August 04, 2024: Earnings In Full Swing, NASDAQ In Correction

Despite a bullish Wednesday, markets had a bad week. Dow Jones lost 2.1%, as did S&P 500. Nasdaq composite was down 3.35%, and is now in traditional correction territory. Cerebras, an Nvidia rival that develops AI chips, has filed confidentially for an IPO. Elliott Management, a hedge fund, said Nvidia and other megacap technology stocks were in “bubble land,” according to a letter viewed by the Financial Times. Microsoft shares fell 4% in after-hours trading Tuesday after it said revenue from enterprise software and cloud server rentals rose more slowly in Q2 than in Q1. Shares of Nvidia and other chip firms jumped Wednesday after Microsoft said Tuesday night that it plans to continue spending tens of billions of dollars on new data centers and chips for AI. Meta’s revenue rose 22% in Q2, and Apple revenue rose 5% despite weak iPhone results. Amazon Web Services revenue grew 19% y/y to US$26.3 billion in Q2, AWS’s fastest growth since 2022 but still significantly lower growth than at smaller cloud rivals Microsoft and Google. AMD projected higher AI chip sales. Qualcomm reported earnings on Wednesday that beat Wall Street expectations. Intel said Thursday that it would cut 15,000 jobs or more than 15% of its workforce over the next two years and embark on a US$10 billion cost-reduction plan to improve its competitiveness. Morgan Stanley will allow financial advisors to offer Bitcoin ETFs. In Canada, Sophic Client, Plurilock appointed a 35-year veteran of enterprise technology IT and solutions sales to its industry advisory council. Sophic Client Xcyte Digital, announced advanced AI-powered captioning and translation features. We also sat down with CEO, Randy Selman, to discuss recent acquisitions and future milestones for the company.

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) appoints 35-year veteran of enterprise technology IT and solutions sales to industry advisory council.

Plurilock announces the appointment of enterprise sales and supply chain and distribution expert Brian Aebig to the Company’s Industry Advisory Council. Mr. Aebig is a 35-year veteran of the IT industry, having served as the leader of a national Canadian organization with annual sales of $120 million, as a General Manager and VP at Avnet distribution with annual sales of $850 million, and as VP Sales for Tech Data Canada with sales of $2.8 billion. Mr. Aebig brings deep, unique expertise in IT solutions distribution to Plurilock, along with unmatched experience in understanding, building, and leveraging end-to-end IT supply chains, from vendor to distribution to reseller to end user, particularly in relation to emerging technologies. https://bit.ly/3A1AtBg

Sophic Client Xcyte Digital (XCYT-TSXV) announces advanced AI-powered captioning and translation features.

Xcyte Digital Corp., a trusted global events technology company, specializing in next-generation applications for physical, hybrid, virtual, immersive, and phone-based events that enhance participant engagement announces the launch of its cutting-edge Artificial Intelligence (AI) powered captioning and translation features. This significant upgrade in the recently acquired Webinar.net platform leverages Amazon Web Services (AWS) speech-to-text AI technology to offer real-time captions, multi-language support, and advanced editing capabilities. These newly launched captioning and translation features will be included in all existing and new Webinar.net subscriptions at no additional cost. https://bit.ly/4dmfHL1

Sophic Client Xcyte Digital (XCYT-TSXV) – Interview with CEO Randy Selman.

Xcyte recently announced the completion of the acquisition of all the assets of Webinar.net Incorporated. Watch this video interview with CEO Randy Selman to learn more about what this means for the Company and their future M&A strategy. https://bit.ly/4fjb2v4

Nvidia challenger Cerebras files confidentially for IPO.

Cerebras, an Nvidia rival that develops AI chips, has filed confidentially with securities regulators for an initial public offering, the company announced on Thursday. The filing highlights how chip developers hope to ride the wave of customer and investor enthusiasm over AI hardware that’s helped boost Nvidia’s revenue and share price over the last year. Cerebras has previously raised US$720 million from investors including Coatue Management, Benchmark and G42, an Abu Dhabi tech conglomerate. The company’s announcement confirmed The Information’s June report on the confidential filing. https://tinyurl.com/y29hb88w

WeRide files for biggest US IPO by Chinese firm since Didi.

