If $META dominates the personal AI agent market, it becomes the ultimate stack for businesses trying to reach consumers. Not only does $META then own top-of-funnel discovery surfaces with FB, IG, and WA, but it also adds a high-intent commerce gatekeeper (the agent), which means it owns the full stack and can do full attribution.
When valuing the company, you must add the value achieved by owning and offering both discovery and high-intent, bottom-of-funnel marketing surfaces.
In essence, this is the holy grail of social and commerce.
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I published an article on what it means for every part of the AI stack if frontier labs (Anthropic, OpenAI) start to slow down their development.
- What is scaring the AI labs & RSI
- Implications on hyperscalers ($AMZN, $MSFT, $GOOGL), semis & app layer
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Anthropic when it comes to pacing of AI development wants AI labs to allocate more compute to safety.
They also shared that they are spending around 6% of their AI R&D compute on safety.
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AI systems are getting more powerful, and they're increasingly being used to build the next version of themselves. We want to illuminate that progress for the public.
Today, we're sharing three measurements that help track AI development:
1. How much AI R&D is done by AI.
2. How well AI agents are overseen.
3. How compute is allocated.
We provide a snapshot of these metrics from inside Anthropic. Any frontier developer could publish the same measures, and third parties could verify them.
As the world considers pacing the frontier, we should do everything possible to minimize the gap between what frontier labs know and what the public knows. This means better measuring the development of AI, publishing our findings, and giving society an opportunity to decide how to use this information.
Read the full post and methodology:
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Investors still don’t fully appreciate the product market fit that $META found with Muse and the TAM of this new business.
The only rare time that an app reached a 4.9 rating with +10k ratings that I can remember is ChatGPT a few weeks after launch.
Users really love Muse.
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One thing I have been thinking about a lot lately and is not priced in the market is that we are just around the corner of recursive self-improving AI.
In this transition period from human researchers building new models to AI models building new models there might be some disruptions to the way models are scaled and to the architecture and with it infrastructure that is required to scale new models as AI becomes the “designer” a not humans. AI can think outside the box that so far human AI researchers have though in terms of scaling laws and transformer architecture.
This might shift the winner and loser landscape of infrastructure companies significantly.
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Zuck must be very confident in $META's next model's performance, as in many cases, $META would benefit from all the labs slowing the pace of development, yet here he is saying, "we are good."
No competitor wants to face the never-happy Terminator Zuck.
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Last month I wrote about how we can build a positive and safe future for everyone:
Every lab has the responsibility and incentive to move at the pace required to train its models safely, and the ability to take its own actions to ensure that happens.
The reality is:
- People won't want to use agents that are misaligned with them and that don't do what they ask, so labs have a strong natural incentive to make their models more aligned.
There is a lot of debate about slowing progress on capabilities until alignment catches up. My view is that trust and alignment are quickly becoming the most important capabilities that will differentiate agents and models. Any lab that doesn't focus on alignment will fall behind.
- Labs face significant liability if their models cause harm, so they have a strong incentive to prevent this as well.
Meta delayed shipping Muse for several months to focus on safety and security. We didn't call for everyone else to do this before we would. We just did it as part of our day-to-day work because it was clearly the right thing for people and for us. I'm proud of the security foundations we've built.
- Engaging independent evaluators and advisors is industry best practice. MSL already does this today in several areas because it helps produce better work. Other labs can just do this too. In general, it would be helpful for there to be a larger and more diverse ecosystem of evaluators.
- Committing the significant majority of compute towards serving people rather than racing towards recursive self-improvement is one of the best ways to ensure we develop this technology safely. Meta has made this commitment and other labs can do this as well.
I believe the key to building a positive future for everyone is maintaining the right balance of power. This is within our power to do.
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The success of $META's Muse is showing you that the future of personal AI agents is in cloud VMs. $AMZN's AWS will benefit a lot from this trend, since it has the biggest capacity to spin up VMs.
Cloud revenue is about to surge not just because of AI workloads, but because agents are taking over both the enterprise and consumer markets and need traditional cloud infrastructure for it.
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Muse is $META’s ChatGPT moment.
Muse is already getting more daily US downloads than Threads, WhatsApp and Facebook, and it's only 3,000 behind Instagram
Biggest consumer AI launch since ChatGPT. A new tier 1 consumer app is born
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There are two types of “AI” companies. One bracket are the companies that benefit most in the long-run that have healthy balance sheets and good business models, but have to keep short-term spend high not to be “out of position” in the long run.
