May 19, 2024: Intraweek Record Highs for Indices

Last week, Dow Jones, S&P 500 and Nasdaq all hit record highs. Dow Jones rose 1.2% during the week, S&P 500 gained 1.5%, and Nasdaq composite was up 2.1%. CoreWeave, an upstart cloud provider that rents out servers with Nvidia’s artificial intelligence chips, raised US$7.5 billion in debt financing led by Blackstone, the company said Friday, adding that it was the largest deal of its kind. OpenAI on Monday launched a new AI model and desktop version of ChatGPT, along with an updated user interface. Google is expanding conversational search results that summarize answers instead of just listing links to other websites. Snowflake is said to be discussing buying AI startup Reka AI for US$1 billion. Squarespace said Monday it had agreed to a buyout by private equity firm Permira for US$44 a share in cash, in a deal that values the company at US$6.9 billion including debt. Reddit shares surged as it struck a content deal with OpenAI. Meta is reportedly working on camera-equipped AI earphones. Netflix said it plans to launch its own advertising technology platform to allow advertisers to buy ads on the streaming service. Millennium, Point72 and Elliott are among Bitcoin ETF buyers, according to a Bloomberg analysis of Q1 13F filings of roughly 1,000 filers. In Canada, Xybion Digital, and CloudMD were both taken out — as we’ve highlighted previously, we expect small to mid cap Canadian listed companies to be acquired unless the valuation gap with US listed companies narrows. Sophic Client, Xcyte Digital released its “Xperience” subscription service. Xperience, the first-of-its-kind service, gives subscribers the flexibility to select the most suitable technologies for hosting events bringing together a global ecosystem of event technology. The Xperience partner ecosystem is intended to be distributed globally and offered to, among others, large multinational enterprises, which is expected to broaden Xcyte’s reach into major worldwide markets.

Xybion Digital Inc. (XYBN-TSXV) announces go-private transaction.

Xybion Digital Inc. announced a proposed go-private transaction pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) whereby the Company will acquire all of the issued and outstanding Class A subordinate voting shares from the holders thereof for cash consideration of $0.90. The Arrangement is intended to provide Shareholders with the opportunity to immediately realize cash for their investment. The Consideration represents an attractive premium to the recent trading price of the Subordinate Voting Shares on the TSX Venture Exchange. Due to the Company’s unique capital structure in which approximately 80% of the voting control of the Company is held by Mr. Pradip Banerjee by virtue of his holdings of Class B proportionate voting shares, there are limited strategic alternatives available to the Company, with the principal alternative to the Arrangement being maintaining the status quo and executing the Company’s current strategic plan. In light of the available alternatives, the Company considers the Arrangement to be more favorable to the Shareholders than any other strategic alternative reasonably available to the Company. A special committee comprised entirely of independent directors of the Company, with the advice of their advisors, unanimously recommended that the Board approve the Arrangement and recommend to Shareholders to vote in favour of the Arrangement. https://tinyurl.com/5vxn9tbb

CloudMD (DOC-TSXV) to be taken private by CPS Capital in $12 million deal.

Vancouver-based healthtech company CloudMD has entered into an agreement to be taken private by Toronto-based private equity firm CPS Capital. CloudMD said the transaction is a result of a strategic and liquidity review the company has been performing since July 2023. The company faced liquidity issues due to its large number of acquisitions over the past four years. As a result, it was unable to generate positive cash flow while making debt repayments or find “reasonable” refinancing options. At the end of April, the Toronto Venture Stock Exchange (TSXV)-listed company announced it would miss the deadline to file its Q4 2023 earnings as a result of its strategic and liquidity review, which it was performing with the assistance of merger and acquisition advisory firm INFOR Financial. The transaction will see CPS acquire all of CloudMD’s outstanding common shares for $0.04 each, valuing the transaction at around $12 million. CPS is funding the transaction through a combination of equity from its new fund, CPS Partners Fund V, and its previous fund, CPS Partners Fund IV. CloudMD said it has also received a $1 million secured bridge loan from CPS as well as a $2 million line of credit from its existing credit facilities to support its liquidity needs prior to the transaction closing. The transaction is expected to be put in front of voting shareholders by the end of June. CloudMD is the latest to join a growing list of Canadian tech companies that have opted to go private in the last year. In April, Montréal payments company Nuvei entered into a $6.4-billion agreement to be privatized by an American private equity firm. Prior to that, many others opted to go private including MDF Commerce, TrueContext, Q4 Inc., BBTV Holdings, and Dialogue Health Technologies. https://tinyurl.com/57k9w7rv

Sophic Client Xcyte Digital (XCYT-TSXV) releases “Xperience” subscription service.

