AI One-Upsmanship

On April 4th, 2023, around two in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash Act. From Bloomberg. This is Foundering The Killing of Bob Lee beginning april sixteenth.

Welcome to the TechBoo Ride Home for Friday, May 22nd, 2026. I'm Brian McCullough. Today quantum computing stocks surged, Spotify surged, maybe SAS isn't dead. Quite yet. Antropic expects its first ever operating profit while OpenAI insists it's still ahead in the rim. race and of course the weekend long reach suggestions. Here's what you missed today in the world.

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First up the surge. Shares of quantum computing companies surged Thursday after the US government announced grants with equity stakes in multiple quantum computer companies. Quoting CNBC, Quantum Computing Shares popped on Thursday as the US government said it would award two billion dollars in grants to nine firms operating in the space.

The National Institute of Standards and Technology announced the signing of letters of intent and a release saying it would take a minority non controlling stake in each company. IBM is the biggest beneficiary of the package with the US Commerce Department agreeing to give the firm one billion dollars. Shares of IBM

Gained twelve percent on Thursday. The company is a front runner in the movement to build supercomputers using quantum technology, which developers say will be able to solve complex problems existing computers cannot tackle. Chipmaker Global Foundries is receiving three hundred and seventy five million while other grant recipients D Wave Quantum, Reggetti Computing, and Inflection will be awarded a hundred million dollars.

Startup Dirac is set to receive thirty eight million dollars in a grant, and PsyQuantum will get one hundred million dollars under the agreement. Shares of D Wave added thirty three percent, Ragetti soared thirty percent in inflection, skyrocketed about thirty one percent. Other quantum firms that were not part of the announcement also climbed on the news with Arkit booming twenty five percent, while Ionic popped twelve percent and quantum computing added nineteen percent.

The deals still have to be formally completed. Funding will come from the twenty twenty two Chips and Science Act. Shortly after the Wall Street Journal published its report on this, IBM confirmed that it would work with the US government to develop America's first purpose built quantum foundry, supported by the proposed one billion dollar award.

The company said the initiative will quote accelerate American quantum innovation and enable advanced quantum wafer production for a broad range of companies. IBM said the incentive from the Commerce Department will support the research and development efforts of a new IBM company called Anderon. to which IBM will contribute a$1 billion investment to match the government grant.

Now for an abrupt gear shift in terms of narrative. Spotify closed up thirteen percent on Thursday after all those newly announced features I told you about yesterday, but also and likely primarily Because of Spotify's 2030 guidance forecasting a compound annual growth rate in the mid teens.

Quoting CNBC once again, Spotify referred to plans to reach one billion subscribers and one hundred billion dollars in revenue as its quote North Star. We are still firing on all cylinders, co CEO Gustav Saunderstrom told CNBC's Julia Borston. in the company's first investor day since twenty twenty two.

We're seeing strong growth in free users and in subscribers. Shares have lost about a quarter of their value over the last year. This is the first investor day for the company in four years and under the direction of its new co CEOs Saunderstrom and Alex Norstrom.

Founder and former CEO Daniel X stepped down at the start of this year after about two decades at the helm. Spotify is also trying to prove it can be more than a music streaming platform as it bets on verticals like audiobooks and podcasts.

At the same time, the music industry is undergoing a major shift. Record labels are grappling with how to protect artists from copyright infringement as platforms that generate music through prompts rise in popularity and blur the lines between AI and human-made music. have already emerged within the industry. In 2024, Werner Music, UMG, and Sony sued AI music startup Suno and Udio, alleging the companies use copyrighted songs to train their AI models.

Suno, which raised two hundred fifty million dollars in November, settled with Warner Music last year and signed an agreement that let users create AI generated music featuring participating artists. Universal and Warner both settled with Yu Dio. Spotify also announced subscriptions for certain creators on the platform and updates to its audiobook feature. The company also launched a program that lets certain mega fans buy two concert tickets before they go on sale to the public.

Since 2022, Spotify said it has added more than 340 million new users to the platform and has grown its subscriber base by more than 110 million. End quote.

And then this would be an interesting potential narrative shift if it's holding out across Other companies. You know that whole narrative over the last six months of a SAS pocalypse of maybe AI coming for everyone in the software space? Well, What if that narrative dies because the SAS incumbents can execute on agentic AI in a complementary way, complementary to what they do or transforming what they already do?

Once more to CNBC, my friends Workday shares popped five percent on Friday after the Finance and Human Resources software maker reported results that came in stronger than expected while bumping up its margin forecast for the full fiscal year.

Workdays revenue grew thirteen percent in the fiscal first quarter, which ended on april thirtieth, according to a statement. On Thursday, the company reported net income of two hundred and twenty two million or eighty cents per share, up from sixty eight million or twenty five cents per share one year earlier.

