AI ROLLUP: ChatGPT's Viral Explosion | xAI Acquires X | Coreweave IPO Rocks Markets

Welcome, Bankless Nation, to the AI roll-up where we stay up to speed with all the emerging trends, developments, drama in the AI crypto space. I'm David Hoffman here with my co-host Jaws. Jaws, how was your week, my man?

What's up, dude? Um, you know that meme of uh Dave Chappelle kind of like scratching his neck and he's got he's like, You got any more of that stuff, David?

Yeah, yeah.

Uh huh. That was me for the last two weeks because we've got a ton of AI updates to kind of go through on this episode. And

We skipped an episode last week. Sorry,

we're

for all of those the regular.

consumers of the AI

schedules didn't work, but we're back with a double dose of AI.

Yeah, and and there is a lot to go through. Some really important stuff happened over the last week, David. Uh, for example, the most contentious and polaric uh events ever were Giblified uh and animated.

To be made seriously.

We all got a new word into our like vernacular, which is giblification.

Yeah. And and it refers to a studio ghibli uh style of artistic animation, which took over Twitter and the world essentially, because uh the folks at OpenAI basically integrated this new feature which allows anyone to upload an image and uh you know giblify it per se. So it made the world

Give generalized artistic direction to what they want that photo to be like amended to, and then everyone was like, make it studio Ghibli.

I mean, I mean, David, like pull up the this thread that I just sent you. Um I mean we we kick off with basically Trump after his The Trump fist pump, yeah.

You scroll down and you've got

Cannabin Square.

I saw a studio Ghibli version of like the World Trade Center, like in the midst of the plane going into it. I'm like, wow, I am surprised that they are allowing this to come out.

This is incredible.

It's pretty nuts. But okay, so like a more under talked point around this whole Gibb of Okay, it's really cool. It took over the internet. Everyone had a load of fun. But um two important things happened kind of behind the scenes from like a business and economic standpoint for OpenAI, David. Number one, um, Sam put out this tweet where he explains that when they had their initial chat GPT moment, right? Um,

which was around 26 months ago, I think he says in this tweet, um, it took them five days to get to a million users, which at the time was record breaking. We haven't seen that across any other company. Um, when they did this uh animation image generation feature, which led to the giblification of everything, um, they added one million users in 60 minutes.

That's

Over one hour. And that was two days after the feature launched.

So I bet you

a million users in five days gets collapsed down to one million users in one hour, is is a pretty insane acceleration.

and it's kind of like a a a trend that we're just seeing with the AI fication of everything in general, right? Um, but then there's even more news here, which is um

They recently closed their round, um, conveniently enough after this new feature launch, which now values OpenAI at $300 billion, David, with a B. Um, so it's pretty insane to kind of like see their valuation growth from I think it was like 10 billion to start off with, and then they've got like a new capital raise of $40 billion. That's $40 billion. I thought that was an April Fool's joke until I realized it was posted on March 31st. Um, so it is the largest private tech funding round in history per CNBC.

That's pretty cool.

I'd say.

That's pretty crazy. Yeah. I think uh one big theme of the episode this week is there is actually very much a lot of life in the AI markets. Despite like the the decreasing NASDAQ, decreasing SPY, like macro fears, the AI economy, the AI investment, and the AI private markets are are extremely strong.

The the fundamentals aren't tracking the market share or the market cap growth of a lot of these different stocks and tokens as a result of that.

All right. So that's that's the first bit of the news that we're gonna cover this week. The rest of let me kind of preview some of the subjects we're gonna talk about. We're gonna talk about the Core Weave IPO that just rocked NASDAQ and again gives us a sense of the strength of the AI bull market. XAI acquires X. So the AI company has acquired X, formerly known as Twitter. So we'll we'll talk about that. There's a new world's best model out there. There's a new world's best model every single week, but uh, this is a new week, and so there's a new world's best model. So I want listeners to place your bets. Which AI lab created it? Did it come from the United States? Did it come from China? Did it come from a different country? Everyone place your bets. Uh and then the company behind vibe coding is now valued at 9.6, almost $10 billion, uh, as vibe coding works its way into public culture, at least on Twitter. Uh so these are all the big news, and then we're gonna, of course, get into uh crypto AI. We're gonna talk about Billy Betts uh and some things going on in the AI agents and crypto AI side of things. Um Joshua, you ready for Core Weave or any last comments before we just dive into the OG crypto AI company? Well before anyone realized that this was the next intersection.

Use for like mining and stuff, right, David?

Core Weave, yes. Okay. So this Core Weave company, which just went public on the Nasdaq just this last week, uh started off as a crypto mining company doing Ethereum GPU mining back in Ethereum's proof of work day. So it was founded in 2017 as Atlantic Crypto. Uh like I said, initially focused on cryptocurrency mining with GPUs. Uh in the 2018 crypto downturn, the crash of the IP uh ICO meta, uh, Core Weave pivoted to leverage its GPUs for just high performance computing tasks. Not necessarily AI, a lot of like rendering stuff. Uh because AI stuff gaming rendering, like graphics rendering, yeah, just like maybe like maybe Hollywood Studio, CGI kind of rendering, things like this. Because AI still really, as an industry, hadn't really taken off yet. The demand for compute resources were still pretty nascent. Um, so that this company is based in New Jersey, where there's just a lot of data centers. Uh, but the core we've also runs data centers all across the United States and Europe with NVIDIA GPUs just to deliver scalable, high-performance cloud computing for AI models and inference. That's their business model today. Just to talk about some of the numbers, uh, Core Weave reported $1.9 billion in revenue in 2024. Uh, net loss of $900 million just to investments, just trying to scale up their business model. Um, during the IPO, they raised $1.5 billion, making it the largest AI-related listing at the time. So that's kind of the big headline news is the Core Weave uh IPO, $1.5 billion raise, making it made it the um the largest AI related listing ever. Uh so that's pretty cool. Um, so everyone is kind of looking at the IPO of Core Weave to see like, okay, markets are are down. There's like shaky markets. Trump is like making it real hard for equity investors. And also, we're all kind of looking at NVIDIA being 30% off the highs. We're like, all right, like is there life in this AI investment like meta, or is it coming to an end? Like, what like give us like the canary in the coal mine for AI related investments? Uh and so.

