What role should oil and gas companies play in climate tech?

Stay Ahead, Stay ONMINE

What role should oil and gas companies play in climate tech?

This week, I have a new story out about Quaise, a geothermal startup that’s trying to commercialize new drilling technology. Using a device called a gyrotron, the company wants to drill deeper, cheaper, in an effort to unlock geothermal power anywhere on the planet. (For all the details, check it out here.) For the story, I visited Quaise’s headquarters in Houston. I also took a trip across town to Nabors Industries, Quaise’s investor and tech partner and one of the biggest drilling companies in the world. Standing on top of a drilling rig in the backyard of Nabors’s headquarters, I couldn’t stop thinking about the role oil and gas companies are playing in the energy transition. This industry has resources and energy expertise—but also a vested interest in fossil fuels. Can it really be part of addressing climate change? The relationship between Quaise and Nabors is one that we see increasingly often in climate tech—a startup partnering up with an established company in a similar field. (Another one that comes to mind is in the cement industry, where Sublime Systems has seen a lot of support from legacy players including Holcim, one of the biggest cement companies in the world.) Quaise got an early investment from Nabors in 2021, to the tune of $12 million. Now the company also serves as a technical partner for the startup. “We are agnostic to what hole we’re drilling,” says Cameron Maresh, a project engineer on the energy transition team at Nabors Industries. The company is working on other investments and projects in the geothermal industry, Maresh says, and the work with Quaise is the culmination of a yearslong collaboration: “We’re just truly excited to see what Quaise can do.” From the outside, this sort of partnership makes a lot of sense for Quaise. It gets resources and expertise. Meanwhile, Nabors is getting involved with an innovative company that could represent a new direction for geothermal. And maybe more to the point, if fossil fuels are to be phased out, this deal gives the company a stake in next-generation energy production. There is so much potential for oil and gas companies to play a productive role in addressing climate change. One report from the International Energy Agency examined the role these legacy players could take: “Energy transitions can happen without the engagement of the oil and gas industry, but the journey to net zero will be more costly and difficult to navigate if they are not on board,” the authors wrote. In the agency’s blueprint for what a net-zero emissions energy system could look like in 2050, about 30% of energy could come from sources where the oil and gas industry’s knowledge and resources are useful. That includes hydrogen, liquid biofuels, biomethane, carbon capture, and geothermal. But so far, the industry has hardly lived up to its potential as a positive force for the climate. Also in that report, the IEA pointed out that oil and gas producers made up only about 1% of global investment in climate tech in 2022. Investment has ticked up a bit since then, but still, it’s tough to argue that the industry is committed. And now that climate tech is falling out of fashion with the government in the US, I’d venture to guess that we’re going to see oil and gas companies increasingly pulling back on their investments and promises. BP recently backtracked on previous commitments to cut oil and gas production and invest in clean energy. And last year the company announced that it had written off $1.1 billion in offshore wind investments in 2023 and wanted to sell other wind assets. Shell closed down all its hydrogen fueling stations for vehicles in California last year. (This might not be all that big a loss, since EVs are beating hydrogen by a huge margin in the US, but it’s still worth noting.) So oil and gas companies are investing what amounts to pennies and often backtrack when the political winds change direction. And, let’s not forget, fossil-fuel companies have a long history of behaving badly. In perhaps the most notorious example, scientists at Exxon modeled climate change in the 1970s, and their forecasts turned out to be quite accurate. Rather than publish that research, the company downplayed how climate change might affect the planet. (For what it’s worth, company representatives have argued that this was less of a coverup and more of an internal discussion that wasn’t fit to be shared outside the company.) While fossil fuels are still part of our near-term future, oil and gas companies, and particularly producers, would need to make drastic changes to align with climate goals—changes that wouldn’t be in their financial interest. Few seem inclined to really take the turn needed. As the IEA report puts it: “In practice, no one committed to change should wait for someone else to move first.” This article is from The Spark, MIT Technology Review’s weekly climate newsletter. To receive it in your inbox every Wednesday, sign up here.