With respect to guidance, Workday called for a 30% adjusted operating margin and$2.46 billion in subscription revenue for the fiscal second quarter. Analysts polled by Street Account had anticipated a 30% margin and$2.45 billion in subscription revenue. Management lifted Workday's full year margin forecast. The company is now projecting a thirty and a half percent adjusted operating margin up from thirty percent as of February. The company is still looking for twelve to thirteen percent growth.

Workday stock has been having its worst year since it went public in 2012, as investors have fretted that generative artificial intelligence models could reduce growth prospects. for major software companies. As of Thursday's close, workday shares were down forty three percent for twenty twenty six while the S P five hundred index has gained about nine percent in the same period. Our core business is strong, our AI strategy is working, and we're moving with the speed and focus required to lead.

The new CEO of Workday was quoted as saying in a statement. Workday said the number of clients using agents it has built more than doubled from the previous quarter, with over four thousand using at least one. Annualized revenue from Agentic AI solutions is approaching five hundred million dollars. Workdays president of product and technology said in a conference call with analysts.

The 150th feature in HR or Finance is not going to move the needle for our business, the company said, but the next agentic application will.

President Trump was supposed to sign a big executive order yesterday on AI, but according to reporting Delayed it, sources say after last-minute calls with Elon Musk, Mark Zuckerberg, David Sachs, among others, sources say Sachs, in particular, told President Trump that federal reviews of AI models, which had been discussed before release, would slow down innovation and hurt the US in its AI race with China. Quoting the journal.

The tech leaders who spoke with Trump, who included SpaceX CEO Elon Musk, and meta founder Mark Zuckerberg, warned that the administration's new vetting system could inhibit development of a technology at the heart of the US economy. according to three people familiar with the matter who spoke on the condition of anonymity to describe the private conversation.

Trump decided not to sign the order after the White House had already sent out invitations to the leaders of top tech companies to attend a signing ceremony scheduled for Thursday afternoon, hours before the event was expected to begin. Even as some industry executives were traveling to Washington for the signing, Trump announced to reporters in the Oval Office that he had called it off because he quote didn't like the draft of the order. I really thought that could have been a blocker.

Trump said, noting the benefits of AI in the American economy, and I want to make sure that it's not, end quote. Trump made the decision to postpone the signing filing conversations with Sachs and other industry leaders, said one of the people familiar with the event. Later on Thursday afternoon, he had phone calls with executives including Musk and Zuckerberg, and then told his staff that the order could not move forward, the person said.

In comments that Musk posted on X after publication of this article, the Tesla CEO said that he had talked with Trump after the president made the decision and that he quote didn't know what was in the order, end quote. Over weeks of discussion with extensive input from tech industry leaders, the White House had arrived at a draft executive order that officials described as balancing concerns about safety.

with the needs of the industry. The order would have created a voluntary system under which companies would provide the government with an early look at frontier AI systems up to ninety days before public release. So agencies could test the models for dangerous capabilities, identify vulnerabilities, and prepare defenses before hackers or foreign adversaries could exploit them according to a draft of the order viewed by the Washington Post.

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But back to narratives once more. You'd better believe that Anthropic and OpenAI are competing to control the narratives. in terms of who is in the lead in the AI race right now. So we're getting little drips and drabs leaking out from both of them like this, quoting the journal. Anthropics revenue is set to more than double to ten point nine billion dollars in the second quarter, an explosive rate of growth that will help it turn an operating profit for the first time.

The company disclosed the figures to investors as part of an ongoing funding round that is likely to push its valuation above open AIs. And Traffic generated four point eight billion dollars in sales in the first quarter, its quarterly revenue is now growing faster than Zoom did during the pandemic and Google and Facebook did in their run up to their initial public offerings.

It is set to turn an operating profit of five hundred fifty nine million dollars in the June quarter. Anthropic shared financial figures with investors last summer that suggested the company didn't expect to turn a full year profit until at least twenty twenty eight. The company might not remain profitable for the full year as it plans spending increases due to its vast computing needs. Its operating profit includes the cost to train new models and excludes stock based compensation, end quote.

So yeah, leaking that you're already profitable and are so two years ahead of your previous best case projection is certainly throwing chum in the water, as it were. So over to you, OpenAI, for the counter, quoting the information. OpenAI generated about five point seven billion dollars in revenue in the first quarter, nearly one billion dollars more than Archrival Anthropic generated in the same period, according to two people with knowledge of the financials.

Opening eyes coding agent codex, along with growth from selling to businesses and testing ads on Chat GPT, helped drive first quarter growth, according to one of the people.

Since then, however, Anthropic appeared to leapfrog the Chat GPT maker, and Anthropic's recent growth rate could widen the gap between the two companies' revenues by the end of this year. Anthropic's annualized revenue, or the past month's revenue multiplied by Recently neared forty five billion dollars, according to a person with knowledge of the figures.