Xcyte Digital Corp., a spatial computing event technology aggregator and developer providing a high value, cost-effective, multi-platform event technology subscription service that powers physical, virtual, hybrid and immersive events and providing professional managed services for physical and hybrid events, announces “Xperience”, Xcyte’s new all-in-one subscription service. Xperience, the first-of-its-kind service, gives subscribers the flexibility to select the most suitable technologies for hosting events bringing together a global ecosystem of event technology. Through Xperience, subscribers will have the freedom to choose event technologies across Xcyte’s extensive and growing partner ecosystem along with its professional managed services to ensure tailored, and economic solutions to make their events more successful. Xperience subscription packages are designed to fit the needs of companies that frequently organize a wide range of events in different formats. Xcyte’s subscription packages are intended to yield meaningful cost savings for clients, who can benefit from choosing the best platform for an event without having to pay for multiple subscriptions. Xperience offers a subscription model that is designed to be cost-effective, based upon the number of users and the frequency of events organized by customers. Key to delivering this offering is the Company’s newly launched partner ecosystem. Xcyte has established more than a dozen partnerships with a diverse range of event technology vendors, including Conrego, Floq, MootUp, Pheedloop, and RainFocus. The Xperience partner ecosystem is intended to be distributed globally and offered to, among others, large multinational enterprises, which is expected to broaden Xcyte’s reach into major worldwide markets. https://bit.ly/44KnfUG

Gatik secures $41 million from Isuzu Motors as pair expands partnership to build autonomous trucks.

Autonomous trucking startup Gatik AI and Japanese commercial vehicle manufacturer Isuzu Motors have teamed up to develop and produce self-driving trucks. For Gatik and Isuzu, which have worked together since 2021, this marks an expansion of their existing partnership. Isuzu has also made an equity investment of $41 million (US$30 million) into Gatik as part of this deal. Gatik and Isuzu plan to collaborate on the design, development, and production of an SAE Level 4 autonomous truck with redundant safety systems covering areas like braking, steering, and sensors. The pair intend to work together to build a new vehicle frame or chassis that is compatible with Gatik’s autonomous driving tech. The goal is to build this truck platform at a dedicated manufacturing facility established by Isuzu that will begin operations in 2027. A Gatik spokesperson confirmed to BetaKit that the company plans to use this funding from Isuzu to deliver “freight-only” operations—meaning trucks that operate autonomously without a human in the driver’s seat—by the end of 2025. The self-driving tech firm, which has received funding and permission from the Government of Ontario to develop and test its driverless trucks solution on public roads in the province, also counts Toronto-based Wittington Ventures and Intact Ventures among its investors. Today, Gatik works with companies like Loblaw and Walmart, and its autonomous box trucks are currently commercially deployed in Arkansas, Texas, and Ontario. Gatik’s partners include Ryder and Goodyear—which, like Isuzi, is also an investor. Since it began making autonomous deliveries, Gatik claims it has completed over 600,000 commercial orders across North America. The startup’s current fleet consists of more than 60 trucks. Level 4 marks the second-highest level of driving autonomy as defined by SAE International. It falls just shy of the full autonomy associated with Level 5. At Level 4, drivers are not involved in the process, but autonomous vehicles still have certain geographic limits imposed on them, whereas at Level 5, self-driving vehicles operate without any limitations. https://tinyurl.com/3h9xmtcu

GPU cloud provider CoreWeave raises US$7.5 billion in debt.

