61 – What happened in 2024? What’s hot/not hot for 2025?

Our review of 2024 and what 2025 holds for the world and the Tech industry. From geopolitical dynamics to M&A and IPOs, regulation, crypto winters and summers, to inflation and DOGE and many other things.

Navigation:

1. Intro (01:34)
2. Review of 2024
3. What’s next, 2025?
4. Conclusion

Our co-hosts:

• Bertrand Schmitt, Entrepreneur in Residence at Red River West, co-founder of App Annie / Data.ai, business angel, advisor to startups and VC funds, @bschmitt
• Nuno Goncalves Pedro, Investor, Managing Partner, Founder at Chamaeleon, @ngpedro

Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

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Bertrand Schmitt

Welcome to Tech DECIPHERED Episode 61. It’s at this time of the year where we look back what happened in the past year in 2024 in tech, as well as trying to put some thoughts into what 2025 might look like, what might be the next big things happening in global tech industry. Let’s start with our review of 2024.

 

Nuno Goncalves Pedro

It’s been an interesting year. A year of elections around the world, so maybe we start at that level. The landscape geopolitically has become very interesting. I’d seen some chart that shows the most gain on the right ever globally across elections. I think there’s some message going on that people are really not happy about, status quo. Obviously, in the US, Donald Trump got elected, so he will again be the President of the United States next year or starting next year.

 

Nuno Goncalves Pedro

In Europe, we’ve had a lot of countries that went to the right. Austria, I believe the right wing party won. A lot of interesting and somehow shocking results in some cases with very populist views, for example, countries like my own Portugal, and all around that. Very significant geopolitical transition where it seems like populism is here to stay.

 

Nuno Goncalves Pedro

There are significant concerns around the world around immigration. There are significant concerns around the world around security. There are significant concerns around the world around economic growth. I think the elections that we saw this year, for the most, are reflecting upon the discontent of citizens across the world, of which the US is just but an example.

 

Bertrand Schmitt

Yes. Actually, I’m not sure anymore about that when we call populism, one side or the other, what it really means at some point, it doesn’t sit right to me anymore. I think 10 years ago, maybe I had some concept about what it means. But today, I’m not really clear, to be frank, because when you see Trump and his alliance with people like Elon Musk or JFK, it’s not clear they are populist at all. The same in Europe. I’m not really clear, what is true is for sure more right wing, moving away from left or centre.

 

Bertrand Schmitt

Yeah, this will have a significant impact on a lot of topics, and we’ll go through that. France also went more right wing, at least in term of parliament. Germany, we will see next year, actually. They’re preparing for election, the government in Germany. I think it was the day or the next day after the result of the US election, the government imploded. There are new elections scheduled for early next year. It looks like it will also go more right wing. It will make certainly for an interesting change of policies and politics.

 

Nuno Goncalves Pedro

Indeed, all of all, I think a lot of renewed discussion around what is the role of countries, governments, different counties, provinces, states in the case of the US, local government, is the system fully broken or not? A lot of debate around precisely the incentives that people have to vote for a party versus another and what are the key issues that are on their mind. But as I mentioned, I feel it’s clear that it’s the economy, stupid back through the day, and security have been effectively the key considerations for this year.

 

Nuno Goncalves Pedro

In terms of the overall year, it was a year that was supposed to somehow be really awful. It wasn’t. It wasn’t a year that was awful. Stock markets have gone up, in particular in the US, driven mostly by technology, The Fed rates started to go down, so it seems like inflation now is more and more under control. We see a lot of movement around, in particular, the technology stack of the fence that has taken us to the next level. There’s a lot of bright spots. I think we had anticipated maybe a very bleak 2024. It certainly was not in terms of equities, both on the public markets, but also on the private market side of the fence, including venture capital.

 

Nuno Goncalves Pedro

We’ll come back to that later. I think there is somehow certainly on the private markets a huge impact of AI. AI is distorting the numbers. The markets are still a bit shaky, but AI and AI investment has changed how the markets look certainly for venture capital. We’ll come back to that later. But basically, a year that was bad, and well, it wasn’t. It wasn’t bad.

 

Bertrand Schmitt

I would mostly agree with you, Nuno. Maybe I would qualify that it’s certainly true in the US. China also in terms of stock market, it did well thanks to a big stimulus. It’s not clear how long it stays that way, but it looks like they plan to keep doing more stimulus. The European markets were pretty bad, or at least it was like zero or slightly negative. US, for sure, doing very well. Maybe also the European startups, at least with the ones in AI, are also doing well like in the US.

 

Nuno Goncalves Pedro

Indeed. In terms of other pieces of the market, the M&A market have been very strained. There has obviously been some acquihires on the low end of the spectrum in terms of lower cap acquisitions in place. There’s now a few large acquihires, as we mentioned in one of our last episodes, happening on the AI space. But a bunch of M&A activity that was basically blocked for big tech companies, and some of them silly blocks, I think in my mind.

 

Nuno Goncalves Pedro

It’s been a tale of two outcomes. One, acquihires somehow seem to be working and getting around the system. Then on the larger M&A side, in particular, the beginning of the year, the first half of the year or so, a lot of blocks and a lot of things that didn’t go through, even when… Some of them actually I don’t understand why they didn’t go through. A little bit surprising and shocking.

 

Bertrand Schmitt

As you say, some of the big tech companies tried to go around M&A getting blocked by doing some very surprising, very large acquihires, never done before, at least at this scale. One interesting one is actually OpenAI, because if you look at what Elon Musk is arguing that it has de facto become acquired by Microsoft, except it is not. That would be another one where will OpenAI have been acquired in a parallel universe by Microsoft, if there was not all these regulations already in place blocking a lot of acquisitions for big tech?