Then there are the set of companies which are highly levered with weak balance sheets but are benefiting from different short-term bottlenecks, because short-term spend is high and the pace of AI is extremly fast.
If we slow down the pace of AI development even if this happens only in the two big labs the capital will flow to the first group. This is what we see today.
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On Wednesday, I am hosting a live discussion with the Chief Strategy Officer of Cerebras ($CBRS), a Former Anthropic employee, and an SVP at Alphasense.
We will cover token consumption and usage trends, clients choosing OPEN vs. CLOSED models (especially in light of the recent news about the slowing pace), the importance of fast, low-latency tokens, how to optimize token spend, future business model changes around token charging, and more.
This will be a super insightful discussion; as you know, I always go into the weeds. Even if you can't make it, make sure to sign up to get the recording after the discussion.
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Haven’t seen as much positive reviews regarding an AI product as I have around $META Muse. (Early ChatGPT vibes)
Once $META start actively promoting Muse inside its networks I expect Muse to be the first AI assistant to reach 1B users.
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We are probably looking at one of the most craziest next 12-24 months humanity has seen as it seems the AI labs already see/know that.
As an investor one too should expect crazy things from the market in this period (plan for tail risk), this is just an extraordinary time.
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I agree that voice is the future key navigation for personal AI agents, but again $META already knows this that is why they developed Muse Voice Transcribe - a real-time audio perception model which ranks 1st on Artificial Analysis streaming speech-to-text.
In some sense they are even two steps ahead with $META smartglasses as the ultimate hardware for personal assistants to connect to the physical world. The user is not there yet but might come sooner than we think.
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Everyone is evaluating the agents without using the lens of voice communication. The reason it's easier to use Instinct is because it works via voice. Talking is cognitively easy vs opening your phone or app and being forced into some nonsense by some random shitty app developers.
"Talking lets you dump intent while you're walking, driving, cooking, looking at something, or thinking through a problem."
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I have followed $META in depth for years, so I say this with all the seriousness that comes with it, but this is $META ‘s most important product/platform since WA and IG.
This finally transitions the $META social media ecosystem to a social commerce ecosystem with a vastly bigger TAM.
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My article on $META's AI infrastructure footprint & why it is undervalued.
- How big it is
- How much revenue & profit $META could generate if they start to sell outside compute
- Why $META is in a unique position where it has leverage right now
- The time to act for $META is weeks, not months.
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If Anthropic comes out at a $2.5T market cap, $AMZN's Anthropic stake will be 20% of its total market cap.
Extracting out that stake, $AMZN will be up only 10% in the last 5 years, despite AWS's ARR in 2021 being $64B while it is $169B today (+160%).
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The AI consumer race will be much different from the enterprise one.
For $META or $GOOGL to win the AI consumer race, they don't need to have the best model. It's all about distribution and cost-effective scaling/serving.
Here is an AI-native company with over 10M users telling you that in many use cases, the users simply can't tell the difference between frontier models and models that are 50x cheaper.
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We’re constantly running A/B tests in production with different AI models.
Increasingly, we’re finding that across some of our core use cases, users simply can’t tell the difference between frontier models and models that are 50× cheaper.
And this is happening more and more often.
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$META is in a perfect negotiating position and must leverage it.
On one hand, there is a compute shortage, and $META can now sell some of its enormous compute fleet to outside customers that it doesn't need right now, since it doesn't have that much inference demand. Given today's compute prices, they could earn +$10-$30B if they sell under 0.5GW of compute.
On the other end, $META is also in a great position to negotiate with $NVDA, as they are one of the biggest clients of $NVDA, and with $NVDA giving financial incentives and backstops to their other buyers (like Neoclouds, etc.) and $META having the possibility of $GOOGL TPUs, $AMZN Tranium, $AMD, they can leverage that for either better prices from $NVDA or for $NVDA to take on a piece of the risk for continued data center buildout.
Can't imagine Zuck not reading the room and not leveraging this unique position soon.
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$NVDA guides gross margin between 73.5% - 74.5%, versus estimates at 75%.
$NVDA has been extremely aggressive lately, both in helping/saving the Neoclouds and in AI model development.
They report earnings in a few days; it will be interesting to see if there are any cracks in the gross margin that are driving these aggressive moves.
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The limits that $META had to impose as part of the settlement will have a very limited effect on their business (engagement), as:
- Users under 18 are not a big cohort
- $META's direct messaging features are excluded from the limits
- Parent approvals can remove the restrictions
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