September 22, 2024: S&P 500 & Dow Jones Record Highs

Last week, following the Fed’s 50 bps rate cut, Dow Jones rose 1.6%, S&P 500 gained 1.4%, and Nasdaq Composite was up 1.5%. Chipmaker Qualcomm has been considering a full takeover of Intel. Intel’s shares have fallen 60% this year. WSJ notes that a deal between Qualcomm and Intel has a high chance of being stopped. One possible way to close the deal would be for Qualcomm to sell assets or parts of Intel to other buyers. Earlier in the week, Intel was said to separate its foundry business, and struck a networking chip deal with AWS. OpenAI’s latest US$6.5 billion funding round is oversubscribed. Microsoft and BlackRock said Tuesday they are planning a US$30 billion fund to develop data centers and power plants to power artificial intelligence. The fund would be one of the largest of its kind. Constellation Energy struck a deal to provide Microsoft with nuclear power for the next two decades by bringing part of the Three Mile Island nuclear plant back into service by 2028. Playtika will acquire mobile game maker SuperPlay for up to US$1.95 billion. Flutter Entertainment agreed to buy Playtech’s Italian gambling business for an enterprise value of €2.3 billion. Google earlier this year offered to sell a key part of its advertising technology empire—an ad exchange that helps ad buyers transact with sellers of ad space, including Google—to win over website publishers and end their legal attacks over Google’s dominance, Reuters reported. Snap, on Tuesday announced a new generation of its augmented reality glasses Spectacles. The new Spectacles overlay augmented reality filters over objects in the real world and operate via voice commands and hand gestures. EssilorLuxottica extended its partnership with Meta Platforms to develop smart eyewear for another decade.

Rogers takes control of Leafs, Raptors in US$3.5 billion deal.

Rogers Communications Inc. is buying BCE Inc.’s stake in Maple Leaf Sports & Entertainment Ltd. for C$4.7 billion ($3.5 billion), giving the telecommunications firm control of Canada’s most valuable sports company. Financing for the deal will include private investors and it won’t affect its debt leverage, Rogers said in a statement — though it’s not yet clear where it will get the money. BCE, parent of Bell Canada, plans to use the proceeds to reduce its debt. The transaction, which values the owner of the Toronto Maple Leafs hockey club and Toronto Raptors basketball franchise at roughly $9.3 billion, is expected to close in mid-2025, pending league and regulatory approvals. https://tinyurl.com/5acbn7zs

AES Corp to sell interest in Ohio unit for US$546 million.

U.S. utility firm AES Corp said on Tuesday it would sell a 30% indirect equity interest in its Ohio subsidiary to Canada’s second-largest pension fund CDPQ for US$546 million, which will be used to support infrastructure investments. AES Ohio said it would invest more than US$1.5 billion from 2024 through 2027 to improve reliability by upgrading transmission infrastructure and modernizing the grid. Utilities are expected to benefit from a surge in demand for power driven by AI and data centers, prompting companies and investors across the board to strike deals with them. The sale, expected to close in the first half of 2025, expands on AES’ existing partnership with CDPQ at its Indiana unit. https://tinyurl.com/4nzuvcdy

Motion closes US$30 million Series B in bid to become “command centre for creative strategists”.

Toronto-based advertising technology startup Motion, which sells analytics and research tools for creative strategists, has secured US$30 million in Series B funding. Motion aims to become the platform that helps companies turn data into ad ideas. Motion’s all-equity Series B round, which closed earlier this month, was led by Montréal-based Inovia Capital with support from fellow new backer Threshold Ventures and other existing Silicon Valley investors: Headline, Abstract Ventures, and Sugar Capital. https://tinyurl.com/4fbzwzvr

Federal government’s massive $2 billion loan to Telesat sparks Elon Musk debate between ministers.

The federal government’s recent commitment to a homegrown satellite communications company has kicked off a conversation about government spending, national sovereignty, and Elon Musk. Ottawa-based satellite company Telesat secured a $2.14-billion loan from the Canadian government and a $400 million loan from the Québec government last week. The combined financial boost totalling $2.54 billion sparked a heated debate on X (formerly Twitter) over the weekend. The funding, for what is believed to be Canada’s largest space program, is meant to boost Telesat’s completion of Lightspeed, a low-Earth-orbit (LEO) satellite network that promises to expand affordable and high-speed, internet, and 5G networks in remote and rural communities in Canada. https://tinyurl.com/yuzb8x2y

Qualcomm wants to acquire Intel as PC makers switch from x86 to ARM.