 

Nuno Goncalves Pedro

There might be acquisitions that maybe already happened that we just don’t know yet. But we’ll soon find out about them. Because the entrenched Trojan horse of participation in the company rights that the companies have while putting money to the company, et cetera, give them effectively right at some point to have ownership of IP and ownership of a bunch of things. Anyway, we won’t know until we know is going to be the scenario for some of these plays.

 

Nuno Goncalves Pedro

Maybe moving to AI. AI is the gift that keeps on giving if you’re trying to fundraise. It’s like it reminds me of crypto and blockchain in Web3 in the heyday where you just had to put something in there, and you would raise money.

 

Nuno Goncalves Pedro

I would say we are starting to see already this year in 2024, even before we go to 2025. I would call it actually the end of the beginning. It’s the end of the beginning of this big AI leap forward that we’ve had. We’re watching the last chapters of this, if this first chapter where there’s been a ton of money, thrown on foundational models, large language model building platforms, as we discussed before in that episode that we dedicated to not starting a company around AI platforms at this stage. I think that cycle is coming to an end. Things are going to scale and continue scaling. There’s going to be, I think, a lot of investment on the AI app side, on the applications that are AI-first.

 

Nuno Goncalves Pedro

But definitely 2024 has been a year where we’re starting to see the end of that beginning, the end of that leap forward that we’ve watched over the last year and a half or so of the big AI momentum coming to bear.

 

Nuno Goncalves Pedro

Really interesting. Really exciting. We’re seeing all these acquihires in the space. I think we’ll see more hardcore M&A, in particular in the US with President Trump being in office, I would say that’s probably going to open even more the floodgates around M&A, like hardcore M&A, not just these funky deals on Trojan horse investment or acquihires that we were just mentioning before.

 

Bertrand Schmitt

Yeah, it’s tough to say at this stage. I don’t think they have been super, super clear on what they plan to do regarding M&A, especially if you look at JD Vance’s positions, who are actually quite supportive of Lina Khan actions. Let’s see until we see who they have named as head of FTC to get a sense of where it’s going.

 

Bertrand Schmitt

In term of AI, I agree with you. I mean, it’s the end of the beginning. The big AI platforms have consolidated their power, and they have consolidated also because there was such an arm race in term of getting the financing to build bigger, larger, better models that basically no one could keep going on if you don’t have billions on the side to keep running. I mean, in a way, Elon Musk with xAI might have been the last entrant in the race, but it’s not clear that anyone can come after that. He certainly came with a bang, building the biggest cluster of NVIDIA GPUs at a break-neck speed.

 

Bertrand Schmitt

We’re at a stage where the biggest players are relatively clear, identified, and there is probably little to no space for anybody else in the foundation models, infrastructure play. From there, I agree with you. I think there is more and more focus on applications, player OPS, verticals where AI will be more practically and focused and aligned with specific needs of enterprises versus the current approach of very generic products.

 

Bertrand Schmitt

Maybe one point around AI regulations, of course, Europe decided to regulate AI in 2024. It’s probably not a good idea, just to be clear. US came close to that but didn’t, at least certainly not as much. Europe might be in a very tight spot with a lot of limitations. We have seen already some players that are planning not to release their AI products in Europe, at least for a bit.

 

Nuno Goncalves Pedro

As always, Europe regulating ahead of time. We’ll see how this pans out. Obviously, push back on the AI regulation in California that didn’t really go through the proposed regulation, which I think is good news for California. Then overall in tech, if we look across the stack, obviously, tech companies really leading the way in terms of market cap around the world and NVIDIA being the big chip supplier of the world, being the number 1 most valid company in the world with US $3.43 trillion market cap as of literally right now.

 

Nuno Goncalves Pedro

If you thought you’re in different planet, if we said something about this 2 or 3 years ago, people will be like, “Huh?” But yes, this is the world we are in this year, and it’s in the last 2 years in particular. Exciting times, but also the chipset war is about to come upon us with the chipset, et cetera. Do you want to talk a little bit more about that, Bertrand?

 

Bertrand Schmitt

Yeah. Even more crazy is to see that change of fortune, in a way. You have NVIDIA, 3.4 trillion market cap, and that’s exactly at the same time that Intel, I’m not going to say it’s going bankrupt, it’s not yet there, but is in a very shape and is at its lowest in term of market cap at only $100 billion market cap. I mean, Intel used to be one of the biggest company by market cap in the world in the late ’90s, early 2000s. For me, it’s incredibly sad to see what has become of Intel.

 

Bertrand Schmitt

I don’t know your perspective on Intel, but for me, I keep looking at Intel having made the worst decision possible over the past 20 years. If you remember, they did not even manage to do a proper transition to 64-bit. When they did it initially, no one wanted to use their new chips. AMD came up with a better 64 bit instruction set, took over the space, Intel had to license AMD 64-bit instruction set. Since then, Intel lost its moat around x86. Basically, for me, that was the beginning of the end. That was in the early 2000s. From there, they made mistake after mistake about not investing in mobile, even getting rid of their mobile division and then buying back one again, ultimately building modems.

 

Nuno Goncalves Pedro

Trying to push Y Max, trying to push Y Max on us. Then they tried to change mobile, and it’s like, “No, we’re okay.” That was a huge mistake, a very costly mistake, very costly mistake at all levels.

 

Bertrand Schmitt

Forgot about Y Max. Y Max, then they tried to do modems. Ultimately, they sold their modem division to Apple, who got it on the chip. Now, here we are. They have no control of the x86 instruction set anymore for the 64-bit version, the licence from AMD. If they were sold, they would lose their licence from AMD. Intel getting acquired is not given just to be 100% clear. Or maybe we’ll go into one of this funky acquisition. We will see if Intel become acquired. I’m joking. But yeah, it’s really in a bad spot.

