Last week Dow Jones rose 2%, S&P 500 was up 1.8%, Nasdaq was up 2%, and the small-cap Russell rose 3.3%. Market leadership remains concentrated in the AI, semiconductors and software space. 5 trillion-dollar companies — including Nvidia, Apple, and Amazon — have been behind most of the S&P 500’s 10% gains this year. T. Rowe Price has marked down its stake in Canva by 67.6%. Twitter is now worth just 33% of Elon Musk’s purchase price, Fidelity says. Fidelity also cut its Reddit valuation by 41% since its 2021 investment. Shares of C3.ai plunged 21% after its earnings outlook fails to live up to the AI hype. Twilio shares gain after a report on meetings with an activist. SentinelOne’s shares plunged 35% after disappointing results and guidance. Okta shares plummet after CEO acknowledges sales ‘uncertainty’. Salesforce CEO Benioff predicted an AI spending boom. Even as a number of prominent artificial intelligence researchers signed onto a joint statement drawing attention to the dangers of runaway AI. In Canada, recently laid off Shopify employees filed a $130 million class-action lawsuit. Westbridge reached definitive agreements to monetize 1.4 GW Alberta solar PV portfolio for an aggregate cash purchase price, between $217 million and $346 million subject to adjustments. Generative AI Solutions intends to raise up to $5 million through a non-brokered private placement. Canadian AI computing startup Tenstorrent (valued at $1 billion) and LG partner to build chips. Sophic Clients UGE International and Clear Blue will be attending the inaugural Canadian Climate Investor Conference Thursday June 8th at the Hyatt Regency Toronto. Sophic Client Kraken Robotics announced a $9.5 million contract with the Navy of a large Asia Pacific country. The Company also reported Q1 results, and reiterated guidance — for fiscal 2023, Kraken expect revenue to be in the $66 – $78 million range and adjusted EBITDA in the $12 – $17 million range.
Canadian Technology Capital Markets & Company News
Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) reports Q1 2023 financial results with 38% year-over-year revenue growth.
Total revenue was $7.6 million versus $5.5 million for the quarter ending March 31, 2022 (“Q1 2022”), a 38% increase. Products revenue was $5.3 million compared to $3.7 million in Q1 2022, a 43% increase. Services revenue increased 26% to $2.3 million over Q1 2022. Gross margins in Q1 2023 were 59.4% as compared to 32.9% in Q1 2022 and increased due to a change in product and project mix. Adjusted EBITDA for the quarter was $0.9 million compared to an Adjusted EBITDA loss of $0.4 million in the comparable quarter. Cash balance at March 31, 2023 was $4.0 million. Subsequent to the quarter, payments on large projects totalling over $8.0 million were received. Kraken Robotics also reiterates its financial guidance provided on May 1, 2023. For fiscal 2023, we expect revenue to be in the $66 – $78 million range and adjusted EBITDA in the $12 – $17 million range. The mid-point of our guidance range ($72 million in revenue and $14.5 million in EBITDA) implies revenue growth of 76% over 2022 and adjusted EBITDA growth of 275%. Capex in 2023 is expected to be $5-$6 million. https://bit.ly/438bkhU
Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) announces first quarter fiscal 2023 financial results.
Revenue was $262,137, a 79% decrease from $1,225,106 for the quarter ended March 31, 2022 (“Q1 2022”). Recurring revenue was $212,004, a 40% increase from $150,975 in Q1 2022. Gross Profit for Q1 2023 was $93,272 compared to $507,500 for Q1 2022, an 82% decrease resulting from lower revenue for the quarter. Gross Margin percentage for Q1 2023 was 36%, down from 41% in Q1 2022. EBITDA was $25,180 versus $(919,958) in Q1 2022, a 102% improvement from Q1 2022. The improved EBITDA reflects the Company’s 2022 cost reduction program, increased costs from eSite operations as well as government grants. As of March 31, 2023, bookings increased to $3,516,857, an increase of 77%, when compared to $1,991,275 as of December 31, 2022, with delivery anticipated over the next three years in the case of Illumience/EaaS and typically in the next four to six months in the case of production orders. Cash at March 31, 2023 was $682,945 versus $853,330 at December 31, 2022. As of May 29, 2023, the Company has $5.6M of available government funding, with $3.8 million receivable in government grants, and $1.8 Million receivable. The Company is on track for F2023 to be more in line with the Company’s historic revenue profile and its 2021 results. Although the eSite acquisition did increase our cost base slightly, Clear Blue’s revenue threshold for cash flow and EBITDA break-even is approximately $9 million. https://bit.ly/45CRRrh
Sophic Client Renoworks Software Inc. (RW-TSXV, ROWKF-OTC) announces first quarter 2023 financial results and provides outlook.
