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French founder of artificial intelligence startup Mistral AI, Arthur Mensch, attends the Viva Technology show at Parc des Expositions Porte de Versailles in Paris, France, on May 22, 2024.

Chesnot | Getty Images Entertainment | Getty Images

Most of the top-funded generative artificial intelligence companies in Europe were founded by entrepreneurs with experience at U.S. technology giants, according to a new report from venture capital firm Accel.

The report, produced in partnership with Dealroom, found a quarter of the 221 generative AI companies across Europe and Israel previously worked at Apple, Amazon, DeepMind, Meta, Google and Microsoft.

That figure rose to more than a third (38%) for the top 40 European and Israeli generative AI companies in terms of venture funding raised, and 60% for the top 10 generative AI companies for funding levels.

Harry Nelis, general partner at Accel, told CNBC tech giants are natural catalysts for new generative AI firms, as those companies “have been leaning forward in AI the most and … have the capabilities when it comes to compute, when it comes to data, when it comes to money.”

“They are really smart in the sense that they have seen how an early lead in this field can lead to a massive competitive advantage,” he said, adding there’s a “golden opportunity” for people with “entrepreneurial mindsets” to make their own genAI ventures.

Europe’s best-funded genAI startups

Company Founding country Founding city Total funding raised
Mistral France Paris $1.1 billion
Aleph Alpha Germany Heidelberg $641 million
Hugging Face France Paris $396 million
Owkin France Paris $335 million
H France Paris $235 million
Synthesia United Kingdom London $157 million
Stability AI United Kingdom London $151 million
PolyAI United Kingdom London $118 million

Source: Accel

In its research, Accel defines generative AI as “an emerging AI frontier that uses models trained on a large data set of content medium … to create something new instead of just analysing existing things.”

Nelis noted many of the largest U.S. tech firms have already made early moves in AI — and Europe is an increasing focus.

Google bought British AI lab DeepMind in 2014, and the firm’s tech is now key to AI products including its Gemini generative AI tools.

Meta, the parent company of Facebook, opened the European arm of Fair, or Facebook AI Research, in Paris in 2015.

Many founders of prominent AI startups developing generative AI tools come from Google, DeepMind and Meta.

Microsoft-backed French startup Mistral, for example, counts Arthur Mensch, a former DeepMind AI scientist, as its CEO. Co-founders Timothee Lacroix and Guillaume Lample both worked at Meta.

And fellow French AI firm H, which is backed by Amazon, was co-founded by former DeepMind researchers Laurent Sifre and Karl Tuyls, and Charles Kantor, a former Stanford University student.

Mistral has raised $1 billion of funding to date, according to Accel, while H, which is only a few months old, has already raised $235 million.

Google is the top producer of new generative AI startups in Europe and Israel, Accel said, with 11.3% of genAI companies having founders with past experience at the tech giant.

DeepMind, which Google owns, is in second place, minting 5% of generative AI firms. Meta is third, producing 4.1%.

Many AI founders are professors, too

Accel noted universities play a major role in the creation of generative AI startups. Many European universities, it said, now serve as so-called “founder factories” that produce new startup founders.

More than a third (38%) of companies have at least one founder who holds or has held a position — such as professor, researcher or lecturer — at an academic institution.

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Lourdes Agapito, co-founder of British AI firm Synthesia — which uses generative AI to remove the need for physical equipment in video production — is a professor of 3D Vision at University College London.

She says her time at UCL helped connect her with like-minded AI innovators.

While at UCL, Agapito grew to know Matthias Niessner, a Synthesia co-founder, before going on to form the company with CEO Victor Riparbelli and Chief Operating Officer Steffen Tjerrild.

“Looking back on Synthesia’s founding team, what was special about us is how we complemented each other so well in terms of expertise,” Agapito told CNBC via email.

Agapito said being based in London was another “key ingredient” behind Synthesia’s early success.

British universities are the most popular study destination for generative AI founders, Accel’s research found. The University of Cambridge produces the most generative AI companies, with 7.9% of founders having studied there.