Driverless technology startup WeRide Inc. filed for what could be the biggest US initial public offering by a Chinese company since ride-share company Didi Global Inc.’s disastrous 2021 listing. WeRide said in a filing Friday that it may face “various legal and operational risks and uncertainties associated with being based in or having our operations primarily in mainland China.” The company won’t disclose the number and proposed price range for its American depositary shares until it’s ready to begin marketing them. https://tinyurl.com/ycnkmj3e

Nvidia is in a ‘bubble,’ AI is ‘Overhyped,’ Elliott Management says.

Elliott Management, a hedge fund based in Florida, said that Nvidia and other megacap technology stocks were in “bubble land,” according to a letter viewed by the Financial Times. The firm told its investors it is doubtful that technology companies will continue purchasing large quantities of Nvidia’s graphics processing units, which are used for training artificial intelligence models. Elliott also noted that it believes AI is “overhyped with many applications not ready for prime time.” Nvidia shares fell almost 2% Friday, adding to a decline in tech stocks. Intel shares plunged 26% on Friday following the company’s poor quarterly report and plans to suspend its dividend. Amazon shares were down nearly 9% on Friday after reporting its second-quarter earnings. The Nasdaq Composite fell over 400 points into correction territory on Friday, roughly 10% below its record high on July 10. https://tinyurl.com/yk5k7nnp

Microsoft’s cloud revenue growth slightly misses forecast.

Microsoft shares fell 4% in after-hours trading Tuesday after it said revenue from enterprise software and cloud server rentals rose more slowly in the June quarter compared to the March one. On the bright side, free cash flow rose 11% to US$23.3 billion, better than the US$21 billion of cash it generated in the March quarter. Microsoft fell slightly short of its forecasted growth in its Azure cloud computing unit, which includes customer spending on artificial intelligence services. Microsoft had projected revenue growth of 30% to 31% for Azure in the June quarter, but actual revenue rose 29% in the period. Microsoft doesn’t break out revenue for Azure, which is about half the size of its bigger rival Amazon Web Services. But the Azure growth was good compared with Google Cloud, which is smaller than Azure and also grew 29% to US$10.3 billion in revenue in the June quarter. Microsoft revenue in the business unit that includes Office 365 commercial subscriptions grew 11% to US$20.3 billion in the June quarter, a slight deceleration from 12% growth in the March quarter. Microsoft’s new suite of AI-powered Copilots built into its Office software first became available to enterprise customers late last year, but the company has not broken out revenue from Copilot subscriptions. https://tinyurl.com/mvzkmp6y

Nvidia shares jump 10% after Microsoft boosts data center investments.

Shares of Nvidia and other chip firms jumped Wednesday after Microsoft said Tuesday night that it plans to continue spending tens of billions of dollars on new data centers and chips for artificial intelligence. Nvidia shares rose 10% in anticipation it would benefit from the Microsoft moves; Microsoft is already one of its biggest customers. Nvidia rival AMD’s stock rose 3% on Wednesday after it said a day earlier that orders for its AI chips from customers such as Microsoft were higher than it had projected. Shares of Arm, which licenses technology for central processing units that are used alongside AI chips, and Micron, which sells advanced memory technology, each rose 7% because their sales are tied to AI infrastructure spending. Microsoft said it spent US$19 billion in the three months ended June 30, primarily on cloud and AI-related expenditures, which includes data center leases and AI chips from Nvidia. That’s up 75% from the same quarter last year, and CFO Amy Hood indicated that spending would continue to increase in the coming year. https://tinyurl.com/578tp9r6

Meta’s revenue rises 22% in the second quarter.

