Hi All,
Welcome to our brief overview of portfolio news from the past few days.
PayPal’s Banking Ambition
PayPal is making a strategic pivot by applying to establish “PayPal Bank”, an industrial bank in Utah.
The bank would offer interest-bearing savings accounts and small business loans while pursuing direct membership with U.S. card networks.
This is a shift from “disruptor” back to the “banking system,” but it makes strategic sense. By holding deposits directly and controlling the lending capacity without third-party bank spreads, PayPal can protect margins and reduce dependency. It also allows for faster processing, lower fees (fewer intermediaries), and better credit risk assessment using its vast transaction data. This move is defensive (protecting margins) but also offensive (expanding its offering and potentially revenue per user).
Fortinet’s Strategic Moves
Fortinet announced two key developments reinforcing its position in the AI era.
Secure AI Data Center: A new solution built with Arista Networks to deliver a scalable, zero-trust architecture for AI data centers. This combines Fortinet’s security with Arista’s high-performance networking, aiming to speed up AI deployment.
Nvidia Integration: Fortinet launched a firewall integration with Nvidia’s BlueField DPUs. This allows core security functions to run on the DPU instead of the host CPU, securing AI environments without slowing down critical workloads.
These partnerships are strategic moves to solve the “AI Security Paradox”, securing massive data flows without killing performance. These are the benefits:
AI training requires ultra-low latency. By integrating with Arista, Fortinet ensures security doesn’t become the choke point in high-speed clusters.
Offloading security tasks to Nvidia’s DPU frees up expensive CPUs and GPUs to focus purely on AI workloads, directly improving the customer’s ROI on hardware.
Instead of being displaced by cloud-native trends, Fortinet is successfully embedding itself into the “AI Infrastructure Stack,” ensuring long-term relevance.
The AI Capital Race: Waymo & OpenAI
The race for capital in the AI and autonomous sectors is accelerating.
Waymo Fundraising: Alphabet’s Waymo is in talks to raise over $15 billion at a valuation of roughly $100 billion. This valuation is more than double the company’s $45 billion valuation in October 2024, a surge driven by significant milestones, including surpassing 127 million autonomous miles, primarily in Phoenix and San Francisco. This growth is just the beginning, as Waymo has already expanded operations into additional states and is poised for international expansion.
Amazon & OpenAI: Amazon is discussing a $10 billion investment in OpenAI, potentially valuing the startup at over $500 billion. Additionally, OpenAI intends to use Amazon’s Trainium AI chips.
The funding needs for AI are massive. For Amazon, this is a strategic win: getting OpenAI to use Trainium validates its custom silicon and shows ASICs can win share from GPUs. Meanwhile, bubble fears persist, with Senator Bernie Sanders calling for a halt to new AI data centers, warning the boom is driven by billionaires rather than public interest.
Meta’s Regulatory & Fraud Woes
Meta Platforms faces scrutiny over its handling of fraudulent ads.
A Reuters report alleges Meta was aware of fraudulent practices by Chinese advertisers but failed to take meaningful action, prioritizing the billions in ad revenue. In 2024, ~19% of its $18 billion in annual revenue from China reportedly came from ads linked to scams, gambling, and pornography. This is a governance failure that could lead to fines and reputational damage. While Meta created an anti-fraud team that reduced problematic ads by half, the allegation that they ignored the issue to protect revenue is concerning.
That’s a wrap. See you soon.
For our final deep dive of the year, we are taking a close look at Grab, a company that achieved the rare feat of beating Uber at its own game. Stay tuned!