 

Bertrand Schmitt

It’s all the most staggering that at the same time you have NVIDIA doing so well. Of course, Intel completely missed AI. I mean, not saying they didn’t have AI initiatives. Of course, they had, but nothing really changed the game for them. To be frank, I think some of their latest CPUs are great. Their integrated GPUs are getting pretty good. Even their NPUs are doing okay integrated with the CPU. They have made some decent moves, but it’s at the where Qualcomm is coming to the PC space. It’s at the time where there are rumours of NVIDIA going to the PC space, not just with GPUs, but with CPUs. Really a weird spot.

 

Bertrand Schmitt

You talk about the CHIPS Act. Apparently, no one is getting the money from the CHIPS Act from what I’m reading. They keep promising money. Companies have to show a lot of proof points in order to get the money. But apparently, no one has got the money from that programme. In the case of Intel, they apparently desperately need the money.

 

Nuno Goncalves Pedro

Yeah, they desperately need the money. There’s arms race on chipset manufacturing, which obviously the US acted upon in 2022 with the act, but it’s been going on for a very long time. China, obviously doing a lot of things already to develop its own ingrown markets around chipsets. I know Bertrand and I disagree on how fast China will catch up, but definitely there’s things going on. Taiwan is standing in there somehow in the middle as if it’s minding its own business, but at some point, we’ll see if geopolitics will change that. Overall, a landscape where everything seems to be fought at chipset level, which is a little bit interesting and funny to me.

 

Nuno Goncalves Pedro

Now living in Silicon Valley, the whole name of this region, everyone had given up on the importance of chips probably a couple of decades ago, and now it seems they’re more important than ever, and they are the building pillars of everything that we’re doing. Again, the silver lining is we, consumers, and we, enterprises, are getting a lot of innovation done at scale.

 

Nuno Goncalves Pedro

Also interesting to me, just to finalise something before we move to other interesting areas of what happened in 2024, like space, for example. Interesting that… I believe Microsoft is the number 2 in the world in terms of most valid company right now. It seems like either you’re doing chipsets for AI or you’re the guys who seem to be leading the way on AI. At the platform, operating system, whatever layer that… It’s interesting because you look, there’s a huge discount on Alphabet and Meta right now in the market. I mean, it’s significant discount, like half market cap of the big guys of the two that we just mentioned. Amazon is somewhere in between, but very interesting, very, very interesting. The world we’re in is definitely exciting.

 

Bertrand Schmitt

I think if you take Google, there is clearly that question about potential breakup. That’s like a shadow over the business and the stock. But also there is a question concerning Google, are they leading in AI or are they also run or are they losing in AI? Obviously, what’s the impact on their search business of AI? A lot of questions which makes the stocks, just Google stock, more risky than before.

 

Nuno Goncalves Pedro

AI, for one, obviously, I’m using more and more the complexities, ChatGPTs of the world. I do think back in the day, Google has nailed it with this page that would present multi views of it, which we had the answer, Gemini-ish answer, and then you’d have the rest of the answers. I think Google needs to be maybe more aggressive on their Gemini plans, definitely in terms of delivery to end consumers, and we’ll see what comes out of that.

 

Nuno Goncalves Pedro

AI ruling the world, clearly, that’s the story of 2024. Space. It’s been an exciting year for space, and I know you’re a nerd around everything that’s been going on with SpaceX and the space ecosystem. Really exciting year for space tech, and in particular, very visible achievements going on at the most public level, so to speak.

 

Bertrand Schmitt

It’s impossible to talk about space without talking about with SpaceX, in a way, I’m not sure there will be a new space industry without SpaceX, and SpaceX might be 90% plus of this new space industry. I mean, it’s obviously amazing what they have achieved. I mean, how many launches they are doing a week. For Falcon 9, and now you have Starship that have proven extremely successful in its testing phases. The last two tests were run quasi-perfectly. I think everyone was amazed to see that mechanical arm taking over the Starship booster at its return and how impressive it was. A fit that nobody else has achieved by very far. I mean, they are 5–10 years in front of anyone.

 

Bertrand Schmitt

Their capacity to launch satellites at cheap cost that has one implication is a success of their separate Starlink business. Starlink has been a continued success. They keep launching satellites. I forgot how many thousands of Starlink satellites we have right now, but they represent probably more than two-third of all satellites in activity today.

 

Bertrand Schmitt

They have certainly changed the way you can communicate if you are not under a cellular coverage. If you are at sea, if you are in the mountains, if you are in a more remote area, if you are in a plane, or if you are in a starship, as we have seen. The videos from Starships were streamed live through Starlink. We might not think about it as anything special, but it’s special. We never had the view from the shuttle, live, that stuff, never happened before. It’s very special to see that in action.

 

Nuno Goncalves Pedro

Another win for SpaceX and for Mr Musk, the situation with the Boeing Starliner, propulsion issues that basically means that the Starliner is back on Earth, but it doesn’t have the astronauts that it was supposed to bring back from the International Space Station. The astronauts are up there, and they will come back, hopefully safe and sound, next February on a SpaceX Crew Dragon capsule. Another win there, just to rub it in, right? It’s like, hopefully everything will go well next February. Fingers crossed on that. But still, I mean, it’s incredible how we went from SpaceX is an interesting thing to now SpaceX is ruling the space world.

 

Bertrand Schmitt

Yeah. If you take the US, okay, Boeing has lost basically the space race, but it has lost it to another US player, to an American, SpaceX. If you take Europe, Ariane is basically gone, and there is no one yet to replace that from Europe. Basically, SpaceX is taking over most of the business from Europe. It’s a very big change in that industry. It’s a very, very significant change. Maybe one last point, there was some news about the SpaceX latest valuation, with a run of financing valuing the business at US $350 billion, making SpaceX the biggest startup.