Meta Platforms, the owner of Facebook, Instagram and WhatsApp, on Wednesday reported second-quarter revenue of US$39.1 billion, up 22% from a year earlier. The company forecast higher revenue in the third quarter than analysts expected and once again increased its estimate for capital expenditures for 2024. Meta’s income from operations was US$14.8 billion, up 58% from a year earlier, and its net income nearly doubled to US$13.5 billion. The company’s share price jumped in after-hours trading on Wednesday, at one point rising more than 5%. Meta said in a press release that its capital expenditures would increase to support “artificial intelligence research and product development efforts.” The company adjusted its capex forecast for this year to US$37 billion to US$40 billion, up from a previous forecast of US$35 billion to US$40 billion. Meta also said it continued to expect its operating losses for Reality Labs, which works on augmented and virtual reality, “to increase meaningfully” from US$16.1 billion in 2023. https://tinyurl.com/3nfp5npe

Apple revenue rises 5% despite weak iPhone results.

Apple’s iPhone sales declined slightly, but the company’s services and iPad businesses came through, lifting overall sales 5% in the June quarter. Apple said its total sales for the quarter ended June 29 rose to US$85.78 billion from US$81.8 billion in the same period a year earlier, as net income jumped to US$21.45 billion from US$19.88 billion. IPhone revenue—which accounts for 46% of Apple’s overall business—fell 1% to US$39.3 billion. The company saw the strongest growth from its iPad business, which rose 24% to US$7.16 billion, thanks to the introduction of new models of the tablet devices. Services rose 14% to US$24.21 billion. Apple CEO Tim Cook said the company set services revenue records during the quarter in advertising, cloud services and payments categories. https://tinyurl.com/y42r5znw

Amazon Web Services revenue growth ticks up as Ads slow.

Amazon Web Services revenue grew 19% year-over-year to US$26.3 billion in the second quarter, AWS’s fastest growth since 2022 but still a significantly lower growth rate than at smaller cloud rivals Microsoft and Google. On a call with reporters, Amazon CFO Brian Olsavksky said generative artificial intelligence was a “multibillion-dollar segment” of AWS revenue but did not give additional details on how generative AI had affected growth. Olsavksky said Amazon’s capital expenditures were US$30.5 billion in the first half of 2024 and would rise in the second half of the year, driven largely by AWS. Amazon’s advertising revenue, meanwhile, grew 20% to US$10.9 billion, the slowest since Amazon started breaking out the unit’s revenue several years ago. https://tinyurl.com/see9r8bt

AMD projects higher AI chip sales.

Advanced Micro Devices, a top rival to Nvidia in developing artificial intelligence chips, said Tuesday it would generate more than US$4.5 billion from sales of such chips this year, up from an earlier projection of US$4 billion. Shares rose 6% in after-hours trading. AMD’s data center unit—which includes its new graphics processing unit, the MI300—generated US$2.8 billion in the three months ended June 29, up 115% from the year prior, the company reported Tuesday. Su said revenue from the AI chips contributed more US$1 billion to the segment. AMD has said companies such as Microsoft and Meta, two of Nvidia’s biggest customers, also bought AMD’s new GPUs. By comparison, Nvidia’s data center unit generated US$22.6 billion in the most recent quarter, up 427% from a year earlier. Nvidia shares are up 115% this year while AMD’s were flat for the year before Tuesday’s report. Overall, AMD generated US$5.8 billion in revenue in the second quarter, up 9% from the same period last year. Free cash was US$439 million, up from US$379 million in the previous quarter. https://tinyurl.com/6bctc4yc

Qualcomm beats estimates and phone chip sales are up 12%.

Qualcomm reported fiscal third-quarter earnings on Wednesday that beat Wall Street expectations, particularly for sales, and provided strong guidance for the current quarter. Qualcomm stock fell 1% in extended trading after initially rising 7% at one point. Qualcomm’s biggest and most important business is in making processors and modems for smartphones, which was up 12% year over year. The company’s IoT and automotive businesses also beat Wall Street expectations. https://tinyurl.com/23dkesu8

Intel revenue shrinks, announces layoffs and suspends dividend.

