November 03, 2024: Slow Your Roll

After mixed Q3 results from big tech, going into the US election, with 10 year yields at their highest in four months — Dow Jones ended the week down 0.15%, S&P 500 lost 1.4%, and Nasdaq was down 1.5% after hitting a record high Thursday morning. Investors valued Waymo at US$45 billion, a surprisingly low number, according to reports. Some 75% of OpenAI’s revenue comes from consumers. Apple grew revenue 6% to US$94.9 billion in the September quarter, its strongest growth in two years, while Warren Buffett/Berkshire sold more stock in the quarter. Microsoft’s revenue rose 16% in the September, but cloud server rental growth slowed. Alphabet said its revenue grew 15% y/y in Q3. More than a quarter of new code at Google is now generated by AI. OpenAI’s ChatGPT added search features. OpenAI will start using AMD chips and could make its own AI hardware in 2026. Nvidia stock is undervalued because AI companies need to spend another US$9 trillion to achieve superintelligence, according to Softbank’s CEO. Super Micro shares plunged 33% as the company’s auditor resigned. In Canada, Sophic Client OneSoft Solutions announced the completion of its acquisition by Irth Solutions LLC, a Blackstone Portfolio company. The all cash consideration represents a premium of 42% to the closing price on last trading day before the deal was announced. Sophic Client American Aires generated record quarterly order volume and sales in Q3/2024, and the seasonally strong Q4 appears to be off to a very strong start. Sophic Client ADM Endeavors provided a corporate and industry update, highlighting growth opportunities and robust asset value, which provides additional support to shareholder equity. Sophic Client Boardwalktech and Scadea Software Solutions announced a partnership to sell and deploy Boardwalk Unity Central and Velocity Platform applications. Sophic Client NowVertical Group launched a data risk mitigation solution with client guarantees for enhanced data security.

Sophic Client OneSoft Solutions Inc. (OSS-TSXV, OSSIF-OTC) announces the completion of its acquisition by Irth Solutions LLC, a Blackstone Portfolio company.

OneSoft Solutions Inc. is pleased to announce receipt of the final order from the Court of King’s Bench in Alberta (the “Final Order”) approving the previously announced plan of arrangement (the “Arrangement”) with irth Solutions LLC and its wholly owned subsidiary irth Acquisition Corp. (collectively, “Irth”), a Blackstone portfolio company (the “Transaction”). The Transaction closed on November 1, 2024. Pursuant to the terms of the Arrangement, Irth acquired all of the issued and outstanding common shares of OneSoft (the “Shares”) for $0.88 in cash per Share, representing a total cash equity value of approximately $113.4 million on a fully diluted basis. The Consideration represents premiums of ~42% and 28% to the closing price and 20-day VWAP, respectively, on the TSX Venture Exchange TSX-V , on August 9, 2024, the last trading day before the Arrangement Agreement was publicly announced. https://tinyurl.com/58jn6vh4

Sophic Client American Aires (WIFI-CSE, AAIRF-OTCQB) generates record quarterly order volume and sales in Q3/2024; Gross Margin improves to 63%.

During the three months ended September 30, 2024, Order Volume (total value of orders placed minus sales discounts) increased by 61% YoY to an all-time Company record of $4.92 million. After taking into account relevant accounting Adjustments (Shipping Revenue, Returns, Return Provision and Deferred Revenue), the Company’s reported sales increased by 57% YoY to a record of $4.59 million compared to the combined non-IFRS sales of $2.92 million a year ago. The quarter’s increase in order volume and reported sales was driven largely by the efficient deployment of scaled-up advertising and marketing budgets, which included strategic partnerships the Company entered into during Q2 and Q3 2024 with the UFC, NHL star John Tavares, Canada Basketball, NBA star RJ Barrett, and the WWE. The quarterly performance extends the Company’s multi-year trend of strong revenue growth through widening its user base, opening new market segments, and expanding its overall reach and brand name recognition. Cash as of September 30, 2024 was reported at $1.79 million and Inventory was reported at $2.23 million. https://tinyurl.com/8cayxj9s

Sophic Client ADM Endeavors (ADMQ-OTCQB) provides corporate and industry update.

