AI’s Economic Weight, Space Race Setbacks, and Dial-Up’s Last Call

11th August, 2025

From AI’s outsized role in U.S. GDP growth to geopolitical escalations in Gaza and the end of an internet era, today’s headlines show how technology, markets, and politics are colliding in real time. Market shake-ups, historic shutdowns, and shifts in global power—plus a few curveballs from space and Silicon Valley. All this and more in today’s Read It And Eat!

Major Headlines

• AI Spending Accounted for Nearly Half of U.S. GDP Growth Last Quarter — But at What Cost?

  
  

• In the past two weeks, one big tech giant after another has posted blowout earnings, fueled by a wholesale embrace of artificial intelligence. But beneath the glossy headlines and record profits lies a more sobering reality: the AI boom is draining corporate cash reserves at an unprecedented rate. Massive investments in chips, data centers, and other AI infrastructure are reshaping the economy—and creating new financial pressures.

  The scale of this spending is staggering. Since Q1 2023, inflation-adjusted investment in information processing equipment has surged 23%, while total U.S. GDP has grown only 6%. In the first half of 2025, this sector contributed more than half of the country’s sluggish 1.2% overall growth rate. In other words, AI-related capital expenditure propped up the economy at a time when consumer spending was stagnating.

  
  

  Behind those numbers is a vast physical and technological build-out. Training and operating large language models requires cutting-edge GPUs, high-capacity memory chips, specialized servers, and advanced networking gear. All of this demands not only technology but also the buildings, land, and energy infrastructure to power them.

  This investment wave is transforming the very business models of America’s largest tech firms. For years, Silicon Valley thrived on being “asset-light”—earning huge profits from intangible assets like intellectual property, software ecosystems, and platforms with strong network effects. Scaling up revenue meant adding users, not warehouses or factories, allowing companies like Apple, Google, Microsoft, and Meta to act as cash-generating machines.

  
  

  Now, the AI arms race is reversing that equation. These companies are becoming more asset-heavy, requiring physical infrastructure on a scale unseen since the early internet era. That shift brings not just growth potential, but also long-term costs, risks, and competitive pressures—reminding investors that the AI gold rush may be as capital-intensive as any industrial revolution before it. Financial Times

  
  
  
  

• Firefly Aerospace Stock Craters Nearly 30% After Strong IPO

  
  

• Just days ago, Firefly Aerospace was flying high—literally and figuratively—after its Nasdaq debut sent shares soaring over 55% and gave the Texas-based space and defense company a $9.84 billion valuation. Investors were captivated by its moon-landing milestone, expanding Pentagon contracts, and growing role in U.S. military space programs. But reality came crashing back down to Earth as the stock tumbled nearly 30% in follow-up trading.

  
  

  Founded in 2014 and once bankrupt by 2017, Firefly’s rise has been anything but smooth. A forced ownership change over U.S. national security concerns, leadership shake-ups, and strategic pivots have shaped its path. Today, it boasts a $1.1 billion backlog, over 30 planned launches, and ambitions to join President Trump’s proposed “Golden Dome” missile defense network. Yet the IPO prospectus warns of years of net losses ahead—a reminder that even the hottest space stocks face gravity.

  The boom in space defense spending may give Firefly fuel for the journey, but its next stage will require proving it can convert launch contracts into long-term profitability. Reuters 

  
  
  
  

• Nvidia and AMD agree to give U.S. 15% of China chip revenues

  
  

• Nvidia and AMD will pay the U.S. government 15% of revenues from semiconductor sales in China under a new deal granting export licenses. Nvidia will apply the levy to its H20 AI chips, AMD to its MI308 chips. Analysts call the agreement “unprecedented,” reflecting the high cost of market access amid ongoing U.S.-China tech tensions.

  The move comes after earlier bans on these chips were reversed, part of a broader thaw in trade relations — including eased Chinese export controls and U.S. concessions on chip design software. Still, the 15% cut raises questions about whether it resolves underlying security concerns. BBC

  
  
  
  

• Netanyahu Signals Gaza Takeover as Civilian Toll Mounts

  
  

• Israeli Prime Minister Benjamin Netanyahu says a new offensive to take “full control” of Gaza City will be launched “fairly quickly,” even as the U.N. Security Council hears renewed calls to halt the humanitarian crisis. The plan—approved by his security cabinet last week—targets what Israel says are Hamas’ final strongholds, but critics warn it risks escalating civilian casualties and prolonging hostilities.

  
  

  The latest strikes have already drawn global outrage. Gaza health officials report multiple deaths, including journalists from Al Jazeera, in an attack near Shifa Hospital. Israel claims one of the journalists was a Hamas operative posing as media, but international human rights observers say the evidence remains unverified. Netanyahu insists the offensive is not about permanent occupation, instead aiming for a “security belt” near Israel’s border.

  As the war approaches its third year, the push to “complete the job” raises the stakes—militarily, diplomatically, and morally. Reuters

  
  
  
  

• AOL to Finally Pull the Plug on Dial-Up Internet

  
  

• If you can still hear the screech of a 56k modem in your head, prepare for a moment of internet history to end. AOL will permanently shut down its dial-up internet service on September 30, closing the book on a service that once connected millions of Americans to the web for the first time.

  
  

  Launched in 1991, AOL became a cultural phenomenon—flooding mailboxes with free CD-ROMs, popularizing the “You’ve got mail!” greeting, and ushering households into the online era. At its peak in 1995, AOL had 10 million subscribers. But the rise of broadband, wireless, and high-speed connections rendered dial-up obsolete, leaving only about 265,000 Americans still using it by 2019. After corporate highs (a $164 billion merger with Time Warner) and lows (a messy split, a sale to Verizon, and later Apollo Global Management), AOL will now live on only in tech nostalgia. For many, it’s not just the end of a service—it’s the end of the internet’s formative soundtrack. MorningBrew

  
  
  
  

Minor Headlines 

Trump’s 401(k) order opens the door to crypto, private assets — and higher fees Reuters

Shipbuilder Fincantieri sues U.S. supplier over faulty fire panels —  Financial Times 

Astronauts Return to Earth After 5-Month ISS Mission — ABC News

Israel eliminates entire Al Jazeera team in Gaza.Disclosetv

Farmers in Vietnam displaced for $1.5B Trump golf club offered cash and rice — Reuters

Pimco chief signals caution over private markets —Financial Times 

Chile’s Codelco cleared to restart El Teniente mine — Reuters

Instagram takes on Snapchat with new ‘Instagram Map’ feature —  TechCrunch