Welcome back to This Week in Stratechery!
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On that note, here were a few of our favorites this week.
- The Capital Constraint. Everyone knows we are short of AI compute. Everyone knows that we may very soon be short on power. What happens, however, if we are short on capital? If AI is as valuable as it seems, then it should pay for itself, but that hasn’t happened yet. This week Nvidia announced a new funding mechanism to tap long-duration capital; this sort of financial engineering, along with Google leading the way in tapping equity, may build the bridge to sustainable AI revenue. It also expands the blast radius of a bubble in the service of Nvidia’s threatened margins. I covered this in Nvidia’s Risky Business, as well as this week’s episode of Sharp Tech. — Ben Thompson
- What to Do About AI Writing? Anyone who’s been online the past few years has found themselves wondering “was written by a human or AI?” and some version of that question will probably persist in perpetuity for all of us. To that end, the EU has mandated that providers of AI systems mark all their outputs, including text, as AI-generated. Wednesday’s Update explored Anthropic’s response to that European regulation and why Ben thinks all of this is a terrible idea. We talked more about the issue on Friday’s episode of Sharp Tech, including the history of idea propagation across centuries, and the likelihood that my son will likely feel differently about AI-generated output than I do. — Andrew Sharp
- A Tale of Two Cites. In an article that was written 100% by a human (though proofread by ChatGPT!), this week’s on Sharp Text explored why caustic rhetoric from Mayor Zohran Mamdani is probably not enough to convince finance execs to leave New York City (even if they live in Connecticut), while Hollywood has unfortunately seen much of its filmmaking industry outsourced to neighboring states and foreign countries (as David Ellison threatens to relocate Paramount’s operations). In brief: New York is a case study in the power of network effects, while Hollywood offers a lesson in the conditions that allow those effects to be broken (and Mamdani exemplifies an irony of the DSA movement, generally). — AS
Stratechery Articles and Updates
- Apple Earnings, More on Amazon’s Earnings — Apple’s earnings (and stock) are limited not by memory but rather chip shortages; then, more on Amazon’s earnings and Andy Jassy’s market analysis.
- Nvidia’s Risky Business — Nvidia is finding new ways for its customers to raise money, and it’s expanding the risk of the AI buildout significantly.
- Anthropic’s Watermarking, How It (Probably) Works, Worse Than It Seems — Anthropic is adding watermarking in response to the E.U.’s AI law. It’s a terrible idea, first and foremost for philosophical reasons.
Sharp Text by Andrew Sharp
- New York and the Power of the Network — New York City exemplifies the power of network effects, while modern Hollywood is a reminder that they do have limits.
Dithering with Ben Thompson and Daring Fireball’s John Gruber
Asianometry with Jon Yu
Greatest of All Talk
Sharp Tech with Andrew Sharp and Ben Thompson
This week’s Sharp Tech video is on why everyone but OpenAI and Anthropic wants open weight models.