The Apple Dance (non-musical AI version)

Top News

• Apple steps up its AI game: Today at its WWDC event, Apple dropped a host of updates including a refreshed UI, new operating systems and more. Tucked into the announcement barrage was something more notable for startups. The new Foundation Models framework from Cupertino will allow developers “direct access to the on-device foundation model powering Apple Intelligence,” the company said. For founders building for the mobile context, Apple’s decision to open up its AI framework could allow for more intelligent AI models sans third-party API fees. That smells like high-margin startup work to us.

• Qualcomm snaps up Alphawave: There’s ample money to be made selling AI — see today’s TWiST500 section — but there’s also a pile to be made in making the hardware that powers the nigh-endless compute that AI inference demands. Enter Qualcomm, which sells mobile-friendly chips, and Alphawave, which sells high-performance networking gear that helps data centers number crunch efficiently. Why is Qualcomm shelling out $2.4B for the smaller company? It’s betting that Alphawave’s technology will aid its “expansion into data centers,” which seems fairly likely from where we’re sitting. Sure, there’s lots of competition, but in a growing market, there should be enough pie for everyone to get a slice.

• IonQ buys Oxford Ionics:Today’s startup deal hails from the quantum world, with the public IonQ (American) buying startup Oxford Ionics (British). I won’t pretend to understand why trapped ions are so critical for commercializing quantum computing, but IonQ is betting just over $1 billion that Oxford Ionic’s ability to blend “world-leading performance of trapped ion qubits with the scalability of semiconductor manufacturing.” With Amazon, Microsoft, and Google all announcing quantum breakthroughs this year, we could be seeing early consolidation on the next space to blow up after AI takes an eventual bow.

TWiST500

As we were heading into today’s TWiST recording, OpenAI dropped news that it has reached $10 billion in annual recurring revenue (ARR). The milestone was notable for its gross scale — $10 billion is a lot of gosh darn revenue — and because that number is materially larger than the $3.7 billion that OpenAI brought in last year, and nearly double the $5.5 billion ARR that it reached last year, per CNBC reporting.

We knew that OpenAI had grown one set of its commercial accounts by 50% in just a few months earlier this year, but the latest growth announcement helps explain how OpenAI was able to raise $40 billion at a $260 billion valuation earlier this year. Who wouldn’t invest in OpenAI at 30x ARR when it’s growing as quickly as it is?

Elsewhere in AI revenue growth, Mistral is reportedly the winner of a number of multi-year, nine-figure contracts, and could reach $100 million worth of top line this year. For the EU AI champion, the news is material in that it shows that there is room in the market for a European player. Anthropic, xAI, and OpenAI consume much of the media oxygen around AI foundation model companies, but Mistral’s open-source work and — let’s be honest — and French domicile aren’t hurting its own growth.

So much for the ‘AI models won’t make any more’ argument, as I tried to lay out a few days before the latest data dropped; I feel even more vindicated in that call with the latest news.

Closing today, there’s a lot of buzz about the recent Apple AI paper that cast doubt on the ability of so-called ‘reasoning’ models to actually reason. We didn’t wind up getting to the document on the show, but I would bet you dollars to donuts that OpenAI didn’t want Apple’s broadside to go unanswered. Otherwise, why drop the revenue milestone during Apple’s big press push? — Alex

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This Week in Startups

E2135: On a brand-new bicoastal TWiST, Jason checks in from LA, while Alex remains at home on the East Coast. They’re talking about Circle’s explosive IPO, and what it means for the markets and crypto looking forward. PLUS the benefits of tokenizied venture capital funds, more crazy Cursor growth, deeper insight into the Anthropic-Windsurf kerfuffle and more details on the Deel-Rippling espionage saga.

E2134: Jason’s away, so Alex and Lon are handling TWiST all on their lonesome. They’re talking about Anthropic cutting off Windsurf ahead of its rumored OpenAI deal, the ongoing deal between Rippling and Deel, and a few stories that don’t actually contain the word “deal.” PLUS Alex chats with Garrett Langley from the in-the-news surveillance startup Flock Safety. (Don’t worry, Jason will be back on Friday.)

E2133: On a special Singapore edition, Jason and Alex are chatting about Grammarly’s billion dollar mega-investment from General Catalyst, questioning how an AI copywriting assistant is generating THAT level of hype. Plus a new Neuralink rival has emerged, founder lessons from Udio and Spotify, and the New York Times’ new licensing deal with Amazon.

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