CoreWeave, an upstart cloud provider that rents out servers with Nvidia’s artificial intelligence chips, raised US$7.5 billion in debt financing led by Blackstone, the company said Friday, adding that it was the largest deal of its kind. The company will use the money to expand its data center footprint and buy more Nvidia chips, which are known as graphics processing units. CoreWeave aims to roughly double its data center capacity from last year. The round comes weeks after the New Jersey-based company raised a US$1.1 billion equity funding round led by Coatue, which valued the company at US$19 billion, according to two people with direct knowledge. Two years ago, CoreWeave was a little known firm that had catered mainly to crypto miners before pivoting to AI. Last year, CoreWeave was one of the first GPU cloud providers to raise debt to fund its business operations. Smaller rivals including Crusoe Energy and Lambda Labs have followed suit. These cloud upstarts have all developed a close relationship with Nvidia, which views them as less of a threat compared to Amazon, Microsoft and Google, all of which also develop their own AI server chips. https://tinyurl.com/27r6txp2

OpenAI launches new AI model GPT-4o and desktop version of ChatGPT.

OpenAI on Monday launched a new AI model and desktop version of ChatGPT, along with an updated user interface, the company’s latest effort to expand use of its popular chatbot. The update brings GPT-4 to everyone, including OpenAI’s free users, technology chief Mira Murati said in a livestreamed event. She added that the new model, GPT-4o, is “much faster,” with improved capabilities in text, video and audio. OpenAI said it eventually plans to allow users to video chat with ChatGPT. “This is the first time that we are really making a huge step forward when it comes to the ease of use,” Murati said. OpenAI, backed by Microsoft, has been valued by more than US$80 billion by investors. The o in GPT-4o stands for omni. The new model allows ChatGPT to handle 50 different languages with improved speed and quality, and it will also be available via OpenAI’s API making it possible for developers to begin building applications using the new model today, Murati said. She added that GPT-4o is twice as fast as, and half the cost of, GPT-4 Turbo. OpenAI, Microsoft and Google are at the helm of a generative AI gold rush as companies in seemingly every industry race to add AI-powered chatbots and agents to key services to avoid being left behind by competitors. Earlier this month, OpenAI rival Anthropic announced its first-ever enterprise offering and a free iPhone app. A record US$29.1 billion was invested across nearly 700 generative AI deals in 2023, an increase of more than 260% from the prior year, according to PitchBook. The market is predicted to top US$1 trillion in revenue within a decade. https://tinyurl.com/yc4242cc

Google expands AI-generated search responses.

Google is expanding conversational search results that summarize answers instead of just listing links to other websites. As the search pioneer tries to catch up to startups like Perplexity and get ahead of a similar web search product Microsoft-backed OpenAI plans to launch, Google said Tuesday that more search users in the U.S. will encounter these artificial intelligence-powered conversational results soon, and it plans to bring the feature to other countries. The company is also upgrading the feature to give more detailed responses to queries, like generating a meal plan that meets multiple criteria. More of the search results page will include AI-generated elements, search chief Elizabeth Reid said at Google’s I/O annual developer conference. The announcements could mean that big changes are coming to the look of the company’s top revenue generator. Google has offered AI-generated responses for about a year to users who opted in, and the company has said those users increased the amount of searches they did—implying the search ad business might not suffer from the changes. Separately, Google demonstrated a new AI assistant that people can talk to and can respond to videos and images they show to it, mirroring new features that OpenAI launched on Monday. A recorded video demonstration showed how the AI could identify which neighborhood the user was located in, based on the view from her window. Google also launched a new AI model, Gemini 1.5 Flash, which it said is designed for tasks that require faster responses and lower costs. https://tinyurl.com/4k226z8h

Amazon-backed Anthropic launches its Claude AI chatbot across Europe.

Anthropic, the artificial intelligence startup backed by Amazon, said Monday it’s launching its generative AI assistant Claude in Europe on Tuesday. It will be available to individuals and businesses through the web and via an iPhone app. A paid subscription-based version of Anthropic’s Claude assistant, called Claude Pro, will be available to users who want access to all its models, including Claude 3 Opus, Anthropic’s most advanced offering. Anthropic is also launching its business-focused Claude Team subscription-based plans, which cost 28 euros (US$30) a month before value-added tax (VAT). The European Union Parliament earlier this year passed the world’s first major set of regulatory ground rules to govern the new technology. The AI Act seeks to, among other things, identify and apply rules in accordance with the levels of risk AI poses, dividing categories of risk into low, medium, high and unacceptable. Anthropic said its Claude assistant is highly fluent in French, German, Italian, Spanish, and other European languages. Anthropic has quickly become one of the buzziest and most-hyped generative AI companies in the market, with investors valuing the firm at a whopping US$18.4 billion as recently as March. That month, Amazon announced a US$2.75 billion investment in the startup, taking its total invested in the firm to date to US$4 billion. Amazon’s investment into Anthropic has attracted concerns from some regulators, who worry it could lessen the company’s independence. In the United Kingdom, regulators are assessing whether Amazon’s investment and partnership with Anthropic, and deals struck by Microsoft with generative AI firms, may constitute effective mergers that could lessen competition. https://tinyurl.com/mt7rfsc5

Snowflake said to discuss buying AI startup Reka AI for US$1 billion.