Revenues of $1,354,175, up 3% over the prior year’s $1,315,917. Recurring revenue of $515,333 versus $460,784 for the same period in 2022, a 12% increase; Gross margin of 73% versus 63% in the first quarter of 2022. Growth was primarily driven by a 44% increase in libraries revenue and a 12% increase in hosting and licensing revenues. https://bit.ly/3C0ATpf
Sophic Client LuckBox (LUCK-TSXV, LUKEF-OTC) files Q1 2023 results.
The Company ended Q1 2023 with player registrations of 387,000 up from 137,000 at the end of 2022; Generated Global Betting Handle of approximately $9.5 million during Q1, up from $3.2 million for the full year of 2022; with Total Q1 2023 revenue of $624,503 vs $18,613 in Q1 2022 and $159,992 in all of 2022. Subsequent events to Q1 2023 include; At the end of April 2023, the Company’s registered player base stood at 420,000; In April 2023, the Company generated record Player Deposits despite April being a short month and a 40% reduction in Marketing costs; and in April, the Company announced that this marketing optimization drove a surge in high value players and boosted the average stake per player by 80% vs. Q1 2023. This marketing optimization was a major step towards profitability. https://bit.ly/3C7cgY7
Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) announces $9.5 million contract with the Navy of a large Asia Pacific country.
The customer cannot be named at this time. Under the scope of the contract, Kraken will deliver its KATFISH™ high-speed minehunting solution. The contract also includes a variety of support and sustainment options, including training, spares and operational support. Under the acquisition contract, Kraken will deliver its KATFISH towed Synthetic Aperture Sonar, Tentacle® Winch and Autonomous Launch and Recovery System (ALARS) in Q2, 2023. This represents Kraken’s first KATFISH system sale in the Asia-Pacific region. This contract follows the results of a successful in-country demonstration of KATFISH™ for the customer in Q1 of this year. Kraken’s team worked in concert with a local survey company to complete a 200 km seabed survey that provided real-time ultra- high-resolution imagery and bathymetry of the seafloor along coastal waters.. https://bit.ly/3ONuNjQ
Watch the Recording of Sophic Capital Clients Sophic Clients UGE International (UGE-TSXV, UGEIF-OTC) Q1 earnings call.
In Q1 2023, UGE continued to grow its business of developing, building, financing, and operating commercial and community solar facilities. The Company experienced one of its strongest growth quarters in its history, highlighted by declaring NTP (notice to proceed) on 10 MW of projects and COD (commercial operation) on a 1.4 MW project in Texas. UGE is in the early stages of scaling its operational portfolio, which will see recurring revenue become the Company’s dominant source of revenue over time. Installed capacity is now four times the installed capacity as at the same time in 2022 with project backlog also swelling to 313 MW compared with 135 MW on March 31, 2022. https://bit.ly/43zl4kY
Sophic Clients UGE International (UGE-TSXV, UGEIF-OTC) and Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) will be attending the inaugural Canadian Climate Investor Conference Thursday June 8th at the Hyatt Regency Toronto.
