Uncover Tech Insights - September 25-29
Weekly market stock moves
Most impactful news of the week
Meta Platforms unveiled the official launch date for its upcoming Quest 3 virtual reality headset and introduced a fresh lineup of Ray-Ban smart glasses, accompanied by a multitude of AI assistants tailored for its suite of social applications. Mark Zuckerberg, the CEO of Meta, expressed during the product announcement, "The limits of your physical space are going to be able to expand. You’re going to be able to be a part of much larger worlds.”
Palantir Technologies Inc. has secured a substantial $250 million contract from the US Department of Defense to spearhead research and development efforts in the realm of artificial intelligence and machine learning technology. This three-year agreement underscores the company's strong ties with the US government and its expanding role within the convergence of AI and defense. In response to Tuesday's announcement, Palantir's shares, which have experienced significant gains this year on the back of AI-related commitments, surged by 6% on Wednesday.
Microsoft's Chief Technology Officer, Kevin Scott, revealed on Wednesday that the company has experienced a notable improvement in its ability to access Nvidia's chips for artificial intelligence workloads in recent months. Scott stated, "Demand was far exceeding the supply of GPU capacity that the whole ecosystem could produce." He went on to say that this issue is gradually resolving, though the situation remains somewhat constrained. Scott expressed optimism, stating that they anticipate more positive developments in the near future rather than setbacks in this regard, which is indeed promising.
On Tuesday, the Federal Trade Commission and 17 states sued Amazon, alleging the online retailer illegally wields monopoly power that keeps prices artificially high, locks sellers into its platform, and harms its rivals. The federal agency and the states alleged that Amazon violated antitrust laws by using anti-discounting measures that punished merchants for offering lower prices elsewhere. The government also said sellers on Amazon were compelled to use its logistics service if they want their goods to appear in Amazon Prime, the subscription program whose perks include faster shipping times.
OpenAI is currently in discussions with potential investors regarding a stock offering that would place an estimated valuation on the artificial intelligence startup, the driving force behind ChatGPT, in the range of $80 billion to $90 billion. This valuation is approximately three times higher than its value earlier this year. OpenAI, in which Microsoft holds a 49% stake, has informed investors that it anticipates achieving $1 billion in revenue for the current year and expects to generate multiple billions more in 2024, according to sources familiar with the matter. It's worth noting that this proposed deal is geared towards enabling employees to sell their existing shares, rather than the company issuing new shares to raise additional capital. While OpenAI has initiated discussions with potential investors regarding this arrangement, the terms of the deal are subject to change.
Over the last three years, TikTok has been actively engaged in persuading U.S. lawmakers that it can function independently within the United States, distinct from its parent company, ByteDance, which is based in China. However, recent staffing changes have left some employees uncertain about this independence. Beginning this year, a series of senior-level executives have transitioned from ByteDance to TikTok, assuming key positions in the popular video-sharing app's revenue-generating functions. Notably, some of these executives relocated from ByteDance's Beijing headquarters to the United States as part of this transition.
Meta Platforms Inc. is rolling out artificial intelligence enhancements to its apps, promising its 3 billion users an experience similar to OpenAI's ChatGPT. These upgrades will include personalized sticker creation, image editing, and a range of chatbot characters featuring celebrity faces, all powered by generative AI. These features will be integrated into Instagram, Messenger, and WhatsApp, as announced during the company's annual Connect developers conference. Additionally, Meta introduced a developer studio for brands, enabling them to create their own AI tools for the company's messaging services, facilitating customer interactions.
Epic Games Inc. has petitioned the US Supreme Court to review a judge's ruling from 2021 that concluded Apple Inc.'s App Store policies do not violate federal antitrust laws. This move by Epic marks the latest development in an ongoing dispute between the creator of Fortnite and Apple regarding the operations of Apple's marketplace. The outcome of this battle holds significant financial implications for Apple, as the company imposes commissions of up to 30% on digital goods and services sold through its App Store—an expense that Epic is attempting to circumvent for its games. The Supreme Court will follow its regular schedule, and a decision on whether to hear the case could be reached by the end of the year.
Amazon has announced its intention to make a substantial investment of up to $4 billion in the artificial intelligence company Anthropic. This move underscores the ongoing trend of major tech giants making significant investments in startups, all in pursuit of an advantage in the competitive AI landscape. As part of this agreement, Anthropic will leverage Amazon's custom chips to develop and implement its AI software. Additionally, Amazon has committed to integrating Anthropic's technology into a range of products within its diverse business portfolio.
According to a person with direct knowledge of the effort, Google executives have extensively discussed dropping Broadcom as a supplier of artificial intelligence chips as early as 2027. In that scenario, Google would fully design the chips, known as tensor processing units, in-house. The move could help Google save billions of dollars in costs annually as it invests heavily in AI development, which is especially pricey compared to other types of computing. The person said that Google executives set a goal earlier this year to ditch Broadcom following a monthslong standoff between the companies over the price Broadcom was charging for the TPU chips.
Microsoft is exploring the potential of next-generation nuclear reactors to supply power to its data centers and support its AI initiatives. This information was revealed in a job listing for a principal program manager tasked with leading the company's nuclear energy strategy. Given the significant electricity consumption of data centers, finding clean and sustainable energy sources is crucial for Microsoft to achieve its climate goals. The increasing energy demands of AI applications further amplify this challenge for the company. AI played a prominent role in Microsoft's recent Surface event, underscoring the importance of addressing its energy requirements sustainably.
