New York is not anti-AI

TSMC reported second-quarter earnings that beat analyst expectations, with revenue and net income ahead of forecasts, but shares fell after the company announced higher-than-expected capital expenditure plans of $60-64 billion for the year and an additional $100 billion for its Arizona facility. The chipmaker cited extremely robust AI-related demand and a strong multi-year AI megatrend, with rising CPU demand from agentic AI benefiting its business across all CPU architectures.

New York is not anti-AI Thursday. An eagle-eyed reader noted yesterday that we swapped a million for a billion in our coverage of the proposed Stripe-PayPal transaction https://www.cautiousoptimism.news/everyone-is-building-the-same-startup/ . Apologies for the fat fingers. Today, we’re looking at TSMC’s mega earnings, a possible rebirth for American open-source AI, and why Twitter is screaming at the state of New York. To work — Alex https://twitter.com/alex 📈 Trending Up Ethics over income https://turntrout.com/why-i-left-google-deepmind … world models https://nvidianews.nvidia.com/news/japans-robotics-and-manufacturing-leaders-build-on-nvidia-cosmos-to-advance-physical-ai-frontier … the future of lawsuits https://www.reuters.com/legal/litigation/musks-xai-sues-grok-user-over-sexualized-deepfakes-2026-07-15/ ? … Microsoft’s cybersecurity footprint https://www.theinformation.com/articles/microsofts-new-security-chief-replaces-top-execs-force-ai-overhaul … consumer spending https://www.census.gov/economic-indicators/ retail sales , albeit less than expected https://www.cnn.com/2026/07/16/economy/us-retail-sales-june … new models from China https://www.ft.com/content/c6ecd8ce-c441-4d7c-aea6-fae3e28fb6ff?accessToken=zwAAAZ9rHGOekdPG7NjOxEFNfNOupvrj4o-2 w.MEUCIQDYAOz8X-sQZ m3bibo6DWikqK-pD4PaptfkT6Jvh4Y7AIgKTxHqP1DYRo-Ql0X2dzhBsSS 1w-RENPBZCsCWo9MXc&segmentId=e95a9ae7-622c-6235-5f87-51e412b47e97&shareId=1546aeb0-2eed-43fd-be05-e7e9b37b7efc&shareType=enterprise&syn-25a6b1a6=1 … Wonder https://fortune.com/2026/07/16/exclusive-marc-lore-says-wonder-is-gearing-up-for-an-ipo-650-million-9-billion-valuation-cathie-wood-grubhub-food-delivery/ …… South Korean interest rates https://apnews.com/article/south-korea-rate-hike-inflation-semiconductor-fad756c430007b891ff275043fea1453 TSMC: Shares of TSMC are off in early trading today, after the company reported https://investor.tsmc.com/sites/ir/financial-report/2026/TSMC%202026Q1%20Consolidated%20Financial%20Statements E.pdf second-quarter earnings. Did the Taiwanese chip giant underperform? No, compared to analyst expectations, the company’s revenue and net income came out ahead https://www.cnbc.com/2026/07/16/tsmc-second-quarter-profit-.html . TSMC also beat its internal guidance, as you can see below: TSMC’s earnings per share rose 77% compared to the year-ago period and 23.4% compared to Q1 2026, against 36% revenue growth. That’s incredible operating leverage. Even better, TSMC expects revenue between “US$44.6 billion and US$45.8 billion” in the current quarter. A casual +10% result in a single three-month period. From a massive base. Why are shares of TSMC falling in the wake of the news? The company’s planned capex is heading higher now $60 billion to $64 billion this year , which may have spooked investors. Pledging an additional $100 billion for its Arizona footprint likely added to investor worries. That said, TMSC is not investing wildly. During its earnings call https://www.investing.com/news/transcripts/earnings-call-transcript-tsmc-lifts-2026-outlook-as-ai-demand-stays-hot-in-q2-2026-93CH-4794777 , the company said that rising prices could harm consumer demand for certain products, but that: AI related demand continues to be extremely robust. … Our customers and customers’ customer, who are mainly the cloud service provider, continue to provide us with their very strong signal and positive outlook. Thus, our conviction in the multi-year AI megatrend remains very high. TSMC went on to state that rising CPU demand thanks to agentic AI is great news for its business, as “no matter what CPU approach is taken, whether it’s a x86, Arm-based, or RISC-V architecture, they are almost all TSMC’s customers.” That’s a flex. Regardless, as we hunt for fresh compute demand signals, indications that the AI capex boom may be fading, we find no evidence here. Thinking Machines Lab: When Thinking Machines Lab announced Tinker last October https://thinkingmachines.ai/news/announcing-tinker/ , the drop didn’t reframe the AI conversation. Dubbed “a flexible API for fine-tuning language models,” we should have paid more attention. Not only was Tinker’s focus on helping other companies tune their own models early and correct, but the product has grown into a reportedly nine-figure business https://sequoiacap.com/podcast/dylan-patel-of-semianalysis-why-hardware-software-co-design-is-ais-real-100x/ . Do the meme https://imgur.com/a/7jzj8qv Well, what does a neolab with a fine-tuning business need? A model of its own. Correct. Thinking Machines Lab has one now https://thinkingmachines.ai/news/introducing-inkling/ : Our model, called Inkling, is a Mixture-of-Experts transformer