Emerging AI Winners + AI Bootcamp

(This article was originally published as the latest edition of our newsletter: Signal. If you'd like to stay ahead of AI transformation in the Enterprise, subscribe to Signal with this link.)

Welcome back to another edition of Signal! If you’re new here, Signal is your go-to resource for uncovering the latest trends in the economy, business, and tech. All with an AI lens.?

Let’s dive in.?And in the Wrapping Up section, I'm sharing a TV show recommendation.

1. Economy: DOGE vs Inflation

2. Business: AI Capital Spending

3. Technology: The Emerging AI Winners

Grab your favorite beverage?and?let's dive into some signals.

But first, let me?share that the?AI Bootcamp?was such a phenomenal success!?

Dec 2024 AI Bootcamp cohort: oversubscribed!?

A few months back,?on a rainy December Saturday, over 30 executives and innovators gathered in Mountain View CA?and it was nothing short of an extraordinary experience. What started as a simple idea—to equip leaders, product managers, and technologists with practical tools for AI transformation—quickly became something much bigger.

Here’s the surprising part: participants shared that they had never been in an AI program like this. A program that blends:

? Business strategies to unlock value through AI.

? Real-world examples to bridge the gap between "what AI can do" and "what AI should do."

? Hands-on experience with low-code/no-code tools for building AI solutions.

? Governance, ethics, and frameworks for responsible AI implementation.

Why did participants find it unique?

Because most AI programs focus on tools and algorithms training, but this program was different. We focused on how to lead AI transformation in organizations. From building an AI strategy to deploying practical solutions, we designed this bootcamp for people who aren’t just technical but decision-makers.

?? What the audience said:

“I’ve attended many workshops, but nothing prepared me for AI transformation like this did.”

“I didn’t know I could build something functional with no-code tools and take it back to my team tomorrow!”

“This is the missing link—most training tells you what’s possible; this program showed me how to make it happen.”

"It really spanned the full spectrum for me - from fundamentals to advanced RAG topics"

Fun fact: We planned for 25 attendees and ended up with 36! The enthusiasm was overwhelming, and so was the feedback. The best part? The energy in the room as participants shared their challenges, exchanged ideas, and started building their visions for AI-powered organizations. A huge shoutout to our phenomenal team who made this happen despite obstacles like tricky tech setups (and even a couple of team members braving the day under the weather)!

What's Next for AI Bootcamp? Coming soon to a conference room near you!

After the session, multiple organizations reached out to us for conducting an AI Bootcamp for their teams.?We are now rolling out AI Bootcamp Enterprise Edition to multiple companies:?now YOU have an opportunity to host an AI Bootcamp for your organization.?

Enterprise Edition of the AI Bootcamp is contextualized for your business and industry. We design the Bootcamp for your organization's priorities and use cases, creating even more value for your company.

This is the fastest, efficient and fun way to make your teams 'AI ready' so that they can lead AI transformation in your organization.

See also: the next public AI Bootcamp will be on Sat March 29th. Take advantage of early bird pricing (35% off, coupon code EARLY). Expires Friday Feb 28th.?

Registration Link:?https://lu.ma/mbmbi1xi

1. ?Economy: Interest?vs Inflation?

A. Fed Hits Pause: Inflation Still Thinks It’s 2022 The Federal Reserve hit the brakes on rate cuts in January, leaving the benchmark rate frozen at 4.25%-4.5%.

Inflation remains stubborn at 3% and tariffs on Chinese imports threatening to turn your grocery bill into a crypto portfolio.

One Cut or Bust: Markets now price in just ONE 0.25% cut in 2025 (likely September).

Translation: The Fed’s 2025 calendar is emptier than a metaverse conference.

B. $5,000 DOGE Check and a Side of Eggflation

U.S. inflation rate at 3% is partly?thanks to everyone’s favorite breakfast staple: eggs. Bird flu has turned your omelet into a luxury item, with prices up 53% YoY. Eggciting stuff.?

Meanwhile, Elon Musk and Donald Trump’s DOGE project could reduce wasteful spending. However the?“DOGE Dividend” proposal wants to mail $5,000 checks to households, because nothing says “inflation fix” like flooding the economy with cash. Economists are sweating bullets, recalling the 2022 stimmy checks that turbocharged inflation to 7.9%.?

But hey, at least we’ll have extra cash to buy… (checks notes)… one carton of eggs.

Warren Buffett's Annual Letter

As a regular reader, you know that I'm a huge Buffett and Munger fan. And so I always look forward to reading the Annual Berkshire letter. I think just reading all those letters is worth than getting an MBA.?

But I digress.

This year’s edition came with stellar news for Berkshire Hathaway – record operating profit of $47 billion and a cash hoard swelling to $334B.

But he also a stern warning to Washington: stop the “fiscal folly”! Buffett gently (or not-so-gently) scolded policymakers about spending and deficits, warning that reckless spending could “destroy the value of paper money” if we’re not careful. (When a 94-year-old genius with $149B net worth calls something folly, you listen.)?

Here are some of my highlights from the letter:

"We paid far more in corporate income tax ($26.8B) than the U.S. government had ever received from any company – even the American tech titans that commanded market values in the trillions."

