The Briefing

By Jessica E. Lessin

Greetings!

Since 100% of the conversations I have on a given day turn to artificial intelligence, I cant stop thinking about the new technology, the new business models around it and how regulators will respond. And if I am being honest with myself, the answer to most of the questions that come up in these conversations is that I simply have no idea how this will all play out.

Apparently, investors dont either.

If you look at the run-ups in stock prices of Alphabet, Meta Platforms and Microsoft of late, it is clear that investors are just hoping, betting and maybe praying a little that AI will help these tech companies in the long run. And they are probably not wrong. Yet there doesnt seem to be much firm evidence to justify their mood.

It is hard to believe, for example, that Alphabet has just grown a quarter of a trillion dollars of expected value in the last month. Thats all based on some very cool new product announcements whose current tangible business impact amounts to a shoulder shrug. Among them is an experimental search product that incorporates generative AI into Google search. It just went live today. (As an aside, I do love Bard and it has become my go-to search AI chat experience!)

Microsoft has had a nice AI bump too. The software giants market cap is up 10%or $220 billionover the last month, capped off by its Microsoft Build conference this week. (Since when did developer events become such a prominent way to juice a stock price?) And its up 36% for the year. The Nasdaq is up only 8%.

Dont get me wrong. I think AI is going to make the big tech giants gobs and gobs of money. But there are unknownsand then unknown unknowns. Investors would be wise to tamp down their enthusiasm at least a little.

A New Paradigm

It's happening! Crypto venture capital firms are now setting their sights on AIor at least one of the largest crypto funds in the world is, according to The Block. The crypto-focused publication reported that Paradigm, the blockchain investing giant that raised $2.5 billion for a single fund back in 2021 (the largest at the time), is expanding its focus into other emerging technologies like AI. The report also said Paradigm had removed the mention of Web3 on its home page, instead branding itself as a research-driven investment company. Later in the afternoon, Paradigm co-founder and managing partner Matt Huang tweeted, Never been more excited about crypto, though he did not address the report specifically.

Now the question is: Will other crypto funds follow suit? On one hand, itd be somewhat predictable given that several firms closed mammoth funds in the first half of last year, just as crypto markets started plunging. Andreessen Horowitz, for one, unveiled its largest crypto fund yet, which totaled $4.5 billion, exactly one year ago today. With dealmaking in the sector this year slowing to a snails pace, you can imagine investors eyeing other places to put their money to work.

On the other hand, such a shift wouldnt be what all those funds limited partners signed up for. One crypto investor I texted this afternoon laughed when I asked if their fund was doing any AI deals (they said the firm is not). They pointed out that at that point, youre not much of a crypto fund at allyoure just a generalist VC firm.Akash Pasricha

In Other News

• Twitters engineering director, Foad Dabiri, left the company on Wednesday (more here).
• JPMorgan Chase is cutting roughly 1,000 of First Republics staff after having acquired the bank, according to Bloomberg. First Republic collapsed last month.
• OpenAI CEO Sam Altmans crypto-focused company, Tools For Humanity, which is developing a contentious eye-scanning orb, closed $115 million in a Series C fundraising round, led by Blockchain Capital, according to CoinDesk.
• Digital Currency Group is shutting down of its subsidiaries, TradeBlock, which serves as a prime brokerage for institutional cryptocurrency investors, according to Bloomberg.

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About Jessica E. Lessin

Jessica Lessin founded The Information in 2013 after reporting on Silicon Valley for eight years for the Wall Street Journal. She regularly writes about all things tech, media and the wild ride both industries are in for. She can be found on Twitter at @jessicalessin.

Email Jessica | Twitter (@jessicalessin)