OpenAI IPO? Grok-SpaceX Merger? The AI IPO Race Heats Up

Today on the AI Daily Brief, open AI IPO, SpaceX XAI merger, a bunch of stories that

help us understand the state of the AI race as we head into February.

Before that in the headlines, you can finally play with Google's Genie 3 World Model.

The AI Daily Brief is a daily podcast and video about the most important news and discussions

in AI.

Alright, friends, quick announcements before we dive in.

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And while you are on aidelebrief.ai, I would so appreciate it if you would fill out our

AI usage pulse survey.

The TLDR here is that I think everyone is trying to start benchmarking themselves and actually

understand with data and not just anecdotes how others are using AI.

To help with that, we're trying to do a lot more original research, a lot more data collection,

and one piece of that is these monthly usage pulse surveys.

It's going to ask you questions like which AI models did you use this month, what use-case

categories were most valuable, how often you use it, it should take you about two minutes.

Like I said, you can find that at aidelebrief.ai, there'll be a couple of different links

to it, and I would so appreciate it if you would take the time to fill that out.

I'll just be leaving it up for a few days, probably till about the middle of next week,

and anyone who fills it out will get the first read results about a week before we share

it more broadly.

Thanks in advance for your help.

Now with that said, let's talk some world models.

Welcome back to the AI daily brief headlines edition, all the daily AI news you need in

around five minutes.

One of the things that we talked about throughout 2025, but especially towards the end of the

year, was the idea of world models.

World models are, in some ways, a fundamentally different approach for getting to the next

level of AI.

World models have a deep understanding of the physics of the world around them, which

allows them to do things that LLMs can't.

Last year, one of the most impressive demos we got was the research preview of Genie

3 that came in August.

That preview was circulated among a fairly tight group of researchers, but we still got

to see some fairly breathtaking videos.

Genie 3 is capable of generating playable 3D worlds, allowing the users to navigate through

the scene with the mouse and arrow keys.

Then back in the preview, the quality was fairly astounding, and it seemed like DeepMind

was making rapid progress on world models.

Well now the model is fully available to the public, rolling out first two Gemini ultra-subscribers.

It's still a research preview, but people can now start playing around and creating their

own generated worlds for the first time.

J.Peter's from the Verge used it to generate a string of worlds that resembled popular Nintendo

games including Mario 64, Metroid Prime and Legend of Zelda.

Rebecca Belan of TechCrunch used it to create a marshmallow castle in a claymation style.

You better believe that I am an ultra-subscriber, and thankfully this was a model where when

they said a certain category of subscribers had access to it they actually did.

The first thing I generated was a neon cyberpunk world set in the 2060s but where there were

no humans only animals.

I wanted a flying squirrel character, and the thing that you're seeing bounce around

your screen now is that.

The way that it works is you use text to describe your environment as well as your character

and then it's off to the races.

The second world I created was an alternative multiverse earthworld, but where we actually

got things like flying cars in a 1960s retro-future aesthetic.

The character I plopped down was a time traveler from the 1990s.

Lastly, it being the 250th anniversary of the Declaration of Independence and the Birth

of America, I of course had to do a bleak winter scene of late 1776.

Chris on Twitter summed up the feelings of a lot of folks who had a chance to play around

with this.

He writes,

The fact that the whole world isn't talking about Genie 3 right now is deeply concerning.

This is going to hit the general public like a truck, it's genuinely got to cause

such a disruption.

I'm calling it right now that there will be no Grand Theft Auto 7 because we're just

simply going to be able to generate it even if we extrapolate half the rate of progress

from Genie 2 to Genie 3.

Kyle Russell agreed, resharing Ethan Mollick's generation of the world of Hamlet, as seen

from the perspective of the poison, writing world models are going to hit the video game

industry like an atomic bomb.

Swix from latent space said that this finally got him to pony up for a Gemini Ultra subscription

and said that while Genie 3 has obvious flaws, it's here, real-time playable video world

model.

For the flaws he says it clips through a lot of terrain, worse than in a game engine,

it also sometimes errors out that you can only live in the world for 60 seconds and then

nothing else except the main character moves.

But at the same time he points out that it is again a real-time video world model, that

its instruction following was pretty good, that its movement accommodates weird legs.