The stock opened at $39, which is below the IPO price at $40. So it opened up below $40. It kind of had this lackluster reception on day one. And then a bunch of people, commentators, were talking about the obvious short around CoreWeave for a few reasons. Very high debt load, uh, $8 billion of debt and $2.6 billion in operating lease liabilities. Uh, and so this raises concerns about the company's ability to just meet their financial obligations. Um, and also there's customer concentration. So 77% of its revenue of Core Weave's company uh revenue comes from um Microsoft and OpenAI. Microsoft relating just for 62% alone. There's some business model doubts that people are wondering if uh Core Weave is just you know GPUs in the cloud. How defensible is that moat? Uh the critics have argued that the lack of unique moat to protect against this market position just doesn't exist. Uh and then also just the market typing and and around AI hype. Um, like I said, the IPO came around a volatile market period with tech stocks under pressure. And some people are just saying Core Weave uh is just overhyped because AI is overhyped. It's trying to ride the AI wave without actually any proven profitability or diversified revenue. Uh and so this was the day one of the IPO. Uh and so the headlines here in the Financial Times says Core Weave's IPO tested the waters and missed the mark. That is day one.

FUD. Day one

It's a lot of fun. A lot of fun. It came came in like $1 below the IPO price. IPO price of like $40, maybe maybe $40.5. Uh came in at $39. That's day one. Day two.

Not the same story. Rips 42% higher, way above the IPO price. We have uh Joe Weisenthal who tweeted out uh this morning, Core Weave up another 20%. And you look at the price right now from the the dot bottom of the market where it bottomed out at $36, like four dollars below the IPO price, it got all the way up to $65. It's currently at $56 this morning. So this thing has just

chart in a bull.

That is a crypto chart, bro. This thing has ripped on the second day after the IPO price. So any any IPO purchaser, anyone who has bought core weave in the last like two days is in well into the green. And I would say that this is if we are looking at just like a canary in the coal mine for broadly AI, looking real good. Looking real good. I got more to say about core weave, but I'll pause and let you let you chime in here.

Well, no, I mean my next natural question is why?

All the all the FUD made sense, David. Surely the FUD like tracks into price progression, similarly to how all the AI progress is leading to price decline, right? Well, what happened here? What am I missing?

I I don't know. I don't know. I well I I think you can maybe use Core Reav as a litmus test for inference, demand for inference.

Okay.

And I think this is coming the timing of this as well as the giblif giblification of the internet, I think is pretty good because Sam Altman was tweeting, you guys are melting our GPUs.

Right.

Like we need we need to actually take away this feature away from free accounts because our GPUs are just melting. I don't think we have any data as to the costs that the gibblification of the internet has put on uh Open AI just for inference costs. But you could demand you can just see Jevin's paradox just exhibited in real time last week, where it's like there is so much demand for turning one picture into a different picture just to share it with your friends, right? There's just a lot of inference demand. And this is one for re sales. This is one feature. Yeah. Well, yeah.

Okay, so there's another part of this story that I think is pretty cool.

Okay, so if the Ethereum here's a fun fact.

If the Ethereum merge happened on time, Core Weave would not be here today.

Explain yourself. What?

Okay, so this is where Core Weave started. They started off mining Ethereum uh in the proof of work days, and that was their revenue. Oh

They would have never focused.

They were they I I from the early days they had apparently just understood that in the future there will be a lot of inference costs, but that future is not yet here today. But that was apparently the vision that they like founded the company on is like, oh yeah, GPU, GPU resource demand is going to be high, not just for AI, but also just modeling graphics and also and also cryptocurrency. And so their plan was to use Ethereum GPU mining to just be sufficiently profitable to get to the point where like in the future AI inference will be a thing that can actually float their business. And so that was back in 2018, 2019. They just started buying up a ton of high-end NVIDIA uh GPUs just to build out a deep well of capacity. Uh, and because the Ethereum merge just got delayed from 2019 to 2020 to 2021, all the way to 2023, they were just able to maintain profitability until Chat GPT got released in 2022. And that's when this AI inference like bull market really, really happened. Wow. Uh and and so I think that that is one of the biggest, most like they saw it, they saw the vision for AI inference and demand for AI inference. They also saw that you know Ethereum mining and GPU mining can carry them to that point. And I think with also a ton of luck, they were able to just pull that transition off pretty beautifully. So I think it's a pretty cool story.

Yeah, that's awesome. It seems like uh the right pieces fell together at the right time. That that is insane. Like I wonder what Corey would have ended up. It would have just focused on crypto mining, presumably at that point.

Yeah, they probably just would have shut down and be like, okay, we just made our money. There's no once Ethereum turned into proof of stake, like the next largest proof of work like yield was Ethereum Classic, which was like one one hundredth the value of Ethereum. And so once Ethereum proof of work went away, there was nothing left for them except Jat GPT had already launched.

Do we know?

Uh just just in the last 24 hours, well, this is a live chart, right? Uh and so uh it is the second, and so I mean the

Like even from its bottom, from like its IPO price, like it must be up like

So the bottom on March 31st was 36. $36. So at the very bottom, at $36.15. Then its top was like