 

Nuno Goncalves Pedro

Wow.

 

Bertrand Schmitt

If you can still call it a startup.

 

Nuno Goncalves Pedro

I’m not sure it counts as a start-up. But still, I mean, ridiculous. Tesla is 1.1 trillion, right? Mr. Musk is doing definitely well across his different plays and everything that he’s doing on that.

 

Nuno Goncalves Pedro

Yeah, space is exciting. Talking maybe a little bit about things that were not so positive this year, a year where we started having a lot of cybersecurity and related kinds of issues, incidents that left us, some places, without actual internet, that deflected flights, logistics, et cetera, like the cloud strike outage related to an update that obviously went totally awry. Things still being played in court on that one.

 

Nuno Goncalves Pedro

We’ve seen a lot of breaks into critical information. By now, if you’re in the US and your social security number hasn’t been taken yet, you must be living under a rock kind of thing, because it seems like everything’s been hacked.

 

Nuno Goncalves Pedro

For those of you listening to us, if you haven’t changed your core passwords, bank accounts, whatever in the last… You should. Just please, please do that. Everything has just gone nuts. I have all these services that track dark web and things that are being exchanged. I now have the updates almost every week that there’s something else that popped up information on me somewhere.

 

Nuno Goncalves Pedro

This is becoming serious, and it’s becoming clear. By the way, we’re not even talking about quantum computing and all this stuff. We’re talking just today’s world, cybersecurity incidents, information being leaked, issues with upgrades and updates on software that cause major issues. I mean, welcome to the new world. This is where we are. Software has eaten the world. Unfortunately, software is not always secure.

 

Bertrand Schmitt

Yes. Maybe crypto. When you look back, it was absolutely a horrible 4 years for crypto under the Biden administration. Basically, they tried to kill it. But then, surprising change of fortune. I mean, not just surprising. The crypto industry work all together to support and finance candidates that are pro-crypto. Ultimately, the pro-crypto candidates won the day. You can expect, and we’ll talk more for 2025, but basically, is that crypto winter suddenly is not a winter anymore. We might be going to the biggest crypto snow ever.

 

Nuno Goncalves Pedro

I stopped checking on my ownership of Bitcoin and Ether, et cetera. It’s just like there is no point. Today we’re below 100K. We’ll see what happens in the next few months. But definitely, if you’re a holder of crypto, you’re a significant holder of crypto, you’ve had a really great end of the year. Well, congratulations to you, because you, sir, have done well. You, sir, or you, ma’am. We know there are crypto billionaires everywhere, so this is a relatively, hopefully equitable market in that sense.

 

Nuno Goncalves Pedro

2024 is upon us. Hopefully, we’ll end the year. We didn’t talk about a number of other things like wars. There’s still wars in Ukraine and the Middle East. Hopefully, some betterment of that Syria re-engagement now. There’s unfortunately a year that ends on a tone of more and more wars and some instability around the world. As we mentioned before, in general, a pretty good year of 2024, much better than we expected. Certainly if we’re looking at the world that we, Bertrand and I, live in, tech, venture capital, start-ups, definitely a positive year overall.

 

Nuno Goncalves Pedro

What’s next? What’s going to go into 2025? What’s going to happen? Is it going to be as good as this year? Is it going to be better, finally? We’re going to go back to a full-on bull market across the board, buy industries, et cetera. Or is it going to be worse?

 

Bertrand Schmitt

I would say, personally, at this stage, I’m extremely bullish, at least the US economy. There would be, I would say the cloud. You can see potentially at the horizon is the inflation risk. Cool inflation, flare back, that will have an impact because that could mean less cuts as an expected or even no cuts. Or even potentially, if it goes really bad, it could mean an increase of interest rate. That’s probably at this stage the only cloud potentially at the horizon, but we don’t know. We will see.

 

Bertrand Schmitt

What’s big, again, in the US is probably that whole movement around less regulation, and nothing to better exemplify that than the new DOGE Department of Government Efficiency, supposed to work for the next 18 months to try to decrease regulations and the bureaucratic state at scale in the US. That might have a very significant impact for us in technology.

 

Nuno Goncalves Pedro

Yeah, and let’s see what our friends that are leading DOGE will do, including our friend Musk. Elon, if you’re listening, just please do this right. But I suspect there’s going to be tremendous amount of efficiencies extracted by this department, as it is called. I also suspect there will be a lot of court cases emerging out of the, I am very sure, many lay-offs and firings that will go across the board, and the elimination of jobs, the elimination of agencies, et cetera. But in some ways, hoping for the best, that we will end up with definitely a more efficient form of government at its core.

 

Nuno Goncalves Pedro

Obviously, the implications on regulations we are still to see, as you mentioned earlier. We don’t know quite well how many new appointments will be made and how these appointments will change the regulatory environment that we currently live on, which has been a little bit more aggressive and a little bit more anti-consolidation, certainly for the tech companies. We think it’s going to be crypto-friendly. That’s what we are led to believe.

 

Nuno Goncalves Pedro

The broad space around fintech, question marks. If we take crypto out of that part of that equation, unsure what was going to happen there. The energy space, there needs to be a movement forward. But obviously, with a new administration, I suspect that the energy moving forward is not going to be a Green New Deal kind of solution, whereas renewables, et cetera.

 

Bertrand Schmitt

Drill, baby, drill.

 

Nuno Goncalves Pedro

Drill, baby, drill, right? I suspect renewables will take a back seat, certainly in the US and other parts of the world, as we saw and discussed in our last episode around European competitiveness. That seems to be the only potential source of European competitiveness, if there is an angle around renewable energies and green energies. We’ll see.

