1. Klarna’s Open-AI Powered Shopping Assistant Could Redefine The Consumer Experience
We think that AI-integrated wallets could transform e-commerce,1 with Klarna’s launch of an OpenAI-powered shopping assistant2 providing a glimpse into the future. Through its nifty chat interface, Klarna provides access to more than six million products across multiple marketplaces. Users can search for specific products or brands, delve into product, pricing, and delivery choices, and find items suited to their preferences, throughout the journey teaching Klarna’s AI assistant how to personalize its services.
To illustrate, Klarna’s AI assistant can guide3 a consumer in selecting a budget-friendly speaker across marketplaces, as shown below, quickly presenting the trade-offs between brand reputation and budget constraints, focusing on features like durability and battery life that are important to consumers and—with time and more information—important to an individual consumer.
Source: ARK Investment Management LLC, 2024, based on an ARK analyst conversation with the chatbot in the Klarna App. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.
ARK’s research suggests that AI-enabled "purchasing agents" will advance beyond search and discovery to execute transactions automatically on behalf of individual consumers, comparing products and completing purchases across different platforms in a fraction of the time consumers take today. As a result, shoppers will no longer need to depend on just one or two marketplaces to save time, which could disrupt traditional consumer marketplaces and reshape the consumer services industry.
If consumers do adopt a marketplace-agnostic approach and rely more on AI to aggregate information and facilitate purchases, then the digital wallet providers that streamline and personalize the e-commerce experience could redefine the consumer experience and value chains. As with many “winner takes most” AI opportunities, the disruption could be profound.
2. The Popularity Of Stablecoins Is Surging
Last week, private fintech company Revolut announced plans to launch its own stablecoin in the first quarter of 2025, joining other players like Ripple, PayPal, and BitGo who have made recent announcements. With more than 45 million customers and £18 billion in customer deposits,4 Revolut will take a compliance-first approach that aligns with MICA (Markets in Crypto Assets), the relatively transparent regulatory framework in Europe.
Revolut and others hope to carve out a niche in an increasingly competitive market. The number of stablecoins in circulation is 200, but two companies, Tether and Circle, dominate 90%+ market share.5
Stablecoins are one of the fastest-growing digital assets and, based on several metrics, they are beginning to rival payment giants like Visa and Mastercard. Thanks to adoption in emerging markets, where use cases extend far beyond trading and speculation, stablecoins have been insulated from the volatility of crypto market cycles. While spot crypto trading volumes have been cut in half since peaking in 2021, the number of stablecoin sending addresses has quadrupled, as shown below.
Note: The Left-side y-axis refers to Exchange Volume. The right-side y-axis refers to Stablecoin monthly sending addresses. Source: Castle Island Ventures and Brevan Howard Digital 2024.6 Note, per original: Exchange volume refers to CoinMarketCap’s aggregate denoised exchange volume figure for spot cryptoassets. Stablecoin active addresses refers to the number of onchain addresses sending a stablecoin transaction in a given month, via Artemis 3 Unless otherwise specified. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.
In countries with weak fiat currencies, such as Nigeria, Indonesia, India, Argentina, and Brazil, demand for stablecoins has soared as their populations search not only for ways to escape the collapse in purchasing power and wealth associated with currency devaluations, but also to access low-cost, cross-border payment services and dollarized yields.
The stablecoin sector is burgeoning into a financial force, at $173 billion in supply outstanding, 22 million monthly active addresses, and a projected adjusted annual volume of $6 trillion,7 roughly half of Visa’s volume—this year.8
The financial industry is taking this movement seriously. Even at the risk of disintermediating traditional services, fintechs, banks, payment processors, and custodians are hoping to capitalize on this opportunity. In its first half report, Tether—the largest stablecoin issuer—reported $5.2 billion in profits9 with fewer than 100 employees, underscoring the profitability and scale of stablecoins. Despite the first US interest rate cut in more than two years, the yield from Tether’s collateral—typically invested in repurchase agreements and short-term U.S. Treasuries—remains highly lucrative, especially for potential neo-banks and fintechs like Revolut with large user bases and significant dollar-denominated deposits.
