Tesla Deliveries Increase, Apple Readies Low-End iPhone | Bloomberg Technology

Tesla's Quarterly Performance and Stock Volatility

• Tesla posted its first increase in quarterly sales this year, but deliveries came in below expectations, causing shares to drop sharply, with the company's volume products beating estimates while the SX and Cyber Truck missed (58s).
• The data shows a narrow beat, but the shares are volatile, and one quarter ago they barely exceeded expectations, with a general flattening and lack of growth from the company seen when looking at the trend going back (2m2s).
• Year-to-date, Tesla's shares may see a decline if trends hold, with the company priced as a growth stock having trouble growing, and a decline of 2% for the year so far (2m22s).

Tesla's Performance in China and Future Outlook

• In China, the expectation was that Tesla would get a boost from increasing subsidies for people to trade in older cars and get EVs, with Tesla's wholesales ticking up, but these numbers are closer to shipments as opposed to vehicle deliveries (2m44s).
• Support may come into play in the fourth quarter of this year, with some people saying the sell side does not know what it's talking about, and that Tesla's future is about operating proprietary robotaxis (3m12s).
• The company has been talking about putting self-driving cars on the road and offering a service like Uber for years, but whether or not they are able to deliver that is another question (3m39s).
• If Tesla is able to execute and do what others have not pulled off, which is this at scale, it would be a massive thing for the company, but it's already a massive valuation for a manufacturer struggling to increase sales (4m7s).

Tesla's AI Strategy and Investment

• The AI play is key to Tesla and the market, but there are still questions about it, with some believing it's early innings and long-term, but near-term, there are huge numbers and huge capex investments needed (4m34s).
• The power demand will double over the next five years, and it may be near-term that this investment brings interesting opportunities in infrastructure and maybe shortages, but the monetization doesn't come as quickly, and it could bring inflation as well (5m10s).
• In terms of investment, it's suggested to go a little into all areas, including infrastructure, chips, and applications, with a focus on digital infrastructure, power, and the combo, which can earn equity-like returns and provide revenue escalation and inflation protection over time (5m56s).

Investment Strategies in the Tech Sector

• Apple is preparing to announce a new low-end iPhone, with the company expected to make an announcement soon (44s).
• Tesla's stock is down 5% due to a quarterly dataset, but some people believe in the long-term story of the company, which is analogous to the growth potential of AI (6m55s).
• The tech sector may underperform due to high expectations and high multiples, with the MAG Seven trading at an average of 32 times, but easing rates by the Fed and central banks could support earnings growth in other shares (7m26s).
• The monetization of General AI (GenAI) may take time, possibly until 2026 or 2027, and will require embedding it in business processes, industrializing, and ensuring cybersecurity (8m22s).
• Beyond the MAG Seven, other companies will participate in the growth of GenAI, including NVIDIA, data centers, and industrial companies providing cooling services, which trade at attractive valuations (8m57s).
• The infrastructure boom driven by GenAI will also benefit utilities, one of the best-performing sectors year-to-date, and other companies that provide necessary services (9m28s).

Apple's Upcoming Product Announcements

• Globally, there are interesting opportunities in data centers, particularly in Asia-Pacific and Europe, where prices are more reasonable on a relative basis (10m16s).
• Apple is preparing to announce a new low-end iPhone early next year, alongside upgraded iPads, which will bring down the price points of features globally to a sub-$500 price point (11m27s).
• The new low-end iPhone, codenamed V59, will look similar to the iPhone 14 and support Apple features, but it is not targeted at the Indian market, where sub-$200 phones dominate (12m43s).
• Apple is planning to release a new low-end iPhone model with upgraded cameras, which will be the last iPhone to transition away from the home button, making it easier for the company to support newer operating systems and provide a consistent user interface across all devices (13m9s).
• The new iPhone model is expected to be a strong seller, as it will offer a more modern design and updated features at a lower price point (13m36s).
• Apple is also updating the iPod Air with minor changes, including new keyboards and a larger display size, which will be significant for schools and businesses that purchase these devices in bulk (13m50s).
• The updated iPod Air will also feature some of the new features from the iPad Pro, creating a more unified accessory ecosystem (14m28s).

Google's AI Development and Competition with OpenAI

• Google is working on AI software that demonstrates human-like reasoning abilities, which could potentially compete with OpenAI's ChatGPT (15m19s).
• Google has been building the technology behind this AI system for some time and is now looking to catch up with OpenAI, which has gained popularity with ChatGPT (16m11s).
• The company is being cautious in its approach, taking the time to get the technology right and considering the potential risks and benefits (17m2s).
• Not everyone is optimistic about the potential of AI, with a renowned MIT professor expressing skepticism about its ability to deliver an economic revolution, estimating that only 5% of jobs will be heavily aided or taken over by AI in the next decade (17m40s).

AI-Powered Application Development Tools

• Codieum, a company that uses AI to speed up coding, has raised $150 million in a Series C round and has 700,000 developers on its platform, with a focus on personalization and reducing development time (18m30s).
• The company's platform has resulted in a 20% reduction in total development time for its users (18m57s).
• Varun, who worked in autonomous vehicles, notes that companies raising large amounts of money without developing a product is not uncommon, especially in a space moving incredibly fast, and the only thing that guarantees the ability to earn the right to work with large enterprises is shipping quickly and staying close to the tech (19m39s).
• The space of application development tools will be crowded because the prize is large, and if a tool can generate or reduce application development time by 20%, it would be surprising if there were only one player (20m15s).
• Varun's company differentiates itself by caring a lot about security and being a platform-agnostic tool, not tying itself to a platform, and not requiring companies to send their IP outside their firewall (20m34s).
• The company has a unique selling point and will keep innovating, with plans to invest in innovation, increase R&D, and provide support to large companies that trust them (21m21s).