In a surprising move, chipmaker Qualcomm has been considering a full takeover of Intel, known for its computer processors. A report in The Wall Street Journal on Friday revealed that although a deal is “far from certain,” the two companies have held talks on the subject. Intel, which is currently valued at US$87 billion, has been facing a huge crisis in recent years. The company’s shares have fallen by 60% this year alone. In 2020, Intel lost Apple from its customer portfolio with the transition from Macs to Apple Silicon chips built on the ARM architecture. Intel has also been disappointing PC customers with its latest processors. In 2023, Intel tried to acquire Tower Semiconductor in an attempt to better compete with TSMC, which is responsible for producing chips for different companies, including Apple and Nvidia. However, the deal failed to obtain regulatory approval. WSJ notes that a deal between Qualcomm and Intel has a high chance of being stopped as well. One possible way to close the deal would be for Qualcomm to sell assets or parts of Intel to other buyers, the report says. Back in 2019, Apple acquired Intel’s modem division for US$1 billion. Although Intel still dominates the PC market with its chips, it’s clear that PC makers are increasingly interested in investing in ARM chips. Compared to x86, the ARM architecture is more efficient when it comes to energy consumption and thermals. https://tinyurl.com/y3h234ym

OpenAI to decide which backers to let into US$6.5 billion funding.

OpenAI’s latest fundraising is nearing completion, with prospective investors set to find out Friday whether they’ll be part of the deal, according to people familiar with the matter. The US$6.5 billion funding round for the artificial intelligence startup is oversubscribed, meaning investors were hoping to put in more money than the company was ready to take on, said the people, who asked not to be identified discussing private information. One of the people said that the excess demand was in the billions of dollars, and some investors will find out Friday that they did not make the cut. Several strategic investors, including OpenAI’s biggest backer Microsoft Corp. and new investors Nvidia Corp. and Apple Inc., are likely to get access, the person said. The deal is set to value OpenAI at US$150 billion, a total that doesn’t include the new investment, people familiar with the matter told Bloomberg. The company was last valued at US$86 billion in an earlier financing deal. At least one notable existing OpenAI investor won’t be participating — Sequoia Capital, the people said. Sequoia recently backed a rival AI business, Safe Superintelligence Inc., which was started by OpenAI co-founder Ilya Sutskever, who departed the Sam Altman-led company earlier this year. Existing investor Thrive Capital is leading the current round and writing a check for US$1.25 billion, the people said. Thrive Capital declined to comment. https://tinyurl.com/2srrdfj3

Microsoft, BlackRock to launch US$30 billion fund to invest in data centers, power for AI.

Microsoft and BlackRock said Tuesday they are planning a US$30 billion fund to develop data centers and power plants to power artificial intelligence. The fund would be one of the largest of its kind, though it isn’t clear how much Microsoft is contributing and shows how the company is enlisting another longtime real estate and data center investor, BlackRock, rather than go it alone as AI costs stack up. Abu Dhabi-based investment firm MGX will also invest in the fund, and Nvidia will consult on the design of data centers built by the fund or the companies it backs, Microsoft and BlackRock said. (MGX has also been in talks to participate in OpenAI’s capital raise of up to US$7 billion.) The new fund, dubbed the Global AI Infrastructure Investment Partnership, will ultimately look to raise as much as US$100 billion, including debt financing, and will “chiefly” invest in infrastructure located within the U.S., the companies said. The data centers will be “non-exclusive” and serve “a diverse range” of customers, the companies said. The fund is the latest sign of Microsoft’s interest in new data centers and power sources needed to train and run large-scale AI models, such as those developed by OpenAI. Microsoft has already projected that it will spend more than US$50 billion this year on capital expenditures, primarily for building data centers, and has discussed building a supercomputing data-center server cluster for OpenAI that could cost more than US$100 billion. Numerous large AI data centers are under way in the continental U.S., according to the AI Data Center Database. https://tinyurl.com/y34mujx6

Microsoft raises dividend 10%, plans US$60 billion share buyback.