For the story, I visited Quaise’s headquarters in Houston. I also took a trip across town to Nabors Industries, Quaise’s investor and tech partner and one of the biggest drilling companies in the world.

Standing on top of a drilling rig in the backyard of Nabors’s headquarters, I couldn’t stop thinking about the role oil and gas companies are playing in the energy transition. This industry has resources and energy expertise—but also a vested interest in fossil fuels. Can it really be part of addressing climate change?

The relationship between Quaise and Nabors is one that we see increasingly often in climate tech—a startup partnering up with an established company in a similar field. (Another one that comes to mind is in the cement industry, where Sublime Systems has seen a lot of support from legacy players including Holcim, one of the biggest cement companies in the world.)

Quaise got an early investment from Nabors in 2021, to the tune of $12 million. Now the company also serves as a technical partner for the startup.

“We are agnostic to what hole we’re drilling,” says Cameron Maresh, a project engineer on the energy transition team at Nabors Industries. The company is working on other investments and projects in the geothermal industry, Maresh says, and the work with Quaise is the culmination of a yearslong collaboration: “We’re just truly excited to see what Quaise can do.”

From the outside, this sort of partnership makes a lot of sense for Quaise. It gets resources and expertise. Meanwhile, Nabors is getting involved with an innovative company that could represent a new direction for geothermal. And maybe more to the point, if fossil fuels are to be phased out, this deal gives the company a stake in next-generation energy production.

There is so much potential for oil and gas companies to play a productive role in addressing climate change. One report from the International Energy Agency examined the role these legacy players could take: “Energy transitions can happen without the engagement of the oil and gas industry, but the journey to net zero will be more costly and difficult to navigate if they are not on board,” the authors wrote.

In the agency’s blueprint for what a net-zero emissions energy system could look like in 2050, about 30% of energy could come from sources where the oil and gas industry’s knowledge and resources are useful. That includes hydrogen, liquid biofuels, biomethane, carbon capture, and geothermal.

But so far, the industry has hardly lived up to its potential as a positive force for the climate. Also in that report, the IEA pointed out that oil and gas producers made up only about 1% of global investment in climate tech in 2022. Investment has ticked up a bit since then, but still, it’s tough to argue that the industry is committed.

And now that climate tech is falling out of fashion with the government in the US, I’d venture to guess that we’re going to see oil and gas companies increasingly pulling back on their investments and promises.

BP recently backtracked on previous commitments to cut oil and gas production and invest in clean energy. And last year the company announced that it had written off $1.1 billion in offshore wind investments in 2023 and wanted to sell other wind assets. Shell closed down all its hydrogen fueling stations for vehicles in California last year. (This might not be all that big a loss, since EVs are beating hydrogen by a huge margin in the US, but it’s still worth noting.)

So oil and gas companies are investing what amounts to pennies and often backtrack when the political winds change direction. And, let’s not forget, fossil-fuel companies have a long history of behaving badly.

In perhaps the most notorious example, scientists at Exxon modeled climate change in the 1970s, and their forecasts turned out to be quite accurate. Rather than publish that research, the company downplayed how climate change might affect the planet. (For what it’s worth, company representatives have argued that this was less of a coverup and more of an internal discussion that wasn’t fit to be shared outside the company.)

While fossil fuels are still part of our near-term future, oil and gas companies, and particularly producers, would need to make drastic changes to align with climate goals—changes that wouldn’t be in their financial interest. Few seem inclined to really take the turn needed.

As the IEA report puts it: “In practice, no one committed to change should wait for someone else to move first.”

This article is from The Spark, MIT Technology Review’s weekly climate newsletter. To receive it in your inbox every Wednesday, sign up here.

