THE SWELL #19
SAIL Weekly Digest May 25–29, 2026 | Issue #19
This week SAIL authors mapped the widening gap between what AI can do and what it costs to run. OpenAI’s math breakthrough and a wave of agent-native infrastructure showed the capability frontier moving fast. Meanwhile rising token bills, a growing public backlash, and hard questions over drones and Chinese biotech power showed the bill, financial and political, coming due.
The Week in AI
The Vatican’s AI encyclical — On May 25, Pope Leo XIV released “Magnifica Humanitas,” the first papal encyclical devoted to AI, centering human dignity, labor, and ethics — and signed 135 years to the day after Rerum Novarum, framing AI as this era’s industrial revolution.
Anthropic passes OpenAI in monster round — On May 28, Anthropic announced a $65B Series H round at a $965B valuation, surpassing OpenAI to become the world’s most valuable AI startup on the back of a projected $10.9B Q2 revenue and its first operating profit.
China curbs AI talent travel — Beijing began requiring government approval before staff working on advanced AI at private firms, including DeepSeek and Alibaba, can travel abroad — tightening its grip on frontier talent.
This Week from SAIL Authors
The Economics of AI Scale
Why AI bills rise as costs fall — Agents consume tokens at rates that are nearly impossible to forecast, so AI bills keep climbing even as per-token costs drop. — Exponential View. Read more
The AI backlash is the only thing growing faster than AI revenues — Public anger is scaling faster than the industry’s balance sheets, and that gap is becoming its own business risk. — Exponential View Read more
Agents Need Infrastructure
Giving Agents Computers — Ivan Burazin, Daytona — Daytona’s CEO on 74% month-over-month growth, 850K daily runs, and bare-metal sandboxes built to give agents their own machines. — Latent Space. Read more
Railway: The Agent-Native Cloud — Jake Cooper — Inside a cloud rebuilt for agents: 3M users, six-figure coding-agent spend, own-metal data centers, and the slow death of the pull request. — Latent Space. Read more
What AI Can — and Can’t — Do
OpenAI’s math breakthrough played to AI’s strengths — A clearer explanation than OpenAI’s own of why the math result is real progress, and why it leaned on exactly what models already do well. — Understanding AI. Read more
Exponential View #575: AI’s math breakthrough and its creative limits — The same math leap, set against the stubborn ceiling on machine creativity. — Exponential View. Read more
Some ideas for what comes next, May 2026 — A read on the open-closed balance, America’s open-source surge, and the power struggles shaping the next model cycle. — Interconnects. Read more
Hardware, Defense & China
The Autonomous Drone Tech Stack & Economics of Drones — Yaroslav Azhnyuk — A Ukrainian drone founder, with guest host Noah Smith, argues the West is asleep at the wheel on autonomous weapons. — Latent Space. Read more
The Empire of Wuxi — China’s biotech giant, and why it is not the TSMC of biotech. — ChinaTalk. Read more
Full Library
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Giving Agents Computers — Ivan Burazin, Daytona — Swyx, Latent Space
OpenAI’s math breakthrough played to AI’s strengths — Kai Williams, Understanding AI
The AI backlash is the only thing growing faster than AI revenues — Azeem Azhar, Exponential View
Railway: The Agent-Native Cloud — Jake Cooper — Swyx, Latent Space
Some ideas for what comes next, May 2026 — Nathan Lambert, Interconnects
Exponential View #575: AI’s math breakthrough and its creative limits — Azeem Azhar, Exponential View
The Empire of Wuxi — Nick Corvino, ChinaTalk
The Autonomous Drone Tech Stack & Economics of Drones — Yaroslav Azhnyuk — Swyx, Latent Space
Why AI bills rise as costs fall — Azeem Azhar & William Gildea, Exponential View
