Bloomberg Technology 04/25/2024

Meta Platforms (META)

• Meta Platforms' stock price dropped due to concerns about the timeline for financial returns from its heavy investment in AI infrastructure.
• Meta's advertising business continues to show impressive growth, particularly in Europe, despite potential impact from Chinese advertisers.
• Meta plans to bring 800,000 GPUs online for AI model training, positively impacting the semiconductor sector, especially NVIDIA.
• CEO Mark Zuckerberg expressed enthusiasm about the progress of the company's AR glasses project and increased investment in the technology.

TikTok and Social Media Landscape

• ByteDance denied plans to sell TikTok, potentially benefiting Meta's Instagram and YouTube if TikTok faces restrictions.
• A potential TikTok ban or divestment in the US could lead to gains for platforms like Snap, YouTube, and Meta as creators seek alternative platforms.

ServiceNow

• ServiceNow reported strong quarterly results and raised its full-year guidance, but fell short of analysts' expectations.
• ServiceNow is an AI platform for business transformation, partnering with companies like Microsoft, NVIDIA, and IBM in generative AI.
• The company believes generative AI will become a significant market with half a trillion dollars spent on it by 2027.
• Unlike Meta, ServiceNow focuses on selling AI as a software platform with tangible revenue-generating capabilities.

GenAI

• GenAI provides fast, accurate, and inexpensive AI services by integrating with leading companies like Meta, Google, and Microsoft.
• Generative AI is used to automate tasks and increase productivity, such as deflecting customer service inquiries and assisting software engineers.

Rubrik

• Cybersecurity company Rubrik went public with an IPO priced at $32 per share, focusing on data management, recovery from ransomware attacks, and cloud mobility.
• Rubrik has been building AI for the last 10 years and recently announced a generative AI-based defense and recovery system.
• The company has a strong partnership with Microsoft and continues to innovate together to provide cyber resilience to joint customers.

Market Reaction and Economic Indicators

• The market reacted to Meta's earnings results and a softer-than-expected GDP reading for the United States, causing technology shares to decline.
• The market is recalibrating its expectations for when the Federal Reserve will cut interest rates, moving from the summer to December.

TikTok's Future in the US

• ByteDance announced it has no plans to divest or sell TikTok, despite the looming threat of a ban in the US.
• The Biden administration has not taken a clear stance on TikTok but expressed a desire to avoid shutting down the app due to its popularity and economic significance.
• Advertisers are unlikely to leave TikTok as long as there is an audience to reach, but prolonged uncertainty could lead to creators and users leaving the platform.
• Meta and YouTube Shorts could potentially benefit from a TikTok ban or divestment.

Meta's AI Potential

• Meta is not expected to become the world's leading AI company anytime soon but has the potential to be a dark horse due to its large built-in audience through Facebook and Instagram.
• Meta AI only needs 43% of U.S. Facebook users to use it monthly to reach the same audience size as ChatGPT in the US.
• Meta has a competitive advantage in monetization as most of its services are likely to be connected to its powerful ad ecosystem.

Legal Matters and Industry News

• Elon Musk will be deposed in a lawsuit where former Twitter employees are suing him for allegedly cheating them out of severance pay.
• Abu Dhabi-based startup G42 is partnering with American companies like Amazon and Microsoft while divesting from Chinese partners due to concerns about potential backdoors for the Chinese government.
• Chinese online tutoring platform Zuoyebang has filed for a U.S. IPO, indicating Beijing's efforts to boost funding for its tech industry.
• Micron, the U.S. leader in memory chips, expects a full recovery in the memory chip market driven by AI-related demand and is preparing to expand capacity.
• The U.S. government is expected to provide Micron with nearly $14 billion in grants and loans to build new American factories.
• Intel is set to report its quarterly results with low expectations due to operational struggles in its manufacturing division.
• NVIDIA stands out in the semiconductor sector with a 2% stock price increase, possibly due to investors' optimism about Meta's potential spending on AI infrastructure using NVIDIA's GPUs and AI accelerators.

AI Industry Analysis

• Meta's earnings report raised concerns about AI infrastructure spending, leading to anxiety in the broader technology sector.
• Meta's long-term potential remains strong despite recent price target cuts, with investments focused on improving the core platform for users and advertisers.
• The AI industry is currently in a hype phase, with limited revenue generation from AI products.
• Microsoft is best positioned in the AI space due to its advanced technology and strong management team.
• Alphabet (Google) needs to improve investor relations and provide more transparency to boost its stock price.