Tech Stocks, Apple in China, and the Paris Olympics | Bloomberg Technology

Tech Stock Volatility and Earnings Season

• The NASDAQ 100 has been down for three straight weeks, losing 3% this week and trading at its lowest point since May.
• The "Magnificent Seven" tech giants have seen a trillion dollars in market cap erased over the past two sessions, with Google being particularly affected.
• Volatility in Nvidia's stock is a major concern for investors.
• The upcoming earnings season will be crucial for tech stocks, with companies like Alphabet, Microsoft, and Nvidia reporting in the coming weeks.
• Anthony, a market expert, believes that valuations in Big Tech are fair to question, given the time it may take for AI investments to pay off.
• Despite the potential for a pullback, Anthony sees opportunities for investors to buy into Big Tech stocks at a cheaper price.
• Alphabet's earnings report will provide insights into the performance of the cloud and advertising sectors.

Shifting Market Sentiment and Investment Focus

• The market's focus has shifted from economic concerns to a more optimistic outlook for the second half of the year, with a potential soft landing and lower interest rates.
• This shift in sentiment has led to increased confidence in companies outside of the "Magnificent Seven," suggesting that their outlooks may improve in the second half.
• Investors are shifting their focus from big tech companies to areas like small caps, financials, industrials, materials, and cyclical trades.
• This shift is driven by a normalization of economic growth patterns, inflation, and interest rates in the U.S., Europe, and Japan.

Apple's Struggles in China

• Apple is losing ground in its key China market, with the iPhone falling out of the top five in the nation.
• Apple's growth in China has been stagnant in recent years, and the company's next earnings call will be crucial for its performance in the region.
• The overall narrative suggests that Apple is losing market share in China while Huawei is gaining ground.
• Apple's sales in China have been affected by the longer phone replacement cycles and government policies encouraging the use of domestic brands.
• Apple's future in China is uncertain, particularly if a Republican president is elected and tensions escalate.
• Micron and Apple executives have been visiting China to engage with government officials, highlighting the importance of maintaining good relations.

TikTok's Potential Ban in the US

• TikTok is facing a potential ban in the US due to national security concerns, with a deadline of January 19, 2024, for ByteDance to sell the app.
• TikTok is actively lobbying against the ban, emphasizing its importance to users and businesses in the US.
• The focus of the debate has shifted from divestment to ownership, with ByteDance refusing to sell TikTok and the Chinese government expressing opposition to a forced sale.
• Vice President Kamala Harris has joined TikTok, highlighting the app's utility and suggesting that the issue is ownership rather than the app itself.
• The video discusses the recent news surrounding ByteDance's forced sale of TikTok in the US, as well as the SEC's lawsuit against Citron Capital for alleged fraud.

The Rise of E-sports

• The video then shifts to the topic of e-sports, focusing on the company NIP (Ninjas in Pyjamas) which recently went public on the NASDAQ.
• NIP's co-founder and chairman, Mario Ho, explains the company's decision to go public in the US, citing the NASDAQ as the largest capital market in the world.
• Ho also discusses NIP's business model, which focuses on talent management, offline production, and expanding into new avenues like e-sports hotels and game publishing.
• The video highlights the potential of the e-sports market, with projections of reaching $100 billion by 2027.
• Ho compares the health of the e-sports market in the US and China, noting that the US market is more monetized and has stronger sponsorships due to the well-established traditional sports platform. However, China has a larger following and population that engages with games and e-sports.
• The video concludes by discussing the significance of e-sports being included in the Saudi Arabia Olympics in 2025, showcasing the global growth and recognition of the industry.
• Mario, a representative from a company involved in e-sports, discusses the growth of the industry and the increasing interest from sponsors. He highlights the importance of proving profitability and mentions partnerships with brands like Red Bull, BYD, and Fila.
• Mario also emphasizes the company's strategy of targeting young audiences and leveraging celebrity endorsements, citing the success of their collaboration with Jackson Wang in China. He expresses openness to replicating this strategy with a U.S. celebrity.

OpenAI's Impact on Alphabet

• The conversation shifts to the impact of OpenAI's beta search GPT on Alphabet's stock price. The news has put pressure on Alphabet's shares, despite the company's strong earnings.

Market Overview and Bitcoin

• The segment concludes with a brief overview of the market, noting the Nasdaq's recent volatility and the outperformance of small-cap stocks. Bitcoin is also mentioned, with a reference to former President Trump's speech at a Bitcoin event in Nashville.

Ride-Sharing and Weight-Loss Drugs

• The Supreme Court in California has signed off on Prop 22, which impacts ride-sharing companies like Uber and Lyft.
• Dexcom, a blood sugar monitoring device maker for diabetics, has seen a significant stock drop (41%) potentially due to the impact of weight-loss drugs like Ozempic.

