With the wide release of Sora, OpenAI's video tool, most of the big tech giants — and some startups — are now racing to create models capable of generating realistic, high-quality videos from text prompts.

Why it matters: GenAI video tools could save time and money for filmmakers, but they could also unleash novel copyright issues and a flood of deepfakes.

• The fiercer the competition in the AI space, the more likely tech companies prioritize release dates over safety.
• Generating AI video requires magnitudes more energy than generating text, which is already straining the power grid.

The big picture: Google, OpenAI and AI startup Runway all offer products that let creators generate short videos with minimal effort.

Google's Veo 2

Google announced Veo 2, the latest version of its genAI video tool, a week after Sora's wider release in December. The company says Veo 2 is now available to early access users in the U.S. who are over 18.

• But good luck testing it yourself.
• "No one seems to have any idea how to actually try it out," tech writer and investor MG Siegler wrote in his blog. "I worked [at Google] for over a decade and I can't begin to tell you how you access it."

Between the lines: Google says Veo lets you create clips up to two minutes long, which means it could generate very short films.

• An entire section of Veo 2's product page is devoted to the tool's limitations, explaining that it struggles with consistency and complex motion.
• Ex-Googler Bilawal Sidhu had early access and posted a video of a dog wearing sunglasses and headphones and drinking a cocktail. Only the color of the umbrella in the cocktail glass changed in different shots.

While there's no agreed-upon benchmarking system for AI video generators, Google's Veo 2 is widely seen as the most promising right now.

• GenAI video creator Blaine Brown praised Veo by showing off videos of how different tools handled the prompt "a pair of hands skillfully slicing a perfectly cooked steak on a wooden cutting board. Faint steam rising from it."
• The test, Brown wrote on X, challenges AI models with physics and movement, an interpretation of what it means when a steak is cooked perfectly and depicting hands — a notorious struggle for AI.

Yes, but: There's a waiting list for Veo 2, while other models are available right now.

OpenAI's Sora

OpenAI released the beta version of Sora to a select group of testers in February 2024, then released the product to all ChatGPT Plus and Pro subscribers in December.

• OpenAI limits its $20/month Plus subscribers to 50 videos at 480p resolution or fewer videos at 720p per month.
• $200/month Pro subscribers are promised "10x more usage, higher resolutions, and longer durations."

Between the lines: Sora is bundled with ChatGPT Plus and Pro, so the $20 or $200 subscription comes with all the text, coding and image-generating capabilities of ChatGPT Plus and Pro.

• Aimed at users who want to create 20-second videos, Sora is ideal for social media and marketing.
• Creating a video with Sora is as simple as entering a description in the prompt box and waiting for it to generate.
• The videos are impressive, but they often struggle with basic physics.

Runway's Gen-3 Alpha

AI startup Runway's most current model — Gen-3 Alpha — has been available on all of its paid plans since September.

• Runway's tools were critical to making the Oscar-winning film "Everything Everywhere All at Once," Axios reported.
• Subscriptions range from $144 to $1,500 per year depending on how many seconds of video you want to generate.

Between the lines: Runway was first out of the gate with a public release of its tool in 2023, but this doesn't always mean success. Think Betamax, Netscape, MySpace.

• Runway's longer tenure has given it more time to work with creators to prevent copyright infringement.
• The company inked a deal with Getty Images in December 2023 to offer a more "commercially safe" version of its tool, and partnered with Lionsgate Studios in September 2024 to train Runway's AI model on Lionsgate's movie catalogue.
• Last month, Runway launched a talent network for independent AI creators to show off their work to studios and production companies.

What we're watching: The race is still anyone's to win, including American giants like Adobe and Meta, Chinese tech companies like Tencent (Hunyuan Video) and Kuaishou (Kling AI), and a collection of other scrappy startups.

AI stocks led markets to record heights in 2024, but some investors are already moving on to the new hotness: quantum computing.

Why it matters: Investors who tripled or quadrupled their money on AI plays are hungry for the next big thing, even if quantum computing is still relatively nascent in comparison.

Context: Quantum computing is bleeding-edge stuff, applying the principles of quantum mechanics to perform computing tasks far too difficult for traditional computing.

• As MIT scientists describe it, traditional binary computers use electrical signals that can be either 0 or 1. Quantum computing uses subatomic particles that can be both simultaneously. It sounds like a small difference, but the power is exponential.
• Google said last month its new quantum computing chip, code named Willow, did computations in five minutes that would take today's supercomputers 10 septillion years.
• Google found a solution for a fundamental problem with error correction that quantum computing researchers have been working toward for decades.

Yes, but: The technology is still in its infancy. As Google itself points out, Willow's achievement is little more than a "convincing prototype" that offers a "strong sign" quantum systems can be built at scale.

Eager investors are nonetheless snapping up shares of small-cap stocks as hype builds around this next generation of technology.

• Rigetti Computing has nearly quadrupled (off a low base) since the Willow announcement, turning it into a nearly $5 billion company.
• Quantum Computing has more than doubled, and larger player IonQ is up more than 10%.

Reality check: Retail investors are notorious for clamoring into stocks that look hot without really knowing why.

• Momentum trading means that quickly rising names will often go up just because they're going up, until some event happens that causes investors to abruptly take profits.
• Rigetti, for example, has about $12 million a year in revenue, meaning that it currently trades for over 400 times its sales, an astronomical valuation for any company.
• It's also been a stock in the doldrums for years, since coming public via a SPAC merger in early 2022. In fact, it didn't get back to its initial price until this recent surge.

Felix Salmon's thought bubble: Just about anything anybody ever gets excited about is now investible. Every so often a stock (or sector) will take the place of a memecoin.

• The movement in quantum computing stocks, for now, is more about meme dynamics than proper investment thesis, particularly in a low-volume holiday period like this past week.

• Nearly 1 in 4 startups claims to be an AI company. (PitchBook)
• Meta's Nick Clegg will step down from his post as policy chief to be replaced by prominent Republican Joel Kaplan. (Axios)
• Companies are going off the grid for clean energy sources to power data centers. (Axios)
• Apple agreed to settle a privacy lawsuit for $95 million. Plaintiffs argued that Siri recorded private conversations and shared them with advertisers. (Reuters)
• Anthropic cut a deal with music publishers to settle parts of a copyright lawsuit over song lyrics. (The Hollywood Reporter)

Simone Biles, who was named yesterday as Sports Illustrated's sportsperson of the year, spoke with my colleague Maxwell Millington about the award, her future and why she is so vocal about her struggles.