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This week in Silicon Valley, startups & tech:
Apple posted $111B in Q2 revenue, up 17%. iPhone 17 is "the most popular lineup in our history." Memory costs are climbing "significantly higher" in Q3.
Musk admitted xAI "partly" distilled OpenAI's tech. OpenAI lawyers revealed Zilis allegedly acted as a covert liaison between Musk and OpenAI.
Cerebras is targeting a $4B raise at a $40B IPO valuation. Intel climbed 114% in April, its best month on record.
DOW signed classified AI deals with AWS, Microsoft, Nvidia, Oracle, and Reflection AI. The Navy awarded Domino $100M to train UUVs.
Founders Fund raised $6B, its largest haul ever. GameStop's Ryan Cohen made an unsolicited ~$56B offer for eBay.
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🔥 Startup Intros Events Coming Up
We’re excited to do another a16z Speedrun AMA with SUN 👋
Before the session, we put together a short audio walkthrough on SUN covering how Speedrun works, what the application process looks like, and what founders should keep in mind going in:
Give it a quick listen: https://sunapp.ai/course/a16z-speedrun
Bring your questions. We’ll see you this Wednesday!
Other Events Coming Up:
May 12: Agentic AI Founders’ Night-Out: We are going beyond copilots and talking about the rise of Agent Orchestration! Register on Luma!
May 15: Caffeine & Capital: Our morning coffee meetup is back at Corgi Cafe in FiDi! Grab coffee, meet founders and investors & register on Luma!
🍎 Apple's $111B Quarter + The Memory Squeeze
📱 The Juicy Numbers
Apple delivered a beat across every segment:
Total revenue: $111.18B, vs. $109.66B est., up 17% YoY
iPhone: Up 22% YoY to $56.99B, vs. $57.21B est. (slight miss, but Tim Cook says supply constraints held it back and "demand was off the charts")
Services: Up 16.3% YoY to $30.98B, beating $30.4B est.
Mac: Up 6% YoY to $8.4B
China: Up 28% YoY to $20.5B, vs. $18.9B est.
Net income: Up 19% YoY to $29.58B
Q3 guidance: Revenue expected to rise 14-17%, above estimates
The Demand Growth: CFO Parekh says, "The iPhone 17 family is now the most popular lineup in our history," and that Apple gained market share during the quarter. Apple shipped 71.6% of all smartphones with satellite connectivity in 2025, a category projected to reach 46% of global shipments by 2030.
The Supply Shortage: Apple is telling suppliers it will maintain its current production share in India rather than expand, after local sites struggled without China-based teams. Record demand, constrained supply.
🧠 The Memory Squeeze
The Cost Problem: Apple warned that memory expenses will climb "significantly higher" in Q3. Tim Cook says the Mac Studio and Mac mini "may take several months to reach supply demand balance," as buyers snap them up for AI and agentic tools. Apple also stopped offering 256GB Mac minis globally, increasing the entry point to 512GB at $799.
The Ripple Effect: The squeeze is hitting beyond Apple as Samsung projects the memory shortage will worsen in 2027, as customers are already placing orders for next year. Memory makers are raising DRAM prices, not shipments, prioritizing revenue over volume. Nintendo's share price has fallen ~45% since August 2025 as rising memory chip costs pressure Switch 2 margins. Memory and storage companies are booming, but the companies that buy their products are paying the price.
Translation: Apple's demand is "off the charts," but memory makers are raising prices, not shipments. When memory companies are booming, and hardware makers are constrained, the bottleneck is the story.
🎁 Megadrop: Bright Data AI Startup Program
We were at the grand opening of Bright Data's new SF office last week and love this company. We just signed up for their AI Startup Program and got our data credits, so we're speaking from experience here.
Most AI products hit the same wall: getting reliable, real-time web data at scale without getting blocked. Bright Data is the platform 70% of AI labs already use for exactly this, and their startup program gives early-stage founders up to $20K in free credits to build on it.
⚖️ Musk v Altman: The Shivon Zilis Revelation
🕵️ The Liaison
The Bombshell: OpenAI's lawyers told the court that Shivon Zilis, a longtime Musk employee and mother to four of his children, acted as a covert liaison between Musk and OpenAI. So while Musk was publicly distancing himself from OpenAI and building xAI, Zilis was allegedly feeding him information from inside the org. This reframes the entire case from passive donor betrayal to someone trying to spy on the company he now claims to have wronged him.
