The break from corporate earnings doesn’t mean any break at all in technology news this week, not least with the Consumer Electronics Show – an armies of PR people – descending on Las Vegas. We’ll be watching what news comes out of CES – and everywhere else.

As always, I’m focused on three things:
1) Technology-driven change;
2) the latest in innovation and startup trends, and;
3) stock fraud.

In This Note:

• 2025: The Year AI Gets Real

• Spire: Space Cadet

• Epistrophy In The News

• My Plans This Week

2025: The Year AI Gets Real

The artificial intelligence landscape will shift in 2025. The era of breakthrough demos ends. The time for implementation begins.

1. The Innovations Will Get Smaller

Revolutionary technologies tend to hit a productivity plateau 18-24 months after their initial surge and, with the ChatGPT “Aha” moment two years in the rearview mirror, we've reached that point with generative AI. Yes, large language models are getting better, with some amazing results, but the improvements are likely to be incremental, not revolutionary. 

And yet we’ll see revolutionary creations of what I’m calling “Small Language Models.” “Precision AI” will be emerging with smaller, task-specific language models built for accuracy and efficiency. Take Microsoft (MSFT:NASDAQ)-backed Fastino, with $7 million in pre-seed funding (full disclosure: some of that is mine), builds CPU-optimized models for enterprise tasks like data structuring and summarization. These models will start to proliferate AI to mobile devices. 

2. The World Beyond NVidia Opens For VCs

For many investors, the AI “play” was singular: buy Nvidia (NVDA: NASDAQ). But in the venture side of things hat universe will expand in 2025 with both private companies like chip makers big (Grok) and small (Positron) signing deals, selling product and getting investor attention. This surge in custom silicon reflects the need for specialized architectures.

Positron, another of my investments, exemplifies this shift. Their memory-focused approach delivers 3-4x improvements in performance and efficiency over traditional GPU systems. While most AI chips achieve only 10-30% of their theoretical memory bandwidth, Positron's architecture reaches near-perfect utilization - crucial for transformer model inference.

3. Copper is Out, Optical is In

There is also a push to connect those power-hungry chips, both within the data centers. Copper wiring doesn’t cut it any more. Massive data loads are now relying on advances in optical networking from the likes of Applied Optoelectronics (AAOI: NASDAQ) Coherent (COHR: NYSE) and Fabrinet (FN:NYSE) as they lead development of 800-gigabit optical components (I’ve invested in two of these stocks.). These faster connections will power next-generation AI data centers, enabling more complex model training and inference at scale.

4. The Year Robots Walk Among Us

In the next year, we’ll see revolutionary AI in robots, not just chatbots.

We’ve gotten quite used to driverless cars in San Francisco – a friend tells me she absent-mindedly said “thank you” when getting out of her Waymo last week. We don’t even bat an eye.

Waymo, owned by Alphabet (GOOGL: NASDAQ), will expand autonomous vehicle operations to Atlanta and Austin, Texas, partnering with Uber Technologies (UBER: NASDAQ). But that's not all – Waymo's going global, starting in Tokyo.

Startup Avride has also joined forces with Uber, deploying autonomous vehicles and delivery robots. Their goal? Launching a robotaxi service in Dallas by 2025. 

Lyft (LYFT: NASDAQ) is teaming up with autonomous vehicle companies like May Mobility, aiming to roll out self-driving Toyota Siennas in Atlanta next year. 

Amazon (AMZN:NASDAQ)-owned Zoox is inviting the public to ride kicking off in Las Vegas. 

And Zoox’s co-founder has launched a new company called Hypr that is launching a host of AI-driven mobility products. 

I also expect we’ll see functional delivery robots on the streets of many cities, not just those silly coolers-on-wheels from Serve Robotics (SERV: Nasdaq).   

The autonomous vehicle revolution is in full throttle – all driven by AI (see what I did there?) 

