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2 days ago
- Business
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Behind bankruptcy plea of London start-up: It hired 700 Indian engineers to pose as AI tools
A major AI scandal has shaken the tech world as once valued at $1.5 billion, has filed for bankruptcy. The company, backed by Microsoft and a Qatari sovereign fund, falsely claimed to build apps in minutes using AI, while actually relying on hundreds of human engineers in India. read more Behind bankruptcy plea of London start-up: It hired 700 Indian engineers to pose as AI tools London-based once valued at $1.5 billion and backed by Microsoft and Qatar's sovereign wealth fund, has filed for bankruptcy after it was revealed that its so-called was mostly done manually by engineers in India, According to a report from The Times of India. According to the report, round 700 Indian engineers were while developing apps. The startup had raised over $445 million by promoting its AI-based app development platform. STORY CONTINUES BELOW THIS AD The company marketed its platform as using AI to build apps quickly, powered by a digital assistant named 'Natasha.' Most of the coding was done manually However, reports revealed that most of the coding was actually done manually by Indian tech workers, while the company falsely presented their work as AI-generated. The collapse of The collapse began in May 2025 when lender Viola Credit seized $37 million from accounts after discovering the company had inflated its 2024 revenue by 300 per cent. Founder Sachin Dev Duggal had claimed $220 million in sales, but an audit revealed the actual figure was just $50 million. All engineer, no AI Concerns about AI claims had surfaced as early as 2019, when The Wall Street Journal reported that the platform largely depended on human engineers rather than real AI. Former employees described it as 'all engineer, no AI,' according to the report. The scheme fully unravelled when the new CEO, Manpreet Ratia, who replaced Duggal in February, discovered the extent of the financial misreporting. US prosecutors have since launched an investigation and requested access to the company's records and customer data. Biggest AI startup collapse downfall is considered the biggest AI startup collapse since the ChatGPT-driven investment boom began. The company now owes $85 million to Amazon and $30 million to Microsoft in cloud computing bills. About 1,000 employees have lost their jobs. 'AI washing' in the time of boom The case has sparked renewed concerns over 'AI washing', a growing trend where companies rebrand traditional services as AI-powered to attract investment during the current tech boom.
Yahoo
22-02-2025
- Business
- Yahoo
A renowned market strategist who called the dot-com bubble warns US stocks are at 'serious risk' as tech analyst optimism starts to sour
Albert Edwards warns declining analyst optimism for US tech stocks could mean trouble. Historically, souring analyst optimism has led to poor stock-market performance. Tech-stock capitalization now exceeds dot-com bubble levels, leaving the market vulnerable, he said. Societe Generale strategist Albert Edwards has long been skeptical that AI stocks in the US could live up to the hype surrounding them. Now, it looks like stock analysts covering the tech sector are starting to grow dubious, too. In a client note published Thursday, the often-bearish Edwards published a series of charts that he thinks should give investors pause as stocks remain close to all-time highs. They show analyst optimism souring on tech stocks, which have underpinned the market's impressive rally — a development he said puts stocks "at serious risk." Here are a few of them. First is the 12-month moving average of the percentage of analysts who are upgrading earnings-per-share forecasts. It's fallen from around 58% to 50% since the start of 2024, yet the Nasdaq 100 has continued its surge. Historically, downtrends like this in optimism have coincided with a dip below the Nasdaq's 200-day moving average. "If the rapid decline in analyst optimism for the Nasdaq 100 is anything to go by, the tide is going out fast," Edwards wrote. "Indeed, it is a minor macro miracle that the index is still trading above its 200 mav let alone record highs." There's also been a disconnect between analysts' expectations for earnings and how well earnings have fared, with reality lagging. Now, it looks like expectations are starting to turn south as trailing earnings flatten and fall short. And estimates for the S&P Composite 1500 have started to turn downward for the first time since their ChatGPT-driven rebound. "It is the chart below that investors should be really nervous about," Edwards wrote. "Notwithstanding the 'blips' from games played around reporting rounds, analyst optimism for the S&P 500 has been a series of lower highs and lower lows. Both the 6 and 12 month moving averages are now turning down." Again, Edwards emphasizes, the problem with souring expectations is that investors' outlook is already at exuberant extremes, and anything that falls short of those extremes is a downside miss. "In ordinary times this would not be a serious threat to equity investors, but it is potentially a big risk when we are at nose-bleed-high valuations and optimism." Here's a look at how frothy the tech sector and US stocks have gotten. Tech stocks now make up a higher percentage of the market than during the dot-com bubble — which Edwards is famous for calling — and US stocks are now an exorbitant 75% of global market cap. Plus, actual market performance tends to trend with where analyst estimates go. A worsening outlook suggests the rally could start to slow. "If US analyst optimism is turning downward might this be enough to pull the rug from under what many see as an extremely expensive equity market, flirting with all-time highs?" Edwards wrote. Indeed, stocks have faced a few hurdles in recent weeks that could be ongoing problems for US investors. Chinese firm DeepSeek released a new AI chatbot in late January, threatening OpenAI's ChatGPT with its lower costs, and calling into question the vast amounts of AI infrastructure spending in the US. President Donald Trump's flip-flopping on tariff policy has also injected uncertainty into the market. And questions about the strength of the US economy have emerged this week as Walmart warned of lower expected sales and the University of Michigan's Consumer Sentiment survey showed consumers are still concerned about inflation. Whether these are catalysts to a longer-term pullback is still unknown. Most Wall Street strategists have bullish year-end price targets for the S&P 500. But Edwards lays out a compelling list of charts investors might do well to keep their eyes on. Read the original article on Business Insider Sign in to access your portfolio
