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OpenAI and Microsoft add new image generation and AI agent features—and showcase their platform advantage

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Hello and welcome to Eye on AI. In today’s edition…OpenAI releases a more capable image generator, while Microsoft plants its stake in reasoning agents; Google debuts Gemini 2.5 “thinking” models; Amazon tests AI assistants for health and shopping; Character.AI gives parents a lens into their kid’s time on the platform; and AI companies’ aggressive crawlers overwhelm open-source projects. 

This week, both OpenAI and its backer (and erstwhile rival…it’s complicated) Microsoft rolled out some of their newest and most powerful AI capabilities into their main platforms. OpenAI debuted a new image generation capability for GPT-4o on its main ChatGPT service, offering enhanced image creation and granular editing capabilities based on text prompts. This makes the image generation far superior to what was possible with its earlier DALL-E model. And Microsoft announced its boosting its Microsoft 360 Copilot offering with two “deep reasoning agents,” as well as “agent flows” designed to remove some of the unpredictability that comes with using AI agents.

ChatGPT already had an image generator, and Microsoft has already rolled out various sorts of agents geared toward the enterprise. Both releases, however, offer a new twist on what they were offering—and shows the power of being able to instantly roll out a new feature on a platform that already has hundreds of millions of users. Having that kind of distribution is a huge edge as the competition among similar products heats up. 

4o Image Generation raises the bar 

Now rolling out to ChatGPT Plus, Pro, Team, and free users, OpenAI describes the new integration as its “most advanced image generator yet.” And I have to say, the results are impressive. 

Overall, 4o Image Generation can produce vivid realistic scenes and produce impressive “style transfer” transformations of uploaded images based on prompts. (You can also edit key features of uploaded images, just from prompts too.) Based on the plethora of images flooding the ChatGPT subreddit, this style transfer capability is proving popular. An image the model created after a user prompted it to change the “Distracted boyfriend” meme into the style of “South Park,” for example, is honestly kind of shocking in how spot-on it is to the show’s visual look—no wonder companies creating generative AI models are being inundated with copyright lawsuits. On another note, users are already testing the boundaries of creating images of public figures such as Donald Trump and Elon Musk. OpenAI confirmed to Eye on AI that it isn’t restricting the new image model from creating images of real people except in cases of nudity or graphic violence. This represents a shift from its restrictions for DALL-E, which would refuse to generate images of real people. 

Perhaps the most interesting advancement, however, is the massive leap in the model’s ability to generate text. DALL-E and other previous image generating models would usually create garbled text, but 4o Image Generation can create long, detailed, and accurate strings of text inside images. The first example in OpenAI’s blog post shows an entire whiteboard of text that is easily readable and accurate to the prompt. 

A ‘researcher’ and ‘analyst’ join your 365 workspace

Microsoft describes its new “deep reasoning agents” for Microsoft’s 365 Copilot as being designed to “handle complicated tasks that require detailed analysis, methodical thinking, and nuanced understanding.” Based on OpenAI’s o1 reasoning model, the Researcher agent is geared toward multi-step research and integrates with external platforms like Salesforce, ServiceNow, and Confluence to garner insights from across a company’s data. Then there’s the Analyst agent, which is based on Open AI’s o3-mini reasoning model. Microsoft claims it’s optimized to do advanced data analysis at work, uses chain-of-thought reasoning, and can run Python to tackle complex data queries. Both are set to start rolling out in April.

In addition to the new agents, Microsoft also announced a new capability it’s calling “agent flows” that’s meant to add predictability to the use of agents. Agent flows provide structured, rule-based workflows that incorporate AI actions, following predefined and deterministic paths. This is important because as I wrote in last Thursday’s newsletter, AI agents have serious issues with reliability and can be risky, especially when it comes to critical actions or sensitive data. 

Various companies have been releasing AI agents touted for “deep research” lately, but Microsoft 365’s role as many businesses’ central platform—and integration with all the other data products they use—gives Microsoft a unique advantage. The AI field is crowded with companies competing with similar products, each jockeying for toeholds of differentiation. These updates make advanced AI features easily accessible right where the users of popular products already operate, which is likely to be a significant market advantage. What’s more, both Microsoft and Google moved to bundle their AI features into their enterprise software by default—and raised the prices of the core products—after previously allowing customers to opt-in to the AI features for an extra cost. That’s the platform advantage. 