Snowflake, the data storage and analytics company, is in talks with startup Reka AI over a possible acquisition, Bloomberg reported Thursday. A potential deal could value the AI upstart at over US$1 billion as the publicly traded Snowflake looks to add more generative AI capabilities to its data offerings. Reka AI, which develops large language models for a range of creative and enterprise tasks, was valued at US$300 million post-money after its US$50 million Series A round backed by DST Global and Snowflake’s venture arm. Snowflake declined The Information’s request to comment, and Reka AI did not immediately respond. Competition has been heating up between Snowflake and its privately-held rival Databricks. Databricks has been on an acquisition spree since last year, acquiring more than half a dozen companies, including generative AI startup MosaicML for US$1.3 billion last year, according to data firm PitchBook. In the last 18 months, Snowflake has made at least eight acquisitions, including the US$185 million takeover of Neeva, the private search engine company founded by Sridhar Ramaswamy, who formerly led Google’s advertising division. Ramaswamy, originally Snowflake’s head of AI, became CEO in February, replacing Frank Slootman, who steered the startup to become a publicly traded company. https://tinyurl.com/mvn7sj2z

Squarespace agrees to Permira buyout for US$6.9 billion.

Web design company Squarespace said Monday it had agreed to a buyout by private equity firm Permira for US$44 a share in cash, in a deal that values the company at US$6.9 billion including debt. Investment firms General Atlantic and Accel, along with Squarespace founder and CEO Anthony Casalena, which hold roughly 90% of voting shares in the company, have agreed to vote for the buyout. GA and Accel plan to reinvest an undisclosed sum of additional capital to take the company private, Squarespace said. Shares rose 13% to US$43.18. The company went public through a direct listing in May 2021 at US$48 a share before plummeting to around US$20 in 2022. Since then shares have recovered but revenue growth, at 19% in the last quarter, has slowed from 31% in the first quarter of 2021, during the height of the pandemic. It has, however, grown profits and managed to lower its net debt-to-EBITDA ratio to 2.8 times from nearly 7 times at the end of 2022, which could improve its appeal to a private equity buyer. It will use the new money to invest in its tools for entrepreneurs looking to build online brands and businesses. Casalena is set to stay on in his role after the deal closes, which is expected by the end of the year. https://tinyurl.com/2s3ks6tr

Alibaba’s global e-commerce grows but core businesses remain sluggish.

Alibaba reported a 7% rise in revenue in the quarter through March thanks in part to the growth of its international shopping site, AliExpress. Alibaba’s revenue from its international e-commerce segment that includes AliExpress grew 45%, driven mainly by AliExpress’s service called Choice, which offers low prices and relatively fast delivery. Analysts view Choice as Alibaba’s answer to rival PDD’s fast-growing global shopping app Temu, which is known for ultralow prices. But Alibaba’s domestic e-commerce business, its biggest source of revenue, remained sluggish with a 4% increase. And the company’s cloud computing business, another major source of revenue, only grew 3% in the quarter. Alibaba has so far struggled to convince investors that those key businesses are capable of finding new engines for growth despite fierce competition and macroeconomic challenges. Alibaba said there are improvements in the China business, citing growth in the number of buyers and purchase frequency. During a conference call with analysts, CEO Eddie Wu said that the company expects the volume of its domestic e-commerce transactions to “gradually return to healthy growth” in the current fiscal year through March 2025, helped by “new monetization mechanisms” it plans to introduce. Wu also said that Alibaba is confident that its revenue from the cloud computing unit will return to double-digit growth in the second half of the current fiscal year. https://tinyurl.com/9nurkkey

Tencent’s strong ad business boosts profits.