Just Right Products Inc., the wholly owned subsidiary of ADM Endeavors, announces major operational developments, including construction updates on their new manufacturing facility, expanded contract renewals, and the strengthening of its sales team. The Company also provides an industry update, highlighting significant growth opportunities within the school uniform market. ADM is looking to capitalize on a unique opportunity in the Dallas Fort-Worth (DFW) school uniform market, as the recent exit of a key competitor creates a clear path to expand its market share. The timing aligns perfectly with ADM’s new facility completion, allowing the Company to scale its operations and reinforce its established regional presence. The Company has developed a robust pipeline of opportunities to fully utilize the new facility’s increased capacity. This significant asset value, however, is not yet reflected in the Company’s valuation, presenting substantial upside for shareholders. ADM’s ongoing construction of its new 100,000 sq. ft. production and retail facility is central to the Company’s growth strategy. This facility is projected to increase revenue capacity by up to five times, enabling ADM to better meet the growing needs of both new and existing customers through both organic and strategic growth initiatives. Management expects the facility to be fully operational in the first quarter of 2025. The Company has also benefited from a significant increase in property value since the initial acquisition in 2021. ADM’s recent appraisal valued the completed facility at approximately US$13 million, with an additional US$3.7 million for the adjacent excess land. These valuations underscore the Company’s robust asset value and provides additional support to shareholder equity. https://bit.ly/3UQ8TyD

Sophic Client Boardwalktech, Inc. (BWLK-TSXV, BWLKF-OTCQB) and Scadea Software Solutions announce partnership to sell and deploy Boardwalk Unity Central and Velocity Platform applications.

Through this partnership, Scadea will deliver focused data management and visibility solutions using the Boardwalk Platform and its Velocity and Unity Central products with a focus on the financial services and manufacturing industries. Boardwalktech will receive license revenue from targeted customers, while Scadea will receive the professional services revenue, plus a referral fee off the initial license, from the incremental business. Velocity and Unity Central can be implemented separately or as a holistic platform. Boardwalk’s Velocity product allows financial services and large enterprises to transform their Excel-based process applications into secure, compliant, and collaborative applications while creating an immutable audit trail, eliminating manual processes and risks without disrupting their existing business processes or replacing Excel. https://tinyurl.com/yc35ssyb

Sophic Client NowVertical Group (NOW-TSXV, NOWCF-OTC) launches data risk mitigation solution with client guarantee for enhanced data security.

NowVertical Group introduced its Data Risk Mitigation solution and unique risk guarantee, empowering enterprises to uncover, mitigate, and control hidden data risks across complex data environments. The global average cost of a data breach has surged to US$4.88 million, driven by vulnerabilities in personally identifiable information (PII) and sensitive corporate data, making this solution relevant to NOW’s clients. The solution has already demonstrated success, including a 37% reduction in risk costs for a global consumer healthcare leader. To underscore NowVertical’s commitment to results-driven solutions, a market-first client guarantee has been introduced alongside the solution. Assuring clients of significant risk identification and a quantifiable reduction in data risk, the guarantee builds unmatched confidence in prospective partnerships. https://tinyurl.com/mpj6jrdt

Shopify (SHOP-NYSE, SHOP-TSX) is winning Salesforce clients, stoking e-commerce rivalry.

Shopify says it has lured hundreds of Salesforce clients, including big brands like Toys R Us and mattress seller Casper, and is encouraging other companies to “join the mass migration.” Shopify’s key selling point is lower prices for its suite of e-commerce services and it has been cheekily calling out Salesforce’s penchant for wining and dining potential clients. https://tinyurl.com/5fxnu59j

Québec launches $4.5 billion Grand V funding initiative for sustainable innovation projects.

