What's up: Nvidia, Microsoft pour $15 billion Into Anthropic; xAI in talks to raise $15 billion; Brookfield raising $10 billion for new AI fund

Good morning. Putting aside the question of whose AI is the fastest or the smartest, Google’s new Gemini 3 is a reminder that innovation in model development continues to move ahead, despite persistent concerns to the contrary.

The launch of ChatGPT in late 2022 was so jarring and set such a high bar, that it set unrealistic expectations for everything that has followed. But three years later, we continue to see steady and meaningful progress in model development, and that’s the foundation on which the entire AI ecosystem is built. Steady improvements in model development give companies and other users more reason to invest in AI, and that helps sustain demand for leading edge chips and the increasingly ubiquitous and expensive data centers where they reside.

That innovation won’t ensure the stability or success of the entire AI investment wave. Without it, though, its future is much less certain or secure. Model developers are still putting competitive pressure on one another and advancing the state-of-the-art, and that’s the key to AI’s continued vitality as a catalyst for investment and change in the real world. Not so long ago, it seemed to many people that Google was doomed to play a losing game of defense in its core search market. That’s not the case today, as Berkshire Hathaway’s recent investment in Google parent Alphabet shows.

Google said yesterday in a blog post that Gemini will have an impact on AI Mode in Search, as well as the Gemini app, developers in AI Studio and Vertex AI and its new agentic development platform, Google Antigravity.

Google sees Gemini’s reasoning and multimodal capabilities as crucial levers in the enterprise market, too.

"Gemini 3 is a major leap forward for agentic AI,” Mikhail Parakhin, chief technology officer of Shopify, said in a Google blog post. “This advancement accelerates Shopify’s ability to build agentic AI tools that solve complex commerce challenges for our merchants."

Coming up today.

Nvidia is due to report earnings after the closing bell, offering a snapshot of demand for chips that are a linchpin in the tech mania that has lifted markets and helped buoy the economy. 

Three of the biggest companies in AI have formed a partnership featuring tens of billions of dollars in spending.

Nvidia and Microsoft will invest up to $15 billion in Anthropic, in a new arrangement that will require the AI startup in turn to buy $30 billion of compute capacity from Microsoft Azure and use Nvidia’s AI chips. Anthropic models will now be available on Azure, WSJ reports.

Everyone is doing business with everyone. The global AI race makes for some strange bedfellows. Microsoft is a big investor in Anthropic rival OpenAI and offers its models to customers, while Nvidia Chief Executive Jensen Huang and Anthropic CEO Dario Amodei have clashed over chip exports and the number of jobs lost to AI.

Other recent developments in the AI industry's quest for cash.

Elon Musk’s artificial-intelligence company, xAI, is in advanced talks to raise $15 billion in new equity at a $230 billion valuation, according to people familiar with the plans. WSJ reports that the new valuation represents a significant increase from the $113 billion xAI disclosed after acquiring Musk’s social-media site, X, in March. 

Brookfield Asset Management is raising $10 billion in equity for its new AI infrastructure fund, WSJ reports. The Canadian investment firm estimates it will cost $7 trillion to build the infrastructure needed to power AI over the next decade. 

The Trump Administration will give Constellation Energy a $1 billion federal loan to restart the Three Mile Island nuclear power plant in Pennsylvania that suffered a partial core meltdown in 1979. Constellation has a 20-year deal with Microsoft, which needs more power to fuel its artificial intelligence business, WSJ reports.

The EU is looking to ease some regulations, a surprising new tack in its years-long effort to reduce the bloc's reliance on U.S. tech.

The European Commission today plans to introduce a proposal expected to pare back some elements of its sweeping digital laws, making it easier for companies to use data to train AI models, WSJ reports.

Once it seemed that there was not a tech tool or practice that Brussels did not want to regulate. But Trump’s re-election and his aggressive stance toward Europe has boosted European companies’ interest in homegrown tech solutions. Political leaders are also beginning to pay attention to business leaders who have grown frustrated at the torrent of legislation.

Meanwhile a U.S.-EU effort to reduce the reliance on Chinese tech has turned out to be a bust.

The Dutch government has handed back control of semiconductor manufacturer Nexperia to its Chinese owner, moving toward resolving a spat that had blocked vital chip supply to the auto industry, WSJ reports.

Under pressure from U.S. authorities, the government seized the company from its Chinese owner, Wingtech Technology, late in September. Beijing in response moved to halt exports of Nexperia chips. Nexperia commands an important share of the market for basic chips used in many components of modern auto manufacturing. Japan’s Honda became the first major player to highlight the chip dispute as a problem.

Pixar’s WALL-E from 2008 painted a bleak future of a trashed planet and colonies of sedentary humans in space, fed on an endless stream of digital pap. WSJ caught up with Andrew Stanton, one of Pixar’s founding fathers, to talk about the degree to which that future vision remains prescient, especially as AI technology gains speed.

Highlights below.

WSJ: How do you think of that vision now?
Stanton: I think we’ve been living a 1.0 version of it for over a decade now. It feels like we are in the midst of an upgrade currently with the investment and anxiety surrounding AI.

WSJ: With each new development in AI, do you feel like we’re slipping closer toward a workless future?
Stanton: In the long run? Maybe. But I’ve seen the workforce adjust to the disruption of technology several times in my 60 years on the planet. Humans are like ants. They’ll find another way to cross that stream, no matter how many ants it takes.

WSJ: How do you see the roles of writers and artists being different in the age of very capable AI tools?
Stanton: I’m convinced that AI, at least in the entertainment industry, is going to replace jobs, but it’s not going to replace them seamlessly. And it’s never going to replace coming up with stuff. It will probably make it easier to express yourself earlier and sooner. You can probably show off what you’re thinking of doing without having to pay a ton of people.

A U.S. district judge on Tuesday dismissed the Federal Trade Commission’s claims that Meta Platforms has an illegal monopoly in social media through the acquisitions of Instagram in 2012 and WhatsApp in 2014.

Adobe is nearing a $1.9 billion deal to acquire Semrush, a software platform that helps businesses run better search-engine optimization, WSJ reports.

Meta's chief revenue officer, John Hegeman, is leaving the company to build his own startup, according to a Facebook post from the executive, WSJ reports.

President Trump said Saudi Crown Prince Mohammed bin Salman “knew nothing about” the 2018 murder of Washington Post journalist Jamal Khashoggi, though the CIA at the time assessed that the royal orchestrated the killing. (WSJ)

Congress overwhelmingly approved legislation Tuesday mandating the disclosure of a trove of government files related to sex offender Jeffrey Epstein, a milestone in a long-running fight that divided President Trump’s MAGA movement. (WSJ)

Target's incoming Chief Executive Michael Fiddelke said the retailer would invest about $1 billion more next year to improve stores, its merchandise selection and digital capabilities, bringing total new investment next year to $5 billion. (WSJ)

A Gustav Klimt painting sold for a historic $236.4 million Tuesday night at Sotheby’s first auction in its new home in New York’s Breuer building, making it the world’s most expensive modern artwork at auction and the second-priciest work of art ever auctioned overall. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.