The conference will bring together growth oriented, publicly traded clean energy and technology companies, and climate conscious investors, to share ideas and to discover ways to accelerate the deployment of capital needed to build a more sustainable future for Canadians. UGE CEO Nick Blitterswyk will present at 11:15am ET and CBLU CEO Miriam Tuerk will present at 10:00am ET. Entry to the conference is free for investors and registration is required in advance. https://bit.ly/3oCcsvn
GENAI (AICO-CSE) announces non-brokered private placement.
Generative AI Solutions Corp. intends to raise up to $5,040,000 through a non-brokered private placement of up to 9,000,000 units at a price of $0.56 per Unit. Each Unit will consist of one common share in the capital of the Company and one Share purchase warrant. Each Warrant will entitle the subscriber to acquire one additional Share at a price of $1.00 per Warrant for a period of two years from the applicable closing date. https://bit.ly/3INNr7c
Westbridge Renewable (WEB-TSXV) reaches definitive agreements with MYTILINEOS to monetize 1.4 GW Alberta solar PV portfolio.
Westbridge Renewable Energy Corporation has entered into definitive agreements entered into on June 1st 2023 in connection with the purchase by Metka-EGN Ltd. (a subsidiary of MYTILINEOS Energy & Metals) for a portfolio of 5 solar projects located in Alberta, Canada, from Westbridge, with anticipated aggregate capacity of 1,410 MWdc (1.4 GW) upon commercial operation. The aggregate purchase price, payable in cash, in respect of all of the Projects is estimated to be between. $217 million and $346 million subject to the adjustments. It is anticipated that upon entering into operation, the Projects will: mGenerate 2.1 terawatt-hours (TWh) per year of renewable energy, equivalent to the electricity necessary to provide power to 200,000 Canadian homes for one year, and avoiding the annual emission of 1,500,000 tons of carbon pollution to the atmosphere; and have a total estimated capex investment of $1.7 billion. https://bit.ly/3ONcyed
Recently laid off Shopify (SHOP-NYSE, SHOP-TSX) employees file $130 million class-action lawsuit.
Canadian e-commerce giant Shopify laid off 20 per cent of its workforce earlier this month. Those terminated employees have filed a $130 million class action lawsuit against the company. In a letter published on May 4, Shopify CEO Tobias Lütke said the layoffs were being carried out to “pay unshared attention to [Shopify’s] mission.” Shopify offered the terminated employees severance packages. However, the laid-off group now alleges that the employer tried to slash their severance packages once they accepted the deal. The class action is led by Iain Russell, who worked at Shopify for seven years. https://bit.ly/3WIEa60
Hostaway unlocks $175 million to expand its vacation rental management platform.
The startup, which provides software used to help manage vacation rentals across the many channels where these might get listed online – Airbnb, Expedia, Booking.com, directly on their own websites, Google and more – has picked up $175 million, an all-equity round that it will be using to continue developing its business on all fronts: enhancing its platform; expanding its customer base beyond the 100,000 properties managed through it today; recruiting more talent; and making acquisitions. PSG Equity is the sole investor in this round; neither the percentage of its stake nor the company’s valuation are being disclosed https://bit.ly/3OSLvhx
OMERS Growth Equity leads Carrum Health’s US$45 million Series B to expand cancer care.
Carrum Health, a value-based healthcare company enabling self-funded employers to buy specialist medical care, raised US$45 million in Series B funding. Founded in 2014, the company provides surgical and cancer treatment guidance and coordination. Members pay a fee to get an all-inclusive pricing model and 30-day warranty on care via Carrum’s Centers of Excellence network. Over the last three years, Carrum Health’s compound annual growth rate in revenue has been 90% to 100%. https://tinyurl.com/3xs36rpv
Crypto exchange Bybit exits Canada citing recent regulatory development.
Bybit has announced that it will be exiting the Canadian market starting as soon as May 31 due to recent regulatory developments in the country, adding to several other exchanges that pulled out from the country. “It has always been Bybit’s primary objective to operate our business in compliance with all relevant rules and regulations in Canada,” the exchange said in a blog post on Tuesday. “In light of recent regulatory development, Bybit has made the difficult but necessary decision to pause the availability of our products and services.” No new account openings will be available from May 31, while existing customers will have time until July 31 to make new deposits and enter into new contracts, the company said, noting that they will be able to withdraw or reduce their positions after the closing date. https://tinyurl.com/2bt4b5ps
Canadian AI computing startup Tenstorrent and LG partner to build chips.