 

Nuno Goncalves Pedro

Space, I suspect there’s going to be a lot of exciting things happening there in terms of regulatory environment. In AI, huge question mark, so much regulation we’ll see in AI with this new government. I think if I had to bet, the AI regulation that we will see will be probably more to start creating silos of IP and silos of inability to export things. Around AI, chips, we’ve already seen it around chips. I think the regulatory environment will be more around trade rather than the classic regulatory environment around, for example, consumer protection, et cetera. That’s my bet if I had to make a bet.

 

Bertrand Schmitt

I mean, me, as a libertarian by heart, I’m so excited. It could be the start of a new golden age in American businesses and technologies, thanks to less regulation. Regulations have constantly crept up the past 20 years in the US and everywhere. But I will say after Argentina, the US seems to be the second country in the world that is serious to really significantly decrease the bureaucratic state and negative impact of regulations, because people never think about the second order consequence of regulations, but the consequence of more regulations has always been to reduce innovation, reduce GDP growth at the expense of basically mostly everyone. I’m super excited about what could happen.

 

Bertrand Schmitt

In AI, it’s very clear that there was a big push of some players to try to basically build an oligarchy around a few top AI companies supported by the government in exchange of control and regulation. I’m so glad we are not going in that direction. It will have been totally dystopian from my perspective. Very excited we are not getting there. There might be some regulations regarding export control, and that sort of stuff, but it seems very clear that there will be very little regulation around AI, at least in the US. I think it will unleash a lot of energies.

 

Nuno Goncalves Pedro

The other floodgates that I think will open is M&A. I mentioned this story in a past episode, a friend of mine was saying before the elections that he was going to vote for Vice President Harris. But if then former President Trump would have been elected, it would be much better for him in terms of M&A activity, et cetera. I think we’re going to have the floodgates of M&A opening, and therefore, if all goes well, there’s no massive crash as the public markets were open as well, so we’ll have a much healthier IPO market next year.

 

Nuno Goncalves Pedro

This year was okay. I’m saying okay because it was better than I certainly expected, but next year might even scale to the next level. The floodgates of IPO is also open, which is absolutely great.

 

Bertrand Schmitt

That would be exciting because the way the venture industry works is it needs to generate exits. Without M&A and IPOs, that’s trouble. How do you raise new financing? How do you convince LPs it was worth it to stock all these funds to illiquid private companies and without an exit in sight? It could dramatically impact in a positive way the tech industry and the venture start-up industry.

 

Nuno Goncalves Pedro

Indeed. AI next year, I predict there will be more acquihires. I predict the acquihires won’t be at the levels that we’re talking about yesterday. I predict we will see a big, big player getting taken out of the market somehow, either acquired or something else. I wouldn’t say OpenAI, I don’t know, Anthropic. But I feel there’s going to be some big M&A activity next year that we’re going to see that will look great on paper, but maybe not great for some of the latter investors in those companies.

 

Nuno Goncalves Pedro

We have a lot of exciting things that we personally have been working on, and so we think that we’re going to start seeing some of those results beyond the world that we’re in, so beyond the world of chain of thought and just GPT in general. As I’ve mentioned before, evolutionary competition excites us and there are a variety of things happening around that. A lot of movements that we will see next year that are more around the future of AI and also the future of the infrastructure that needs to serve AI. A lot of excitement.

 

Nuno Goncalves Pedro

We’ve also discussed in the past, there’s going to be a lot of challenges like energy, consumption, even real estate to a certain extent. There’s going to be a lot of limitations that will need to be dealt with. But overall, for me, a market that will be a little bit more subdued than this year on the fundraising side, definitely exciting on the M&A side, is how I would position it going forward. Fundraising, I think it will be a little bit more thoughtful. The apps space, the AI space, I think will have some interesting developments, but maybe a little bit more subdued that we’ve seen.

 

Bertrand Schmitt

One interesting change in 2024 coming from AI was some nuclear renaissance with so many deals being made to restart nuclear reactors that were shut down, because the needs of energy for AI, I don’t want to say unlimited, but definitely represent way more need for capacities and utilities that might be able to provide with the current plans. It would be interesting to see if we indeed witness a true nuclear renaissance pushed in part by AI and also in part by the recognition that’s the most efficient source of energy and the cleanest source of energy.

 

Bertrand Schmitt

One big question for AI is, have we touched the limit? We kept talking about LLM improving significantly, model after model, but is it still true? A lot of rumours right now in the industry that Gemini, OpenAI have reached a limit, and that basically more data and more computing power does not translate anymore into a so much better LLM, at least if you keep having that transformer-based approach. That’s a big question mark that will have a lot of impact on the industry.

 

Bertrand Schmitt

But at the same time, there’s still a lot of path for growth. I mean, multimodal approach combining not just text, but image, audio, video, the new chain of thoughts type of approach. Agents, multiagents might take the relay for growth.

 

Nuno Goncalves Pedro

Our belief is that at some point, there will be an increase in commoditisation of the methodologies that we’re in, in particular, GPT. The competition will happen on UX, it will happen around the edges on price, but the future is upon us as well. Seeing that transition happen and how the big players are going to deal with that transition, I think we’ve already started seeing OpenAI reacting to it. This is not a religious war. It’s not about GPT. I don’t think they need to win just with GPT. They’re going to win with other methodologies as well that they will apply and use it the best effort.

 

Nuno Goncalves Pedro

Definitely, I think it’s going to be an interesting year next year. As I said, I think fundraising and more, I think it’s going to be more subdued. Heavy-duty M&A, as I said, maybe even one or two big deals on the M&A side to consolidate that perspective and that pressure that is now, for example, exerted upon companies like Google, or Alphabet in that case, the holding and Meta and others. Even Apple, to be honest. Definitely very interesting to see how that pans out.

