Man plans, AI laughs.

The energy-guzzling artificial intelligence era isn’t helping Microsoft reach its carbon-negative-by-2030 goal, so the company announced Tuesday it is buying 500,000 carbon credits from Occidental Petroleum over the next six years. The deal is the largest of its kind in the industry, the companies claim. But it comes right as some influential experts are beginning to ponder whether all this AI hype is justified, anyway.

Capture the Flag

Microsoft has a problem. Between 2020 and 2023, the Big Tech firm’s carbon emissions increased nearly 30%, due in large part to the expansion of AI and cloud computing infrastructure. And the easiest way for any $3.4 trillion company to solve a problem (one that also happens to be pushing its share price to all-time highs) is to throw money at it. Enter Occidental and its growing carbon management unit, 1PointFive.

Essentially, Microsoft will be paying 1PointFive to remove 500,000 metric tons of carbon from the atmosphere via so-called Direct Air Capture (DAC) technology at its first-ever and still-under-construction DAC plant, called Stratos. The West Texas-based facility, which will be the largest of its kind, is projected to capture 500,000 metric tons of carbon from the air annually. Experts, it should be noted, say DAC is far less effective than point-source carbon capture — directly at a factory’s smokestack, for instance — while costs on a per-metric-ton basis tend to run higher than the going DAC carbon credit rate of roughly $1,000. Climate experts also say carbon credits should be reserved only for offsetting particularly hard-to-eliminate emissions.

Meanwhile, AI skeptics are rearing their heads on Wall Street, and carbon emissions aren’t the only reason. A recent report from Goldman Sachs titled “Gen AI: Too Much Spend, Too Little Benefit?” in particular is turning some heads:

• In the report, Goldman’s head of global equity research and semiconductor industry analyst, Jim Covello, argues that the costs of building out AI infrastructure — estimated at over $1 trillion in the next few years alone — and operating AI, which he does not expect to dramatically decline, are very likely to outweigh whatever efficiencies the tech may bring.
• “Replacing low wage jobs with tremendously costly technology is basically the polar opposite of the prior technology transitions,” Covello writes. He adds that unlike the internet and smartphones, “not one truly transformative — let alone cost-effective — application has been found” in the 18 months since Gen AI’s debut.

Gridlock: The report also highlights the massive energy grid expansion needed through 2030 to support the AI industry’s ambitious expansion, less than half of which is expected to come from renewable energy sources. Translation: Microsoft will likely be on the market for a lot more carbon credits.

The Elon bump may be over at X.

The platform formerly known as Twitter has become less of a headline magnet in recent months compared to the explosive period following Musk’s hamfisted acquisition. But just because the news cycle is comparatively calm doesn’t mean everything is going smoothly. The Financial Times on Tuesday published some previously unreported figures from X that show its user growth has plateaued.

I Feel So Unused 

According to the figures put out by the FT, X said its daily active user count (the number of people who open Twitter on a daily basis, a.k.a. masochists) for Q2 of this year was 251 million, marking a 1.6% increase year-over-year. That’s compared to 3.9% growth from 2022 to 2023, the period when Musk took the reins, and 16.6% growth from 2021 to 2022. For its part, X publicly released some user stats on Tuesday claiming that its monthly user numbers have grown 6% year-over-year.

But daily users are more valuable, and app analytics company Sensor Tower told The Daily Upside that specifically on mobile, it thinks the numbers are even worse:

• “According to Sensor Tower estimates, X worldwide mobile app DAUs [daily active users] have continued to decline materially in the post-acquisition period,” Seema Shah, VP of research and insights at Sensor Tower, told The Daily Upside. Shah said June 2024 saw a 13% decrease in DAUs year-over-year, and a 20% decrease from October 2022 right before Musk bought it. 
• Shah said possible explanations for the drop in user numbers include “continued user frustration over controversial content and technical issues” as well as a trend toward more TikTok-esque, short-form video leaving X out in the cold.

Friends Again? Part of that “controversial content” comes down to Musk himself, and while he’s shown no sign of kicking his tweet habit, he did recently attempt some diplomacy with advertisers. Last month, Musk and X CEO Linda Yaccarino both attended the advertiser conference at Cannes, reportedly with the goal of courting advertisers — about seven months after he rather crudely told advertisers where they could go if they took issue with the platform’s moderation policies. But Musk’s antics and politics may be a fairly secondary issue if advertisers perceive X as a dead end for user growth.

When you think of unicorn companies, the first things that come to mind are delivery robots, payment apps, or self-driving trucks.

Then there’s Athletic Brewing Company, a potential unicorn valued at $800 million following a $50 million fundraising round Tuesday. It makes craft beer that won’t get you drunk. Calorie-conscious, alcohol-wary consumer sentiment could soon push it over the $1 billion hump.

Total Net Worth

Athletic was founded in 2017, not by tattooed Portlanders but by Connecticut-based former hedge fund traders. CEO and co-founder Bill Shufelt told CNBC Tuesday the company sold 3 million cases and made over $90 million in revenue last year.

That drew investors, led by growth capital firm General Atlantic, to Athletic’s latest equity financing round of $50 million, first reported by The Wall Street Journal. The round doubles Athletic’s valuation from 2022, when an investment from soda giant Keurig Dr Pepper took a $50 million stake. Beer industry and consumer trends are likely to make future stakes pricier:

• Set against more and more Americans, especially younger Americans, telling pollsters they are less inclined to drink alcoholic and calorie-heavy beverages, US beer production and imports fell 5% in 2023, according to the Brewers Association.
• Non-alcoholic beer, however, is showing some hops: Research by Nielsen found that, in the year leading up to August 2023, non-alcoholic beer, wine, and spirits sales rose 31% to $510 million — with beer representing 86% of sales.

Ozempic Gold Medal: In addition to growing consumer aversion to alcohol, adoption of weight-loss treatments like Ozempic, Wegovy, Mounjaro, and Zepbound — which Moody’s estimates could make $80 billion in annual sales by 2030 — could be another boost to producers like Athletic. In a survey conducted by Morgan Stanley earlier this year, more than half of drinkers taking obesity drugs said they were consuming less alcohol, with nearly 1 in 5 consuming none at all.