I’m running out of expletives. It’s a sort of “FOMO” thing which rules out obsessing on Labour’s implosion or the Epstein “hoax” which mysteriously keeps removing only British citizens from high profile roles. No, the headlines driving my heightened state of anxiety are derived from a familiar theme. However, it’s a theme which is now hitting warp speed. We have previously written that the best pulse-take of the monster AI trend was tracking the “picks and shovels” of AI/cloud infrastructure rather than the “gems” of digital intelligent progression. Well, this week is turning into a “biggie” for the AI infrastructure theme. I’d highlight three key developments and a few other snippets. So, here goes….
The creation of start-up billion dollar ‘unicorns’ has hardly any scarcity value these days. Maybe, we should think in trillions. Step forward almost 50-years old Oracle. Who knew Larry Ellison’s database software business would rack up a trillion dollar enterprise value at the beginning of this week? Probably nobody. Even the Wall Street analysts paid to follow every line of the Oracle business and financial model were truly shocked by the big reveal in Oracle’s quarterly update. In fact, earnings results were slightly shy of expectations. But, the share price proceeded to rocket 40%. Why? The future contract work backlog in its cloud(AI) infrastructure business grew 359% to $455 billion. I mentioned “warp speed” earlier so here’s what caught the eye. Oracle’s cloud revenues from Amazon, Google and Microsoft grew by 1,500% but the entire division this year is annualising revenues of circa $10 billion. That number will be $144 billion by 2030. Welcome to trickle-down AI economics. Oracle was barely mentioned in AI giddiness a year ago, now its owner is the richest man in the world. Oracle is not the only AI ‘unknown’ making waves.
Anyone heard of Nebius? No, me neither until this week but I do remember its former Russian search/e-commerce platform, Yandex. Anyway, Russian sanctions forced a sale of the Russian assets leaving Nebius as an Amsterdam-listed company specializing in cloud computing (GPU) infrastructure. This week Microsoft signed an agreement worth up to $19.4 billion for Nebius in exchange for 5 years’ access to its GPU datacentre infrastructure in Vineland, New Jersey. Nebius’ market value before that news was less than $15 billion. Not surprisingly, the share price has roared 50% higher and the company is now seeking to raise $3 billion in fresh funds to accelerate its growth plans. This was not the only Dutch tech/AI zinger story this week…..
Eindhoven-based ASML is the world’s dominant player in critical lithography technology used in chip manufacturing equipment. A single machine can contain up to 100,000 parts and cost $300-400 million. Clearly, semiconductor chips and AI are thematically closely connected. But investing in an AI start-up caught ASML analysts on the hop. ASML has just invested $1.5 billion in French AI player, Mistral, for a circa 11% stake valuing Mistral at close to $14 billion. Remember, Mistral raised $385m in late 2023 with a $2 billion valuation and early investor support from BNP Paribas, AndreessenHorowitz, Lightspeed Ventures and telecoms entrepreneur, Xavier Niel. Less than 2 years later, the Mistral valuation is racing towards a 7-8x return for those early investors. Apart from being an example of multi-layer AI investment activity, the deal is being hailed as a boost to Europe’s AI and semiconductor chip sovereignty. And maybe I’m not the only one feeling a bit FOMO….
It seems Ireland’s Taoiseach, Micheál Martin, has been thinking ‘sovereign’ too and looking at France’s early initiatives in funding AI startups. The Business Post has reported that Martin has sought the help of Eir owner, Xavier Neil (see above), in establishing an AI/tech incubator modelled on his highly successful Station F start-up campus. There might be good reason why Ireland needs to increase the pace of its AI and start-up readiness. I thought the next few little snippets should be focusing minds in Government buildings and elsewhere:
Private investing: The UK debt market is worrying many, but on a more positive note it was interesting to see Hargreaves Lansdowne and Schroders join forces to offer UK retail investors the opportunity to add private assets to their pension pots. Note to Irish government – start-ups need investor incentives first, then campuses.
Consumer behaviour: Wildfire Systems’ 2025 Consumer Shopping Trends Report shows 61% of consumers are now using generative AI tools like ChatGPT as a tool for deal-hunting.
Company growth speeds: Stripe’s Indexing the AI Economy report shows AI companies reaching $1m annual recurring revenues (ARR) 4 months faster than even the fastest growing SaaS/software companies. And… AI companies reaching $5m revenues are reaching that milestone 3x faster.
I feel my back-to-school mantra should read: The future is private, AI and fast. Very fast.