During the US government's antitrust trial against Google in Washington, a Microsoft Corp. executive voiced frustration regarding the search-engine competition with Alphabet Inc.'s Google. Mikhail Parakhin, who heads Microsoft's advertising and web services, disclosed that Microsoft's Bing search engine had consistently been treated as little more than a bargaining chip in its efforts to become the default search engine on iPhones. Despite Microsoft's persistent attempts to displace Google, Apple never seriously considered switching to Bing. Parakhin even remarked that Apple was financially benefiting more from Bing's existence than Bing itself. Microsoft has continually sought to persuade Apple to adopt its search engine, but without success.
Meta and Ray-Ban are still trying to figure out what tech people might want in their glasses. Their bet this time: audio for most people and cameras for creators. Meta’s smart glasses are not called “Stories” anymore. They’re just called smart glasses now. Technically, the new model Meta just announced is called the Ray-Ban Meta Smart Glasses, and the company will happily correct you anytime you call them something else, but these are simply smart glasses. The new glasses, which Meta just announced at its Connect launch event and which are up for preorder now will be on sale from the 17th of October starting at $299.
Microsoft has been heavily reliant on OpenAI, a startup it funded, for incorporating artificial intelligence into its software. However, as the expenses associated with running advanced AI models continue to rise, Microsoft is exploring alternative approaches. Recently, Peter Lee, who supervises Microsoft's team of 1,500 researchers, instructed many of them to develop conversational AI that may not perform as well as OpenAI’s but that is smaller in size and costs far less to operate, according to a current employee and another person who recently left the company. Microsoft's product teams are actively working on integrating this Microsoft-developed AI software, which is based on large language models, into existing products. For instance, they are incorporating it into a chatbot for Bing search, similar to OpenAI's ChatGPT.
OpenAI has introduced a significant update to its iOS and Android apps, enabling its popular chatbot, ChatGPT, to audibly communicate in five distinct voices. This development allows users to engage in spoken conversations with the artificially intelligent bot. Additionally, OpenAI has implemented a new feature that enables ChatGPT to respond to images presented by users, offering a more comprehensive and interactive experience.
Snap Inc. has decided to shut down its ARES division, which was dedicated to developing augmented reality services for businesses. This move marks the end of Snap's recent effort to diversify its revenue streams beyond its advertising-dependent model. The ARES unit, which stands for "augmented reality for enterprise services," was only announced in March with the goal of allowing retailers to leverage Snap's AR technology for their websites. However, Snap has determined that the undertaking's cost and complexity were too substantial to sustain, as confirmed by a memo from CEO Evan Spiegel.
According to sources familiar with the matter, Jony Ive, the renowned designer known for his work on the iPhone, and OpenAI CEO Sam Altman have been engaged in discussions about the potential development of a new AI hardware device. Additionally, SoftBank CEO and investor Masayoshi Son has reportedly been involved in these conversations, although it remains uncertain whether he will continue to be part of the project. If this collaboration materializes, it would mark a high-profile partnership and a significant new venture for one of the world's most famous designers, Jony Ive, who left Apple in 2019 and established his own design studio called LoveFrom, working on various projects.
Ad industry insider pointing out what is already happening in the industry and how AI is affecting it.
Top-tier ad agencies have been reporting ad spending growing between 4%-9% this year. They also expect 2024 and 2025 to be strong years.
AI tools are already starting to replace some creative teams, which is creating cost savings.
AI will create hyper-personalized ads delivered at the right time, which will end up driving higher ROI for advertisers.
Google Gemini is expected to be released soon. According to this expert, a lot of focus will also be on API integrations with internal data sources from companies helping them manage the business (stock, organizational, etc.).
Former AWS business development director and now consultant shares his view on the chip/cloud industry and what AI means for the industry.
The AI market is, in his view, expected to grow at a 35%-36% annual compound rate to $1.3T in 2030. In his view, Nvidia is in a great position.
The majority of IT workloads right now are low to medium-intensity computing workloads. That will change in the future as high-performance computing will grow a lot faster and become a much bigger part.
Data center energy consumption is expected to grow 2.5x to 3x in the next 7-8 years.
We are still in a phase of generic AI, but soon, we will go to a specific use-case AI period where synthetic data will play an important role, in his opinion.
The problem for the industry might become data center equipment, not just GPUs, as lead times for some of the data center equipment areas are already 1 year long.
Former Amazon and Microsoft employee who worked at AWS & Azure (4 years at each one, both in sales)
When it comes to discounts to clients, AWS is more straightforward. It has an Enterprise discount program (EDP) and gives clients discounts on everything in return for a long-term commitment. Azure, on the other hand, is more concerned about margin and is more picky with discounts doing SKU-level discounting.
The difference between AWS and Microsoft when it comes to sales is in their approach and product set. Microsoft goes to market with its productivity suite (Azure is just one piece), whereas AWS focuses only on cloud solutions.
Microsoft is strong in gaining clients with incentives like discounts on licenses. On the other hand, to combat that, AWS has tried different tactics like offsetting some of the costs and allowing clients to bring their own licensing.
Azure had trouble gaining traction with Silicon Valley unicorns and startups. It’s a field where AWS dominates. In fact, the expert being interviewed when working at Azure got the first unicorn startup to move workloads from AWS to Azure in 2016, but it was a struggle as Azure wasn't fully ready for it.
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Source: the expert interviews are found on Alphasense, a platform specialized for expert interviews and other investment data.
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