Market Update and Chip Sector Rebound

• Varun's company has raised $65 million in a Series B and now a Series C, giving them some money to spend on innovation and supporting large customers (21m45s).
• Google is racing OpenAI in terms of innovation in AI, and key companies to look out for are those that can generate or reduce application development time (21m59s).
• The market was trading lower at the start of the program, with Broadcom and NVIDIA leading from a points perspective, and Bitcoin bouncing back from yesterday's selloff amid geopolitical tensions (23m15s).
• Tesla posted quarterly sales below estimates, but is now off session lows, while Apple is flat after being down 1.5% due to production of a low-end iPhone that could come early next year (23m47s).
• NVIDIA and Broadcom are among the biggest point contributors, while Tesla has missed third-quarter delivery numbers, especially with issues in China (24m22s).
• Chip shares were down last quarter, but Evercore made a call for the fourth quarter anticipating a potential rebound in chip stocks, which is beginning to be seen this morning (24m53s).
• The rebound in chip stocks may be a knee-jerk reaction to yesterday's selloff, but it could also be a sign of a changing thesis, with companies like Micron trading at a discount (25m16s).
• Chip companies are monitoring supplies of high-purity quartz after Hurricane Helene halted production in North Carolina mines, as quartz is a crucial material in chipmaking due to its low imperfections, which are a result of its formation hundreds of millions of years ago when there was very little water on the planet (26m20s).
• Quartz wafers are used in frequency control, and the industry is good at stockpiling the materials it needs, with major chipmakers like TSMC and Samsung seeming "unbothered" by the current situation and thriving off of their stockpiles (27m2s).
• The two mines in North Carolina account for 80% or more of the global supply of quartz, and manufacturers are hopeful that they will soon be able to reopen after the hurricane (27m33s).
• There is no clear timeline for when the mines will reopen, but manufacturers seem confident that the plants will eventually come back online (28m1s).

Potential Takeover of ASMPT and Oracle's Investment in Asia

• KKR is considering a takeover bid for ASMPT, having made a nonbinding preliminary approach, following similar attempts in the past by other companies (28m28s).
• Oracle is spending $6 billion to build out services in Asia, providing data centers to corporate clients, although specifics have not been offered (28m35s).
• A new law in the Philippines would impose a 12% value-added tax on nonresident digital service providers, including search engines, digital marketplaces, cloud services, and media companies (28m49s).

SoftBank's Investment Strategy and Focus on AI and Energy

• SoftBank is a software distributor and a conglomerate with divisions and investment committees, but ultimately, decisions come down to Masayoshi Son making an instinctive call, with a track record of getting big bets spectacularly right (31m26s).
• Masayoshi Son is a futurist who has proven his vision time and again, with notable successes including deals with Alibaba, Vodafone, and ARM, although he has also had some significant misses (31m13s).
• SoftBank's investment in OpenAI is seen as a strategic move, with the company sitting on over $40 billion in cash, and the $500 million investment in OpenAI being a relatively small bet by SoftBank's standards (34m31s).
• SoftBank's CEO, Masa, has been fascinated by AI and has been talking about its potential since 2014, with a focus on singularity and its implications for the tech industry (33m51s).
• The first Vision Fund was a true fund with third-party money, mainly from the Middle East, while the other Vision Funds are on SoftBank's balance sheet (35m15s).
• SoftBank's acquisition of ARM is seen as a strategic deal, with ARM being well-positioned in the chip design market, particularly in terms of energy efficiency, which is becoming increasingly important for AI and autonomous cars (36m5s).
• ARM's acquisition of Graphcore is a signal that the company intends to challenge NVIDIA's dominance in data centers (36m32s).
• SoftBank's investment in OpenAI may not be a big bet, but it is expected that the company will make its next big move, potentially in the AI or energy space, with SoftBank Energy being one of the leading solar power generators (37m32s).
• SoftBank's track record, including being three years ahead in the smartphone market, suggests that the company will time its next big move correctly and be part of the conversation (37m43s).
• The company's focus on AI and energy is expected to continue, with potential opportunities in the buildout of data centers, which are highly power-hungry (38m13s).

Pinterest's Transformation and Success with AI-Driven Tools

• Pinterest has transformed from a digital window shopping platform to a place where users buy and shop directly with retailers, achieving its best product market fit ever with users and advertisers, with a record turnout and doubling the number of clicks to advertisers year on year for three consecutive quarters as AI add tools are brought on (39m24s).
• The platform has become the place where Gen Z shops, with 40% of users being Gen Z, the largest and fastest-growing demographic, and 60% of users saying they are always shopping, with the rise of Gen Z's buying power growing and predicted to bypass baby boomers in buying power over the next five years (40m5s).
• Pinterest is broadening its reach with advertisers, with the most sophisticated advertisers being the first to take advantage of the platform's stores, and AI-driven tools making it easier for a broader set of advertisers to take advantage, including automated campaign creation and automated creative (41m3s).
• Big advertisers like Walgreens are seeing a 55% improvement in click-through rate by using Pinterest's generated backgrounds, and smaller up-and-coming advertisers like Ruggable are seeing three times the clicks at half the cost, with AI-driven tools broadening out the advertisers on the platform (41m32s).
• Pinterest is not a hardware platform, but it is seeing an increase in usage, with more than 80% of usage being people coming to the mobile app directly, and increasingly using the platform for shopping, with visual exploration journeys and visual search being where Pinterest stands out (42m21s).
• AI has become a core competency for Pinterest, with the move to GPU serving and large models giving a 10 percentage point lift in relevancy of recommendations, and users coming to Pinterest to curate their tastes, providing a unique signal for AI-driven innovations (43m5s).