Stay Ahead

Explore More Insights

Stay ahead with more perspectives on cutting-edge power, infrastructure, energy, bitcoin and AI solutions. Explore these articles to uncover strategies and insights shaping the future of industries.

Sysadmins ready for AI, but skepticism abounds

The report shows that AI is being deployed typically in high-volume, repetitive tasks. Troubleshooting and log analysis lead the way, with 41% and 35% of sysadmins, respectively, reporting use of AI in those areas—up significantly from 2024. Respondents reported that the following tasks are most likely to be automated with

Unexpected costs drive on-premises computing

“This reversal challenges the assumption that cloud is always the end goal, and highlights growing concerns about cost predictability, control, and performance in shared cloud environments,” MacDonald told Network World. The survey found 86% of IT professionals report that their organizations currently use dedicated servers, with government (93%), information technology

CISPE seeks to annul Broadcom’s VMware takeover

However, Forrester Research Senior Analyst Dario Maisto said, “Broadcom VMware commercial practices have been under the lenses for quite some time now. While we may agree or disagree with the European Commission’s decision to approve Broadcom’s acquisition of VMware, the fact is that a number of European organizations are suffering from

CompTIA updates Linux+ certification

CompTIA has updated its Linux+ certification exam to include new and expanded content on artificial intelligence, automation, cybersecurity, DevOps, infrastructure as code (IaC), scalability, and systems troubleshooting. The Linux+ V8 certification validates IT professionals’ abilities to manage, secure, automate, and troubleshoot Linux systems in cloud and hybrid environments, according to

Oil Slips on Stronger Dollar, Trade Doubts

Oil fell as the dollar strengthened and conviction waned that the US will reach agreements with key trade partners ahead of a deadline next week. West Texas Intermediate crude slid more than 1% to settle near $65 a barrel after President Donald Trump said the US has a 50-50 chance of striking a trade deal with Europe, a contrast to the optimism the bloc’s diplomats expressed this week. Trump also said most tariff rates are essentially settled now. The effective US tariff rate is at the highest in a century, by some estimates, a potential threat to energy demand. In another headwind, Trump indicated he had no plans to fire Federal Reserve Chair Jerome Powell, boosting the dollar and making the commodities priced in the currency less attractive. Crude has remained in a holding pattern this month, but is down for the year as increased supply from OPEC+ adds to concerns of a looming glut. The group will next meet on Aug. 3 to decide on production levels. On Thursday, one member, Venezuela, was given a production reprieve by a US decision to let Chevron resume pumping oil in the country. “We expect crude to slowly sell off this fall, driven by steady acceleration of stock builds, softening physical markets, reduced refinery margin support and continued deescalation of geopolitically driven supply risk,” Macquarie Group analysts including Vikas Dwivedi wrote in a note. Oil Prices WTI for September delivery fell 1.3% to settle at $65.16 a barrel. Brent for September settlement slipped 1.1% to $68.44 a barrel. What do you think? We’d love to hear from you, join the conversation on the Rigzone Energy Network. The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with

BP to Exit $36B Australian Green Hydrogen Hub

BP Plc will exit its role in a massive green hydrogen production facility planned in Australia as the British oil major refocuses on the fossil fuels that drive its profits. The company told its partners in the Australian Renewable Energy Hub that it plans to leave the project as both operator and equity holder, according to a statement from a BP spokesperson. It’s the latest setback for green hydrogen, a fuel once touted as a key way for Big Oil to profit from the energy transition that has so far proved too costly for mass production and consumption. The AREH project company will take over as operator over coming months with support from founding partner InterContinental Energy, according to an AREH spokesperson. BP’s decision to exit the project doesn’t reflect the opportunity the hub presents to decarbonize the Pilbara and support the creation of a green iron industry, they said. BP’s entry into the project – once estimated to cost about $36 billion – came at a time when the company sought to rapidly build up a business in low-carbon energy and shrink its oil business. But after years of stock under-performance compared with its peers and the departure of the plan’s architect – Chief Executive Officer Bernard Looney – BP has refined its strategy to focus more squarely on profits than green goals. The company is far from alone in leaving its ambitions for green hydrogen behind. Scores of companies that once saw the fuel as the next big thing in energy have cut back plans as hoped for cost declines failed to materialize. Also on Thursday, Fortescue Ltd. said it would abandon plans for a $550 million Arizona Hydrogen Project in the US and a $150 million PEM50 Project in Gladstone, Australia – resulting in a pretax writedown of $150 million. Meanwhile, Woodside