Intel said Thursday that it would cut 15,000 jobs or more than 15% of its workforce over the next two years and embark on a US$10 billion cost-reduction plan to improve its competitiveness. The announcements came after Intel reported that revenue in the second quarter of this year shrank by 1% from the year ago period. The company swung to a net loss of US$1.6 billion in the quarter from a net profit of US$1.5 billion in the same quarter last year. The company also lowered its earnings guidance for the third quarter, attributing it to weaker demand in China and continued spending on chip designs for AI servers. The reason for the decline in earnings was due to higher spending on making chips for AI-enabled PCs, which haven’t yet yielded meaningful profits, the company said. Intel CEO Pat Gelsinger said in a separate memo that Intel’s costs were too high and its margins were too low. As part of the cost reductions, Intel said it would suspend its dividend beginning in the fourth quarter. https://tinyurl.com/4ttbd59b

Pinterest shares fall after revenue warning.

Pinterest shares dropped almost 11% after hours Tuesday after the social media site warned of a slowdown in revenue growth.The online scrapbooking site said revenue for the second quarter rose 21% from the year ago period to US$854 million, slightly higher than its own forecast. The company expects its third-quarter revenue to be in the range of US$885 million to US$900 million, or 16% to 18% higher than the prior year but short of analysts’ estimates of just under US$907 million. The more moderate growth outlook undercut investor enthusiasm for the stock. Shares had rallied 15% since late April, buoyed by changes under CEO Bill Ready that included an overhaul of the app to make it easier for people to buy items they viewed. The report also added to a lackluster showing for ad-supported internet sites. Last week Google-owned YouTube said revenue growth slowed to 13% in the second quarter from 21% in the first. Pinterest said global monthly active users rose 12% year over year to 522 million, on pace with the prior quarter. Net income swung to $9 million from a loss of almost $35 million in the year-ago quarter. https://tinyurl.com/355kyzd5

CrowdStrike-Microsoft outage cost Delta US$500 million, airline CEO says.

CEO of Delta Airlines Ed Bastian said in a CNBC interview Wednesday that the outage caused by CrowdStrike software on computers running Microsoft Windows earlier this month cost the airline US$500 million in five days. This figure includes losses in revenue as well as compensation to Delta customers for cancellations and hotels, Bastian said. The amount gives a sense of what Delta will seek in expected litigation against the company and Microsoft. “We have no choice,” Bastian said when asked if Delta would sue CrowdStrike. Delta recently hired attorney David Boies, chairman of law firm Boies Schiller Flexner, to seek damages from the two tech companies, according to CNBC. A CrowdStrike spokesperson said the company has no knowledge of a lawsuit and declined to provide further comment. The airline canceled over 5,000 flights, more than it had in all of 2019, after an automatic update released by CrowdStrike to users of its Falcon software on Windows caused PC systems around the world to crash. Delta also had to manually reset 40,000 servers, Bastian said. CrowdStrike shares fell almost 3% Wednesday and are down 41% this month. However, analysts say they expect a limited financial impact to the company, in part because the company and its clients can likely tap cybersecurity insurance. https://tinyurl.com/y8eds6p7

Apple’s AI features won’t be ready for the next iPhone software update.

Apple’s artificial intelligence features won’t be ready for this year’s launch of iOS 18 and could be delayed by several weeks to October, Bloomberg reported. The delay underscores the short timeline Apple has had to work on its new AI features, which began in early 2023. Apple tends to make major updates to its software on an annual basis to coincide with the release of new iPhones. However, that release schedule means engineers only have a limited time to iron out bugs and other issues.Apple is concerned about the stability of its AI features and in an usual move plans to roll out some of these AI features as early as this week for developers so they can be tested on a wider scale, according to Bloomberg. Bloomberg also said that when the AI features are officially released, there will still be major features missing that Apple had announced including the ability for the iPhone to learn better context from on-device data and from what’s on its screen. https://tinyurl.com/2yvpjpjt

After delay, OpenAI releases AI voice assistant.

OpenAI began releasing its voice-based artificial intelligence, which allows customers to speak with ChatGPT, to a small group of paying subscribers, with plans for a wider release in the fall, the company said Tuesday. The move comes a month after OpenAI said it would delay the release of the feature to improve its safety measures, and two months after the company initially demonstrated the voice capabilities publicly. While the product won plaudits for what looked like a significant improvement over existing voice assistants such as Siri or Google Assistant, the demonstration immediately generated problems for OpenAI CEO Sam Altman. Actress Scarlett Johansson said Altman had approached her last year about cloning her voice, which she declined, and was shocked to hear a resemblance between the voice in the demo and her own. OpenAI has said the voice from the demo won’t be part of the publicly available product. https://tinyurl.com/4xzvxru3

Neuralink rival Synchron’s brain implant now lets people control Apple’s Vision Pro with their minds.