with 975B total parameters, 41B active. It supports a context window of up to 1M tokens. It was pretrained on 45 trillion tokens of text, images, audio and video. … Inkling reasons natively over text, images, and audio, and balances cost with performance through efficient and controllable thinking effort. We trained it to be a broad, balanced foundation model: strong across many domains, flexible enough to adapt. Inkling is not the strongest overall model available today, open or closed. Instead, a combination of qualities makes it a good open-weights base for customization: multimodal capabilities, efficient thinking, and availability on Tinker for fine-tuning Clown on them, Mira. While TMLab talks down Inkling’s benchmark performance, it competes rather well with Nvidia’s Nemotron 3 Ultra model, which is perhaps the de facto American open AI model. Now we have two More are welcome, as more competition is more good. - Thinking Machines Lab now has a proven tuning product and a solid model to pair with it. I don’t fully understand the economics of offering tuning services, but if the market warms to Inkling, I do not see why the company can’t double or triple its top line, and thus economically derisk itself. Quickly. 📉 https://finance.yahoo.com/news/servicenow-pledges-1-5bn-investment-110000403.html Trending Down 📉 https://finance.yahoo.com/news/servicenow-pledges-1-5bn-investment-110000403.html AI usage limits https://x.com/thsottiaux/status/2077632589498913087 … AI usage limits https://x.com/ClaudeDevs/status/2077603834453770467 … grocery spending https://www.cnbc.com/2026/07/16/us-grocery-spending-slows-in-hit-to-food-companies.html … the value of gold https://www.reuters.com/business/gold-falls-mideast-escalation-dims-hopes-easing-inflation-2026-07-16/ … shock, surprise https://www.ft.com/content/f2f77b53-f141-43b0-9ce4-94cf49819fba … SpaceX shares, after an IPO pop https://www.cnbc.com/2026/07/15/spacex-spcx-stock-ipo-price.html … different human-agent password access https://9to5mac.com/2026/07/16/1password-now-lets-claude-sign-in-to-websites-without-seeing-your-passwords/ … Chinese GDP growth https://www.reuters.com/world/china/chinas-q2-gdp-growth-slows-43-yy-misses-market-forecast-2026-07-15/ … Closed-source AI? Building off the Thinking Machines Lab news, Fireworks AI announced https://fireworks.ai/blog/series-d-announcement a $1.5 billion round at a $17.5 billion valuation, powered in part by its passing “$1 billion in annualized revenue run rate.” But more importantly, Fireworks helps customers tune models with their own data. You know, to chase better results and lower costs for their AI dollar. Expect related reporting from competing companies in short order. SpaceXAI’s rep: Though progress is being made. Recently, developers discovered that Grok Build https://www.cautiousoptimism.news/everyone-is-building-the-same-startup/ Grok CLI could upload a user’s codebase to private cloud storage controlled by SpaceXAI. Blowback was quick and torrential. In response to all the shouting, the company announced it would delete all stored data and worked to explain its data retention policies in non-sinister terms. The market was not completely soothed. So, to protect its Grok 4.5 model — which people quite like — from withering away under a self-inflicted PR crisis, SpaceXAI open-sourced Grok Build. You can check out the code here https://github.com/xai-org/grok-build and read developer-guru Simon Willison’s rundown of what’s inside here https://simonwillison.net/2026/Jul/15/grok-build/ . It’s worth noting that while Grok 4.5 is a strong model especially in cost-performance terms , it’s not igniting the public AI charts. On OpenRouter, Grok 4.5 is less popular than OpenAI’s GPT-5.6 Sol, and when you add up total inference demand for the entire GPT-5.6 family, it’s not even close. SpaceXAI market share on the model router remains dramatically off-peak. - We’re still looking at SpaceXAI pre-Cursor. That deal is ongoing and expected to close this quarter https://www.sec.gov/Archives/edgar/data/1181412/000162828026043411/spaceexplorationtechnologi.htm . Lots of developers like Cursor. Perhaps its eventual grafting onto SpaceXAI will resolve the issues that the larger company just ginned up for itself. Everyone is mad at New York News that New York will enact https://www.governor.ny.gov/news/first-statewide-moratorium-new-hyperscale-data-centers-launched-governor-kathy-hochul the “first statewide moratorium on new hyperscale data centers” has the usual suspects up in arms. POTUS thinks the move is a terrible idea https://www.cnbc.com/2026/07/15/trump-blasts-new-york-gov-hochul-over-ai-data-center-moratorium.html . Tech types are shouting about the state committing economic suicide https://x.com/Jason/status/2077717381988630582 . Industry is worried https://www.politico.com/news/2026/07/15/i-wouldnt-call-it-panic-industry-quails-at-hochuls-data-center-pause-00998127 . The Journal’s Editorial Board is incensed https://www.wsj.com/opinion/kathy-hochul-new-york-data-centers-moratorium-32457d9c . Subscribe to Cautious Optimism to unlock the rest. 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