Apple's AI Delay and Trump's Pro-Crypto Turn | Bloomberg Technology

Apple Intelligence Delay

• Apple's AI features, known as Apple Intelligence, have been delayed and will miss the initial release of iOS 18 in September.
• The initial intention was to launch Apple Intelligence with iOS 18 and iPadOS 18 in September, but it has been pushed back to 18.1.
• This delay means Apple Intelligence will likely not be installed in the iPhone 16 when those are sold.
• Apple Intelligence requires devices with Apple Silicon, such as Macs, iPhones, or iPads with 8GB or more of RAM.
• Currently, only the iPhone 15 Pro and iPhone 15 Pro Max support Apple Intelligence, as they are the only iPhones on sale now that include 8GB of RAM.
• The company plans to release Apple Intelligence by October but will make it available to software developers for early testing as soon as this week.

Apple Intelligence Features

• Apple Intelligence is Apple's big initiative for the upcoming year, showcasing its generative artificial intelligence features.
• This feature will include a variety of AI capabilities, such as image creation, ChatGPT integration, a new version of Siri, writing tools, and text summarization.
• While these features are not entirely new, Apple's deep integration and user-friendly interface are expected to give it an edge over competitors.

Apple's AI Investment Impact

• Apple's upcoming earnings report will be closely watched for guidance on the iPhone's performance, as the new AI feature is expected to drive upgrades.
• Analyst Tom Forte believes that the AI upgrade cycle will be significant but not as impactful as the 5G upgrade cycle due to regulatory pressures in Europe and China.
• The discussion focuses on how Apple's AI investments will translate into revenue and earnings growth.
• Tom Forte, from Maxim Group, suggests that AI's impact on Apple's sales will be similar to the 5G upgrade cycle, potentially adding $50 billion in revenue.
• Forte believes that AI will contribute to mid to high single-digit EPS growth for Apple.
• Forte cautions that investors may be overestimating the impact of AI on iPhone sales, as the stock is currently trading at a higher PE ratio than its big tech peers.
• Forte highlights the importance of Apple's ecosystem, where users utilize both devices and services, and believes AI will further strengthen this story.

AI Investments in Tech Earnings

• The discussion focuses on the upcoming tech earnings season, particularly for the "Magnificent Seven" mega-cap companies.
• Investors are interested in how AI investments will impact the near-term financial performance of these companies, specifically looking at the return on investment for AI infrastructure.
• While AI is becoming increasingly integrated into business models, making it difficult to isolate its impact, investors will be looking for evidence that these investments are driving revenue growth.
• The discussion highlights the importance of AI for companies like Tesla, Meta, and Amazon, and how their strategies for leveraging AI will be a key focus for investors.
• Brad Erickson, a research analyst at RBC Capital Markets, suggests that investors will be looking forward to the AI narrative, while also evaluating traditional revenue trends and the overall health of the companies.

AI Investment Strategies

• Brad Erickson believes that investors should be patient with companies like Apple, Meta, and Amazon, as they are making significant investments in AI, which may take time to pay off.
• Erickson suggests that Meta's CEO, Mark Zuckerberg, may be more confident about the company's future if he talks about moderating growth rates and feels positive about the investments they are making.
• Erickson expects Amazon to be bullish on AI and provide confident commentary, but he doesn't anticipate them to disclose specific revenue figures for AI.
• Erickson believes that Amazon should provide more details about their progress in acquiring GPUs and training their AI models to reassure investors.
• Erickson clarifies that Amazon's multi-billion dollar run rate for AI includes broader AI initiatives that predate the emergence of generative AI last year.

Other Business News

• Alibaba's stock reached its highest point in two months due to its plan to increase its service fee for merchants, which will boost its core merchant revenue.
• Xiaomi, a Chinese electronics company, purchased a plot of land in Beijing for $160 million to expand its electric car production. The company has already delivered over 40,000 vehicles since entering the car market in March and is on track to deliver 100,000 cars by November.

Fiber Network Attack in France

• A large-scale attack on fiber networks in France occurred overnight, affecting nine locations across the country. The attack targeted long-distance fiber-optic cables, which are crucial for internet connectivity.
• Despite the attack, there was no significant disruption to the Paris Olympics or train services due to redundancies in the network.
• Authorities are investigating the attack and are looking into whether it is connected to a previous attack on rail nodes last week. However, there is no evidence yet to suggest a link between the two incidents.

Rugby Sevens Tournament in Paris

• The segment begins with a discussion about the recent train attacks in France, with no information yet available on who is responsible.
• The conversation then shifts to the Rugby Sevens tournament in Paris, with Benoit Berthelot describing the positive atmosphere and the successful organization of the event.