The Admission: Earlier in the week, when asked whether xAI has ever distilled tech from OpenAI, Musk said the claim is "partly" true. That single word hands OpenAI's legal team evidence of the very cross-contamination they need to flip the narrative.
🔇 The Judge's Limits
No Existential Talk: The judge told Musk's lawyer she did not want talk of AI's existential threat to seep into the trial, and to focus instead on facts about OpenAI. This guts Musk's most emotionally compelling argument: that he backed OpenAI to save humanity, and Altman sold that mission for profit. Without the existential framing, the case becomes a narrow contract dispute between billionaires.
Translation: Musk admitted to distilling OpenAI's tech while suing them for betraying their mission. The judge won't let him talk about existential risk. When the plaintiff's own testimony undercuts his case, what's left to argue?
🔧 Cerebras $27B IPO + The AI Chip Reshuffling
🏦 The Race to Replace Nvidia
Jensen Huang said Nvidia's market share of AI accelerators in China "has now dropped to zero" and that the US export policy "has already largely backfired." That vacuum is creating opportunities on every side.
In the US, Cerebras is selling 28M shares at $115-$125 apiece, aiming to raise $3.5B at a valuation of up to $26.62B in its second attempt to go public. The AI chipmaker builds wafer-scale processors designed for training large models.
Intel climbed 114% in April, its best month on record, pushing its market cap past $470B. Intel tapped ex-Qualcomm EVP Alex Katouzian to lead its Client Computing & Physical AI group, signaling a push into edge AI. Also, Blackstone's data center acquisition vehicle is seeking to raise $1.75B in its own IPO, targeting newly built data centers valued at $250M-$1.5B. After years of Nvidia dominance, the public markets are finally pricing in alternatives.
🇨🇳 The China Gap
The Self-Sufficiency: Huawei expects AI chip revenue to hit ~$12B in 2026, up 60%+ from $7.5B in 2025, as orders for its Ascend 950PR chip surge. DeepSeek's V4 model is heavily optimized for Huawei Ascend AI chips, accelerating China's move toward AI self-sufficiency. But NIST's CAISI evaluation indicates that DeepSeek V4 Pro still lags behind leading US models by about 8 months. China is building its own stack, but the performance gap hasn't closed yet.
Nvidia's Asian suppliers now account for ~90% of its production costs, up from 65% in 2025. The irony: Nvidia's China market share is zero, but its supply chain dependency on Asia has never been higher.
🔀 The Diversification
In Europe, Anthropic is in early talks to buy AI inference chips from UK-based Fractile, which will become available in 2027. Nebius agreed to acquire Eigen AI for ~$643M, a company that optimizes chip inference performance. But legislators are criticizing the EU's €20B sovereign compute plan, questioning whether there is demand and flagging its reliance on Nvidia GPUs. Even the plans to diversify away from Nvidia still depend on Nvidia.
Translation: Nvidia's China market share is zero, but its Asian supply chain dependency hit 90%. Even though everyone wants to break Nvidia's dependency, almost no one actually has.
🎖️ The Military AI Gold Rush
🔒 The Classified Expansion + Operational Deployments
The DOD struck deals with AWS, Microsoft, Nvidia, Oracle, and Reflection AI to use their AI tools on classified military networks "for lawful operational use." This is the broadest classified AI deployment in US military history, moving from last week's single-vendor debates to multi-vendor classified access at scale.
The US Navy awarded Domino Data Lab a contract worth up to $100M for AI software that teaches underwater drones to identify new mines in the Strait of Hormuz. Scout AI raised $100M to build an AI model that operates and commands autonomous military ATVs. True Anomaly raised $650M at $2.2B for autonomous spacecraft and Space Force software, bringing its total funding to $1B.
🛡️ The Guardrails
The US, UK, Australia, Canada, and New Zealand published joint guidance on agentic AI, warning that most organizations give AI "more access than can be safely monitored." And a Chinese court ruled that companies cannot fire workers just to replace them with AI. The boundaries are being drawn, but the military deployments are already ahead of them.
Translation: Five companies just got classified military AI contracts. The Navy is using AI to find mines in the Strait of Hormuz. The Five Eyes say most orgs give AI more access than they can monitor. The guardrails are being written after the deployments, not before.