Microsoft will raise the quarterly dividend that it pays investors to 83 cents a share, up from 75 cents, beginning in November, the company said late Monday. The software maker will also buy back US$60 billion in stock. It’s almost completed a US$60 billion stock buyback initiated in 2021. Shares rose by roughly half a percentage point on Monday evening after the company’s announcements. Microsoft is returning cash to shareholders as they await a return on the company’s unprecedented spending on AI in recent years. Microsoft has invested US$13 billion in OpenAI in exchange for the rights to reuse its software and a share of its profits. It has also projected that it will spend more than US$50 billion in capital expenditures this year to build out datacenters to power AI applications. Microsoft has been generating revenue from OpenAI’s use of its Azure cloud computing servers, The Information previously reported, but has yet to see a noticeable bump in software sales as customers hold back on spending heavily on Microsoft’s AI-infused applications. https://tinyurl.com/2p5wus29

Intel to separate foundry business, strikes networking chip deal with AWS.

Intel’s stock jumped more than 8% in after-hours trading after CEO Pat Gelsinger published a memo outlining several ways he plans to revive the firm, including by making a server networking chip with Amazon and receiving more funding from the government. He said the chip designer plans to make its money-losing chip manufacturing business, Intel Foundry, an independent subsidiary so the unit has the ability raise outside capital. Gelsinger also said Intel and Amazon Web Services plan to develop a custom semiconductor known as an “AI fabric chip,” which Intel Foundry will produce. He said the deal is a part of a “multi-year, multi-billion-dollar framework.” An Intel spokesperson declined to provide more specifics on the terms. The fabric chip is a networking technology that will allow servers to communicate with each other, according to someone with direct knowledge of the effort, and could help AWS lower costs for AI workloads in its data centers. The chip deal suggests AWS is reviving old plans for a networking chip. Gelsinger also said Intel received US$3 billion in funding under the CHIPS Act to manufacture advanced semiconductors for the Department of Defense. Earlier this year, Intel got a separate US$8.5 billion CHIPS Act grant to build advanced chip fabrication facilities in the U.S. Before Monday’s announcement, Intel shares were down 56% this year. https://tinyurl.com/yeyk3n44

Playtika to acquire mobile game maker SuperPlay for up to US$1.95 billion.

Playtika has agreed to acquire SuperPlay, a mobile gaming company in Israel for a price ranging from US$700 million to US$1.95 billion. The price of the Tel Aviv, Israel-based maker of Dice Dreams and Domino Dreams depends on whether SuperPlay hits financial targets over three years. If it does, then the transaction will be worth US$1.25 billion more, for a total of US$1.95 billion. It’s a sign that mobile game acquisition activity is coming back to life. Playtika will acquire SuperPlay for US$700 million in up-front consideration, subject to customary working capital adjustments, which is expected to be funded using balance sheet cash. Additional contingent consideration of up to US$1.25 billion is subject to SuperPlay achieving certain financial targets for 2025, 2026, and 2027. Annual earnout quantum and eligibility are contingent on both revenue and Adjusted EBITDA performance. The earnout payments, if any, are expected to be funded via cash generated from ongoing operations and the company’s balance sheet. Playtika is evaluating its financing alternatives and debt maturities in the near-term. Morgan Stanley & Co. LLC is acting as exclusive financial advisor to Playtika and Furth, Wilensky, Mizrachi, Knaani – Law Offices is serving as legal counsel. The Raine Group and Aream & Co are acting as financial advisors to SuperPlay. https://tinyurl.com/crxc7ubn

Flutter agrees to buy Playtech’s Italian unit for €2.3 billion.