Chinese internet giant Tencent reported a 6% increase in revenue and a 62% jump in net profit in the first quarter thanks to the strength of its advertising business. Tencent’s online ad revenue rose 26%. The company, which operates the WeChat messaging app, cited “notable growth” in advertising spending by customers in gaming, internet services and consumer goods sectors. The ad growth helped offset a 2% decline in Tencent’s revenue from videogames in China. Advertising also boosted Tencent’s profits, as its sales of high-margin ads for short video and search platforms grew rapidly, the company said. Tencent’s gross margin for its online ad business improved to 55% in the quarter from 42% a year earlier. https://tinyurl.com/fzuk8ww8

Cisco reports better-than-expected results even as revenue suffers steepest drop in 15 years.

Cisco reported earnings and revenue for the fiscal third quarter that topped Wall Street’s estimates, even with sales dropping from a year earlier. The stock rose as much as 8% in extended trading. Cisco’s revenue declined by about 13% year over year in the quarter, which ended on April 27, according to a statement. That’s the steepest slide since 2009. Net income fell 41% to US$1.89 billion, or US$0.46 per share, from US$3.21 billion, or US$0.78 per share, a year earlier. The weakening performance stems from clients setting up the equipment they received in recent quarters, according to the statement. Cisco offered similar commentary in its previous earnings report. https://tinyurl.com/352c3c9b

Reddit shares surge as it strikes content deal with OpenAI.

OpenAI has struck a deal with Reddit to use content from the social media platform for its artificial intelligence chatbot, sending shares in the company up as much as 15 per cent in after-hours trading. Thursday’s announcement is the latest in a number of deals between the Microsoft-backed start-up and media brands as the competition for high-quality and reliable data to underpin powerful new AI models intensifies. At the same time, OpenAI is fighting copyright lawsuits from publishers who are reluctant to allow their content to be used by the ChatGPT-maker. The agreement gives OpenAI access to content on Reddit’s website and will allow the social media platform to embed more AI tools. Financial terms were not disclosed, but a jump in Reddit’s stock would mean a windfall for Sam Altman, the co-founder and chief executive of OpenAI, who has invested tens of millions of dollars into the social media group. Altman, who has said he has no equity stake in OpenAI, held close to 10 per cent of Reddit’s stock ahead of its public listing in March via various entities, according to public filings. https://archive.ph/V3M2z

Meta is reportedly working on camera-equipped AI earphones.

In a race to integrate artificial intelligence into our everyday lives, tech giants are constantly exploring new ways to make their AI more accessible and intuitive. Now, The Information reports that Meta, Facebook’s parent company, is entering this fight, hoping to bring AI-powered earphones equipped with cameras. These earphones, internally codenamed “Camerabuds,” are envisioned to leverage AI capabilities for real-time object identification and foreign language translation. Meta CEO Mark Zuckerberg has shown keen interest in the project, reviewing various design concepts for what could be either in-ear earbuds or over-the-ear headphones. The Information‘s sources reveal that Meta’s leadership sees AI-powered earphones as the next logical step in the evolution of wearable technology, with competitors likely to follow suit. The company has even engaged with Ear Micro, a Kansas-based electronics company specializing in “smart” earphones, to explore the possibilities of this emerging technology. However, the project is not without its challenges. Technical hurdles, such as potential camera obstruction by long hair and overheating issues, need to be overcome before the product can become a reality. Additionally, privacy concerns surrounding the use of cameras in wearable devices, reminiscent of the Google Glass controversy, will need to be addressed. Despite these challenges, the prospect of AI-powered earphones is exciting, to say the least. Such devices could revolutionize how differently-abled users interact with their surroundings, potentially offering features like real-time translation and contextual information about objects and locations. Meta’s interest in AI wearables is part of a broader trend in the tech industry. OpenAI and Apple are also reportedly exploring similar devices, while startups like Humane and Rabbit have already launched AI wearables with… varying degrees of success. Whether “Camerabuds” will become a reality remains to be seen, but the project reflects the tech industry’s relentless pursuit to make AI an ever-present part of our daily experiences. https://tinyurl.com/auk6fud7

Netflix plans to build its own advertising technology platform.