He asked for a giant robot spider like in Wild Wild West and finally he said they never

ever shipped Genie models to production, never ever, what TPU sorcery is this?

Congrats to the Genie 3 team, I can't believe this actually shipped, what absolute mad

lads.

Now speaking of AI video and AI video adjacent things, TechCrunch reports that the Sora

app from OpenAI is struggling.

Now you might remember that when OpenAI launched Sora 2 in late September, it came along

with a companion app.

That app gathered over 100,000 downloads on day one and actually became the top app

exceeding chat GPT.

New data suggests however that the churn is extreme and new downloads have rapidly tapered

off.

According to app figures Sora saw 3 million downloads across September and October with

another 3.2 million in November.

Monthly downloads are now down almost 2.3rd since then, with January figures at 1.2 million.

On the US app store Sora has now fallen out of the top 100 list for free apps on both iOS

and Android.

Now at this point we don't really know exactly how OpenAI views Sora.

I don't think that they necessarily released it because they had conviction that it was

going to become the next TikTok.

I think they released it because they wanted a place for people to try Sora video generations

and they wanted to see how people would receive an AI first social network.

Remember OpenAI has a deal with Disney and so we'll see if over time that actually changes

the fate of Sora or whether AI video just ate it.

As an AI video aside, if you haven't seen Times on this day 1776 yet, I highly encourage

you to go check it out.

You can find it on Times website and basically they got Darren Aaronovsky to use AI to create

a series that brings us back to the incredibly fraught and important year of 1776, but in

a way that's an actual film rather than just a documentary of historians talking about

it.

The comments are of course just chocker block full of people, screaming about what AI

slop it is, and while I understand that there could be good faith critique of where we

are with AI video, I think it's pretty awesome, really well done and shows of course where

we are headed.

Looking back however to our last couple of headlines, Proplexity has signed a massive

new cloud deal with Microsoft diversifying them away from AWS.

The deal includes 750 million and spending across a three year term.

Interestingly, Proplexity said that part of the rationale for the deal was the ability

to access models from OpenAI, Anthropic, and XAI through Microsoft's Foundry platform.

Proplexity has their own in-house model that powers for usage but paid users have access

to a variety of models from other labs.

The Microsoft deal could allow them to consolidate the service onto a single platform instead

of tapping individual APIs from rival labs, which could of course become relevant if first

party API access is blocked as Anthropic has done to multiple other competitors over

the past year.

The deal also gives Proplexity a failover option if Amazon pulls the plug.

AWS has been Proplexity's major cloud provider since launch, however, in November, Amazon

sued Proplexity for disguising their web crawling activity related to agentic shopping.

If that lawsuit gets nasty, Proplexity could certainly benefit from having another option.

Speaking of Anthropic, our last story today is that Anthropic is going to war with the

Pentagon over limits to their military AI deal.

In the first half of last year, each major AI lab signed a deal to provide AI technology

to the military.

OpenAI, Meta, Google, XAI, and Anthropic all signed up, with multiple labs shifting

their acceptable use policies to facilitate the deals.

Now the notion was that the technology would be mostly used for administrative tasks

at the Department of Defense, slash Department of War, with limits on surveillance and warfighting

applications.

Anthropics deal came in July and was worth 200 million, which for some felt like kind

of a big departure from Anthropics founding principles regarding AI safety.

In the latter part of the year, the Department of War announced a string of initiatives aimed

at driving AI adoption at the Pentagon, which included discussions of lethal applications

of the technology.

Reuters now reports that Anthropics' relationship with the Department of War is souring to

the point that contract might be terminated.

Sources said that tensions began almost immediately.

Anthropics' terms had rejected the use of the technology for lethal operations and

domestic surveillance.

Administration officials were reportedly frustrated by Anthropic dictating terms, arguing

that usage should be unrestricted as long as it complies with U.S. law.

The government's desire to leverage AI fully autonomous weaponry and mass surveillance

is apparently weighing on the mind of CEO Dario Amade, with both themes featuring prominently

in his recent essay about the Dark Side of AI adoption called the Adolescence of Technology.

Secretary of War Pete Hegseth is also airing the grievance in public.