Bitcoin and Crypto News

• The segment transitions to a discussion about the technology markets, focusing on the upcoming earnings reports from major tech companies and their potential impact on the NASDAQ 100.
• The segment highlights the recent surge in cryptocurrency prices, particularly Bitcoin, which reached its highest level since mid-June following Donald Trump's pro-crypto speech at the Bitcoin 2024 conference.
• Trump's speech outlined his plan to make the United States the "crypto capital of the planet" and the "Bitcoin superpower of the world."
• Bloomberg Intelligence analyst James Seaver, who attended the conference, describes the excitement surrounding the event and attributes it to the launch of Bitcoin ETFs in January and the growing interest from major banks and institutions.
• The Bitcoin 2024 conference saw a significant presence of institutional investors, including BlackRock, State Street, and Fidelity, indicating growing interest in Bitcoin.
• Former President Donald Trump delivered a speech at the conference, expressing his support for Bitcoin and promising to replace SEC Chair Gary Gensler with someone who "loves crypto" if he is re-elected.
• Trump's speech was well-received by the Bitcoin community, particularly his promise to fire Gensler, despite the fact that he may not have the authority to do so.
• Trump's shift from skepticism to support for crypto is a significant development, according to Kristin Smith, CEO of the Blockchain Association.
• Smith believes that Trump's change of heart is a reflection of a broader trend, with more politicians becoming more knowledgeable about and supportive of crypto as they learn more about its potential.
• Millions of Americans believe that cryptocurrency could be the foundation for a new financial system, offering an alternative to big tech ecosystems.

Trump's Crypto Policy

• Former President Trump has stated that he will fire Gary Gensler, the current SEC chairman, and appoint a new chairman who supports the development of cryptocurrency.
• Trump has also pledged to create a Bitcoin and Crypto Presidential Advisory Council.
• The Blockchain Association and its member companies are excited by Trump's statements, as they have been critical of Gensler's approach to regulating the cryptocurrency industry.
• There is also growing support for cryptocurrency regulation within the Democratic Party, with 14 members of Congress urging the Democratic National Committee to include pro-crypto policies in their platform.
• The Blockchain Association is hoping to engage with Vice President Kamala Harris's campaign team to discuss cryptocurrency policy.
• The Blockchain Association believes that there is a growing bipartisan consensus on the importance of cryptocurrency, with both Democrats and Republicans vying for support from the crypto community.
• Kristin Smith, CEO of the Blockchain Association, believes that both political parties need to be thoughtful about their approach to cryptocurrency, as it is an important issue for voters, especially in swing states.

TikTok Ban

• The U.S. Justice Department has filed a detailed response to TikTok's efforts to overturn a law requiring the company to be sold by its Chinese owners by January 19th.
• The Justice Department argues that TikTok collects a lot of data on its users, including private messages, viewing habits, and location, which is not adequately protected from China's government.
• The Justice Department also claims that China could exert control over content on the platform, censoring or promoting content that suits its interests.
• The Justice Department argues that free speech rights do not apply when the algorithm and data are being collected and owned by a foreign power.
• TikTok has responded by doubling down on its claim that the law violates free speech rights and insists that the government has not provided adequate evidence of a national security threat.

"Deadpool and Wolverine" Box Office Success

• The movie "Deadpool and Wolverine" has broken box office records, earning $205 million in its opening weekend, making it the highest-grossing R-rated film ever.
• The film's success is attributed to its global appeal and exceeding expectations, particularly in the US and Canada.
• The film's success is significant for the struggling movie theater chains and the film industry as a whole.
• The film's success is also seen as a comeback for Marvel and Disney, following a period of underperforming Marvel films.
• The film is expected to continue dominating the box office, taking away audiences from other films like "Twisters," especially for IMAX showings.

YouTube Music's Growth

• Google's streaming music player, YouTube Music, has lagged behind Spotify, Apple, and Amazon in US market share.
• Despite being included in YouTube Premium subscriptions, many users, including Austin Carr, are unaware of YouTube Music's existence and continue to use other music streaming services.
• YouTube Music differentiates itself from other services by offering access to music videos, live concerts, and podcast material.
• YouTube Music is a streaming service similar to Spotify, but it leverages data from the YouTube video website to personalize music recommendations.
• For example, if you watch a late-night talk show with a particular artist on YouTube, you might see more of that artist's music recommended on YouTube Music.
• YouTube Music is seeing significant growth in emerging markets where YouTube is already popular.
• YouTube Music is bundled with YouTube Premium, which includes ad-free video access, and this has contributed to its growth.
• While YouTube Music is gaining traction, it is still not as popular as Spotify or Apple Music in North America.

CapCut's Rise and Impact

• CapCut, a mobile video editing app owned by ByteDance, the parent company of TikTok, is gaining popularity and putting pressure on established creative software companies like Adobe.
• CapCut's usage has skyrocketed since the start of the pandemic in 2020, attracting 300 million monthly active users.
• The potential ban of TikTok in the US could also affect CapCut, as they share the same parent company and office space.
• While Adobe might benefit from CapCut's disappearance, the loss of TikTok would also negatively impact them, as TikTok is a platform for content creation, which requires editing apps.
• CapCut is estimated to generate $5 million in revenue annually, demonstrating its significant growth and potential.
• The text-to-video feature in CapCut, while not perfect, is a popular feature that Adobe is struggling to compete with.
• The future of text-to-video technology is still uncertain, but CapCut's success highlights the growing demand for user-friendly video editing tools.
• The journalist states that many people are switching from apps like Adobe to similar alternatives.
• The journalist believes this trend is happening across the entire industry.
• The journalist acknowledges that true text-to-video AI is emerging, but currently, only symbolic tools are available.
• Ed suggests that creators on TikTok would likely use apps like CapCut.

Bloomberg Technology Podcast

• Brody Ford, a contributor to "Bloomberg Technology," constantly discovers new information.
• The show will continue to cover major technology earnings throughout the week.
• Viewers are encouraged to listen to the "Bloomberg Technology" podcast, available on various platforms.