And with that, here’s more AI news. 

Sage Lazzaro
sage.lazzaro@consultant.fortune.com
sagelazzaro.com

This story was originally featured on Fortune.com



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‘Euphoria’s’ makeup artist got her first job off Craigslist—now she’s the founder of a $16 million beauty company, working alongside Zendaya

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  • The make-up artist for Euphoria, Chappell Roan, and Kesha got her start working on a vampire web-series gig she found on Craigslist. Now the millennial entrepreneur, Donni Davy, is setting beauty trends and running a $16 million makeup company thanks to her “superpower” and early career choices. 

Most people rising to career heights wince looking back at the early days: roughing it by bussing tables, awaiting a golden opportunity. For Doniella “Donni” Davy—Euphoria makeup artist and founder of Half Magic Beauty—her first gigs off Craigslist were an exhilarating start to where she is now.

“I really loved every single one. I did not think at the time, ‘Oh God, I’m really slumming it on Craigslist,’” she tells Fortune. “I was so stoked. I was an animal.”

Davy’s early years working on a vampire YouTube series and low-budget films are in stark contrast to what she’s taking on now. The makeup artist is behind the looks seen in movies like Moonlight, Ford v. Ferrari, and If Beale Street Could Talk. Most notably, she’s known for the generation-defining beauty of colorful and graphic makeup trends she set on the hit HBO series Euphoria—with season three set to return in 2026. Davy’s celebrity clients include icons like Chappell Roan, Kesha, Reneé Rapp, and Mindy Kaling. Meanwhile, she’s juggling her $16 million makeup brand Half Magic Beauty.

Davy’s interest in makeup makes sense on paper; she was raised by two artistic parents in Los Angeles, one of the creative capitals of the world. But in those early years, her schools didn’t explore non-traditional creative forms like makeup artistry. She didn’t even know a job like that existed. However, what she did know was that she enjoyed painting; and moved from cotton canvas to skin.

“I found out about this career of being a makeup artist for film and TV, where you get to read the scripts, and it’s all about storytelling, not just about making people look more conventionally attractive,” Davy says. 

From working a vampire web series to hit TV show Euphoria 

At just 21, Davy pivoted from her previous creative background and leaned into her true calling—starting with a two-week crash course in make-up, instead of going through cosmetology school.

Davy has proved that speed-running a skills course works out well when you have the passion and talent. While audiences now gawk at her work among the upper echelons of Hollywood, the start couldn’t have been any different. Davy’s first gig was a low-budget project riding the popularity of Twilight

“My first ever job was a vampire web series that was on YouTube. I got that on Craigslist, and then a lot of student films,” Davy says. “That’s how I built up my portfolio—just working on little, itty bitty, tiny things.”

At the time Davy also juggled a part-time job at a wine bar, slipping in shifts between projects. Davy says it took a few years of picking up gigs off the website—sleeping on the floors of sets, schlepping between indie film group houses—before she took on a project that flipped the switch. It was Moonlight—a 2016 fan-favorite, which received critical praise with two wins at the Academy Awards, and one at the Golden Globes, BAFTA Awards, and the Screen Actors Guild Awards. 

“After Moonlight, more opportunities started coming. I had formed this relationship with A24…it was a really nice thing for my resume,” Davy says. “I got an agent after that, and it was very easy to elevate up a little bit.”

Davy led makeup artistry for a few indie films—including The Devil Has a Name, Momster, and Under the Silver Lake—before HBO caught wind of her talents. The company had a pilot it wanted her to test for: a teen drama called Euphoria. Not only would this job bring out a different side of her artistry, but it would be career-defining. The makeup looks on Euphoria would soon bring beauty enthusiasts to their knees. Rhinestone cat-eyes, colorful cut creases, and neon eyeliner would dominate the main feeds of TikTok and Instragam. Not only was the show a pop culture sensation—but the characters’ makeup came to define the individuality and play of Gen Z’s fashion sensibilities. 

“The makeup on that show blew up on a whole other level. There was no going back to how things were before,” Davy says. “My life is completely different now.”