The Québec government’s investment arm, Investissement Québec, announced a new program that will disburse an estimated $4.5 billion through 2027 to Québec companies looking to boost innovation and ecological sustainability. Grand V, which falls under the purview of the Ministry of Economy, Innovation and Energy (MEIE), is a new program seeking to supply financial aid and technological support to Québec businesses of all sizes that want to minimize their environmental impact. Québec companies of all sizes can apply for $250,000 term loans, with the option of equity financing. The initiative also seeks to address the productivity gap between Québec and Ontario, which IQ notes is ever-shrinking. https://tinyurl.com/5betwvua

Waymo fetches US$45 billion valuation and grows market share.

Investors in autonomous vehicle-maker Waymo’s latest funding round, which was announced last week, valued its business at US$45 billion, according to a Thursday report by Bloomberg. That’s a surprisingly low number, given that Alphabet and other investors have committed at least US$13 billion to Waymo to date. Waymo’s parent company, Alphabet, led the latest financing, investing US$5.6 billion alongside investment firms including Andreessen Horowitz, Fidelity, and Tiger Global. The valuation also demonstrates that Waymo is tiny compared with Alphabet’s overall worth. Alphabet currently has a market capitalization of US$2.1 trillion. The valuation comes amid growing signs that Waymo’s robotaxi business is gaining traction. It operates in San Francisco, Phoenix and Los Angeles, and is expanding to Atlanta and Austin in a partnership with Uber. On Uber’s third-quarter earnings call on Thursday, Uber CEO Dara Khosrowshahi said that Waymo had a ride hailing market share in the “high single digits or low double digits” in the areas of San Francisco where it operates. https://tinyurl.com/2n8rcw7b

Musk’s xAI to raise capital at US$40 billion valuation.

Elon Musk’s xAI, the developer of the Grok chatbot, is in talks to raise more money at a US$40 billion valuation, according to a person with direct knowledge of the fundraising efforts. Wall Street Journal was first to report the news. The company, founded last year, raised US$6 billion in a round announced in May that valued it at US$24 billion, including the investment. Investors in the round included Vy Capital, Valor Equity Partners, Andreessen Horowitz, Sequoia Capital and Saudi Arabian investor Prince Alwaleed bin Talal, among others. In September, Musk completed a cluster of 100,000 Nvidia H100 chips in just four months, a feat that rattled competitors and inspired new investor interest, according to X investors. On Monday, Musk wrote on X that he plans to double the size of that training cluster, which is already the most powerful cluster of GPUs in the world. https://tinyurl.com/34k9v29z

Nvidia doubles down on Musk’s xAI cluster claims.

Elon Musk’s Memphis, Tenn., data center for xAI has drawn an enormous amount of attention—from people who believe his claims that he built the world’s largest AI cluster in just 19 days, an unbelievably short timeframe, and those who are skeptical he actually pulled it off. On Monday Musk got additional support from Nvidia. In a press release, Nvidia said from the time the first servers arrived, they were up and running in 19 days, though it noted it took the companies 122 days to build out other aspects of the data center and supercomputer. Nvidia also did not specify whether the 100,000 chips were all operational in 19 days, or whether they were all connected to each other, as opposed to being set up in smaller clusters. Nvidia said xAI plans to double the size of its GPU cluster to 200,000 chips. It did not provide a timeline. Nvidia said Musk was able to string together such a large cluster of chips because he used Nvidia’s Ethernet-based networking technology. AI model developers have increasingly been considering switching away from Nvidia’s proprietary Infiniband networking technology to Ethernet-based networking. Ethernet is generally viewed as a cheaper alternative to Infiniband that could work better for AI clusters. While Nvidia sells an Ethernet-based product, so do others. https://tinyurl.com/33bmbff2

OpenAI says 75% of revenue comes from consumers.