Canadian AI computer design startup Tenstorrent said on Tuesday it was partnering with South Korea’s consumer electronics firm LG Electronics Inc to build chips that power smart TVs, automotive products and data centers. Tenstorrent, started in 2016, designs computers to train and run artificial intelligence models and works on both the software and hardware. The company, already worth $1 billion according to data firm PitchBook, has not revealed any of its customers until now. LG will initially use Tenstorrent’s AI chip blueprint to design its own chips, but the partnership is more strategic. https://bit.ly/43wLyDS
Global Markets: IPOs, Venture Capital, M&A
5 trillion-dollar companies — including Nvidia, Apple, and Amazon — have been behind most of the S&P 500’s 10% gains this year.
The S&P 500 index is on a tear, rising nearly 10% so far this year — in stark contrast to a 13% decline over the same period last year. But gains in the benchmark index — which tracks a broad range of sectors such as banks, manufacturing, tech, and retail — are thanks to massive upswings from just five companies: Apple, Microsoft, Alphabet, Amazon, and Nvidia, all of which have posted outsized gains in market cap this year so far. The companies are part of the elusive club of firms touching US$1 trillion in market valuation, with Nvidia becoming the latest company to briefly hit the milestone before giving up some gains. Collectively, the five companies have raised their market cap by about US$2.9 trillion in 2023 — contributing 96% of the almost US$3 trillion gains in the S&P 500’s market value this year. This means the rest of the 495 companies in the S&P 500 contributed to just 4%, or US$110 billion in the index’s gain. The outsized gains of the five companies have also put the benchmark index under scrutiny for concentration risk. Apple: US$718 billion in marcap gains. Microsoft: US$672 billion in marcap gains. Nvidia: US$628 billion in marcap gains. Alphabet: US$426 billion in marcap gains. Amazon: US$391 billion in marcap gains. https://bit.ly/3WGE92J
T. Rowe Price has marked down its stake in Canva by 67.6%.
Last summer, Blackbird, one of Australia’s largest venture operations, marked down the value of one of its most prized stakes, in the Sydney-based design platform Canva. Valued at US$40 billion by investors in a US$200 million round in the fall of 2021, Blackbird adjusted its own valuation of the company 36% to US$25.6 billion. Now, T. Rowe Price — the mutual fund Goliath that began investing aggressively into late-stage startups nearly a decade ago, continued to fund them throughout the pandemic, and led the US$40 billion round in 2021 — has marked down the value of its stake in Canva even more dramatically, adjusting it by a whopping 67.6%. (T. Rowe’s Blue Chip Growth Fund, which owns several classes of Canva shares but predominantly Series A shares, has to date invested US$99.1 million in Canva and states in its most recent prospectus, dated March 31, that it now values those shares on a cost-adjusted basis at US$32.1 million.) T. Rowe’s investment in Canva represents a minuscule amount of money for the sprawling investment firm. Its Blue Chip Growth Fund had roughly $53 billion in assets under management at the end of the first quarter of this year, down from $63 billion a year ago, in June 2022. Still, it’s notable that one of the savviest asset managers in the U.S. thinks a company that was for a time the fifth most valuable startup on the planet is currently worth far less — essentially US$13 billion and not US$40 billion. https://tinyurl.com/yc2xxcfs
Twitter is now worth just 33% of Elon Musk’s purchase price, Fidelity says.
Twitter is now worth just one-third of what Elon Musk paid for the social-media platform, according to Fidelity, which recently marked down the value of its equity stake in the company. Musk has acknowledged he overpaid for Twitter, which he bought for US$44 billion, including US$33.5 billion in equity. More recently, he said Twitter is worth less than half what he paid for it. It’s unclear how Fidelity arrived at its new, lower valuation or whether it receives any non-public information from the company. https://bloom.bg/3ISQ8o1
Fidelity has cut Reddit valuation by 41% since 2021 investment.