Flutter Entertainment Plc agreed to buy Playtech Plc’s Italian gambling business for an enterprise value of €2.3 billion (US$2.6 billion) in its latest international acquisition as the Fanduel owner takes advantage of a growth surge in the US to expand. The deal for Playtech’s Snaitech division is expected to be closed by the second quarter of 2025, Flutter said in a statement on Tuesday. Flutter, which has benefited from a surge of new customers and revenue in the US, moved its primary listing to New York from London earlier this year. It has aggressively expanded internationally in recent years, including buying businesses in Italy, Georgia and India. Last week, Flutter said it will buy a majority stake in NSX Group, Brazil’s fourth-biggest online gaming operator. Flutter Chief Executive Officer Peter Jackson told Bloomberg last month that mergers were part of the company’s strategy to build “podium positions” in local markets. Milan-based Snaitech, founded in 1990, is one of Italy’s leading betting companies. It operates gaming machines, manages horse racing and sports betting, and owns race tracks. It represents Playtech’s primary consumer business and after the deal, Playtech’s main business will be oriented around selling software to other gambling companies. https://archive.ph/P57n8

Google reportedly proposed selling its ad exchange to end EU antitrust attacks.

Google earlier this year offered to sell a key part of its advertising technology empire—an ad exchange that helps ad buyers transact with sellers of ad space, including Google—to win over website publishers and end their legal attacks over Google’s dominance, Reuters reported. The publishers reportedly rejected Google’s offer, which comes as competition regulators in the EU and U.S. ramp up cases against the company. Up to this point, Google hadn’t offered to completely cleave off any businesses to end allegations that it has been rigging advertising auctions and that it takes too big of a cut of transactions because it runs the ad exchange as well as the key digital tools that buyers and sellers use to transact. As one Google exec once put it, Google’s role in the ad tech industry would be equivalent to investment firm Goldman Sachs owning the New York Stock Exchange. One of Google’s ad buying tools is tied to YouTube and has helped turn the video site into an ad sales powerhouse. The ad buying tool is arguably more important than the ad exchange because it concerns the spending budgets of the world’s advertisers. Google is less likely to be willing to give that up. https://tinyurl.com/43h9466f

Microsoft adds new AI ‘agent’ features to Office 365 Copilot to drive adoption.

Microsoft is rolling out new ‘Copilot’ features in its Office 365 software in an effort to convince more businesses to spend on the US$30-per-user AI software, CEO Satya Nadella said Monday. The company is adding a new “Copilot Agents” feature that lets people configure AI agents that will carry out certain tasks automatically without being prompted by a human—for instance, the agents can monitor an email inbox and automatically add data from certain emails to a spreadsheet as the emails arrive, Microsoft said. Microsoft has for months been working on the new agent features, which are powered by OpenAI’s models, in the hopes of convincing more customers that the AI software is worth the money, The Information previously reported. The company is also rolling out new features aimed at making 365 Copilot work better in apps like Powerpoint and Excel. One feature automatically creates Python code based on users’ written prompts, then feeds the Python code into Excel in order to carry out complex tasks like forecasting or visualizing data, corporate vice president Jared Spataro said Monday. The Information first reported that Microsoft was building such features earlier this month amid halting adoption from customers who were frustrated by glitches in the pricey AI software. The new features will be introduced this month, Spataro said. https://tinyurl.com/4ujh3wdy

Snap launches new augmented reality glasses.

Snap, the maker of the app Snapchat, on Tuesday announced a new generation of its augmented reality glasses Spectacles. The new Spectacles overlay augmented reality filters over objects in the real world and operate via voice commands and hand gestures. Spectacles wearers can also create generative AI images that show up in as augmented reality filters or ask Snap’s AI chatbot MyAI questions about what the wearer is looking at using OpenAI technology. The Information reported Snap and OpenAI were discussing such a partnership last fall. The Spectacles are launching with apps including a beat-boxing game, a golf simulator and a virtual pet. Still, the Spectacles appear far from being a mainstream consumer technology. At 226 grams, or around 0.5 lb, the Spectacles are more than four times heavier than Meta’s Ray-Ban smart glasses, and the battery life is just 45 minutes. Instead, Snap is pitching the latest glasses to developers, who it is hoping will build apps to jumpstart eventual consumer usage. Snap is only selling the Spectacles through its developer program, which will cost US$99 a month with a minimum commitment of 12 months. https://tinyurl.com/2sy35ytc

EssilorLuxottica extends smart glasses partnership with Meta.