At an event earlier this month, he said the Pentagon would not quote employee AI models

that won't allow you to fight wars.

Sources said that these comments were squarely aimed at the simmering dispute with Anthropic.

Officially, Anthropic issued a partial denial of the schism.

Their spokesperson said, Anthropic is committed to protecting America's lead in AI and helping

the U.S. government counter foreign threats by giving our warfighters access to the most

advanced AI capabilities.

They added that Claude is used, quote, extensively in national security missions, and that

Anthropic is in productive discussions with the Department of War about ways to continue

that work.

However, with a quick glance over the current headlines, it's easy to see why Anthropic

might be second-guessing their provision of the technology to the government, both wired

and the information reported on ICE's use of AI in 2025, which has also become apparently

an issue for Palantir employees.

MAI on Twitter summed up the stakes writing,

The stakes here go way beyond one contract.

It's about whether Frontier AI labs become neutral infrastructure providers or political

actors that get to say no when governments want to weaponize their models.

Whatever compromise or standoff emerges will likely shape how regulators, allies, and

rivals think about AI red lines for years.

This my friends is very much deserving of a full exploration, and I'm sure we will have

context at some point to do that.

For now, however, that is going to do it for the headlines.

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Welcome back to the AI Daily Brief.

Yesterday's episode was all about meta and Microsoft's earnings, and of course the context

through which we explored that was what it's had about the market's expectations and

thoughts around an AI bubble as we move into 2026.

Interestingly, we got a set of news in the past 24 hours that almost serves as a compliment

to that to get a better view of the entire state of the AI race, looking at basically

all of the big players.

Some of it's expected and some of it's very unexpected.

So let's look at some of the biggest stories to finding the AI race as we head into the

new month of February.

First off, Apple, yes, Apple has made an acquisition in the AI space.

It is not perplexity or any of the big ones that people have speculated on.

Instead, it's a frankly mysterious company called QAI, a goal of whom seems to be

understanding what a person wants without them having to speak.

So let's talk about what this isn't.

This is not a slam dunk, get back into the LLM race acquisition of the type that people

had been advocating for throughout 2025.

You might remember that back at the beginning of last summer, I said that Apple should try

to pay up and get anthropic while they were still even in the realm of affordable, but

at that time anthropic was worth around 60 billion.

The latest fundraising has it at 350 billion, so probably fairly outside of acquisition range.

Anthropic, of course, has given no indication that they have any interest in doing anything

then continuing to accumulate consumer and business devotion.

And so that I think can safely be taken off the table.

Now, there have been rumblings at various points that Apple had explored a deal like

perplexity.

Apple SVP of services at EQ in particular was a leading advocate of a perplexity deal, although

that didn't come to fruition either.

Instead, what we have is the second largest acquisition in Apple's history.

Their deal for beats remains their largest to three billion, but according to the financial

times, they are paying $2 billion for QAI.

So what is QAI?

QAI works on imaging and machine learning, using the technology to develop a system that

can detect speech without audio.

At the moment, their systems can enhance audio and noisy environments and detect whispered

speech.

However, the reporting noted that QAI holds a patent for optical sensors technology that

can recognize and interpret facial skin micro movements as speech.

The patent describes the technology being built into headphones or glasses, and the speculation

is that this technology could be used to enable silent communication with an AI assistant

by simply mouthing words.

Not making the deal even more notable, QAI was acquired out of stealth without releasing

a product.

That said, the company does have an extremely strong pedigree.

For CEO and co-founder Aviyad Mezels, this is a second time being acquired by Apple.

He previously founded PrimeSense, which developed the image recognition technology that

powered Xbox Connect and was repurposed for Apple's Face ID system.

Tom Huom, a venture investor at Google Ventures who led QAI's seed round, wrote that their

technology could help us find out, quote, what happens when the computer finally disappears

into our daily lives.

Bradley speaking, I think there are two interpretations of this.

The first is, when you combine this move with Apple's decision to partner with Google

on foundation models that are going to power experiences like Siri, it feels like they're

more or less at least unless something radical changes passing on the foundation model space.

At the same time, one could view this move as Apple sticking to their core focus around

hardware.

Indeed, it's been a long time since Apple was truly a software first company.