Netflix said it plans to launch its own advertising technology platform to allow advertisers to buy ads on the streaming service. In addition, Netflix announced that its ad inventory will be available to buy across a number of ad tech platforms including Google’s Display & Video 360, The Trade Desk and Magnite. These companies join Microsoft’s Xandr, which helped launch Netflix’s ad-supported tier in late 2022 as its exclusive ad tech partner for buying and serving ads. The ad tech announcement follows news from Wednesday morning that Netflix had secured the rights to exclusively stream two Christmas Day NFL games globally later this year. Both pieces of news were timed to Netflix’s presentation during the TV industry’s “upfronts” week in New York, when big media companies such as Disney and Comcast’s NBCUniversal hold glitzy events to pitch upcoming programming to advertisers. This was the first time Netflix held an in-person upfronts event. Netflix also said that its ad-supported subscription tier now reaches 40 million monthly active users globally, up from 5 million a year ago. Netflix has not disclosed how many subscriptions it has for the ad-supported tier (one subscription could include multiple active users in the same household). https://tinyurl.com/3ens35p6

Netflix inks a 3-year deal with the NFL to show football games.

Netflix will show two NFL games on Christmas Day this year, plus “at least one” game on Christmas in 2025 and 2026, the company and the NFL announced Wednesday. As we’ve discussed before, the logic for Netflix is simple here: While Netflix spent years insisting it didn’t want to be in live sports, that was before it had an ad business, and live sports — particularly for the NFL — are considered the best way to aggregate an audience of ad watchers. Not coincidentally, Netflix is making its pitch to advertisers Wednesday in New York as part of the annual “upfront” pitch cycle. And if you don’t care about Netflix’s ad sales and care only about watching NFL games, this simply means you need to have yet another network to watch games this fall. The league, which has become an expert at getting multiple media companies to pay it for games, already had deals with CBS, Fox, NBC, Disney/ESPN, and Amazon. Add another to the list. https://tinyurl.com/ms4yfuc8

US sharply raises tariffs on Chinese EVs and semiconductor imports.

President Joe Biden is sharply raising tariffs on Chinese imports, ranging from electric vehicles to solar cells, in a pre-election effort to protect US jobs. The White House said US$18 billion of Chinese goods would be hit by the rises, which were “carefully targeted at strategic sectors” and designed to buy time for US companies to catch up with Chinese rivals in green technology. In one of the biggest moves, the US will quadruple the tariff on Chinese EVs to 100 per cent this year. Brad Setser, a trade expert at the Council on Foreign Relations, said the tariffs were “an indication that Biden is not willing to let [China’s President] Xi Jinping hijack his plans for a made-in-America green transition”. He said the “most consequential tariff” was the higher rate for EVs. Only 2 per cent of US imports of EVs come from China, according to the CSIS, a think-tank. But the higher tariffs are designed to make it even harder for the Asian country to gain a real foothold. Biden is also tripling the rate on imports of steel and aluminium. The rate on Chinese chips will be doubled from 2025, and the tariff on solar cells will be doubled this year to 50 per cent. https://archive.ph/V0kDR

TikTok creators sue over potential U.S. ban.

TikTok creators sued the U.S. government on Tuesday over the new law forcing a sale or ban of the short-form video app, the Washington Post reported. Eight creators are involved in the suit, which includes similar arguments to the ones made by TikTok and parent company’s ByteDance in a lawsuit last week that argued the law violates its users’ freedom of speech. The creators involved in the lawsuit come from a variety of backgrounds, including Brian Firebaugh, a 43-year-old cattle rancher from Texas; Chloe Joy Sexton, a 29-year-old who owns a cookie business in Memphis; and Topher Townsend, a 33-year-old Air Force vet and rapper who shares videos quizzing viewers about the Bible. TikTok is covering the creators’ attorney fees, as it’s done for creators in Montana when the state moved to ban the app. https://tinyurl.com/5xrvpwuw

Europe investigates meta over child safety risks.

The European Commission on Thursday opened investigations into Meta Platforms for the potentially addictive effects of Facebook and Instagram on children. Meta’s apps “may exploit the weaknesses and inexperience of minors and cause addictive behavior,” the commission, the executive arm of the European Union, said in a statement. Meta may not be complying with the Digital Services Act, which requires online platforms to police illegal content and to mitigate risks to children, the commission said. The investigation could lead to fines of up to 6% of Meta’s global revenue. “We want young people to have safe, age-appropriate experiences online,” a spokesperson for Meta said in a statement. “This is a challenge the whole industry is facing … We look forward to sharing details of our work with the European Commission. https://tinyurl.com/2kr653pe

Temu cools on the U.S. after shelling out billions.