Eni Profit Tops Estimates

Eni SpA reported profit that beat analyst estimates as proceeds from asset sales and sweeping cost cuts helped counter a weak oil market. While crude prices were lower in the second quarter — weighing on earnings at other European oil companies — Eni has been buoyed by a cost-reduction program introduced earlier this year, while asset disposals brought down debt. Adjusted net income fell 25% from a year earlier to €1.13 billion ($1.3 billion), the Italian energy company said Friday in a statement. That exceeded the €932.6 million average estimate of analysts surveyed by Bloomberg. Eni said it’s now targeting €3 billion of cost cuts this year, up from €2 billion previously. The company has also reaped billions of euros by offloading stakes in its renewables arm and mobility division, and is in talks to sell half of its carbon capture unit. “The combination of divestments set to come through this year, ongoing ‘self-help,’ as well as the additional cash flow from new ramp-ups sets Eni up for a strong second half of 2025 and 2026,” RBC Europe Ltd. analyst Biraj Borkhataria said in a note. He expects “growing free cash flow and a more resilient balance sheet than we’ve seen for many years.” The shares rose as much as 0.6% at the open in Milan, before trading little changed as of 9:08 a.m. local time. Eni confirmed plans for shareholders’ returns this year. It expects free cash flow before working capital of about €11.5 billion at $70-a-barrel crude, up from previous guidance of €11 billion. The company also raised its forecast for annual earnings from its gas division to €1 billion from €800 million. Net debt shrank to €29.1 billion at the end of June. WHAT DO YOU THINK? Generated by readers, the comments included herein do not reflect the views and opinions of

Chevron to Cut Positions as Part of Hess Integration

Chevron will “consolidate or eliminate some positions” as part of its integration with Hess Corporation, a Chevron spokesperson told Rigzone. “Chevron completed the merger with Hess Corporation on July 18,” the spokesperson said. “We are working quickly to integrate the Hess workforce and are focused on maintaining safe and reliable operations throughout the transition period,” the spokesperson added. “As part of the integration, we will consolidate or eliminate some positions. As required by the WARN Act, Chevron has provided notice of a planned workforce reduction to appropriate state and local government representatives for Downtown Houston and North Dakota,” the spokesperson went on to state. When asked by Rigzone to confirm how many positions will be affected, the Chevron spokesperson said, “for the WARN Notices issued on July 21, Chevron anticipates a reduction of approximately 575 employees in Downtown Houston and 70 employees in North Dakota”. The spokesperson told Rigzone that “these are difficult decisions which … [the company does] not make lightly”. “We understand the impact this news may have on employees, their families and the communities where we operate,” the spokesperson said. “Our priority is to support our employees through this transition. We are offering severance benefits and outplacement support,” the Chevron representative added. In a statement posted on its website on July 18, Chevron announced that it had completed its acquisition of Hess Corporation following the satisfaction of all necessary closing conditions, including a favorable arbitration outcome regarding Hess’ offshore Guyana asset. “This merger of two great American companies brings together the best in the industry,” Chevron Chairman and CEO Mike Wirth said in that statement. “The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders,” he added. In this statement, former Hess Corporation CEO