Some 75% of OpenAI’s revenue comes from consumers paying for its AI-powered chatbot and other products, a company spokesperson said on Monday. That figure highlights the effort OpenAI and its rivals will need to put in to get businesses to pay for their AI software. Currently, ChatGPT has 250 million weekly active users, up 25% from August. The company has converted 5% to 6% of free users to its paid chatbot, which starts at US$20 per month, the spokesperson said. Those usage numbers suggest OpenAI’s chatbot, which beat rival products from Anthropic, Google and Meta Platforms to market, still has a lead. In August, for instance, Meta’s artificial intelligence assistant, Meta AI, had 185 million-plus weekly active users. Bloomberg first reported how much of OpenAI’s revenue was coming from consumers. That growth comes at a steep price, though. The company recently projected to lose US$5 billion this year, with losses rising as high as US$14 billion in 2026. https://tinyurl.com/563fzmnp

Apple lifts revenue 6% on stronger iPhone sales.

Apple lifted revenue 6% to US$94.9 billion in the September quarter, its strongest growth in two years. Operating profit rose 10% to US$29.6 billion, while after-tax profit dipped sharply reflecting a big tax penalty levied against Apple in Europe. Apple stock fell slightly in after-hours trading. The tech giant said iPhone revenue rose 5.5% to US$46.2 billion, nearly double the growth rate of the year-ago quarter, countering the widespread perception that the iPhone 16 line of phones had underperformed past releases. The quarter also showed marginal growth in sales of Macs and iPads, while wearable sales dipped slightly. Apple’s services revenue rose 12% to US$24.9 billion. https://tinyurl.com/5czjeanc

Microsoft revenue rises 16% but cloud server rental growth slows.

Microsoft said Wednesday its revenue rose 16% to US$65.6 billion in the third quarter—1 percentage point higher than in the second quarter—as its Azure cloud computing unit grew at a slightly slower rate than in the previous quarter. Shares fell nearly 4% in after-hours trading. Azure revenue rose 33% year over year, which CEO Satya Nadella attributed to “AI-driven transformation” among customers. Those customers include payments OpenAI makes to Microsoft to host ChatGPT and other AI products. Microsoft doesn’t break out Azure revenue in dollars, but it was about half the size of Amazon Web Services in terms of revenue in recent years. Starting this quarter, Microsoft changed how it reports revenue across its different businesses and now includes Bing ad sales in its Azure results. Azure’s growth this quarter was 1% slower than its growth last quarter as recalculated under the new reporting methods, which CFO Amy Hood attributed in part to a slight decrease in the contribution of non-AI products to Azure’s growth. By comparison, Google’s cloud server rental business, which is smaller than Microsoft’s, grew just 2 percentage points faster in the third quarter. Google Cloud revenue rose 35% in the quarter, up six percentage points from its growth rate in the second quarter, boosting Google shares 3% Wednesday. (In terms of revenue, Google Cloud is about 40% the size of AWS, though the Google cloud business also includes productivity apps like Gmail and Google Docs.) Revenue in the business unit that includes Microsoft’s Office 365 software rose 12% to US$28.3 billion, a slight acceleration from 11% growth in the previous quarter. Microsoft investors have been awaiting word of revenue from the suite of Copilot AI tools that Microsoft is selling as add-ons to its Office software, but that has yet to appear in large numbers as customers remain cautious about the software and its cost. Overall, Microsoft said that its total revenue from AI products—including its sales of OpenAI models on Azure, AI Copilots, and other AI products—is on track to exceed US$10 billion in annualized sales in the coming quarter, but did not elaborate about which products were driving that growth. https://tinyurl.com/yjpnmysf

Google’s booming cloud unit helps Alphabet overcome ad growth slowdown.