The bargain app Temu, which has gained spectacular popularity with American consumers, is shifting business priorities beyond the U.S., people close to the company said. Temu, owned by Chinese e-commerce giant PDD Holdings, wants to limit risks and seek other sources of growth. One catalyst for the shift is TikTok’s troubles with the U.S. government, the people said. Temu is focusing more on acquiring users in Europe and other countries. As a result, it now expects less than a third of its sales to come from the U.S. this year, compared with 60% last year, the people said, a prediction earlier reported by the business publication The Information. It is a notable strategy shift for a company that in less than two years became the U.S.’s second-most popular shopping app after Amazon.com by monthly users, attracting them with its US$5 water dispensers and US$3 T-shirts. Temu’s foraging for new growth opportunities also comes as the app’s U.S. advances show signs of losing steam. U.S. sales continue to grow but at a slower pace, according to Earnest Analytics. In the U.S., Temu’s ad spending is increasingly focused on retaining users rather than attracting new ones, according to the people. Temu has shelled out billions to acquire new U.S. users; PDD paid Meta nearly US$2 billion for ads last year and was also a top advertiser at Google, The Wall Street Journal has reported. It is still one of the top social-media advertisers, particularly on Facebook, but Temu has pivoted more of its ad spending to Europe and other markets this year, said Seema Shah at market-intelligence firm Sensor Tower. By April, the U.S. made up 38% of its total ad dollars, compared with 63% in the fourth quarter in 2023, she said. In the U.S., the number of people who used Temu at least once a month shrank to 50 million in the first quarter, down 10% from the 55.6 million peak in last year’s third quarter, according to Sensor Tower. Monthly users in the rest of the world surged 128% in the same period. https://archive.ph/9FoK8

Millennium, Point72 and Elliott are among Bitcoin ETF buyers.

When it comes to Bitcoin ETFs, it’s not just the retail trading crowd that’s taking the plunge. It’s now clear that hedge funds, pension funds and banks have also sprinkled capital into the exchange-traded funds after their blockbuster debut that was more than a decade in the making. Among the most well-known buyers that have emerged are hedge funds like Millennium Management, which held around US$2 billion worth of shares in at least four Bitcoin ETFs, as well as Steven Cohen’s Point72 Asset Management, Elliott Investment Management and Citadel Advisors. Others ranged from the State of Wisconsin Investment Board to Bank of Montreal among firms crossing geographies from Hong Kong to the Cayman Islands, Puerto Rico and Switzerland. Following Wednesday’s deadline to file first-quarter 13F reports with the US Securities and Exchange Commission, roughly 1,000 filers held shares in the ETFs, according to a Bloomberg analysis of the filings. BlackRock’s iShares Bitcoin Trust (ticker IBIT) was held by around 420 firms that filed 13Fs, by far the market leader after eclipsing all its peers in terms of inflows. More than 230 filers held the Fidelity Wise Origin Bitcoin Fund (FBTC). Grayscale Bitcoin Trust (GBTC) had over 620 13F investors for a total market value of around US$8.4 billion, data compiled by Bloomberg show. Other ETFs that launched at around the same time in January have averaged just around three to five holders, according to data compiled by Bloomberg Intelligence’s Eric Balchunas. And according to Bitwise’s Hougan, when the first gold ETF was launched in 2004, initial 13F filings showed just around 95 professional firms invested in the product. https://archive.ph/pSMor

SoftBank’s Arm plans to launch AI chips in 2025.