OpenAI, in contrast, recently topped thirty billion dollars in annualized revenue. Anthropic has also projected its revenue will more than double to nearly eleven billion dollars of revenue in the second quarter alone, plus a nearly six hundred million dollar surprise operating profit. OpenAI's second quarter outlook couldn't be learned, though the company has seen gains in core products that could drive revenue growth.

Since April, OpenAI launched GPT 5.5, which is stronger at breaking down tricky requests from users compared to older OpenAI models, and saw faster user growth from consumers with the release of its latest image generation model, according to one of the people. OpenAI's coding focused model codex has also seen significant uptick, the person said. OpenAI's first quarter data suggests that it is on track to hit its earlier goal of generating thirty billion dollars in revenue in twenty twenty six.

The data also showed it was still operating deeply in the red, and the company's chatbot user growth has stalled. OpenAI has told investors that its adjusted operating income margin was negative one hundred twenty two percent in the first quarter, according to the people. That means that for every dollar of revenue the company generated, it lost. $1.22, even after exceeding some large line items such as stock base compensation, according to one of the people.

OpenAI faces another challenge, growing chat GPT usage. OpenAI's weekly active users for the quarter averaged about nine hundred and five million users, according to the two people. Although the company hit about nine hundred and twenty million weekly active users back in February, the lower average figure for the quarter implies that usage during the rest of the quarter was weaker than the February snapshot.

The number of users at the end of March couldn't be learned. The company had expected to hit 1 billion weekly active users by the end of last year, but had warned employees to expect rough vibes as consumer AI rival Google made gains with its Gemini chatbot. A fraction of those hundreds of millions of users actually pay for Chat GPT. ChatGPT had fifty five million ping consumer subscribers for the first quarter, up from about forty seven million at the end of the year, according to the people.

Subscribers pay between eight dollars and one hundred dollars per month for more usage and extra features compared to non paying users. OpenAI plans to supersize its ChatGPT advertising business by the end of the decade, when it expects to generate about$122 billion in ad revenue by 2030. End quote.

One weekend long read for you this weekend, and it's a controversial one. You might have heard that birth rates around the world have been plummeting for at least a decade now, but some folks increasingly think technology itself is to blame. Quoting the FT In more than two thirds of the world's one hundred ninety five countries, the average number of children born to each woman has fallen below the replacement rate of two point one that keeps population stable without immigration.

In sixty-six countries, the average is now closer to one than to two. In some, the most common number of children born to each woman is zero. Analysis of data ranging from population records to Google searches indicates that although many factors contribute to falling birth rates, the most recent plunge appears connected with our use of technology.

Almost all of the world is now affected. Until recently, ultra-low and rapidly falling birth rates were primarily a concern for rich countries, but many developing countries now have lower fertility rates than much wealthier ones. In several rich countries, including the US and the UK, a major barrier to forming families in recent decades has been housing. But this cannot account for the most recent steep decline or its global breadth.

In the Nordic region, for example, fertility has fallen despite economic stability and a rise in the number of young adults living on their own rather than with parents or flatmates. Dissatisfied with purely economic explanations, researchers are beginning to point the finger at a new culprit, the digital devices and platforms that play an outsized role in young people's lives across the world.

The number of berths fell first and fastest in the areas that received high speed mobile connectivity earliest. The authors of a recent study argue that smartphones have transformed how young people spend time with one another, sharply reducing in-person socializing and leading to the collapse in their fertility. For example, US, British, and Australian birth rates for teens and young adults.

were broadly flat during the early two thousands, but began to fall markedly from two thousand seven. The same slide began in France and Poland around two thousand nine and in Mexico, Morocco and Indonesia around twenty twelve. What had been steady declines in fertility in Ghana, Nigeria, and

Senegal became precipitous drops between twenty thirteen and twenty fifteen. All of these inflection points coincided with the mass adoption of smartphones in local markets, as measured by Google searches for mobile apps. In country after country, the birth rate plunged after the introduction of smartphones, no matter what the previous trend was. The younger the age group, the more pronounced the downturn, a mirror image of smartphone usage pattern.

Melissa Kearney, professor of economics at the University of Notre Dame, said it is quote quite plausible that the modern digital media environment has had profound effects on society that have led to a decline in romantic coupling. Among couples, sexual dysfunction is higher for the young adults with the heaviest social media use, notes Finnish demographer Anna Rotrick.

She argues that the time taken up by social media and the values and lifestyles such platforms project has also made it harder for young adults to form committed relationships, end quote.

So I will not have a regular episode for you on Monday because it is Memorial Day here in the US, but I will have a bonus episode for you. It is the first How I AI episode, and Chris Messina is back on. But also, most of it is about me. I gotta go first with this show and tell stuff. Exactly one month ago, April 27th. I sat down, opened a project on cloth. And one month later I have vibe coded not just a website, not just an app, but a fully featured AI powered.

SAS product. Longtime listeners will probably be able to guess what the product does. Listen for that story, but also for my deeper learnings about how I got vibe coding religion and maybe even Talk to you on Tuesday.