France’s Ecole Polytechnique is the second-highest academic founder factory in Europe, with 7% of generative AI founders having studied there.

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Nvidia to join Dow Jones Industrial Average, replacing rival chipmaker Intel

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Nvidia to join Dow Jones Industrial Average, replacing rival chipmaker Intel

CEO of Nvidia, Jensen Huang, speaks during the launch of the supercomputer Gefion, where the new AI supercomputer has been established in collaboration with EIFO and NVIDIA at Vilhelm Lauritzen Terminal in Kastrup, Denmark October 23, 2024.

Ritzau Scanpix | Mads Claus Rasmussen | Via Reuters

Nvidia is replacing rival chipmaker Intel in the Dow Jones Industrial Average, a shakeup to the blue-chip index that reflects the boom in artificial intelligence and a major shift in the semiconductor industry.

Intel shares were down 1% in extended trading on Friday. Nvidia shares rose 1%.

The switch will take place on Nov. 8. Also, Sherwin Williams will replace Dow Inc. in the index, S&P Dow Jones said in a statement.

Nvidia shares have climbed over 170% so far in 2024 after jumping roughly 240% last year, as investors have rushed to get a piece of the AI chipmaker. Nvidia’s market cap has swelled to $3.3 trillion, second only to Apple among publicly traded companies.

Companies including Microsoft, Meta, Google and Amazon are purchasing Nvidia’s graphics processing units (GPUs), such as the H100, in massive quantities to build clusters of computers for their AI work. Nvidia’s revenue has more than doubled in each of the past five quarters, and has at least tripled in three of them. The company has sginaled that demand for its next-generation AI GPU called Blackwell is “insane.”

With the addition of Nvidia, four of the six trillion-dollar tech companies are now in the index. The two not in the Dow are Alphabet and Meta.

While Nvidia has been soaring, Intel has been slumping. Long the dominant maker of PC chips, Intel has lost market share to Advanced Micro Devices and has made very little headway in AI. Intel shares have fallen by more than half this year as the company struggles with manufacturing challenges and new competition for its central processors.

Intel said in a filing this week that the board’s audit and finance committee approved cost and capital reduction activities, including lowering head count by 16,500 employees and reducing its real estate footprint. The job cuts were originally announced in August.

The Dow contains 30 components and is weighted by the share price of the individual stocks instead of total market value. Nvidia put itself in better position to join the index in May, when the company announced a 10-for-1 stock split. While doing nothing to its market cap, the move slashed the price of each share by 90%, allowing the company to become a part of the Dow without having too heavy a weighting.

The switch is the first change to the index since February, when Amazon replaced Walgreens Boots Alliance. Over the years, the Dow has been playing catchup in gaining exposure to the largest technology companies. The stocks in the index are chosen by a committee from S&P Dow Jones Indices.

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Super Micro’s 44% plunge this week wipes out stock’s gains for the year

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Super Micro's 44% plunge this week wipes out stock's gains for the year

Charles Liang, chief executive officer of Super Micro Computer Inc., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024. The trade show runs through June 7. 

Annabelle Chih | Bloomberg | Getty Images

Super Micro investors continued to rush the exits on Friday, pushing the stock down another 9% and bringing this week’s selloff to 44%, after the data center company lost its second auditor in less than two years.

The company’s shares fell as low as $26.23, wiping out all of the gains for 2024. Shares had peaked at $118.81 in March, at which point they were up more than fourfold for the year. Earlier that month, S&P Dow Jones added the stock to the S&P 500, and Wall Street was rallying around the company’s growth, driven by sales of servers packed with Nvidia’s artificial intelligence processors.

Super Micro’s spectacular collapse since March has wiped out roughly $55 billion in market cap and left the company at risk of being delisted from the Nasdaq. On Wednesday, as the stock was in the midst of its second-worst day ever, Super Micro said it will provide a “business update” regarding its latest quarter on Tuesday, which is Election Day in the U.S.

