It's Monday, May 25th: Google replaced its search box with AI agents at I/O, SpaceX filed the largest IPO in history and its S-1 exposed a $1.25B monthly compute deal with Anthropic, and Anthropic is closing a $30B round that would make it worth more than OpenAI.
🇺🇸 Happy Memorial Day!
To our AIC members in the US, we hope you enjoyed the day off. For everyone else, enjoy this abbreviated article covering what's been happening in AI this week.
Covering what’s happening on the ground in AI, every Monday.
1️⃣ GOOGLE I/O 2026: Search Gets Agents, Gemini Gets Cheaper
Image from Yahoo Tech
Google used I/O 2026 to ship Gemini 3.5 Flash, a 24/7 personal agent called Gemini Spark, and a Search overhaul now serving over 1 billion monthly AI Mode users.
Gemini 3.5 Flash is GA at less than half the cost of competing frontier models. AI Ultra drops from $250 to $100/month with 5X usage limits and 20TB storage.
Gemini Spark runs on Google Cloud VMs 24/7, even when your laptop is closed. Beta launches next week for U.S. Ultra subscribers with email access, sub-agents, and payment authorization.
Search merges AI Overviews and AI Mode into one experience worldwide. Information Agents that monitor topics and push synthesized updates arrive this summer.
Google is betting cheaper inference plus a bundled agent platform pulls developers off standalone API plans. Watch whether Spark earns trust with real payment authorization.
2️⃣ SPACEX FILES S-1: Largest IPO In History Targets $1.75T
Image from DW
SpaceX filed its S-1 with the SEC on May 20, disclosing $18.7 billion in 2025 revenue and targeting a $75 billion raise at a $1.75 trillion valuation.
Starlink has 10.3 million subscribers across 164 countries, generating $11.4B in revenue and $4.4B in operating income. xAI burned $12.7B in capex, pushing SpaceX to a $4.94B net loss.
Anthropic signed a $1.25 billion per month compute deal for xAI's Colossus infrastructure through May 2029, potentially worth $45B over the contract term.
Musk retains 85.1% voting control through dual-class shares and will serve as CEO, CTO, and Chairman post-IPO. Goldman Sachs and Morgan Stanley are leading the underwriting syndicate.
Starlink prints cash, xAI burns it, and public investors will be asked to fund both with no governance check on Musk's allocation decisions.
3️⃣ AI VALUATIONS: Anthropic Eyes $900B, Overtaking OpenAI
Image from inkl
Anthropic is closing a $30B+ funding round at a $900B pre-money valuation, which would make it the most valuable AI startup in the world, surpassing OpenAI's $852B.
Sequoia Capital, Dragoneer, Altimeter, and Greenoaks are each putting in roughly $2B. Founders Fund and General Catalyst are also participating. The round is expected to close the week of May 26.
Valuation jumped from $61.5B (March 2025) to $900B+ now, roughly 15x in 14 months. Q2 revenue is projected at $10.9B with a first operating profit of $559M. Claude Code alone hit $1B annualized.
OpenAI filed its own IPO on May 22. Both companies are racing to lock in capital before the other sets the public market benchmark.
If both close near $900B-$1T, watch whether downstream AI startup valuations follow the same inflationary curve or investors start demanding profitability proof first.
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📰 Other Headlines
LAB DEFECTION: OpenAI co-founder Andrej Karpathy joined Anthropic's pre-training team to build a research group using Claude to accelerate model development.
VERDICT IN: A federal jury dismissed Elon Musk's lawsuit against OpenAI in under two hours, ruling he filed too late and clearing a key legal obstacle to OpenAI's IPO.
MATH SOLVED: An internal OpenAI reasoning model autonomously disproved an 80-year-old Erdos conjecture in discrete geometry, verified independently by Fields Medalist Tim Gowers.
TALENT GRAB: Google DeepMind acqui-hired 20+ researchers from Contextual AI in a deal valued at $80-90M, including CEO Douwe Kiela.
WORKFORCE SHIFT: Meta laid off 8,000 employees (10% of its workforce), cancelled 6,000 open roles, and redirected 7,000 staff into AI-focused teams.
AI PIVOT: Intuit is cutting 3,000 employees (17% of its workforce) while signing multi-year AI deals with both Anthropic and OpenAI to embed AI across TurboTax and QuickBooks.
SUPPLY CHAIN BREACH: A trojanized VS Code extension gave attackers access to 3,800 internal GitHub repositories for 18 minutes before the compromised employee's session was revoked.
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🧑💻 About the Editors
About Noah Frank
Noah is a researcher, innovation strategist, and ex-founder thinking and writing about the future of AI and the workforce. His work and body of research explores the economics of emerging technology and organizational strategy. Outside of AIC, Noah heads research for Centaurian AI.
About Joy Dong
Joy is a news editor, writer, and entrepreneur at the intersection of AI and blockchain. Whether she is demystifying complex systems in her newsletter, TEA, or building streamlined solutions through her automation agency, Ownly, Joy’s mission is to make emerging tech accessible and actionable for everyone.