Fidelity, the lead investor in Reddit’s most recent funding round in 2021, has slashed the estimated worth of its equity stake in the popular social media platform by 41% since the investment. Fidelity Blue Chip Growth Fund’s stake in Reddit was valued at US$16.6 million as of April 28, according to the fund’s monthly disclosure released over the weekend. That’s down 41.1% cumulatively since August 2021 when the asset manager spent US$28.2 million to acquire the Reddit shares, according to disclosures the firm has made in its annual and semi-annual reports. Reddit was valued at US$10 billion when the social media giant attracted funds in August 2021. Fidelity — which has marked down its stakes in many startups including Stripe and Reddit in recent quarters — also slashed the value of its Twitter stake, it disclosed in the filing, valuing Elon Musk’s firm at about US$15 billion. Reddit, which has raised over US$1 billion to date, counts Sequoia Capital and Andreessen Horowitz among its backers. https://bit.ly/3N9UucQ
EV maker Lucid to raise US$3 billion, mainly from Saudi’s PIF.
Lucid Group said it plans to raise about US$3 billion through a stock offering, nearly two-thirds of which will come from Saudi Arabia’s Public Investment Fund (PIF), sending shares of the luxury electric-vehicle maker down 9% after market hours. PIF, which owns more than 60% of the company, has agreed to buy 265.7 million shares in a private placement for about US$1.8 billion, Lucid said, implying a price of about US$6.80 per Lucid share, compared with the stock’s Wednesday close of US$7.76. The remainder will be raised from a public offering of 173.5 million shares of common stock. The additional funds are critical and come as the automaker, like its peers, struggles with mounting losses and tightening cash reserves amid recession fears and a price war sparked by market leader Tesla. https://tinyurl.com/32w8pjac
C3.ai plunges 21% after its earnings outlook fails to live up to the AI hype.
Shares of C3.ai fell more than 20% on Thursday as the company fell short of huge investors expectations around artificial intelligence stocks. The software company’s stock plunged as much as 21% shortly after the opening bell after it reported fiscal fourth-quarter earnings results and offered underwhelming guidance to investors. The bar was high for C3.ai considering that its stock price has soared 258% year-to-date heading into its earnings results. While the company beat its quarterly revenue and profit estimate by US$1.1 million and 4 cents per share, it offered investors underwhelming guidance and didn’t follow Nvidia’s footsteps by significantly increasing its revenue guidance. C3.ai said it expects total revenue of up to US$72.5 million in its upcoming quarter, compared to analyst estimates of US$71.3 million. For its full fiscal 2024 year, C3.ai said it expects up to US$320 million in revenue and adjusted losses from operations of up to US$75 million. https://bit.ly/3NbF1cy
Twilio shares gain after report on meetings with activist.
Twilio stock rose nearly 5% in after hours trading Tuesday after The Information reported that activist hedge fund Legion Partners has pushed for divestitures and board changes in meetings with the company’s board of directors and management team. The report came less than a month before the software communications company’s supervoting shares, which give CEO and co-founder Jeff Lawson a voting stake of 21.8%, expire under a longstanding agreement. That change could open the company up to more pressure from shareholders. Twilio shares have fallen nearly 80% since the start of 2022. https://tinyurl.com/4sr242nd
SentinelOne’s shares plunge 35%.
Cybersecurity software company SentinelOne increased revenue 70% in the April quarter, but that was less than what the company forecast. The company also lowered its expectations for the rest of the fiscal year. In a letter to shareholders, management said that macroeconomic challenges affected how long it took to sell products and services to customers, and how much those customers were willing to spend. The stock plunged roughly 35% after hours. While the firm’s operating loss widened to more than US$115 million for the quarter, cash burn was roughly 43% less than it was in the same quarter last year. Cybersecurity stocks have surged year-to-date, and SentinelOne is no exception—it was up 42% this year as of Thursday’s close, before it reported earnings. However, several cybersecurity software companies have struggled to please investors. Okta, as one example, said Wednesday night in its earnings report that it exceeded its own revenue guidance for the April quarter and raised its forecast for the rest of the year, but the stock closed more than 17% lower on Thursday, likely because the company said macroeconomic challenges are still growing. https://tinyurl.com/2t66jp7y
Okta shares plummet after CEO acknowledges sales ‘uncertainty’.