Alphabet said its revenue grew 15% year-over-year to US$88.3 billion in the third quarter, driven by acceleration in Google’s revenue from renting out cloud servers, which also includes the sale of artificial intelligence to businesses. The cloud result helped Alphabet overcome a dip of nearly 1 percentage point in Google’s ad-sales growth between the second and third quarters. Shares rose nearly 6% in after-hours trading. Google’s cloud revenue in the September quarter grew 35% year-over-year to US$11.5 billion, compared to 29% growth in the second quarter. Google Cloud’s operating income of US$1.95 billion was six times higher than in the same period a year earlier and 67% higher than in the second quarter. By comparison, Amazon Web Services revenue rose 19% to US$26.3 billion in the second quarter and it generated US$9.3 billion in operating income. Amazon reports third quarter results Thursday. Google still generates 75% of revenue from ad sales, and revenue from both search and YouTube ad sales increased around 12%, slightly lower than in the second quarter. Free cash flow fell 22% to US$17.6 billion, compared to the third quarter of 2023, reflecting Google’s increased spending on data centers and computing for AI: Capital expenditures, which include such investments, rose 62.5% to US$13 billion in the September quarter. And losses from “Alphabet-level activities” that include its main AI group, DeepMind, increased 39% to US$3.2 billion in the third quarter compared to the second quarter, and was nearly twice as high as the same line item cost in the third quarter of 2023. https://tinyurl.com/2ks5tchn

Amazon Web Services reports steady growth.

Amazon Web Services revenue grew 19% to US$27.5 billion in the third quarter, the same rate as the previous quarter, Amazon said Thursday. Meanwhile, the cloud computing unit’s operating margins ticked up to 38.1% from 35.5% over the same period of time. Amazon shares rose 5% in after-hours trading on Thursday. The steady AWS growth comes after Google reported accelerated cloud growth and Microsoft reported a slight decrease in Azure growth earlier this week. Both rival cloud services are smaller than AWS but growing faster. Amazon’s revenue from online retail sales and physical stores grew 8% and 5%, respectively, slightly higher than their growth rates during the previous quarter. But third-party seller services, which include the fulfillment fees and commissions Amazon charges merchants who sell on its site, rose 10% to US$37.9 billion, the segment’s slowest growth rate since the first quarter of 2022. https://tinyurl.com/35r49x8u

Meta’s revenue rises 19% in the third quarter.

Meta Platforms, the owner of Facebook, Instagram and WhatsApp, on Wednesday reported third-quarter revenue of US$40.6 billion, up 19% from a year earlier. Growth slowed from the second quarter, when Meta posted annual revenue growth of 22%. The company again increased its estimate for capital expenditures for 2024 and forecast significant capex growth for 2025. Meta’s income from operations was US$17.4 billion, up 26% from a year earlier, and its net income rose by 35% to US$15.7 billion. The company’s share price fell in after-hours trading, at one point dropping more than 3%. Meta said in a press release that its capital expenditures would increase significantly next year to boost its computing capability. In prior quarters, the company said those expenses stemmed from artificial intelligence research and product development. Meta now expects capital expenditures this year to be US$38 billion to US$40 billion, up from a previous forecast of US$35 billion to US$40 billion. Meta also said it expects its operating losses for Reality Labs, which works on augmented and virtual reality, “to increase meaningfully” from US$16.1 billion in 2023. Through nine months this year, the Reality Labs unit posted an operating loss of US$12.8 billion, up from a loss of US$11.5 billion in the same period last year. https://tinyurl.com/5cxkvpc9

Reddit stock soars 42% in wake of strong earnings.

Shares of Reddit rose 42% to US$116 a share on Wednesday, as investors applauded the social media firm’s strong third quarter earnings report. Reddit shares have now risen 241% since its IPO in March. The company reported 68% higher revenues, and its first-ever net profit, of US$29.9 million, fuelled by 47% growth in the number of people using Reddit daily compared with a year ago. And it projected fourth quarter revenues would grow between 54% and 60%. While most of the revenue growth flowed from higher advertising revenues, the company has also showed significant growth in data licensing revenues tied to deals with AI firms. At US$116 a share, Reddit has a market capitalization of US$20.4 billion. https://tinyurl.com/3d4kyb9p

Uber lifts revenue 20% despite slowing growth in ride hailing.