SoftBank Group subsidiary Arm will foray into the development of artificial intelligence chips, seeking to launch the first products next year. The move is part of SoftBank Group CEO Masayoshi Son’s 10 trillion yen (US$64 billion) push to transform the group into a sprawling AI powerhouse. U.K.-based Arm will set up an AI chip division, aiming to build a prototype by spring 2025. Mass production, to be handled by contract manufacturers, is expected to start in the fall of that year. Arm already supplies circuit designs called architecture to Nvidia and other chip developers. The company holds an over 90% share in architecture for processors used in smartphones. Arm, in which SoftBank owns a 90% stake, will shoulder initial development costs, expected to reach hundreds of billions of yen, with SoftBank also contributing. Once a mass-production system is established, the AI chip business could be spun off and placed under SoftBank. SoftBank is already negotiating with Taiwan Semiconductor Manufacturing Corp. and others over manufacturing, looking to secure production capacity. Under Son’s vision of an AI revolution, SoftBank aims to expand to data centers, robots and power generation. He envisions bringing together the latest AI, semiconductor and robotics technologies to spur innovation in various industries. AI chips that can process large volumes of data is at the core of that project. SoftBank plans to build data centers equipped with homegrown chips in the U.S., Europe, Asia and the Middle East as early as 2026. As data centers require huge amounts of power, the company will branch out into power generation as well. It is planning to build wind and solar power farms, with eye on next-generation fusion technology. The group announced a plan in February to establish a robotics joint venture with a unit of Saudi Arabia’s sovereign wealth fund. https://tinyurl.com/3376sx7s

China is asking its tech giants to ditch Nvidia chips and buy local instead.

Major tech companies like Alibaba, Baidu, TikTok parent company ByteDance, and Tencent were told to pare back their spending on foreign-made chips like Nvidia’s, the outlet reported, citing people familiar with the matter. Chinese tech giants, The Information’s sources said, are now expected to purchase equal numbers of locally and foreign-made AI chips for their new data centers. According to the outlet, the directive hasn’t been strictly enforced, and it is unclear if any penalties will be imposed for non-compliant companies. Representatives for China’s National Development and Reforms Commissions, its Ministry of Industry and Information Technology and the four tech giants didn’t respond to The Information’s requests for comments. Nvidia declined to comment on The Information’s reporting too. Nvidia is developing three new GPUs for China — the H20, L20, and L2. All three chips are designed to meet the restrictions under prevailing US sanction rules, Reuters reported in January, citing two people familiar with the matter. China is a critical market and key revenue generator for Nvidia. The country accounted for 19% of Nvidia’s data center chip revenue in fiscal year 2023. In February, Nvidia CFO Colette Kress told investors that US export restrictions caused China’s revenue share to plunge to a “mid-single-digit percentage.” https://tinyurl.com/yckbrdyp

Microsoft’s AI Push Is Jeopardizing its Pledge to Go Carbon Neutral by 2030.

Microsoft’s heavy spending on new data centers and artificial intelligence tools has derailed the company’s progress toward being carbon neutral by 2030, Microsoft said in its annual sustainability report published on Wednesday. Microsoft has said it will spend more than US$50 billion this year to expand its data centers in order to support its growing use of generative AI, which requires far more compute power and consumes more electricity than most software. The company has in recent months announced a slew of new multibillion-dollar data center investments in countries including the U.S., Japan, Indonesia, Germany and the U.K. The disclosure shows how energy-hungry the AI boom is proving to be. While Microsoft previously announced plans to reduce its carbon emissions annually between 2020 and 2030, the company’s emissions rose to their highest-ever level in the past year, according to the report. Microsoft said it will explore new ways to reduce emissions in the years ahead, including using more renewable energy and investing in more energy-efficient silicon chips and building materials. https://tinyurl.com/nhb6d74z

Fewer people in the US plan to buy EVs this year, study shows.

The number of buyers in the U.S. considering an electric vehicle purchase in 2024 has fallen from a year ago due to a shortage of affordable cars, inadequate charging infrastructure and ignorance about EV benefits, a study by J.D. Power, opens new tab has shown. Other factors contributing to waning EV demand in the United States include stubborn inflation, high interest rates and underwhelming growth in model availability, the study said. U.S. automakers invested billions in developing EV models and ramping up production. But they have had to slow down some of those plans as demand for EVs softened over the last few quarters. Falling demand for EVs has pressured sales at U.S. automakers. In April, EV leader Tesla said its quarterly revenue fell for the first time since 2020, when the COVID-19 pandemic hampered production and deliveries. The same month, Ford Motor recorded a US$1.3 billion operating loss in the first quarter for its EV and software division. The study showed that 24% of prospective vehicle buyers were “very likely” to consider purchasing an EV in 2024, down from 26% a year ago. The percentage of those who said they were “overall likely” to consider purchasing an EV this year decreased to 58%, from 61% in 2023, the report said. https://tinyurl.com/2hnptne4