"One further point in our CEO selections: I never look at where a candidate has gone to school. Never!"

Is Warren Buffett's Sending a Signal?

Though Warren is pro-equity and he has always maintained that he favors stocks over cash, Berkshire's cash pile is at it's highest level ever.

Either Warren is gunning for a large acquisition or he sees something in the markets that he prefers cash in the short term.?

Which one is it?

2. Business: AI Capital Spending

AI Capital Expediture: $325B and Counting

Big Tech will be spending $325B on AI in 2025—up 46% from 2024. That’s enough to buy 65 billion lattes or 1.3 billion RTX 4090s. The goal? Build AI so smart it can explain why your Netflix recommendations are all "90 Day Fiancé".

Investors are skeptical, but CEOs swear cheaper AI models will “unlock demand.” Translation: “We have no idea, but our stock options vest in Q3.”

Despite DeepSeek, Spending Will Need To?Increase:?

But on a more serious note, AI spending is required.

Models like DeepSeek are showing that we can use new techniques to optimize the utilization of AI infrastructure. But here's why AI spending will need to increase even further:

"AI reasoning models can easily use more than 100 times as much computing resources as conventional large language models, Nvidia’s vice president of product management for AI, Kari Briski, wrote in a recent blog post. That multiplier comes from reasoning models spending minutes or even hours talking to themselves—not all of which the user sees—in a long “chain of thought.”

The amount of computing resources used by a model is proportional to the number of words generated, so a reasoning model that generates 100 times as many words to answer a question will use that much more electricity and other resources.

Things can get even more resource-intensive when reasoning models access the internet, as Google’s, OpenAI’s and Perplexity’s “deep research” models do."

Data: WSJ

See also: Gavin Baker's take on Deepseek and need for AI infrastructure and power.

See below: BG2's chart of forecasted Big Tech Capex spend.

3. Tech: The Emerging AI Winners

It was not too long ago that everyone had declared OpenAI in general and?ChatGPT in particular the 'current' AI winner followed by Anthropic and Google by a wide margin. And then DeepSeek happened which is now challenging the leaders with an open source strategy.

Grok 3 was released last week, and it has made the AI model field even more interest:

Emerging AI Winner:?Grok 3

Grok 3 is built for reasoning, not just regurgitating facts or generating text. It’s designed totackle complex, multi-step problems with accuracy and speed. Key features include:

• Big Brain Mode: A specialized feature that allocates additional computational resources to solve intricate problems in math, science, and coding. This mode boosts accuracy but takes longer to process queries, making it ideal for high-stakes tasks.
• DeepSearch: Grok 3 scours real-time data from X (formerly Twitter) and the web to provide comprehensive, up-to-date answers. Think of it as Google on steroids butwith fewer ads and more existential humor.
• Multimodal Capabilities: Beyond text, Grok 3 can process images, videos, and audio inputs, making it versatile for applications like content creation, research, and real-time data analysis.
• Computational Power: Powered by xAI’s Colossus supercomputer with?100,000 Nvidia H100 GPUs ??, Grok 3 has 10x the compute power of its predecessor, enabling it to handle tasks that other models can’t touch.

What's fascinating is that Grok has built a lot of these capabilities in a fraction of the time it has taken for other AI leaders, see chart below.

Emerging AI Winner: Cursor, the fastest growing software company in history.

According to Sacra, Cursor skyrocketed from $1M in ARR in 2023 to $100M by the end of 2024—a staggering 9,900% year-over-year growth. It reached this milestone in just 12 months, with a team of about only 32 employees. ????

Cursor’s explosive success can be attributed to three key factors: 1. Massive Developer Adoption Unlike traditional SaaS companies that focus on enterprise sales, Cursor took a developer-first approach. With over 360,000+ individual developers paying $20–$40 per month, the company has built a sustainable model with an average contract value of $276. This grassroots adoption has been a major driver of its rapid growth. 2. AI-First Code Editor and Agent Cursor isn’t just another coding tool—it’s an AI-powered code editor that transforms the development process. By integrating seamlessly with the VS Code ecosystem, Cursor offers: a) Real-time AI assistance for writing, editing, and automating code

b) Context-aware AI that helps developers refactor, debug, and optimize their work c) Enhanced productivity with VS code integration, making coding more efficient and streamlined 3. Product-Led Growth Model Cursor’s success is fueled by a freemium model that hooks developers early and encourages upgrades.?The free tier includes 2,000 monthly AI code completions, offering a taste of the product’s capabilities.?As developers see the value, they upgrade to paid plans, driving revenue growth. What does Cursor’s meteoric rise tell us? AI isn’t just transforming what we build—it’s revolutionizing how fast businesses can scale.

Wrapping Up

Highly recommend Severance on?Apple TV+, and now they've just released Season 2. The show has? everything going for it: Sci-fi, thriller, black comedy, dystopian, mystery and drama.

Brilliant.

That's it for this edition.

Seize the day!

Abhijeet

Note: This newsletter is for informational purposes only and does not constitute financial advice or consulting recommendations. If you would like to speak with Abhijeet or one of Spearhead's leaders, please schedule a call.