⚡ Startup Quick Hits
Sierra: $950M Series E at $15.8B valuation for Bret Taylor's AI customer service agents; led by Tiger and GV, up from $10B in 2025
Panthalassa: $140M at $1B valuation for floating data centers powered by ocean wave energy; led by Peter Thiel
Avoca: $125M+ across seed, Series A, and Series B at $1B valuation for AI agents that handle inbound calls and dispatch for physical services businesses
Linkerbot: Series B+ at $3B valuation for China's dexterous robotic hands maker, which holds 80%+ of the global market; seeking $6B in next round
Suno: ~$2.5B valuation with 2M+ paying users and $300M annualized revenue as of February; music AI startup battling record labels and artists
Fun: $72M Series A co-led by Multicoin and SignalFire for fiat and crypto payment rails powering platforms like Polymarket and Aave
Axoft: $55M Series A for a brain implant company that tested its device in a Shanghai patient; plans for more China trials
OpenLight: $50M Series A extension for custom application-specific photonic chips; total raised now $84M
Actively: $45M Series B at $250M valuation for AI sales agents for account management; co-led by TCV and First Harmonic
Sahi: $33M Series B at $200M valuation for Bengaluru-based stock trading platform; led by Accel
Casa: $27M including $20M Series A for AI home maintenance using lidar scanners to catalog homes and manage proactive maintenance
Pursuit: $22M seed for AI that scans public data to help companies find and win government contracts; backed by Bill Gurley and Jack Altman
💰 Investor Quick Hits
Founders Fund: $6B for a later-stage fund, its largest haul ever; $4.5B from limited partners, the rest from partners
OpenAI / The Deployment Company: $4B+ raised at $10B pre-money for new JV that will help businesses adopt OpenAI tools
Coatue / Next Frontier: Formed in 2025 to buy land for data centers; JV with neocloud Fluidstack has raised $5.7B via junk bonds
Anthropic $1.5B JV: Finalizing a JV with Blackstone, Goldman Sachs, Hellman & Friedman, and others to sell AI tools to PE-backed companies
Katie Haun: $1B across two funds split between early and later-stage; focused on startups blending financial services, AI, and alternative assets
KKR / Helix Digital Infrastructure: $10B+ to launch AI infrastructure company led by ex-AWS CEO Adam Selipsky
💸 IPO & M&A Quick Hits
Long Lake / Amex GBT: Investment and tech firm buying corporate travel operator for $6.3B, citing AI's ability to modernize business travel
GameStop / eBay: Ryan Cohen's unsolicited ~$56B offer; eBay stock +4% but below offer price, GameStop -10%
SAP / Dremio + Prior Labs: Acquires open data lakehouse provider Dremio; pledges €1B over four years in Prior Labs to create a frontier AI lab
Cisco / Astrix Security: Acquires startup that monitors and controls permissions granted to AI agents; ~$400M
Palo Alto Networks / Portkey: Acquires AI gateway tech for managing and securing AI agents; valued at $120-140M
Meta / Assured Robot Intelligence: Acquires AI-for-robots startup; team joins Meta Superintelligence Labs
Amadeus / Idemia: World's largest travel booking system acquires French biometrics company for €1.2B in cash
OPay IPO: SoftBank-backed Nigerian mobile payments company preparing US IPO at $4B valuation
MoonPay / Sodot: Crypto payments company acquires Israeli security startup in ~$100M all-stock deal
🌟 Editor's Note
At Startup Intros, our mission is to bring the latest founder-investor news straight to your inbox, keeping you ahead in the fast-paced world of Silicon Valley.
🎁 Bright Data AI Startup Program: We just hit up Bright Data's new SF office and love this team. Up to $20K in free credits for AI startups building on web data. Signup here
💭 Parting Thoughts: The $65B Week
What a week!
Apple posted $111B in revenue, but memory makers are raising prices, not shipments. Samsung warns that the shortage will worsen in 2027.
Musk admitted to "partly" distilling OpenAI's tech while suing them. The judge banned existential risk arguments. What's left to argue?
The DOD gave classified AI access to five companies. Cerebras is going public at $27B.
The money keeps flowing into AI, whether it's consumer, enterprise, or combat.
Till next time!
 | Dev Chandra |
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