Meta's Acquisitions and Antitrust Scrutiny

• The world's largest glassmaker is reportedly in talks with Meta to acquire a stake in the company. Meta had previously launched Ray-Ban smart glasses in 2021.
• The European Union is fining Meta for allegedly abusing its dominance in the ad market by tying Facebook Marketplace to its social media platform.
• The EU Commission believes that Meta should not make access to Marketplace obligatory for users with a social media account and should not use data from rivals like eBay and Craigslist to compete against them.
• Meta claims the EU's allegations are unfounded and continues to work with regulators.
• The EU's fine could be significant, potentially reaching 12% of Meta's global annual revenue.
• Meta had previously offered concessions to the UK's Competition Authority, but the EU Commission wants more.
• The situation between Meta and the EU is currently at a standstill.
• Facebook is facing antitrust scrutiny for its Marketplace platform. The company is being investigated for creating a separate portal for users without Facebook accounts to access Marketplace.
• WhatsApp has reached 100 million monthly active users in the United States. This growth is a positive sign for Meta's efforts to expand WhatsApp's user base.

FTC Chair Lina Khan on Generative AI and Competition

• FTC Chair Lina Khan discussed her thoughts on generative AI and its potential impact on competition. She believes that openness and open-source models can foster innovation and lower costs for startups. However, she also expressed concerns about potential restrictions and licensing issues that could hinder competition.
• Khan addressed concerns about her agenda potentially alienating the tech community. She stated that she is focused on doing her job and that she often hears from businesses, including small businesses and entrepreneurs, that they want a fair and competitive market.
• The FTC Chair Lina Khan emphasizes the importance of open, fair, and competitive markets to foster innovation and allow the best ideas to succeed.

Kennet Partners' Growth Equity Investments

• Kennet Partners, a transatlantic growth equity firm, has raised its largest amount to date, bringing its assets to over $1.4 billion.
• Kennet Partners focuses on investing in business-to-business software companies, particularly those that are bootstrapped and mission-critical to their customers.
• The firm's strategy emphasizes investing in companies that have been built to scale by their founders with limited resources, which they believe offers compelling risk-adjusted returns.
• Kennet Partners has a long track record of over 20 years in the sector and has invested in companies like Cross-Border Solutions, an AI-driven tax and partner solutions provider, and a financial platform.
• Hillel Zidel, Managing Director of Kennet Partners, discusses the current state of AI investments, emphasizing the need for rational investing and focusing on good businesses, management teams, and strategies at the right pricing.
• Zidel acknowledges that AI is the next platform shift, but believes the market needs to catch up with the hype surrounding it.
• Kennet Partners invests in businesses across Europe, the UK, and the US, with a focus on supporting their expansion and international growth.
• Zidel highlights their recent investment in ScreenDragon, a UK company, and emphasizes their focus on businesses serving international markets.

Paris Olympics and Security Concerns

• The conversation transitions to the upcoming Paris Olympics, where Airbnb is expected to see strong demand, with over $1 billion in spending anticipated.
• Concerns about security arise as an arson attack on trains and planes heading to the Olympics raises questions about the identity of the attackers.
• The Olympics cyber team is bracing for potential cyberattacks, following a recent cyberattack that shut down a film festival in France.

CrowdStrike Outage and PagerDuty's Response

• CrowdStrike experienced a major outage last week, with 99% of its sensors now back online.
• PagerDuty, a cloud computing company specializing in early warning systems, saw a significant surge in traffic during the CrowdStrike outage, with a nearly 200% spike in events and a 1425% increase in incident workflows.
• PagerDuty CEO Jennifer Tejada highlighted the importance of operational resilience and investing in infrastructure to handle unexpected events.
• Tejada noted a 45% increase in customer-facing incidents year-on-year, indicating a growing trend of major incidents impacting businesses.
• The increasing complexity of technology infrastructure, driven by new products and services, as well as the advent of generative AI, is contributing to this trend.
• Ed Ludlow, the Bloomberg Technology host, emphasized the importance of preventative measures and good practices for businesses to mitigate such incidents.
• Jennifer Tejada, CEO of PagerDuty, emphasizes the importance of investing in modernizing technology and operational processes to effectively handle technology-related disruptions.
• She highlights the unpredictable nature of these events, emphasizing the need for resilience and proactive measures like chaos engineering, tabletop exercises, and communication with customers about redundancy and failover practices.
• Tejada underscores the crucial role of human operators in managing technology disruptions, despite the increasing focus on automation and generative AI.
• She acknowledges the dedication of individuals working tirelessly to restore systems and emphasizes the importance of recognizing the human element behind technology.