Good morning, AI Night readers. A Swedish startup just hit $6.6B in five months. Japan is betting $19 billion on AI sovereignty. And Luma AI wants to turn every actor into an AI-powered chameleon. December isn't slowing down.

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Stockholm based Lovable closed a $330 million Series B at a $6.6 billion valuation on December 18, 2025, more than tripling its $1.8 billion valuation from just five months earlier. The company has become Europe's leading player in "vibe coding," a term coined by former OpenAI co-founder Andrej Karpathy in February 2025 to describe building software by describing what you want in plain language, letting AI generate all the code

Lovable's trajectory from $1M ARR to $200M ARR in roughly a year makes it one of the fastest growing software companies in history. The vibe coding market is exploding, Y Combinator reported that 25% of startups in its Winter 2025 batch had codebases that were 95% AI-generated.

Luma AI announced Ray3 Modify on December 18, 2025 a new video-to-video AI model designed specifically for hybrid workflows where human actors and real camera footage guide AI generation. Unlike text-to-video models, Ray3 Modify transforms existing footage while preserving the performer's motion, timing and emotional delivery.

One of the big frustrations with early AI video tools was their unpredictability. You couldn't count on them to accurately follow what a performer was actually doing on screen, which made them pretty much useless for professional work where you need consistent, repeatable results.

Ray3 Modify from Luma AI takes a different approach. Instead of generating everything from scratch, it uses your actual footage as the starting point. That changes what's possible suddenly you can swap out wardrobe, change the environment around your subject, adjust lighting, drop in virtual products, or pull off VFX-style transformations, all without going through the usual post-production grind.

Japan unveiled a ¥3 trillion (~$19 billion) national AI development initiative on December 21, 2025, with SoftBank leading development of a trillion-parameter foundation model to reduce reliance on American and Chinese AI systems. The announcement reported by Japan's Yomiuri newspaper citing a draft government plan represents Japan's largest AI commitment to date.

A new venture company launches in Spring 2026, with data centers in Hokkaido and Osaka operational by fiscal 2026. The project falls under Japan's broader ¥10 trillion ($65 billion) AI and semiconductor commitment through 2030.

The government explicitly frames this as a national security priority excessive reliance on foreign AI development poses strategic risks, and Japan needs to protect strategic industrial data. The Ministry of Economy(MOE),Trade and Industry(METI) leads the initiative which includes securing semiconductor supplies amid global competition.

Japan's approach differs from Western models, the country's AI Promotion Act establishes an "innovation first" regulatory framework with voluntary compliance and no penalties, and Japanese law permits AI training on copyrighted works without authorization