Shares of Okta dropped nearly 18% in the wake of yesterday’s earnings report, as investors seemed alarmed over comments CEO Todd McKinnon and CFO Brett Tighe made on an earnings call about slowing sales to new and existing customers. The sell-off, which happened despite a strong quarterly earnings report in which Okta raised its annual sales and operating income targets, illustrates the challenges software providers are facing as customers’ spending budgets tighten. “The macro backdrop is just – there’s a lot of uncertainty around it,” said McKinnon on an earnings call. On the call, McKinnon and Tighe said many customers are asking for shorter contracts and this has led to smaller overall deal sizes. That helps explain why Okta’s “net dollar retention rate”—a measure of a company’s ability to get customers to spend more over time—dropped from 120% last quarter to 117% this quarter. https://tinyurl.com/59vbkjew
Salesforce CEO Benioff predicts AI spending boom.
Salesforce shares fell more than 5% after its first-quarter earnings report even though the software provider raised its full-year earnings and operating margin targets, suggesting that some investors are still wary about its ongoing efforts to run more efficiently. On an earnings call, CEO Marc Benioff focused on the opportunity Salesforce sees in generative AI, declaring that “we are about to enter an unbelievable supercycle for tech” and characterizing OpenAI’s GPT large language models as “definitely not just the technology of this lifetime, but maybe any lifetime.” Also joining the call was Srinivas Tallapragada, president and chief engineering officer, who fielded questions about large language models from Benioff and investors. The Information reported in April that Tallapragada’s profile inside Salesforce was on the rise. Salesforce’s revenue rose 11% to US$8.25 billion in the three months to April 30 compared to last year, down from 14% annual growth last quarter. Excluding items, Salesforce’s operating margin was 27.6%, compared to 29.2% last quarter. Free cash flow grew 21% to US$4.25 billion during the quarter. https://tinyurl.com/ym6uaw46
Amazon in talks to offer cheap or free mobile plans to Prime members.
Amazon is negotiating with Verizon, T-Mobile and Boost Mobile owner Dish about potentially launching a cheap or free mobile phone service for U.S. Prime members, Bloomberg reported on Friday. The talks have been happening for six to eight weeks and have also included AT&T at some points, according to the report. A potential Prime unlimited phone plan could either be free or sell for $10 a month, drastically undercutting unlimited plans at traditional carriers that go for $60 per month or more, Bloomberg reported citing people familiar with the situation. Dish shares jumped 19% on Friday morning, while shares of AT&T, Verizon and T-Mobile parent Deutsche Telekom all fell by single digits. Offering phone plans through Prime would be yet another perk that could help Amazon boost Prime membership and differentiate the service from Walmart’s competing subscription plan, Walmart+. In addition to exploring a Prime mobile plan, Amazon is also expected to start selling plans from Boost mobile on its site as soon as July, Bloomberg reported. https://tinyurl.com/3exspfjr
Meta announces Quest 3 ahead of Apple headset debut.
Meta Platforms’ Quest 3 mixed reality headset will launch this fall and retail at $500, the company announced Thursday. In a blog post published a week before Apple is expected to launch its highly anticipated MR headset, Meta said the new device will feature Meta’s “highest resolution display yet” and include technology that will “let you interact with virtual content and the physical world simultaneously.” Meta also plans to cut the cost of its existing Quest 2 headsets. The stakes are high for Meta, whose last headset, the high-end Quest Pro, received a lukewarm reception from many customers and commentators. Meta also faces a formidable challenge from Apple, which has not released a new personal computing device since 2015. https://tinyurl.com/ypb6su3h
Apple’s rumored VR headset could have ridiculously high-end screens.