Neurotech startup Synchron on Tuesday announced it has connected its brain implant to Apple’s Vision Pro headset. It’s now possible for patients with limited physical mobility to control the device using only their thoughts. Synchron is building a brain-computer interface, or a BCI, designed to help patients with paralysis operate technology like smartphones and computers with their minds. The company has implanted its BCI in six patients in the U.S. and four in Australia. It still needs approval from the U.S. Food and Drug Administration to commercialize its technology more broadly. Apple released the Vision Pro earlier this year, and users typically control it with eye movements, voice commands and hand gestures. Synchron has been working to make it accessible to patients who can’t speak or move their upper limbs. Synchron is a part of an increasingly competitive BCI industry, and the company said Tuesday that it is the first to connect its system to Apple’s Vision Pro. Other companies like Paradromics, Precision Neuroscience, Blackrock Neurotech and Elon Musk’s Neuralink are also developing BCI systems, though their designs and ambitions all vary. https://tinyurl.com/5b6hfavj

Twitch generated US$2 billion in revenue in 2023.

Amazon-owned livestreaming site Twitch generated about US$667 million in advertising revenue and US$1.3 billion in commerce revenue in 2023, the Wall Street Journal reported on Monday. That means the unit, which Amazon acquired for about US$1 billion a decade ago, makes up less than 0.5% of Amazon’s overall revenue. Twitch remains unprofitable even after two rounds of layoffs since the beginning of 2023, according to the Journal. In recent years, Twitch’s biggest-spending users have spent less on creator subscriptions and donations, a trend that could cause annual revenue to fall by nearly US$250 million if it continues through 2025, the Journal reported. Twitch’s founder, Emmett Shear, stepped down as CEO in March 2023 and was replaced by Dan Clancy. https://tinyurl.com/4j495b4b

AI search engine Perplexity to share ad revenue with publishers.

Perplexity, an AI-powered search engine startup, announced on Tuesday new partnerships with news publishers including Time, Fortune and WordPress.com. As part of the multi-year deals, the publishers will receive a cut of advertising revenue each time their content is referenced in search results, free access to Perplexity’s application programming interfaces so they can create their own custom search engines on their sites and pro subscriptions to Perplexity for their employees. The partnerships follow recent copyright complaints lodged against Perplexity and its peers by news outlets. Earlier this month, magazine giant Condé Nast sent a cease-and-desist letter to Perplexity, demanding that it stop using content from Condé Nast publications in its search results. https://tinyurl.com/3w97buaz

Justice Department raises fresh concerns about TikTok.

The U.S. Department of Justice said in a court filing that TikTok collected user data on sensitive topics such as gun control, abortion and religion, and made such information accessible to China-based employees of the app’s parent company, ByteDance. The accusation was part of the Justice Department’s argument supporting the new U.S. law that could force a ban or sale of TikTok due to concerns that China’s government could influence the app’s content or gain access to American users’ data. TikTok is now fighting a legal battle in an attempt to block the law. “The serious national-security threat posed by TikTok is real, as evidenced by the public record and confirmed by classified information supplied by the intelligence community,” the Justice Department said in the filing. In response to the DOJ filing, TikTok posted its statement on X: “As we’ve said before, the government has never put forth proof of its claims, including when Congress passed this unconstitutional law. Today, once again, the government is taking this unprecedented step while hiding behind secret information.” https://tinyurl.com/38wyu6jj

Alibaba to launch ai-powered search engine for e-commerce merchants.