Coal- and gas-fired power plants have a new best friend: data centers

Abbe Ramanan is a project director at Clean Energy Group. In 2020, the Virginia Assembly passed the Virginia Clean Economy Act, a law that required the state’s largest utility, Dominion Energy, to generate all its electricity from renewable resources by 2045. However, Dominion has found a useful loophole to get around the law’s requirements — data centers. Viriginia hosts the largest data center market in the world, and is home to at least 150 hyperscale data centers, with more being proposed. In its recent integrated resource plan, Dominion cited projected energy demand from these data centers as a key reason to delay retiring existing power plants, including the Clover Power Station, a coal-powered peaker plant in Halifax County, a disproportionately low-income region. In addition to delaying peaker retirements, Dominion has proposed building new gas-powered generation, including a 1-GW peaker plant in Chesterfield, a community that already shoulders an undue environmental burden from existing natural gas- and coal-fired generation. Similar stories have played out across the country as data centers become more and more ubiquitous, particularly in the Southeast. Utilities in Virginia, Georgia, North Carolina and South Carolina have proposed building 20,000 MW of new gas power plants by 2040. Data centers driving the projected load growth are being used to justify this buildout. In Virginia, Georgia and South Carolina, data centers are responsible for at least 65% of projected load growth. Data centers are also delaying the retirement of fossil fuel power plants nationwide, with at least 17 fossil fuel generators originally scheduled for closure now delaying retirement. This new gas buildout, as well as the delayed retirement of fossil fuel generators, overwhelmingly harms Black and brown communities, who face higher energy and environmental burdens. The gas bonanza is especially concerning because the projected demand from data centers could be

GM, Redwood Materials sign deal to deploy energy-storage batteries

Dive Brief: General Motors and battery recycler Redwood Materials have signed a non-binding memorandum of understanding to accelerate the deployment of stationary energy storage systems built using both new modules and second-life batteries from the automaker’s electric vehicles, according to a July 16 press release. The plans are part of a new business unit launched by Redwood Materials in June named Redwood Energy that’s focused on assembling and deploying low-cost stationary energy-storage systems to help meet growing power demands of AI data centers and other applications. “Electricity demand is climbing, and it’s only going to accelerate,” Kurt Kelty, VP of batteries, propulsion, and sustainability at GM, said in the release. “To meet that challenge, the U.S. needs energy storage solutions that can be deployed quickly, economically, and made right here at home.” Dive Insight: Redwood Materials plans to establish a domestic supply chain to manufacture batteries to support energy storage applications via its Redwood Energy unit. The company currently repurposes around 20 gigawatt hours of batteries annually, which is the equivalent of 250,000 EVs or roughly 90% of all lithium-ion batteries and battery materials currently recycled in North America, according to its website. GM is already providing the battery recycling company with used batteries to help power what Redwood calls “the largest second-life battery development in the world and the largest microgrid in North America” at an installation in Sparks, Nevada, per the release. The electricity produced by the microgrid is being used by AI infrastructure company Crusoe. “Electricity demand is accelerating at an unprecedented pace, driven by AI and the rapid electrification of everything from transportation to industry,” said JB Straubel, founder and CEO of Redwood Materials, in the release. “Both GM’s second-life EV batteries and new batteries can be deployed in Redwood’s energy storage systems, delivering fast,

AI Project Stargate struggles to get off the ground

Analysts aren’t surprised at the news. “Big IT projects have a long history of dramatically overpromising and it appears that trend is quickly moving into the world of AI data center-based projects as well. The Stargate project, in particular, also seems to have more of a political bent to it than many other projects so that’s likely complicating matters as well,” said Bob O’Donnell, president and chief analyst with TECHnalysis Research. “There’s little doubt we will see massive investments by many different organizations to build out AI infrastructure here in the US, but I’m not convinced that individual projects will end up mattering that much in the long run,” he added. “I have always been skeptical about the huge number that was projected. In the hundreds of billions,” said Patrick Moorhead, CEO & chief analyst with Moor Insights & Strategy. “The only problem was that only a few billion in new funding was raised. And now there’s strife between OpenAI and SoftBank. To be fair, Oracle is part of Stargate now and OpenAI will soak up many GPUs in the Texas facility, but this was already in process when the Stargate announcement happened.”