European eyewear giant EssilorLuxottica has extended its partnership with Meta Platforms to develop smart eyewear for another decade, the company announced Tuesday. EssilorLuxottica has been working with Meta since 2019 on Ray-Ban smart glasses, which allow wearers to make phone calls, stream music or take photos. The first version of the glasses struggled to gain traction with users but the second version, which includes AI features, sold better than Meta had anticipated. Other tech companies have also shown interest in working with EssilorLuxottica on smart glasses, The Information previously reported. “The incredible work we’ve done with Meta, still in its early stages, has already proven to be an important milestone in our journey to making glasses the gateway to the connected world,” EssilorLuxottica CEO Francesco Milleri said in a statement Tuesday. https://tinyurl.com/ycytactr

Three Mile Island nuclear plant to reopen — to power Microsoft’s AI push.

Constellation Energy has struck a deal to provide Microsoft with nuclear power for the next two decades by bringing part of the Three Mile Island nuclear plant back into service by 2028. One of the reactors closed after a system malfunction caused its partial meltdown in 1979. The second reactor remained open after the accident before finally closing in 2019. It is this reactor that’s set to be refurbished and reopened. Tech giants, including Microsoft, are increasingly exploring nuclear energy as a power source for energy-hungry AI data centers. Job postings uploaded last year suggested that Microsoft, which has invested heavily in artificial intelligence through its partnership with OpenAI, was exploring using nuclear energy to power its data centers. Bobby Hollis, Microsoft’s vice president of energy, told Bloomberg that the Three Mile Island reactor would help Microsoft meet its target of being carbon-negative by 2030 and that energy from the site would be used for data-center expansion in Pennsylvania and nearby states. The AI models behind chatbots like ChatGPT require huge amounts of energy to train and run, and those power needs have supercharged a wave of spending on data centers across the US. That, in turn, has sparked concerns over AI’s environmental impact, with experts saying that building AI systems requires vast amounts of water and emits tons of carbon dioxide. Microsoft and Constellation did not respond to a request for comment sent outside normal working hours. https://tinyurl.com/3zhszee8

TikTok is becoming a popular news source for American adults.

Almost 40% of young adults regularly get news from the app TikTok faces a ban in the US if parent company doesn’t divest. TikTok is becoming a regular news source for a growing number of Americans, including young adults, according to a new survey, a sign more people are turning to the video app for online debate about politics. About 17% of US adults say they regularly get news from the site owned by China-based ByteDance Ltd. — a fivefold increase from 2020, according to survey data from Pew Research published Tuesday. https://tinyurl.com/4ynm7zv7

Disney reportedly will drop slack after data breach.

Disney said it would stop using messaging app Slack after a hacking group in July claimed to have obtained internal data from its Slack channels, including computer code and details on unreleased products, the Wall Street Journal reported. It’s a blow to Slack owner Salesforce, which featured Disney prominently in announcements at its Dreamforce conference this week. Most of Disney’s teams will stop using Slack later this year in favor of “streamlined enterprise-wide collaboration tools,” chief financial officer Hugh Johnston said in a memo to staff this week. Spokespeople for Disney and Salesforce didn’t immediately return a request for comment. https://tinyurl.com/25dy4vt6

At TikTok Hearing, judges signal skepticism to app’s arguments.

Three federal appeals court judges hearing TikTok’s suit against the U.S. government over legislation that would ban the app in the U.S. focused their questions on the government’s claim that TikTok posed a national security risk. The line of query signaled the judges may be unswayed by TikTok’s argument that the law will violate its users’ freedom of speech. During oral arguments before the United States Court of Appeals for the D.C. Circuit, judges knocked down TikTok’s argument that its ownership by China’s ByteDance was analogous to foreign–owned media outlets such as Politico (owned by Germany’s Axel Springer). And the judges noted there was precedent for a court ruling that national security concerns outweighed freedom of speech concerns. TikTok is trying to stop a U.S. law that requires it to find a new parent for the app in the U.S. or shut down by Jan. 19 from going into effect. TikTok has successfully fought prior U.S. efforts to ban the app by arguing such bans infringe on its users’ freedom of speech, and in the case of former President Donald Trump’s executive order in 2020, that he was exercising presidential overreach. Congress, in passing legislation on TikTok earlier this year, argued a divestment of the app from its U.S. parent is necessary to prevent China’s Communist Party from influencing TikTok’s U.S. users. Outside legal experts said it will be much harder for TikTok to convince the court to overlook these national security concerns. https://tinyurl.com/3r2tu2uz

EU overturns Google Antitrust fine on adtech practices.