The iPhone has become their core business, and they're only notable AI success to the

extent that you can call it that has been on the hardware side, with the m-series chips

and the perpetual popular Mac mini, which we'll talk about in a minute.

So someone or maybe Apple doesn't need an AI model, and they are in fact better off putting

all their resources into winning the competition for AI devices.

Now yesterday, also saw Apple report earnings with a blowout result.

They recorded their largest quarter ever for iPhone sales with 85 billion in smartphone

revenue.

Mac sales and services revenue both came in below expectations, but top line revenue

still grew by 23%, which was a significant beat.

Going back to those possible interpretations, the earnings really reinforced that Apple

is in iPhone business and business is good.

On the AI side, the company continues to be completely directionless, at least in terms

of what they're telling us.

That crunch summed it up with the headline, guys, I don't think Tim Cook knows how

to monetize AI.

Responding to a question about how Apple will turn AI bets into revenue, Cook said, well,

let me just say that we're bringing intelligence to more of what people love, and we're integrating

it across the operating system in a personal and private way.

And I think that by doing so, it creates great value, and that opens up a range of opportunities

across our products and services.

Which even for a public market CEO is some impressive word, Salon.

Then again, it does feel like it's not impossible that over the next year or two, Apple's

strategy, whether intentional or not, is going to come into clear review.

Robert Scobal wrote, this is an important purchase for Apple because later this year,

it will introduce a new kind of camera.

In two years, everyone will have a camera, headphones, and glasses that all work together

joined by the phone.

This sort of echoes those recent comments from Mark Zuckerberg on his earnings call, where

he said it's hard to imagine a world in several years where most glasses that people

wear aren't AI glasses.

The other topic of conversation around this was summed up by Village Global's Ben Casanocha

who wrote, Apple just did its second largest acquisition ever.

One can imagine a world where Apple, feeling behind an AI, finally ramps up M&A and spends

10 to 20 billion dollars buying AI startups over the next couple of years.

That would be great for the venture ecosystem.

So maybe the hanging back and letting it all happen will work for them in the flurry

last weekend around Claudebot, which is now known as OpenClaw.

It didn't escape people's notice that one of the major beneficiaries was Apple, as dozens

if not hundreds or even thousands of people, took to Twitter to talk about how they had

ordered a Mac mini, sharing a post of Google's Logan Kill Patrick, sharing his Mac mini

order, investor Sam Lesson wrote, Apple's AI strategy remains undefeated.

Next up, let's talk about Amazon.

Broadly speaking, I would say that the perception of Amazon isn't one similar and opposite

to the perception of Apple when it comes to AI, whereas many have felt Apple felt

rudderless for having no AI strategy to some Amazon has felt rudderless for having

every AI strategy.

The most recent news is that the company is considering a $50 billion bet on OpenAI.

Earlier in the week, we got reports that suggested that Amazon and Vidya and Microsoft were

all in talks to invest in OpenAI to the tune of $60 billion between them.

The rumors were that Amazon was probably in for $20 billion.

At the time, the takeaway was mostly that OpenAI should have no problem hitting their $100

billion fundraising target.

However, the Wall Street Journal is now reporting that Amazon is the lion's share of that

number, which dramatically changes the implications.

At OpenAI's rumored $830 billion valuation target, this investment if it comes to fruition

would give Amazon a 6% stake.

It would also represent around half of their CapEx spend for last year.

Reports suggest that CEO Andy Jassy is holding negotiations directly with Sam Altman around

the exact shape of the deal.

An investment of this size could change Amazon's position in the AI race.

They already put $8 billion into Anthropic in 2024, which is likely somewhere north of

a 10% stake.

By adding a sizable chunk of OpenAI, Amazon simply might not need to compete on frontier

models.

They could license or create a custom version to make AI Alexa and just focus on their core

infrastructure businesses their big AI bet.

It looks kind of like Amazon is trying to construct a win-win-win scenario for themselves.

If either OpenAI or Anthropic come out on top, Amazon wins.

If both companies flounder, well, Amazon made a ton of money along the way selling them

compute.

At the same time, I certainly don't think it's clear that markets are seeing things

in quite that light.

Jason Luongo summed up the bull case when he wrote,

Guess who bought another Amazon leap today while everyone else was panicking?