The company’s recent challenges date back to August, when Super Micro said it would not file its annual report on time with the SEC. Noted short seller Hindenburg Research then disclosed a short position in the company and wrote in a report that it identified “fresh evidence of accounting manipulation.” The Wall Street Journal later reported that the Department of Justice was in the early stages of a probe into the company.

Super Micro disclosed on Wednesday that Ernst & Young had resigned as its accounting firm just 17 months after taking over from Deloitte & Touche. The auditor said it was “unwilling to be associated with the financial statements prepared by management.”

A Super Micro spokesperson told CNBC that the company “disagrees with E&Y’s decision to resign, and we are working diligently to select new auditors.” Super Micro does not expect matters raised by Ernst & Young to “result in any restatements of its quarterly financial results for the fiscal year ended June 30, 2024, or for prior fiscal years,” the representative said.

Analysts at Argus Research on Thursday downgraded the stock in the intermediate term to a hold, citing the Hindenburg note, reports of the Justice Department investigation and the departure of Super Micro’s accounting firm, which the analysts called a “serious matter.” Argus’ fears go beyond accounting irregularities, with the firm suggesting that the company may be doing business with problematic entities.

“The DoJ’s concerns, in our view, may be mainly about related-party transactions and about SMCI products ending up in the hands of sanctioned Russian companies,” the analysts wrote.

In September, the month after announcing its filing delay, Super Micro said it had received a notification from the Nasdaq indicating that its late status meant the company wasn’t in compliance with the exchange’s listing rules. Super Micro said the Nasdaq’s rules allowed the company 60 days to file its report or submit a plan to regain compliance. Based on that timeframe, the deadline would be mid-November.

Though Super Micro hasn’t filed financials with the SEC since May, the company said in an August earnings presentation that revenue more than doubled for a third straight quarter. Analysts expect that, for the fiscal first quarter ended September, revenue jumped more than 200% to $6.45 billion, according to LSEG. That’s up from $2.1 billion a year earlier and $1.9 billion in the same fiscal quarter of 2023.

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Apple to buy Pixelmator, the iPhone image editing app with AI features

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Apple to buy Pixelmator, the iPhone image editing app with AI features

Peopl walk outside Steve Jobs Theater at the Apple Park campus before Apple’s “It’s Glowtime” event in Cupertino, California, on Sept. 9, 2024.

Nic Coury | AFP | Getty Images

Apple will buy Pixelmator, the creator of image editing apps for Apple’s iPhone and Mac platforms, Pixelmator announced Friday in a blog post.

Pixelmator, a Lithuanian company, was founded in 2007, and in recent years has been best known for Pixelmator and Pixelmator Pro, which compete with Adobe Photoshop. It also makes Photomator, a photo editing app.

Apple has highlighted Pixelmator apps over the years in its keynote product launches. In 2018, Apple named Pixelmator Pro its Mac App of the year, citing the company’s enthusiastic embrace of Apple’s machine learning and artificial intelligence capabilities, such as removing distracting objects from photos or making automated color adjustments.

We’ve been inspired by Apple since day one, crafting our products with the same razor-sharp focus on design, ease of use, and performance,” Pixelmator said in its blog post.

Apple does not acquire as many large companies as its Silicon Valley rivals. It prefers to make smaller acquisitions of companies with products or people that it can use to create Apple features. Neither Pixelmator nor Apple provided a price for the transaction.

Pixelmator said in its blog post that there “will be no material changes to the Pixelmator Pro, Pixelmator for iOS, and Photomator apps at this time.”

Earlier this week, Apple released the first version of Apple Intelligence, a suite of features that includes photo editing abilities such as Clean Up, which can remove people or objects from photos using AI.

Apple has acquired other popular apps that received accolades at the company’s product launches and awards ceremonies.

In 2020, Apple bought Dark Sky, a weather app that eventually became integrated into Apple’s default weather app. In 2017, it bought Workflow, an automation and macro app that eventually became Shortcuts, the iPhone’s scripting app, as well as the groundwork for a more capable Siri assistant.

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