Google convinced a European Union court to overturn a US$1.7 billion fine levied by EU competition authorities over the company’s advertising practices. The victory comes after Google lost separate antitrust cases in Europe and the U.S. The European Commission applied the fine in 2019 after finding Google used its search engine dominance to impose restrictive contracts blocking rivals from selling search ads on websites Google doesn’t own—a relatively small market. On Wednesday, the General Court of the European Union, Europe’s second-highest court, upheld most of the Commission’s findings but said that the Commission wrongly assessed the contractual clauses it had deemed unfair. The Commission can still appeal the decision to Europe’s highest court. Last month, a U.S. federal judge ruled that Google was an illegal monopoly in the general search engine and search text advertising markets. Google is facing a second U.S. antitrust trial over allegations it abused its dominance in the advertising technology market to raise prices for ad buyers and stifle competition. https://tinyurl.com/2wwrffy8

EU to warn Apple to further open up iPhone software to developers.

The European Union plans to warn Apple that it must further open up its operating systems to outside developers or face big fines, Bloomberg reported. The report said the EU would stop short of launching a more formal probe and would instead just warn Apple that it needs to give developers more access to the iPhone’s features. Developers, for example, can’t connect their apps to the iPhone’s text message and calling services, and there is a limit to how much they can integrate their apps with the Siri voice assistant. Apple already said it would open its App Store and payment chip to third parties as part of efforts to comply with the EU’s Digital Markets Act, a sweeping new law that requires tech gatekeepers to ensure equal access to their operating systems. The EU already has another probe investigating whether Apple is preventing developers from offering services outside its official App Store. And earlier this month, Europe’s top court ruled that Apple would have to pay Ireland US$14.4 billion in back taxes, which is the location of its headquarters in the EU. https://tinyurl.com/zh8ftzrx

Amazon adds PayPal checkout option for buy with prime.

Amazon announced on Wednesday that it’s adding PayPal as a checkout option for its Buy With Prime feature, which allows brands that don’t sell on Amazon to offer speedy shipping on their own e-commerce sites. Amazon will also allow shoppers to link their Amazon and PayPal accounts beginning next year for purchases through Buy With Prime. PayPal isn’t a checkout option on Amazon’s own e-commerce site, and the announcement marks its latest move to boost its checkout and payments processing services by striking more partnerships. PayPal announced earlier this month that Shopify had added PayPal as an additional debit and credit card processor in the U.S., where Shopify was already using Stripe. https://tinyurl.com/54y49j5f

Apple Card could switch from Goldman Sachs to Chase and change ‘key’ features.

The ongoing saga of the future of the Apple Card continues today. According to a report from The Wall Street Journal, Apple is in talks with JPMorgan Chase about taking over the Apple Card business from Goldman Sachs. This comes as Goldman’s losses from its consumer business continue to mount, recently surpassing US$6 billion. Apple has held talks with several potential partners, including Capital One and Synchrony Financial, who could take over Apple Card. Goldman Sachs also separately spoke with American Express about transferring the partnership last year. Talks between Apple and JPMorgan Chase are said to have started earlier this year “and half advanced in recent weeks.” A deal, however, could still be “months away,” and “key details including the price are still to be negotiated.” Currently, Apple Card has around US$17 billion in outstanding balances across 12 million users. JPMorgan hopes to pay “less than the full face value” of those balances. Credit-card portfolios often sell at par or for a premium to the total loans, while accounts that have high delinquencies or some other flaw can sell at a loss. Apple has both subprime exposure and terms associated with its current program that could be costly to take on for any issuer. As part of the talks, JPMorgan has also reportedly made clear that it wants to change “key components” of the Apple Card. This includes eliminating the current billing system, where all cardholders receive their statement at the beginning of the month. https://tinyurl.com/r3rmy6yx