Apple’s rumored mixed reality headset might have extremely pixel-dense and bright displays, according to a tweet from Ross Young, CEO of Display Supply Chain Consultants, who has shared accurate information about Apple products in the past. Young says that the AR / VR headset will be equipped with two 1.41-inch Micro OLED screens, each with 4,000 ppi, and they’ll be able to go beyond 5,000 nits of brightness. Based on previous reporting, it already seems like the headset could be a monster device, and displays like these could make it even more of a high-end product. Meta’s Quest 2 offers 773 ppi and 100 nits of brightness, and while that’s not a totally fair comparison given the likely vast gulf between Apple’s rumored US$3,000 device and the comparatively more affordable Quest 2, it still shows just how impressive Apple’s headset might be. We may not have to wait long to see if these eye-popping display specs are a reality. Apple is widely expected to reveal the headset, potentially called the “Reality Pro,” at its Worldwide Developers Conference, which kicks off on June 5th. https://bit.ly/3q8Ystd
Scientists warn of ‘Extinction’ from AI.
A number of prominent artificial intelligence researchers, including leaders at Google, OpenAI and Anthropic, have signed onto a joint statement drawing attention to the dangers of runaway AI. The 22-word statement, drafted by the nonprofit Center for AI Safety, reads, “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” The signatories included Demis Hassabis and James Manyika from Google and Sam Altman from OpenAI. Some AI pioneers and practitioners have warned that advanced systems could pose a threat to society. Geoffrey Hinton, a towering figure in the field and one of the signatories, recently left Google in order to speak more freely about the technology’s risks, which include misinformation and widespread unemployment from automation, he has said. The Center for AI Safety did not identify any concrete actions or policies that would reduce the risk it highlighted. Notably missing from the list of names is Meta’s chief AI scientist, Yann LeCun, who wrote on Twitter that superhuman-level AI is “nowhere near the top of the list of existential risks.” https://tinyurl.com/2fkdnjrk
Media, Streaming, Gaming & Sports Betting
California Assembly passes news bill opposed by Meta.
The California Assembly on Thursday passed a bill in a 46-6 floor vote that would require tech companies to pay news publishers for hosting their content based on the percentage of the revenue generated by their content. Meta Platforms on Wednesday threatened to pull news content from Facebook and Instagram should the bill, called the California Journalism Preservation Act, pass, Meta’s policy communications director Andy Stone said in a tweet. The bill is aimed at reversing a decline in local news by targeting online platforms to compensate Californian publishers. Stone called the bill’s payment structure a “slush fund” and that it would primarily benefit “big, out-of-state media companies under the guise of aiding California publishers.” It now advances to the state Senate. https://tinyurl.com/mr29h2mh
Adtech, Privacy & Regulatory
Executive order on outbound investment will be ‘narrow’ and ‘administrable’.
Assistant U.S. Treasury Secretary Paul Rosen said restrictions on U.S. investment in China will focus on advanced semiconductors, artificial intelligence and quantum computing, confirming earlier reports. Rosen, who spoke to the Senate Banking Committee on Wednesday, did not say when President Biden expects to sign the executive order. Rosen said the priority is to ensure the order is both “focused” and “tailored,” but also that it is “understandable by the public and the business community, and administrable.” He said the restrictions would be on capital that “comes with know-how and expertise.” The executive order is intended to prevent American money from helping China develop advanced technologies that its government could use for surveillance or espionage. Such an order will impact U.S. firms’ Chinese portfolios, and raise questions about the future of their Chinese practices. The threat of an order has put new pressure on U.S. investment firms to divest from China. https://tinyurl.com/5fjnnu8u
Temu takes on heavy losses to win U.S. customers.