 

Bertrand Schmitt

Beyond the LLMs, it will be interesting to see what Tesla does with their full self-driving. The new version is just coming out in beta. Full self-driving version 13. A lot of rumours that it’s doing way better. There is also an acceleration in that direction as well.

 

Nuno Goncalves Pedro

Indeed. We may have said earlier in this episode that NVIDIA is the top stock in the world in terms of market value, but it is not. Apple is actually still number 1 with 3.67 trillion just for those asking. Maybe talking about big tech in general and going into Apple and other players, the pressures of adoption of AI are there. Obviously, Apple has its own world that it lives in because of its ecosystem that it creates and that it fully owns.

 

Nuno Goncalves Pedro

But Alphabet, I think, will need to react definitely next year and do something major. Meta as well. Obviously, there are announcements around VR, et cetera. It’s been interesting and exciting, but what’s next for Meta? Is it just a social network? Microsoft will also be interesting, I think, to see how will they react. If we include in that group NVIDIA, is it one of those only there to lose? Can they continue growing in market cap and just hitting numbers, et cetera? I do not know.

 

Nuno Goncalves Pedro

But if I had to make a prediction for next year, it’s at some point, gravity will have to hit. At some point, people will be like, yeah, maybe this is a little bit too much. We shall see, but definitely probably a good year for big tech, definitely an exciting year for big tech next year as we see the smaller market cap guys in this gang having to react and do major movements.

 

Bertrand Schmitt

For NVIDIA, it’s very interesting because they are in a position to, if you think about the old Wintel approach, Windows combined with Intel, or even the Apple integrated approach. NVIDIA is in a similar position on the server side, on the data centre side with not only hardware, not only GPUs, NPUs, but the full infrastructure, the cabinets, the networking, and also the software side with CUDA. And not just CUDA, but all the software that are built on top of CUDA to help accelerate the development of AI in different industries.

 

Bertrand Schmitt

They had a very, very integrated system approach. I think that’s what will make them very special for a while, having a moat that is much wider than many have thought. For instance, AMD, there was a lot of discussion. Can AMD sell more, take some business from NVIDIA? Now it’s very clear they have not been able to do that at all. It will be interesting to see how it keeps developing.

 

Bertrand Schmitt

Personally, I’ve been very impressed by Meta, their released of the Llama models, their newfound commitment to open source. They have definitely been a disruptor in the AI space.

 

Nuno Goncalves Pedro

Moving maybe to defence, homeland security in general, but defence seems to be going through its own renaissance. It used to be defence probably led the way in many epics of our lives, around the wars, post-wars. In terms of development, in some ways, we owe Silicon Valley to all the public-private partnerships that happened afterwards, all these technology transferring from the military back into civil society.

 

Nuno Goncalves Pedro

I think we’re going through a similar stage. I mean, defence is leading the way around many uses of AI, uses of robotics, the application of things that are really, really out there. The beauty about defence, whether you like it or not, is there’s a lot of capital in it. It’s like no questions asked kind of thing.

 

Nuno Goncalves Pedro

In particular, if it’s under the US military complex, I suspect it’s the same for a couple of other complexes around the world, but the US military complex leading the way on this, on innovation. And aggressiveness of trying new things, doing proofs of concept, from anything that you can imagine, it’s happening right now. There’s obviously a lot of money and there’s a lot of interest in expanding capabilities. We’re in the middle of a very tense geopolitical arena around the world with wars ongoing that are significant.

 

Nuno Goncalves Pedro

We’re seeing a lot of this innovation already being deployed. In the Ukraine war in particular, obviously. We’ve seen some of the scary things that happened with Israel and Palestine. It comes to mind, the whole pager exploding stuff. There’s a lot of stuff happening right now that is cutting-edge tech happening in defence, and that makes it particularly exciting to play in if you are a start-up that is thinking about going after that space, et cetera.

 

Bertrand Schmitt

Yeah, the exploding pager, I don’t know if it’s amazing tech, but it was definitely an amazing intelligence operation. But yeah, in term of new companies, you cannot talk defence, I guess, without talking about Anduril. Anduril, that new company start-up that’s been around for a bit now and that has had a focus to try to employ Silicon Valley technologies, approach business model to the defence industry, and that has been doing extremely well. I’m very excited with what they have done and what they have achieved and where it’s going.

 

Bertrand Schmitt

Maybe one thing to note is that change since the start of the Ukraine war, actually, where 5 years ago, if you look at Google and Microsoft, in many situation, employees didn’t want to do any business related to the defence industries, were blocking initiatives, and now it’s a complete turnaround. If there is no more qualms around doing defence business, it’s actually expected for many of the big techs. It’s a big change of mindset as well, and there as well in the financing. I think that some VCs might have restrictions in terms of financing the defence industries, but I think step by step, especially in the US, the mindset has changed, and I guess LP’s constraints have evolved.

 

Nuno Goncalves Pedro

Indeed. I feel if you will look in particular at the Middle East and geopolitical situation, there’s a lot of appetite, by certain players to really reunite it and be really into a stage of peace once and for all for a long period of time. But obviously, there’s different actors that have different views on what that looks like. We’ll have to wait and see.

 

Nuno Goncalves Pedro

Meanwhile, defence as a market to sell to and to innovate in, thumbs up, definitely a market that is on the up and up. The cool thing is I think we’re going to see a lot of technology transfer, again, from these markets back into civil society and other markets, et cetera, which is probably generational for us. Certainly, my generation, I think we’ve seen some technology transfer back, but definitely probably not at the scale that we’ll see over the next decade or so from defence back into civil life.