Uber lifted revenue 20% to US$11.2 billion in the third quarter, as higher advertising revenues in its Uber Eats delivery service offset weakening gross bookings on its ride-hailing operation. Uber forecast a slightly higher rate of growth in its gross bookings in the fourth quarter. The company’s cash generation is continuing to grow. In the third quarter, Uber’s free cash flow—cash from operations less capital expenditures—more than doubled to US$2.1 billion. Profit margins improved at both of its businesses, as Uber restrained costs even as volume of bookings grew. The quarter showed that growth in bookings at Uber’s ride-hailing business continued to slow, to 17% in the thrd quarter from 23% in the second quarter. On the food delivery side, however, growth was stable at 16%. https://tinyurl.com/3sbujjx8

Snap revenue gains on direct ads, subscriptions.

Snap said revenue for the third quarter jumped 15% to US$1.37 billion, on the high end of its prior outlook, boosted by a 10% gain in digital advertising and more demand for its subscription product, Snapchat+. The parent of Snapchat also turned cash flow positive for the three months ended in September, and it announced a new US$500 million stock buyback plan. The company’s shares rose 9% after hours. They’re down 33% for the year. Snap, one of the first of the major social media companies to report earnings, said it had benefited from more demand for its direct response ads, which prompt users to take an action, like downloading a game. But the report reflected some of the challenges facing the company, which has been dwarfed by rival apps from Meta Platforms and ByteDance’s TikTok. While global users hit 443 million, up 9% from the year ago quarter, North American users have flatlined at about 100 million. https://tinyurl.com/munppye9

AMD shares dip 7% despite data center chip sales growth.

Shares of chip designer Advanced Micro Devices fell more than 7% in after-hours trading on Tuesday despite the company’s decision to raise its sales forecast for artificial intelligence chips that compete with Nvidia’s. Sales of AMD’s data center server chips, which includes the Instinct MI300A chip that competes with AI chips from Nvidia, rose 122% to US$3.5 billion compared to last year, or 7 percentage points faster growth than in the second quarter. And AMD raised its AI chip sales forecast to more than $5 billion for the full year, up from the $4.5 billion forecast it announced three months ago. But the results showed how far behind AMD is compared to Nvidia, whose data center chip sales rose 154% to US$26 billion in the quarter that ended in July. Nvidia stock is up nearly three times so far this year, compared to a 20% rise for AMD shares in the same period. Sales of AMD chips for PCs grew 29% to US$1.9 billion compared to last year. Gaming chip sales fell 69% to US$462 million. Embedded Systems, which includes chips for cars and connected devices in factories, dropped 25% to US$972 million. Overall, AMD’s sales grew 18% to US$6.8 billion in the third quarter. Gross profit rose 24% to US$3.4 billion, and AMD generated US$469 million in free cash flow, up 13% from the second quarter and up 67% from the third quarter of last year. AMD projected revenue of US$7.5 billion in the December quarter, which would be 22% higher than in the same quarter last year. https://tinyurl.com/2r9xkv8z

Coinbase plans share buyback after fourth straight quarterly profit.

Cryptocurrency exchange Coinbase reported its fourth straight quarterly profit and announced a stock buyback of up to US$1 billion, showing the company is delivering on its promise of steadier profits even during crypto market swings. Revenue rose nearly 80% to US$1.2 billion year-on-year in the third quarter, but dropped compared with the second quarter. A large part of Coinbase’s revenue comes from fees on crypto trades, which tend to rise and fall in tandem with crypto prices. Coinbase noted that trading in stablecoins grew significantly compared to the previous quarter—it generated little or no fees from those trades, but executives said growing stablecoin adoption still helps its overall business. Coinbase also generates revenue through a partnership with Circle, which issues stablecoins designed to track the U.S. dollar. Coinbase shares in the interest generated by reserves backing the stablecoins, and revenue from the partnership was up 43% year-over-year and roughly flat from the prior period. Coinbase projected stablecoin and other non-trading revenue of between US$505 million and US$580 million in the fourth quarter, compared to US$375 million the same period a year earlier and US$556 million in the third quarter. https://tinyurl.com/y66a3st2

Super Micro shares plunge 33% as auditor resigns after raising concerns months earlier.