Storage vendors bring record capacity devices to handle massive data generation

Both are built on Seagate’s Mozaic3+ with advanced storage technology called HAMR, or Heat-Assisted Magnetic Recording. By heating the platter to as much as 500°C, they can squeeze up to 3TB per platter. Other than that, it looks like a standard hard drive: 3.5-inch enclosure, 7,200 RPM spin rotation, and SATA III interface with 6Gbps/s transfer speeds. The drivers are available now and are rather affordable. The 30TB Exos is just $599 on NewEgg.com. On the enterprise solid state drive (SSD) front, KIOXIA America has expanded its high-capacity KIOXIA LC9 Series enterprise SSD lineup with the introduction of a 245.76TB NVMe SSD. The drive comes in a 2.5-inch and Enterprise and Datacenter Standard Form Factor (EDSFF) E3.L form factor and is purpose-built for the performance and efficiency demands of generative AI environments.

Technology is coming so fast data centers are obsolete by the time they launch

Tariffs aside, Enderle feels that AI technology and ancillary technology around it like battery backup is still in the early stages of development and there will be significant changes coming in the next few years. GPUs from AMD and Nvidia are the primary processors for AI, and they are derived from video game accelerators. They were never meant for use in AI processing, but they are being fine-tuned for the task. It’s better to wait to get a more mature product than something that is still in a relatively early state. But Alan Howard, senior analyst for data center infrastructure at Omdia, disagrees and says not to wait. One reason is the rate at which people that are building data centers is all about seizing market opportunity.” You must have a certain amount of capacity to make sure that you can execute on strategies meant to capture more market share.” The same sentiment exists on the colocation side, where there is a considerable shortage of capacity as demand outstrips supply. “To say, well, let’s wait and see if maybe we’ll be able to build a better, more efficient data center by not building anything for a couple of years. That’s just straight up not going to happen,” said Howard. “By waiting, you’re going to miss market opportunities. And these companies are all in it to make money. And so, the almighty dollar rules,” he added. Howard acknowledges that by the time you design and build the data center, it’s obsolete. The question is, does that mean it can’t do anything? “I mean, if you start today on a data center that’s going to be full of [Nvidia] Blackwells, and let’s say you deploy in two years when they’ve already retired Blackwell, and they’re making something completely new. Is that data

‘Significant’ outage at Alaska Airlines not a security incident, but a hardware breakdown

The airline told Network World that when the critical piece of what it described as “third-party multi-redundant hardware” failed unexpectedly, “it impacted several of our key systems that enable us to run various operations.” The company is currently working with its vendor to replace the faulty equipment at the data center. The airline has cancelled more than 150 flights since Sunday evening, including 64 on Monday. The company said additional flight disruptions are likely as it repositions aircraft and crews throughout its network. Alaska Airlines emphasized that the safety of its flights was never compromised, and that “the IT outage is not related to any other current events, and it’s not connected to the recent cybersecurity incident at Hawaiian Airlines.” The airline did not provide additional information to Network World about the specifics of the outage. “There are many redundant components that can fail,” said Roberts, noting that it could have been something as simple as a RAID array (which combines multiple physical data storage components into one or more logical units). Or, on the network side, it could have been the failure of a pair of load balancers. “It’s interesting that redundancy didn’t save them,” said Roberts. “Perhaps multiple pieces of hardware were impacted by the same issue, like a firmware update. Or, maybe they’re just really unlucky.”