Everyone still thinks of Amazon as a retail company.

Meanwhile, AWS is the backbone of AI infrastructure.

In talks to invest 50 billion in OpenAI, owns 15% of Anthropic and cloth is everywhere

right now, 750,000 robots automating their warehouses, ads business quietly printing 50

billion, the most underrated AI stock in plain sight.

At the same time, I certainly don't think that view is consensus in the markets yet.

Now part of that is that any sort of momentum narrative is confused by the fact that Amazon

also this week announced that they were cutting 16,000 employees.

This follows 14,000 layoffs from Amazon's corporate workforce back in October.

On Wednesday, SVP of People Beth Galetti published a blog post confirming the layoffs were going

ahead.

She framed them as a continuation of the headcount reduction from October, stating that

they will quote strength in our organization by reducing layers, increasing ownership

and removing bureaucracy.

Now the post did say that this is it for the layoffs in Amazon is not going to get into

a pattern of continuous downsizing.

Between the two rounds, this is now a roughly 8% reduction in Amazon's 350,000 strong employee

base.

Although AI wasn't mentioned in either round of layoffs, it is certainly assumed to be

a contributing factor.

Back in June, CEO Andy Jassy sent a company-wide memo stating that he expected AI adoption

would lead to a reduction in how many employees the company needed.

Of course, even if the layoffs have nothing to do with AI, that's going to be the widespread

perception.

AI is even showing up in some of the reporting completely unsourced.

That said, especially as we watch the political narratives that heat up in this US election

year, an interesting wrinkle that I'm starting to see emerge is people calling out the AI

jobwashing, when actually there are other things to blame.

Hany Girgis wrote, Amazon says it will cut 16,000 more corporate jobs.

At the same time, the company is expanding in India.

They will call it AI efficiency or bureaucratic cuts.

The optics are layoffs in the US, growth abroad, and more visa inflow.

And the plum meanwhile is making it explicitly political.

The new candidate for Congress in Texas made a long post about how this was not about

AI and was in fact about outsourcing.

He writes, well, this isn't exactly how I hoped my day would start.

After eight years, I just got laid off as did 16,000 of my peers.

But before anyone rushes in with explanations that make them feel better, let me be clear

about what this wasn't.

It wasn't performance and it wasn't AI.

It wasn't location, versatility, or impact.

I was in L7.

I led global AI enablement.

I built systems executives dependent on, moved wherever the company needed me, and fixed

problems that had been sitting on touch because no one else could untangle them.

And I was still cut.

He argues that in his words in the US right now experience isn't an asset, it's a liability.

And that this is, quote, enabled by a global labor market with almost no guardrails.

When replacement is cheaper than retention, he writes that decision gets framed as strategy

instead of consequence.

AI, he writes, becomes the excuse, not the cause.

It is way beyond the scope of this particular show to get into all that, but it's interesting

to see outsourcing not AI emerges the real political bug of bobe.

Interestingly, we had one other example this week of a company doing really well in yet

still cutting jobs, a sml who builds chipmaking equipment, posted record quarterly orders,

increased projected sales by a few billion dollars, and still said that it was planning

to slash about 1700 jobs in tech and IT.

This phenomenon of companies growing but still downsizing is something that I think

we're going to need to watch this year.

Still moving on to our next story in the AI race, we also got some reporting around

IPO plans.

You listen to my 2026 predictions, you'll have heard that my base prediction was that

neither anthropic or open AI would ultimately decide to go public this year.

The reason being that I thought that private capital markets were going to remain strong

and that being public came with headaches that the companies just wouldn't want.

One of the big factors that I thought could change that was open AI wanting to get out

ahead of anthropic.

I said in that episode that I thought it was less likely that anthropic would worry

all that much about that, but that I could definitely see open AI trying to be the first

to go.

The Wall Street Journal reports that that is exactly what's happening.

According to their reporting, open AI has pushed up plans to go public and are now targeting

the fourth quarter.

They are reportedly taking informal meetings with investment banks and have hired a chief

accounting officer and corporate business finance officer to handle investor relations

and financial reporting.

Specifically, this reporting suggests that there's been a new sense of urgency.

Rights the journal open AI executives have privately expressed concerns about anthropic

beating the company to an IPO.