 

Nuno Goncalves Pedro

Space tech, same usual suspects, SpaceX, Starlink, and all the usual suspects are lying around that wonderful ecosystem. Many countries putting significant amounts of capital into competing at space level. It feels like it is truly the next frontier, not to overquote Star Trek, but definitely it seems like it is the next frontier. Exciting moments. Is it evolution, revolution? I don’t think we’re seeing any revolutions in 2025, but probably more of the classic evolution. We’re going to see those astronauts finally coming down, hopefully, to Earth with a Dragon capsule. That’s cool.

 

Bertrand Schmitt

In term of innovation, Starlink should start its direct to cellular approach, which is exciting because it means that suddenly when you are out of reach of cell towers, your phone might use cell towers in space as a relay. I think that would change quite dramatically, actually, how you think about what is a phone and where does it work. Suddenly, no more zones where you don’t have signal anywhere in the world. That would be quite, I think, game changer for a lot of activities.

 

Bertrand Schmitt

Obviously, Starship’s getting out of edge. The impact of Starship is dramatic in term of cost of launching satellites in space. With Starship going into production at scale, soon we will be in a position again to see that decrease of the price of kilograms to space and as a result, the rise of brand new business models. The same way we got the Starlink coming up, maybe we’ll have something totally new we’re not really thinking about yet. It might take very exciting times once we have Starship at scale in production. Will that happen by end of 2025? Possibly.

 

Nuno Goncalves Pedro

Yeah. Maybe we will have something dramatically exciting. Maybe no. Maybe it will be more evolution rather than revolution. Biotech, the new frontier. Obviously, a lot of things happening with computational evolution in the use of AI. It is a space that I am personally not an expert on, but it’s for me, feeling like it’s the next big wave. If you’re listening to us, and you’re a big biotech fan, and you understand a bunch about the space, do reach out to me. Would love to talk.

 

Nuno Goncalves Pedro

There’s definitely some special momentum around it that makes it now become obviously mainstream, funds that are just solely focused on it, and obviously a lot of expertise going into it. In some ways, still subject to the issues around life sciences and health tech, where a lot of capital sometimes needs to go into it, but a lot of the layers we’re seeing around software are much lighter and less capital-intensive. I think a brave new world overall on the biotech side.

 

Nuno Goncalves Pedro

I don’t know if we’re going to have any big breakthroughs next year or not, but it’s definitely a space that I’ll definitely be spending a lot more time in and paying a lot more attention to. That’s one of the gifts that COVID also gave us, the belief that we had during COVID that the evolution of biotech needs to be much faster than we’ve had until now. Obviously, a lot of capital being poured into it, which will no doubt lead us to that next stage of development.

 

Bertrand Schmitt

Yeah, and that’s probably a space where the decrease in regulations can help improve the pace of change. On another topic, going back a bit more macro, definitely free speech. It has been a battleground for a lot of things, and I think we are going to get more of it versus less of it, at least in the US. While in comparison, it’s pretty clear that at least in the US, DEI is going down, is definitely losing momentum. We have seen more and more companies in 2024 abandoning the DEI initiatives, by themselves or by pressure from shareholders or pressure from customers, and then changing into how it’s seen by the population.

 

Bertrand Schmitt

ESG as well is certainly going down, at least in the US again. That’s a pretty dramatic shift because when you think about it, the past 4 years have been big on DEI and ESG, have been small on free speech. It’s a complete reversal on these topics, at least in the US. But my expectation is what’s happening here in the US will have a significant impact in every other market because the US is leading the way in many topics, including these topics, so that when there is such a change of reversal, many will be forced to follow up.

 

Nuno Goncalves Pedro

I think there’s been some good movement, but obviously, that’s the problem with a lot of these acronyms and the way they were positioned to the big companies and that way they were used or misused in some cases by the big companies and really showing impact that they really didn’t have. There’s a lot of work still to be done. I won’t go into the philosophical discussion of whether this is worthwhile in devo or not, but there’s been certainly a lot of, sadly, lipstick on a pig attached to the DEI initiatives and ESG initiatives that don’t really show any fundamental change or any impact in the world, so to speak.

 

Nuno Goncalves Pedro

Maybe that’s the right momentum, but definitely there still needs to be a lot of change in the world for some of these things to be more actable. We’ll see. We’ll see how things move. Not sure it’s all good news, but there’s definitely a lot of, as I said, lipstick on a pig that we can do well without.

 

Nuno Goncalves Pedro

We’ll talk about more the geography of the world, and maybe we start with our close neighbours to the US, Canada and Mexico. Tariffs impact on both of those countries, obviously with new President Trump in power is expected. We’ll see how that works, if our Mexican friends will be made to pay for a wall again or not.

 

Nuno Goncalves Pedro

Definitely some geographical tension, even with our close neighbours. We’ll see regarding Canada and Mexico. Do you have any perspective, Bertrand, if there’s anything dramatic that’s going to… I don’t think so. It’s going to be this back and forth of tariffs. I mean, Mexico is the number 1. The number 1 importer into the US is Mexico now. I think they are ahead of China from the latest numbers I’ve seen. There needs to be some balance here at some point.

 

Bertrand Schmitt

It’s pretty clear that at the end of the day, it’s more a threat of tariff than tariffs themselves. That’s the plan. That’s what has been announced by Trump on just a few days ago, a threat of tariff if there is no more control of illegal immigration coming from Mexico, from Canada. If there is not a better control of the import of some drugs. It’s a threat at this stage, and it seems like both of these countries seems to react positively. To be clear, they have a lot lose if Trump is going to follow up on the tariffs.

 

Bertrand Schmitt

They don’t have options. They can say they can put some tariff back, but it’s like nine to one in term of tariff impact. My guess is that the minute you are serious about it, the minute you are serious about your threat, and you are ready to go on your threat, then the other side has no other choice but then to basically take action.