Super Micro’s shares plunged 33% on Wednesday after the company disclosed its auditor had resigned following months of disagreement with the firm over its governance and board independence. Ernst & Young in its resignation letter said it was “unwilling to be associated with the financial statements prepared by management.” The accountancy also raised concerns about the board’s independence from CEO Charles Liang and “other members of management.” EY had been hired to audit Super Micro for the first time for the 2024 fiscal year, the company said. Super Micro has still not issued its financial statements for this year, and is reportedly under federal investigation. https://tinyurl.com/2n3karps

Nvidia stock is undervalued because AI companies need to spend another US$9 trillion to achieve superintelligence, Softbank CEO says.

Even after Nvidia’s ascent to the second-largest company in the world, Softbank CEO Masayoshi Son says he thinks the stock is still “undervalued.” Son said in an interview on Monday that the ongoing spending trends in artificial intelligence will only accelerate in the years ahead, benefiting Nvidia and its GPU chip business, which has been the driving force behind most AI advancements. “I think Nvidia is undervalued because the future is much bigger,” Son said at the Future Investment Initiative conference. Son’s bullish view on AI stems from his belief that artificial “superintelligence” will be achieved by 2035. An AI expert discusses the hardware and infrastructure needed to properly run and train AI models Whereas artificial general intelligence is broadly viewed as an AI system that is as smart as a human, Son defined artificial superintelligence as an AI system that is 10,000 times more powerful than the human brain. Son said that to achieve that level of AI, it will require upwards of 200 million GPU chips and US$9 trillion in total capex spending by companies. According to Son, that could be a bargain when considering the immense profits that could be generated from a potential artificial superintelligence. “I say it’s still very reasonable capex. US$9 trillion is not too big, maybe too small,” Son said. The famed investor calculated that if artificial superintelligence replaces just 5% of GDP in 10 years, it has the potential to deliver as much as US$4 trillion in profits annually. Softbank has sharpened its focus on investing in AI companies, recently contributing US$500 million to OpenAI’s funding round. The Japan-based investment company also owns about 90% of Arm Holdings, which is planning to launch its own AI chips next year. Son’s bullishness on AI and Nvidia means he also has some regrets. Softbank previously owned a 4.9% stake in Nvidia, but sold it in 2019 for about US$4 billion. That stake would be worth more than US$160 billion today. “I had to tearfully sell the shares,” Son said earlier this year, calling Nvidia “the fish that got away.” https://tinyurl.com/yc22evej

More than a quarter of new code at Google is generated by AI.

Google is building a bunch of AI products, and it’s using AI quite a bit as part of building those products, too. “More than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers,” CEO Sundar Pichai said on the company’s third quarter 2024 earnings call. It’s a big milestone that marks just how important AI is to the company. “In Search, our new AI features are expanding what people can search for and how they search for it,” CEO Sundar Pichai says in a statement. “In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time.” https://tinyurl.com/jw6ue7mm

OpenAI’s ChatGPT adds search features in challenge to Google.

