Good morning, AI enthusiast.

Google's impressive Gemini 3 model has reportedly sent OpenAI into 'code red' mode. The release earned high praise from industry leaders, prompting CEO Sam Altman to accelerate ChatGPT's capabilities and intensify the AI arms race.

With strong competition now coming from multiple fronts, OpenAI's era of being the unchallenged leader in the AI space appears to be over. Is this the start of a more dynamic and competitive landscape that will push innovation forward for everyone?

In today’s AI recap:

• OpenAI's 'code red' over Gemini 3

• Ads arrive in Google's AI Mode

• Inside Waymo's driverless AI brain

• Howard Marks on the AI investment bubble

• 8 trending AI Tools

OpenAI's 'Code Red'

The Recap: A new report indicates that Google's impressive Gemini 3 model has prompted OpenAI CEO Sam Altman to declare a 'code red,' aiming to accelerate ChatGPT's capabilities and intensify the AI arms race.

Unpacked:

• The pressure mounted after Gemini 3 earned widespread praise, with Salesforce CEO Marc Benioff declaring, “I’m not going back,” after three years of daily ChatGPT use in a post he wrote on X.

• This isn't just about Google; OpenAI is now competing on multiple fronts, with rivals like Anthropic's Claude often cited as the top model for coding and Elon Musk's Grok reaching performance levels similar to ChatGPT.

• OpenAI is already signaling its response, as Chief Research Officer Mark Chen said recently on a podcast that the company has internal models on par with Gemini 3 that it will release soon.

Bottom line: The era of OpenAI's unchallenged lead in the AI space appears to be over, creating a more dynamic and competitive landscape. This heightened competition will likely accelerate innovation, pushing companies to deliver more powerful and useful AI tools for everyone.

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5. 🌐 VoiceCheap – Automatically dubs and lip-syncs your videos into over 30 languages to reach a global audience effortlessly.

6. 📈 Gauge – Discover how often your brand is mentioned by ChatGPT and other large language models to track your AI-driven visibility.

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The AI Ad Era Begins

The Recap: Google has officially started integrating ads into its AI Mode, marking a major shift in how AI products are monetized and signaling the potential end of the ad-free chatbot experience.

Unpacked:

• Unlike traditional search, Google serves ads based on a person's conversation with the AI, not just on keyword matches.

• The rollout follows an earlier phase where sponsored results began appearing in Google's AI Overviews for queries that had a "commercial angle."

• This is part of a broader strategy, as Google has also told advertising clients that ad placements are planned for Gemini in 2026.

Bottom line: Google is walking a fine line, needing to fund its expensive AI development without repeating the ad-clutter issues that plagued its traditional search. This move sets a monetization precedent for the entire industry, putting pressure on competitors to find sustainable revenue models beyond subscriptions.

AI Training

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The Recap: We just posted our very first (of many!) AI automation training videos on YouTube. In this video, we walk through how to use n8n, firecrawl, and rss.app to scrape virtually any piece of web content and transform it into LLM-ready output.

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Inside Waymo's AI Brain

The Recap: Waymo just pulled back the curtain on its autonomous driving AI, detailing a unified architecture built around its new Waymo Foundation Model. The system is designed from the ground up to create a continuous learning loop focused on provable safety.

Unpacked:

• Waymo’s strategy relies on a holistic, three-part ecosystem powered by the same foundation model: a Driver to navigate, a Simulator to test in virtual worlds, and a Critic to evaluate performance and find areas for improvement.

• The system uses large, powerful "Teacher" models for each task and then uses a technique called knowledge distillation to create smaller, more efficient "Student" models that can run in real-time inside the vehicle while retaining the larger model's capabilities.

• A continuous "flywheel" effect drives improvement by using the Critic to flag suboptimal driving events from real-world data, generating better alternatives, and then testing them at scale in the Simulator before deploying to the fleet.

Bottom line: Waymo is sharing a potential blueprint for building safe and scalable AI that operates in the physical world. This safety-first, integrated ecosystem approach could set a standard for other high-stakes applications like robotics and logistics.

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The Shortlist

California's Legislative Analyst’s Office reported that taxes on stock grants from just 12 AI-fueled tech companies now make up an "unprecedented" and potentially risky portion of the state's income.

AI is the betting favorite for TIME's 2025 Person of the Year, with online prediction markets giving the technology a greater than 40% chance of winning the title.

Waymo revealed that its autonomous driving foundation model is trained in part using Gemini, leveraging Google's model for complex semantic reasoning to handle rare on-road scenarios.

Signing off,

David, Lucas, Mitchell — The Recap editorial team