Alibaba plans to launch an AI-powered search engine in September that helps merchants source goods online, the Chinese e-commerce giant said on Wednesday. Using conversational AI, the search engine will be available for all e-commerce merchants, regardless of whether they sell on Alibaba’s platforms or not. The tool aims to spare merchants the trouble of searching and sifting through webpages of product listings and manually comparing product pricing and features. The tool will be free to use and cover product information from both Alibaba’s own e-commerce sourcing site Alibaba.com and other similar sites. https://tinyurl.com/4emc3n44

Trump vows to fire SEC Chair, create national bitcoin stockpile.

Donald Trump on Saturday gave his full-throated support to the cryptocurrency industry, saying he would fire Gary Gensler, chair of the Securities and Exchange Commission, and create a “strategic national bitcoin stockpile” in a second presidential term. In a speech in Nashville at the Bitcoin 2024 conference, he pledged to turn the bitcoin currently held by the U.S. government into what he described as a national reserve, meaning that it wouldn’t be sold. The U.S. has seized an estimated 210,000 bitcoins since 2020, worth US$15 billion today, making it one of the world’s biggest holders. “If bitcoin is going to the moon, as we say, it’s going to the moon, I want America to be the nation that leads the way,” he said. During his first presidential term, however, Trump and his officials expressed skepticism about crypto and its potential to hurt the U.S. dollar, and the SEC took numerous legal actions against crypto-related firms. Trump took aim at the SEC’s crypto crackdown under President Joe Biden and said he would create an advisory council to design regulatory guidance, implying he could diminish the SEC’s role. He also vowed to create a regulatory framework for “safe and responsible” expansion of privately-issued stablecoins, which are typically backed by cash and U.S. treasuries. Another presidential candidate, independent Robert F. Kennedy Jr., pledged even stronger support for crypto at the event. On Friday, he told attendees he would direct the Treasury to buy bitcoin everyday until it holds at least 4 million, worth about US$275 billion currently, which would represent nearly 20% of the total supply. Meanwhile, advisers of Vice President Kamala Harris, the presumptive Democratic presidential candidate, have approached some top crypto companies to “reset” relationships, the Financial Times reported Saturday. Harris doesn’t appear to have taken a public stance on crypto regulation. https://tinyurl.com/3z2hbkss

Morgan Stanley allows financial advisors to offer Bitcoin ETFs.

Morgan Stanley on Friday told its roughly 15,000 financial advisers that they are allowed to pitch wealthy clients on investing in two bitcoin exchange-traded funds starting next Wednesday, CNBC reported, citing people with knowledge of the policy. The two funds are BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, according to the report. Clients will need to have a net worth of at least US$1.5 million to be eligible. Previously, clients could only invest in the funds if they asked for them unprompted. Wealth management businesses at big banks have been cautious about embracing bitcoin exchange-traded funds, which securities regulators approved for the first time in the U.S. in January, given their price volatility. https://tinyurl.com/2ky8z47e

Chipmaker TSMC to begin construction on first Europe a in August.

TSMC, the world’s largest chip manufacturer, will break ground on its first factory in Europe next month, Nikkei Asia reported. The company is responding to pressure from customers and governments to diversify its operations beyond Taiwan as a hedge against natural disasters and trade conflicts. That could disrupt the flow of the world’s most advanced chips, all of which are made by TSMC in Taiwan. TSMC’s chairman and CEO, C.C. Wei, will lead a delegation to Dresden, Germany, for a groundbreaking ceremony on Aug. 20, the newspaper said. The firm announced last year that it was establishing a joint venture with Robert Bosch, Infineon and NXP to build a factory in Europe. The facility, which will cost more than $10.8 billion, aims to start commercial production by the end of 2027 and will produce less cutting edge chips meant for the automotive and industrial sectors. https://tinyurl.com/bdmybdrh

Yellen says US$3 trillion needed annually for climate financing, far more than current level.

U.S. Treasury Secretary Janet Yellen said on Saturday that the global transition to a low-carbon economy requires US$3 trillion in new capital each year through 2050, far above current annual financing, but that filling the gap is the biggest economic opportunity of the 21st century. Yellen said in Belem, Brazil’s Amazon gateway city, that reaching net-zero emissions goals remained a top priority for the Biden-Harris administration and this would require leadership far beyond U.S. borders. https://tinyurl.com/nhhd7349