Davy’s success on Euphoria laid the groundwork to launch her makeup brand, Half Magic Beauty, in collaboration with A24. The products are distinct to her creative style—and sticking to her ingenuity has paid off. The company’s valuation reached $16.1 million in Q2 of 2024, representing 24% quarter-over-quarter growth. Half Magic Beauty has retail presence across three continents, and is on the shelves of over 800 Ulta stores in the U.S. It was also awarded four Allure Best of Beauty Awards. 

Davy’s essential “superpower” and advice for young dreamers 

While many may envision that working with the likes of Zendaya and Chappell Roan is a total dream, Davy’s job isn’t for the faint of heart. She has the perks of working with trailblazing artists and on award-winning films, but her career spans well beyond makeup. 

“I quickly have been trying to adapt to becoming a content creator, becoming a founder who has to be in front of the camera, when in the past, that petrified the sh-t out of me,” Davy says. “There was no way I was ever going on camera, and now it’s 100% part of my job on a weekly basis.”

Davy’s rise as a top Hollywood makeup artist has thrown her for a loop—her bouts of success quickly followed one another, steadily propelling her as a trendsetter. She credits her ADHD as a “superpower” in the chaos of it all, because she can really hone her focus on the things she cares about. 

For many looking to make it in entertainment, the fame and industry competition can be daunting. Davy may be riding a career high, but it all started with a Craigslist ad and a vampire YouTube series. She says if she didn’t take on and value every opportunity she got, she wouldn’t be where she is today. Dreamers shouldn’t be scared to try and make it in Hollywood—just do every gig in earnest.

“What I try to convey now to the younger generation, or anyone who asks me advice is: Those jobs are really exciting jobs,” Davy says. “I always tell people to take seriously any job they have, even if they’re doing makeup for an actor getting a headshot. Take it really seriously.”

This story was originally featured on Fortune.com



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JPMorgan says Trump’s tariffs to send US into recession

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JPMorgan Chase & Co. said it expects the US economy to fall into a recession this year after accounting for the likely impact of tariffs announced this week by the Trump administration.

“We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3%, down from 1.3% previously,” the bank’s chief US economist, Michael Feroli, said Friday in a note to clients, referring to gross domestic product.

“The forecasted contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3%,” Feroli said.

President Donald Trump’s announcement Wednesday of major tariffs on US trading partners around the world sent the S&P 500 index of US stocks to its lowest level in 11 months, wiping away $5.4 trillion of market value in just two trading sessions to close out the week.

Read More: Worst Stock Meltdown Since Covid Deepens as Recession Odds Soar

JPMorgan’s forecast came alongside similar changes from other banks, which have been slashing projections for US growth this year since the tariff announcement. On Thursday, Barclays Plc said it expects GDP to contract in 2025, “consistent with a recession.”

On Friday, Citi economists cut their forecast for growth this year to just 0.1%, and UBS economists dropped theirs to 0.4%.

“We expect US imports from the rest of the world fall more than 20% over our forecast horizon, mostly in the next several quarters, bringing imports as a share of GDP back to pre-1986 levels,” UBS Chief US Economist Jonathan Pingle said in a note. “The forcefulness of the trade policy action implies substantial macroeconomic adjustment for a $30 trillion economy.”

‘Stagflationary Forecast’

Feroli said he expects the Federal Reserve to begin cutting its benchmark interest rate in June and proceed with rate cuts at each subsequent meeting through January, bringing the benchmark into a 2.75% to 3% range from the current 4.25% to 4.5% range.

Those cuts would come despite a rise in a key measure of underlying inflation to 4.4% by the end of the year, from the current level of 2.8%.

Read More: Powell Says Fed in No Hurry to Cut as Markets Continue to Swoon

“If realized, our stagflationary forecast would present a dilemma to Fed policymakers,” Feroli wrote. “We believe material weakness in the labor market holds sway in the end, particularly if it results in weaker wage growth thereby giving the committee more confidence that a price-wage spiral isn’t taking hold.”

On Friday, Fed Chair Jerome Powell said “it feels like we don’t need to be in a hurry” to make any adjustments to rates. His comments followed the release of the latest monthly employment report from the Bureau of Labor Statistics, which showed robust hiring in March alongside a slight uptick in the unemployment rate, to 4.2%.

Investors are betting on a full percentage point of reductions by the end of the year, according to futures.

This story was originally featured on Fortune.com



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Consumers scramble to buy big-ticket items before tariffs kick in

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