OpenAI said Thursday it added more web search capabilities to ChatGPT, putting it in greater competition with Google as consumers increasingly use chatbots as a partial replacement for traditional searches. ChatGPT’s conversational answers will now include more links to relevant websites that can provide additional information, and they will include more real-time information on topics such as the weather, sports and the stock market. Google shares fell about 1.5% on Thursday but that was in line with broader stock indices, suggesting the OpenAI announcement didn’t make an impact. Meta Platforms, meanwhile, is developing its own search engine so it can provide real-time information in its artificial intelligence chatbot, rather than rely on Google and Microsoft’s Bing. The move comes several months after OpenAI announced a prototype of SearchGPT, an AI-powered search engine that’s separate from ChatGPT. However, the company said Thursday that, based on feedback from the SearchGPT prototype, it decided to incorporate the search features into ChatGPT instead. Paying ChatGPT users will have access to the new search capabilities starting on Thursday, and free users will receive access in the coming months, the company said. https://tinyurl.com/2xffmdpe

U.S. regulators block AWS nuclear power deal.

U.S. energy regulators on Friday rejected a proposal related to Amazon Web Services’ deal to buy nuclear power for several data centers for artificial intelligence in Pennsylvania, according to a public filing. In a split vote, the Federal Energy Regulatory Commission denied a request to increase the amount of power that would supply the data centers, putting the project in limbo. The agency said it had concerns that offloading a large amount of power from the energy grid, which AWS’ plan entails, could negatively affect customers and the grid’s reliability. AWS planned to buy up to 1 gigawatt of power from Talen Energy, which owns a nuclear power plant located in Luzerne County, Pa., to power several data centers at the site. The deal, announced in March, was seen as a pathway for AWS to meet its growing need for AI data center power with clean energy, but it has been at the center of a larger debate around whether power serving the grid should be purchased by technology giants. Willie Phillips, the chairman of FERC, who voted in favor of the plan, said Friday in a press release that “maintaining our nation’s leadership in this ‘era-defining’ technology will require a massive and unprecedented investment in the data centers necessary to develop and operate those AI models. And make no mistake: access to reliable electricity is the lifeblood of those data centers.” It isn’t clear how AWS will proceed with its planned data center campus in Pennsylvania. It has invested in other nuclear projects in recent weeks. Spokespeople for FERC for AWS did not immediately respond to a request for comment. https://tinyurl.com/mr36v6hv

EU set to launch Temu probe over illegal products.

The European Commission is set to launch a formal investigation into Temu, Bloomberg reported Wednesday. The EU on Oct. 11 requested Temu share information on how it addresses and prevents the sale of counterfeit, unsafe or illegal products on its site, and Temu’s responses did not sufficiently address the commission’s concerns, the report said. The investigation would be part of the EU’s crackdown against big tech firms under the Digital Services Act, which requires large internet companies to take steps to control the spread of disinformation and illegal content on their platforms. Temu and other bargain e-commerce sites like Shein have faced mounting scrutiny around the globe over product safety. In September, federal safety regulators in the U.S. called for an investigation of Shein, Temu and other foreign e-commerce sites to better understand their safety practices, after The Information reported that unsafe and illegal children’s products could be purchased on Shein and Temu. https://tinyurl.com/23wjsdf8

OpenAI will start using AMD chips and could make its own AI hardware in 2026.

OpenAI is reportedly working with Broadcom to develop new custom silicon designed to handle its large AI workloads for inference and secured manufacturing capacity with TSMC, according to sources speaking to Reuters. OpenAI has reportedly built a chip development team of about 20 people, including lead engineers who previously worked on Google’s Tensor processors for AI. Still, on its current timeline, the custom-designed hardware may not start production until 2026. In the meantime, the sources also said OpenAI is incorporating AMD chips into its Microsoft Azure setup. AMD introduced its MI300 chips last year, which was a big part of the news this summer that its data center business has doubled in a single year as it chases market leader Nvidia. The reported strategy puts OpenAI on a similar track to the other tech companies trying to manage costs and access to AI server hardware with custom chip designs. But Google, Microsoft, and Amazon are all already a few generations down the road in their efforts, and OpenAI may need significantly more funding to become a true competitor. https://tinyurl.com/3j3w4r7h