."

Business spending on AI jumps 500% to $13.8 billion … on $240 billion in capex

Menlo Ventures’ annual State of Generative AI in the Enterprise report — the result of surveys with more than 600 enterprise IT decision-makers — found that, this year, generative AI has become “a mission-critical imperative for the enterprise.”

The details: The main finding of the report has to do with corporate spending on generative AI, which grew dramatically from $2.3 billion in 2023 to $13.8 billion in 2024, a 500% — or 6x — increase. 

These companies have all suggested that this trend will continue through the rest of this year, and that it is expected to grow next year. All told, these four companies combined are on track to spend roughly $240 billion in capex by the end of this year, according to Forbes. This, again, does not include capital expenditures from Tesla, xAI, Anthropic, Apple, IBM, Intel or any number of other prominent tech names that don’t quite count as megacap firms. 

xAI’s expenditures are in the billions for GPUs alone — though the exact number is unknown, the firm recently set up a cluster of 100,000 H100 Nvidia GPUs, and plans to double that number soon. A single GPU can cost around $30,000, meaning that this cluster — not counting the cost of electricity, manpower, maintenance, etc, — is a multi-billion-dollar cluster. 

The report additionally found that, not only are corporations committing themselves to an integration with generative AI, adoption — rather than just experimentation —  is already occurring. This is in line with what Microsoft recently told me regarding the rapid adoption of its Copilot tool. 

The top five use cases here involve code generation, support chatbots, enterprise search and retrieval, data extraction and summarization and meeting summarization. Enterprises aren’t too concerned about the cost; what they are concerned about is a clear opportunity for return on their investment, according to the report, with a third of those surveyed saying easily quantifiable ROI is the main selection criteria for a generative AI tool.

With adoption seemingly increasing at a rapid rate — even as a significant number of AI pilots falter and fail — OpenAI is steadily losing market share to its competitors, according to the report.

“What we’re seeing goes beyond implementation — it’s disruption,” Derek Xiao, an investor at Menlo Ventures, said in a statement. “In 2023, we reported that incumbents were keeping startups at bay, but in 2024, we saw Chegg lose 85% of its market cap to ChatGPT and StackOverflow lose half its traffic to GitHub Copilot. These aren’t isolated incidents — they’re early indicators that established leaders are vulnerable.”

I think we are close to reaching a critical point here. Obviously, the current environment of AI capex is not sustainable forever — that $13.8 billion number represents just 5% of this year’s planned capital expenditures. 

Of course, the companies we’re talking about have plenty of cash on hand to play around with, but at a certain point, the idea would be that the revenue is higher than the spend. Obviously, there are other revenue streams not being included here, but cracking the enterprise is the big one, and I don’t know that enterprise spending on AI will increase by another 6x next year. 

So, this is the critical point. We are a few years into the generative AI wave, now — next year, on even more capex, if enterprise spending doesn’t increase meaningfully, investors’ patience for all this capex — already wearing thing — might evaporate completely. 

And that would be interesting. 

🤔 Your thought process:

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💭 A poll before you go

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

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Here’s your view on GPT-4o’s new update:

A third of you can barely notice the update; slightly less than a third of you said it was a noticeable improvement.

22% don’t use ChatGPT and 10% wish the update was related to o1.