 

Nuno Goncalves Pedro

If we’re talking about goods imports, Mexico, I think, is now number 1 ahead of China. Canada must be number 3, if I’m not mistaken, and well ahead of everyone else. This is like number 1, number 3 on goods imports to the US. The dependencies they have on the economy of the US is significant. To your point, I think everyone has an interest to make this work. Even the US, I think, has a deep interest to make this work. There will be tariffs, there will be aggression on certain points, but at some point in time, there needs to be a little bit of a balancing act. It is about getting something in return. It’s more of a quid pro quo dynamic of negotiation and bargaining that I think we’re facing right now than anything else, in particular with Canada and Mexico. I think with China, it’s more of a strategic long-term discussion, but with Canada and Mexico, it’s more of a tactical, let’s get stuff sorted and implemented and move from there.

 

Bertrand Schmitt

I think it would be relatively quick. I would expect mostly painless, but we will see. I mean, Europe, there is also question of potential tariffs. It’s not clear the position yet. What is clear is that there is an expectation by politicians in Europe that will be some price to pay, expectation to spend more in energy from the US, expectation to buy more defence equipment from the US. There is already some expectation that there might be tariff coming and the way to not have tariff coming might be to buy even more from the US. I’m not sure it’s a great deal, it’s reasonable. But again, that would be one side has more power than the other side in these discussions.

 

Nuno Goncalves Pedro

We’ll see what happens with Europe. We’ll see what happens in these relations. Things are also expanding. I mean, even looking at my country, there’s so much immigration coming from the US into Portugal, but definitely Europe is a little bit more being pushed around, very different sides of the world in what comes to anything that relates to free speech, very different views of the world and what comes to bear on energy as we discussed earlier. There’s obviously still not natural resources in the US and a lot of dependency on such. That with the new president, I believe, will be even further emphasised rather than de-emphasised, as in the current government.

 

Bertrand Schmitt

Yeah, on the topic of free speech, there was a tweet from JD Vance, pretty strong one highlighting that their NATO allies better behave well in term of free speech, else they might not be NATO allies anymore. I think it’s not just about tariffs and import-export, but it looks like the US will have a stronger point of view on some topics that it expects its allies to follow through under some level of direct threats.

 

Nuno Goncalves Pedro

Defence is going to be a concern for Europe. They still have huge dependencies on the US in terms of capital because of NATO. Obviously, there are local players in Europe that are significant and at scale. We’ll see how the dependencies get generated in terms of buying of equipment from the US, and if that’s an increasing trend or not, but definitely there needs to be more and more spend by Europe on defence, given what we’re seeing, particularly in the Ukraine and all this geopolitical instability that we see around the world.

 

Bertrand Schmitt

Or we might have a quick resolution to Ukraine, given that Europe doesn’t want to spend the money.

 

Nuno Goncalves Pedro

Maybe. I don’t know, the détente in Ukraine. I mean, I would wish that we do. We’ll see. But I do think that the spend in military and defence going forward, someone was telling me about Poland and very significant increase in military spend over the last several years. I feel it’s a trend. Countries need to be prepared, and therefore, certainly, the European Union needs to make sure that its countries are getting more and more prepared for the instability that we’re having.

 

Bertrand Schmitt

My take is that if you look at France and Germany, they have not been doing much. They have been talking, but it’s not clear at all. It’s going anywhere in term of serious increase of defence spending. When you see the French government that is going down right now, the German government that imploded a few weeks ago, it’s not clear at all there will be additional spent by these two countries. We saw these two countries leading the way. I’m really not so clear about what’s going to happen, quite frankly, because if you don’t have an increase of spend from them, an increase of support from them to Ukraine and the US move in a similar way, I think some things will have to conclude.

 

Nuno Goncalves Pedro

Yes. Some spend more than others. We know that, right? We know that in Europe, there’s been countries that are with significant percentage of their GDP applied to military and to defence expenditure. I feel there needs to be more, and it’s going to grow even faster. If I’m looking at 2025, I don’t see how this steps back in terms of defence spend, in particular with Trump in power, where all things are up for negotiation, right? I don’t see how Europe can get away with not really having to increase significantly defence spend.

 

Nuno Goncalves Pedro

Asia, I mean, China is the obvious one. Definitely significant tariffs coming their way, export controls all the round. Trump in power, I think it’s going to be more rather than less. As we said in our episode, talking about the candidates and the implications of each of them being elected. We feel their policies on China were both already quite aggressive, but I feel with President Trump back in power, it will be even more. Now, gone from a very, very tense non-ideal partnership maybe a decade plus ago to basically this is the enemy. This is, I think, where we’re going to end up.

 

Nuno Goncalves Pedro

I think we’re going to end up in more and more aggression, regulation, tariffs, and everything that goes alongside it, certainly in what relates the US to China, and then we’ll see what China does and how China reacts and what’s the development of the economy of China in the next year as well.

 

Bertrand Schmitt

I think it’s going to keep a similar trajectory. I don’t know if it will get much worse, to be frank. Of course, there will be threats of tariff and stuff, but practically, will it get much worse than the current trajectory? I don’t know. Let’s not forget for China, the big issue is that their internal market is certainly not ready to basically compensate for the loss of the US market. You can imagine that in that game of tariff, Europe will be forced to pick a camp, and I don’t think they will be able to pick the China camp.

 

Bertrand Schmitt

It’s not just the US, China might lose in term of market, but also Europe. It’s really significant for China in term of financial risk, especially if the country is not doing so well. If you look at unemployment statistics, if you look at overall this state of the tech economy after the big clamp down of the past few years. I would expect that there would be a lot of noise and stuff, but ultimately I would expect that China is going to adjust to what the US wants. I don’t know