Temu, the e-commerce site owned by Chinese giant PDD, is spending heavily to break into the U.S. market and compete with established e-commerce giants like Amazon. According to a recent report by Wired, the company loses an average of US$30 on each order placed on its site, primarily by subsidizing the cost of international shipping. PDD, Temu’s parent company, used a similar strategy to gain market share for Pinduoduo, another e-commerce site it operates in China, by taking on the cost of the deep discounts offered to customers. To further drive costs down, Temu is also squeezing suppliers in China, the report said, giving them little control over pricing for their items on the platform. Over the long term, Temu aims for American shoppers to spend an average of US$1,500 a year on the site, the report said, citing a company insider. But Temu has struggled to win market share from Amazon, and has spent heavily on high-profile ads to help grow its customer base—the company plans to spend US$1.4 billion on U.S. advertising this year, according to the report, and US$4.3 billion next year. https://tinyurl.com/4d59h9tb
Fintech, Blockchain & Cryptocurrency
Elon Musk is accused of insider trading by investors in Dogecoin lawsuit.
Elon Musk is being accused of insider trading in a proposed class action by investors accusing the Tesla CEO of manipulating the cryptocurrency Dogecoin, costing them billions of dollars. In a Wednesday night filing in Manhattan federal court, investors said Musk used Twitter posts, paid online influencers, his 2021 appearance on NBC’s “Saturday Night Live” and other “publicity stunts” to trade profitably at their expense through several Dogecoin wallets that he or Tesla controls. Investors said this included when Musk sold about US$124 million of Dogecoin in April after he replaced Twitter’s blue bird logo with Dogecoin’s Shiba Inu dog logo, leading to a 30% jump in Dogecoin’s price. A “deliberate course of carnival barking, market manipulation and insider trading” enabled Musk to defraud investors, promote himself and his companies, the filing said. https://tinyurl.com/yweftruk
The AI boom runs on chips, but it can’t get enough.
A shortage of the kind of advanced chips that are the lifeblood of new generative AI systems has set off a race to lock down computing power and find workarounds. The graphics chips, or GPUs, used for AI are almost all made by Nvidia. But the boom in demand for them has far outpaced supply with the viral success of ChatGPT, a chatbot that is able to respond to questions in humanlike ways. That situation has restricted the processing power that cloud-service providers like Amazon.com and Microsoft can offer to clients such as OpenAI, the company behind ChatGPT. AI developers need the server capacity to develop and operate their increasingly complex models and help other companies build AI services. The demand for Nvidia’s products has driven the company’s stock up roughly 167%. Chip costs vary, but Nvidia’s advanced AI chips are sold by some retailers for around US$33,000, though they can command higher prices in secondary markets amid the high demand. Server manufacturers and their direct customers say they are facing waits of more than six months to get Nvidia’s latest graphics chips. The CEO of Supermicro, one of the largest server-makers, said the company’s back-orders of systems featuring graphic chips was at its highest level ever and that the company was rushing to add manufacturing capacity. https://archive.is/BjVRX
Foxconn forecasts its AI server business will double in second half of 2023.
Foxconn forecasts its AI server business will at least double in the second half of this year, making the world’s biggest contract electronics manufacturer — best known for making the iPhone — the latest beneficiary of the rapid rise of generative artificial intelligence systems such as ChatGPT. “We could see triple-digit growth in AI servers in the second half,” said Foxconn chair Young Liu at the company’s annual meeting on Wednesday. Demand for processors in such servers has boosted chip designer Nvidia to become the most valuable semiconductor company, with its market capitalisation briefly breaching the US$1 trillion mark on Tuesday. Liu said the fast spread of generative AI systems such as ChatGPT and users’ increasing reliance on them was driving the boost in demand. Of Foxconn’s NT$6.6 trillion (US$215 billion) in revenue last year, NT$1.1 trillion came from manufacturing servers, of which it has a 40 per cent global market share, and 20 per cent of the server business was in AI. Foxconn’s bullish forecast sharply contrasted with a very cautious overall outlook. Pointing to a lack of visibility due to inflation and geopolitical tensions weighing on the global economy, Liu reiterated his earlier forecast that 2023 revenues would be flat compared with last year. https://archive.is/AXXfD
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