November 7, 2024

Spending spree

Hi there, 

Here is this week's Hot or Not.

Hot: Data center buildout

In Q2’24, big tech players Amazon, Microsoft, Google, and Meta spent a combined $52.8B on capex. 

That’s up nearly 60% year-over-year. 

AI is pushing the pace. 

Here are comments from Amazon CEO Andy Jassy on the company’s earnings call last week: 

“The faster we grow demand, the faster we have to invest capital in data centers and networking gear and hardware.”

Its capex spend in Q3 ($22.6B) represented 82% of AWS’ entire revenue ($27.5B). 

This spending is creating opportunities across the AI data center value chain, from energy providers (like nuclear) to support infrastructure (like cooling). 

So we mapped out the 12 high-momentum tech markets in the data center value chain to bet on for growth. 

CB Insights customers can get the data & analysis here.

Hot: AI valuation multiples

AI search startup Perplexity is set to raise $500M at a $9B valuation — up from $3B in June. 

With a reported $50M in ARR, that would be a 180x revenue multiple. 

That’s not even the highest recent multiple we’ve seen in the genAI landscape: customer service AI agent startup Sierra raised at a $4.5B valuation on $20M in ARR just last month. 

These sky-high multiples of course are a reflection of these startups’ growth potential: Perplexity’s revenue is up over 15x from ~$3M last October. 

Meanwhile, the revenue leader OpenAI is projecting it will hit $11.6B in revenue next year, up from ~$3.4B. 

That would make its latest $157B valuation look cheap. 

Hot: AI agents & copilots in finserv

Where is generative AI taking root in financial services?

Many finserv-focused genAI startups are building agents and copilots to improve productivity across:

• Sales
• Employee support
• Coding
• And other functions/tasks

Of the markets highlighted above, coding AI agents & copilots — solutions helping software developers write and fix code — has drawn the most funding this year ($1.4B across 22 deals).

Want to dig into the activity in each market? Check out our generative AI in financial services market map.

Not: Apple market cap vs. Nvidia

Earlier this week, Nvidia once again passed Apple to become the most valuable company in the world. 

As of Tuesday, the chipmaker’s stock was up 850%+ from late 2022, highlighting its leading role in the AI rush.

For more on how the chipmaker plans to usher in the next wave of AI, check out this strategy map.

While Apple slipped, it still sits in the No. 2 spot and has grand AI plans of its own.

In June, the big tech company introduced Apple Intelligence — a suite of AI tools that CEO Tim Cook recently stated mark a “new chapter” for Apple products.

Want to learn more about what Apple is doing to make the most of the AI moment? Find out in our Apple AI strategy map.

The +1

Sketchy. No crayon was left behind.

I love you.

Anand

@asanwal 

Co-Founder & Exec Chair

P.S. We recently announced this year’s Fintech 100 winners — ya know, the most promising fintech startups in the world. Learn more about this year’s cohort in this briefing.

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