Although stablecoins currently account for only 0.82% of the US M210 money supply, their potential is global and enormous. We believe the combination of auditability, instant settlement, low transfer costs, and programmability could propel stablecoins into a multi-trillion-dollar market. As financial systems continue to digitize, stablecoins could transform a significant part of the global financial infrastructure, paving the way for widespread adoption and usage across sectors.
3. OpenAI, Targeting Trillions In Value, Seeks Billions In Funding
OpenAI reportedly is seeking to raise $6.5 billion in funding from venture investors.11 If successful, this deal would be one of the top 10 venture capital (VC) funding rounds in history, as shown below. OpenAI is seeking to further improve its state-of-the-art AI models.
Source: ARK Investment Management LLC, 2024. This ARK analysis draws on a range of external data sources, including Pitchbook, which may be provided upon request. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency.
While its funding round is top tier, OpenAI’s potential $150 billion valuation12 is even more noteworthy, as it would position it as the third most valuable private company ever to raise venture funding and the most valuable US firm ever to do so, a shown below. Only two companies, both Chinese, were higher: TikTok’s owner, Bytedance, and Ant Group, the firm behind Alipay.13
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Source: ARK Investment Management LLC, 2024. This ARK analysis draws on a range of external data sources, which may be provided upon request. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.
The equity value seems steep but, in our view, justifiable. OpenAI is positioning its AI system as an operating system for all AI software. ARK’s research suggests that such a “foundation model” could command remarkable value. The productivity that AI promises to deliver should revolutionize the global economy and accelerate economic growth worldwide. By 2030, ARK expects that commercial foundation model providers like OpenAI will garner $3.5 trillion in revenue by helping to run $13 trillion in AI enterprise software. Given the roughly 30% in operating margins typical of other compute infrastructure providers14 and an EV/EBITDA15 multiple around 19,16 the enterprise value that foundation model companies could command collectively could reach $20 trillion.
While OpenAI is in the lead today by many measures, Anthropic and xAI are pursuing similar business models, and Meta’s open-source approach could become an orthogonal disruptive threat. OpenAI seems to have the most commercial traction among the candidates.17 According to reports in June, its annualized revenue roughly tripled year-over-year to $3.4 billion.18 Unless its growth were to slow suddenly, OpenAI’s equity value at $150 billion suggests that its forward price-to-sales multiple would fall between those of Nvidia and Microsoft: lofty to be sure, but not absurd.
*OpenAI revenues are reported annualized revenue numbers and assume no change in revenue growth rates. For publicly traded companies, forward revenue expectations reflect the Visible Alpha analyst consensus. Source: ARK Investment Management LLC, 2024. This ARK analysis draws on a range of external data sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.
OpenAI’s fundraising, alongside that of Anthropic and xAI, is notable in an otherwise soft VC fundraising environment. Including this OpenAI round, more than half of VC dollars invested quarter-to-date in the US and more than 40% globally have flowed into AI opportunities, as shown below. Year-to-date, VC dollars flowing into AI have totaled $90 billion, up 50% year-over-year, while non-AI VC investments have dropped 15% to their lowest level since 2016.
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Source: ARK Investment Management LLC, 2024. This ARK analysis draws on a range of external data sources as of 9/20/24, including Pitchbook, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2024. This ARK analysis draws on a range of external data sources, including Pitchbook, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency.
With the late nineties in mind, skeptics will conclude that the boom in venture funding for AI signals a bubble. Given the scope of the potential opportunity, however, we believe the dollars are justified. The rise of Artificial Intelligence could become the most economically momentous technological transition in history.19 If we are correct, then record amounts of capital should be seeking to accelerate that transition.