Anthropic has also reportedly told investment bankers that they're open to an IPO by the

end of the year as well.

Now the Wall Street Journal presented the obvious cause for concern pointing out that

whoever goes first out of anthropic open AI in SpaceX, which by the way is our last

story in just a second, will gather a huge amount of investor interest and they speculate

that there may not be enough to go around.

And even if there is enough to go around, I can see why open AI is concerned and why

this isn't just a vanity thing.

Let's game this out.

If anthropic goes first, what are the possible outcomes?

Let's say that their IPO is a rousing success.

Investors pile in an anthropic commands the market's attention for months.

In fact, it might even be confirmation of an ascended anthropic narrative that is taking

hold right now in a big way.

Open AI would then still be able to go public, but they'd have to wrestle that narrative

and investment dollars away from that competitor who's got a lot of momentum.

What about on the other end of the spectrum?

What happens if the IPO is a flop?

And in fact, it's the event that pops the bubble that so many insist the market is in.

In that case, the IPO windows slam shut and open AI is forced to either launch into a

bear market or raise another hundred billion dollars from private investors who either

A might not have that appetite or B are looking at an actual valuation markdown.

The point is that both scenarios make open AI's IPO much harder than it needs to be.

So I can see the logic in trying to get out first.

Now fin to it on this point is absolutely useless with every little bit of news around

an open AI IPO being basically nothing more than a rush act test for how you feel about

Sam Altman.

I would say if anything fin to it has decided that it will be a major bust, which is why

Xanelidix is taking the opposite side of the argument, the writing fin to it has already

decided the open AI IPO is dead on arrival if it happens at all.

This means it's not even close to dead exceeding expectations by a wide margin.

Punituric sums up the fate of open AI IPO this year is going to tell us a lot about

where we are in the AI tech bull market.

Which brings us to our last story Elon Musk is apparently considering plans to consolidate

his corporate empire.

Earlier this week Tesla announced that they'd made a $2 billion investment in XAI ignoring

a failed shareholder vote.

It now seems that Musk's plan is to go much further.

Reuters is reporting that SpaceX and XAI are in talks to merge.

And while the plan is reportedly in an early stage, new holding companies were established

last week to facilitate the deal.

SpaceX is believed to be considering an IPO over the summer so this move could result

in XAI going public on an accelerated schedule.

Here in the day Bloomberg reported that SpaceX is also considering a merger with Tesla,

with the deal being reported as an alternative to the XAI merger.

Now Musk has frequently discussed the logic behind consolidating his companies into a

tech conglomerate in order to share resources.

And honestly holding aside feelings about Musk, if he wants to build products that intersect

AI space in the physical world, then it would make a lot of sense to combine the companies

rather than deal with the friction of deal making between them.

The Optimus robots are an obvious early project where XAI's research team might be needed

to build the AI models that drive the robots.

Wright's Bloomberg Musk has also discussed using SpaceX's Starship Rockets to carry

Tesla's Optimus robots to the moon as well as to Mars.

XAI could benefit enormously from computing capacity provided by SpaceX's data centers

in orbit if the company can make the engineering work.

Mostly the reaction to this one has been, well, yeah, of course that's what he's doing.

Dave has a rica writes, anyone surprised by this in the slightest simply hasn't followed

or paid attention to Elon's empire building.

It's all just a part of Elon Inc.

Signal meanwhile pointed out, just how wild this ride is.

They wrote, LMAO, wait, hold up everyone so XAI investors will get liquidity before

open AI and anthropic investors, that outcome is genuinely insane.

Even more insane is that the investors who backed Elon during the Twitter buyout are now

sitting on a ridiculous trade.

Twitter equity effectively morphed into XAI exposure which now has a clear path into SpaceX.

Remember when people frame Twitter as a catastrophically bad investment?

Turns out it was a control layer bet with insane optionality.

Every single one of those anti Twitter buy takes and making fun of Elon are aging extremely

poorly.

When you make investments, the pathway to success rarely if ever looks clean.

Extremely well stated and that is where we will end, TLDR in January of 2026, the AI race

got even crazier than it's ever been.

For now that is going to do it for today's AI Daily Brief, appreciate you listening

and watching, as always, until next time, peace.