4. The Corporate Wallet Will Open

Enterprise adoption remains crucial. Most large companies spent 2024 testing AI initiatives. Battery Ventures surveyed 100 technology executives who control $35 billion in annual spending. Of these, 74% plan to increase technology budgets in 2025. AI has only just begun. 

5. There Will Be Fraud!

This is Golden Age of Fraud, and that was true before the AI rush was upon us. And still, fools and billions rush in. In 2025 AI frauds will be revealed. 

Manias breed deception. In the 1960s, the "Tronics Boom" spawned a litany of frauds. Transistors and electronics were the future. Companies like Dumont Oscilloscope, pushed by the notorious Edward Krock, fleeced unsuspecting investors. 

The 1970s? The "Garbage Stock" era. High-risk penny stocks, like Equity Funding, revealed as a massive fraud in 1973.

The 1980s saw the rise of junk bonds and savings and loan scandals. ESM Government Securities, a financial scam uncovered in 1985, cost investors millions. The dot-com boom of the 1990s? Hundreds of companies charged by the SEC. Billions evaporated. Bre-X Minerals' gold deposit fraud in 1997 shook the mining world. In the 2000s, Langbar International's uranium deposit scam and the subprime mortgage crisis exposed greed and deceit on a grand scale.

This AI mania will be every bit as bad. Greedy promoters, armed with buzzwords and hype, are ready to pounce.In this Wild West of algorithms, a massive AI fraud is inevitable, likely by 2025 (I’m quietly short at least one company that I believe is exaggerating its AI business).

AI is real. But not all the AI companies in 2025 will be. 

Space Cadet

It is untrue that all things that go up must come down. But that may very well be true of Spire Global (SPIR: Nasdaq) which aims to collect space-based data using a proprietary constellation of wine-bottle-sized low-earth “receiver nanosatellites.”

In mid-August the company announced its inability to report second-quarter results due to an ongoing re-examination of its revenue recognition policies. Now the third quarter and fourth quarter have passed and we still don’t know the true financial performance of this money-losing company. 

But here’s the biggest worry: their satellites are quietly falling from orbit. 

Spire's last 10-K reveals an escalating “loss on decommissioned, satellite deorbit & launch failure” expenses. These losses are growing consistently across quarters, suggesting systemic issues.

The current solar cycle represents a significant shift in the space environment. CEO Peter Platzer recently highlighted the issue, noting that increased solar activity is “impacting all activities in space.” As the sun's output ramps up during this roughly 11-year cycle, it causes the Earth’s atmosphere to expand. For Low Earth Orbit (LEO) satellites like Spire's, this means increased atmospheric drag and faster orbital decay. Platzer acknowledged that “some of the older satellites basically will deorbit a little bit earlier than we had anticipated,” forcing Spire to “reset the useful lives for some of the satellites.”

While this phenomenon affects all LEO constellations, Spire faces particular exposure given its reliance on a large fleet of small, relatively inexpensive satellites. 

The satellite reliability issues extend beyond solar flares. Spire's 10-K details potential satellite failure modes: mechanical failures, electrical defects, battery degradation, communications system collapses. Spire has long warned that some of its satellites can experience “technical failures” rendering them useless after just one month.

The company's business model hinges on continuously refreshing its network with new launches. A shortened lifespan for these satellites could increase Spire's required replacement rate and capital intensity. 

The growing "decommissioned satellite" expenses suggest these aren't theoretical risks, but recurring operational disasters gradually eroding the company's technological and financial foundation (and, full disclosure, I’m now short the stock). 

And while the company has yet to release complete financial statements, it was able to disclose ongoing cash burn as it offloaded its best business unit, maritime services. The stock has doubled but the business is continuing to unravel. 

Epistrophy In The News

Good times on New Years Eve on NewsNation with Laura Ingle, talking about Elon Musk, Tesla, SpaceX, password management and the future of crypto. And I got to revive my old tradition of going formal for the last TV appearance of the year.  

My Plans This Week

I’m available all week and would love to expand on the thoughts above.

I hope these notes are helpful to you. I’d love to discuss them further and, as always, comments, questions and ideas are appreciated.