Cisco upgrades 400G optical receiver to boost AI infrastructure throughput

“In the data center, what’s really changed in the last year or so is that with AI buildouts, there’s much, much more optics that are part of 400G and 800G. It’s not so much using 10G and 25G optics, which we still sell a ton of, for campus applications. But for AI infrastructure, the 400G and 800G optics are really the dominant optics for that application,” Gartner said. Most of the AI infrastructure builds have been for training models, especially in hyperscaler environments, Gartner said. “I expect, towards the tail end of this year, we’ll start to see more enterprises deploying AI infrastructure for inference. And once they do that, because it has an Nvidia GPU attached to it, it’s going to be a 400G or 800G optic.” Core enterprise applications – such as real-time trading, high-frequency transactions, multi-cloud communications, cybersecurity analytics, network forensics, and industrial IoT – can also utilize the higher network throughput, Gartner said.

Supermicro bets big on 4-socket X14 servers to regain enterprise trust

In April, Dell announced its PowerEdge R470, R570, R670, and R770 servers with Intel Xeon 6 Processors with P-cores, but with single and double-socket servers. Similarly, Lenovo’s ThinkSystem V4 servers are also based on the Intel Xeon 6 processor but are limited to dual socket configurations. The launch of 4-socket servers by Supermicro reflects a growing enterprise need for localized compute that can support memory-bound AI and reduce the complexity of distributed architectures. “The modern 4-socket servers solve multiple pain points that have intensified with GenAI and memory-intensive analytics. Enterprises are increasingly challenged by latency, interconnect complexity, and power budgets in distributed environments. High-capacity, scale-up servers provide an architecture that is more aligned with low-latency, large-model processing, especially where data residency or compliance constraints limit cloud elasticity,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “Launching a 4-socket Xeon 6 platform and packaging it within their modular ‘building block’ strategy shows Supermicro is focusing on staying ahead in enterprise and AI data center compute,” said Devroop Dhar, co-founder and MD at Primus Partner. A critical launch after major setbacks Experts peg this to be Supermicro’s most significant product launch since it became mired in governance and regulatory controversies. In 2024, the company lost Ernst & Young, its second auditor in two years, following allegations by Hindenburg Research involving accounting irregularities and the alleged export of sensitive chips to sanctioned entities. Compounding its troubles, Elon Musk’s AI startup xAI redirected its AI server orders to Dell, a move that reportedly cost Supermicro billions in potential revenue and damaged its standing in the hyperscaler ecosystem. Earlier this year, HPE signed a $1 billion contract to provide AI servers for X, a deal Supermicro was also bidding for. “The X14 launch marks a strategic reinforcement for Supermicro, showcasing its commitment

Microsoft will invest $80B in AI data centers in fiscal 2025

And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs). In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023. Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025. Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads. Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.

John Deere unveils more autonomous farm machines to address skill labor shortage

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Self-driving tractors might be the path to self-driving cars. John Deere has revealed a new line of autonomous machines and tech across agriculture, construction and commercial landscaping. The Moline, Illinois-based John Deere has been in business for 187 years, yet it’s been a regular as a non-tech company showing off technology at the big tech trade show in Las Vegas and is back at CES 2025 with more autonomous tractors and other vehicles. This is not something we usually cover, but John Deere has a lot of data that is interesting in the big picture of tech. The message from the company is that there aren’t enough skilled farm laborers to do the work that its customers need. It’s been a challenge for most of the last two decades, said Jahmy Hindman, CTO at John Deere, in a briefing. Much of the tech will come this fall and after that. He noted that the average farmer in the U.S. is over 58 and works 12 to 18 hours a day to grow food for us. And he said the American Farm Bureau Federation estimates there are roughly 2.4 million farm jobs that need to be filled annually; and the agricultural work force continues to shrink. (This is my hint to the anti-immigration crowd). John Deere’s autonomous 9RX Tractor. Farmers can oversee it using an app. While each of these industries experiences their own set of challenges, a commonality across all is skilled labor availability. In construction, about 80% percent of contractors struggle to find skilled labor. And in commercial landscaping, 86% of landscaping business owners can’t find labor to fill open positions, he said. “They have to figure out how to do

2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

Stay Ahead, Stay ONMINE