Information Technology

Why AI may fail to unlock the productivity puzzle

4 Jul 2024

The world’s richest economies are grappling with slowing growth in output. Many investors believe artificial intelligence can provide a much-needed boost. But four features of the technology suggest the benefits will be limited – and might even achieve the opposite outcome.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

Nvidia customer’s valuation voodoo tests AI mania

2 Jul 2024

Germany’s $1.4 bln Northern Data has access to the US giant’s sought-after chips and makes money by renting them out. It may re-list parts of the business on the Nasdaq. If investors accept a mooted $10-16 bln price tag, it’s a sign the market has truly lost touch with reality.

Larry Fink makes racy salvo in private markets war

1 Jul 2024

BlackRock will buy UK buyout fund data provider Preqin for $3.2 bln, muscling aside rivals like S&P. It’s a rich price that will take years to pay off. While CEO Fink has a history of savvy deals, higher rates and acute competition in alternative assets both raise the stakes.

The economics of AI points to value of good data

28 Jun 2024

Investors chasing the artificial intelligence boom have pushed up the value of $3 trln chip supplier Nvidia and big cloud computing firms. Yet AI models have dubious benefits unless they are trained on reliable information. Moreover, high-value data makes them cheaper to develop.

Olympic Games can withstand Atos farce

26 Jun 2024

The French firm managing the Paris sporting event’s IT backbone is close to bankruptcy. It may find 800 mln euros of short-term financing from President Macron’s government and loans even after creditors ditched restructuring talks. But its future after the Games is less certain.

Revolut’s desired $40 bln price tag is a stretch

24 Jun 2024

The UK fintech group wants to sell $500 mln of shares at a valuation far above its last level. To get to $40 bln, investors need to assume it’s like payment giant Adyen. With a lower margin and discounts warranted in other areas, Revolut’s value looks more like $20 bln.

A warning from history about large-cap stock booms

21 Jun 2024

Five decades ago, shares in a handful of large companies like IBM and McDonald’s propelled the US stock market to new highs before collapsing. As investors pile into tech giants led by $3.3 trln Nvidia, the earlier period may be instructive for those who believe history rhymes.

Saudi expands strategic toolbox with Lenovo deal

29 May 2024

A PIF unit is the sole investor in the laptop maker’s $2 bln convertible bond. It pays no interest and can’t be swapped for stock until 2027. The real value to the kingdom is Lenovo’s pledge to build a new factory and regional HQ there to bolster Riyadh’s manufacturing goals.

AI will help treat Big Pharma’s looming illness

15 May 2024

Drug discovery is a long and costly process with success rates below 10%. Caps on prices and shorter patent periods in the US will also make life harder for the likes of Pfizer, AstraZeneca and rivals. Despite patchy results, betting on machines may be the best hope of a cure.

Elon Musk clearly sees AI hallucinations

10 May 2024

Even though the Tesla billionaire expects the cutting-edge tech to make all jobs obsolete someday, he says he hasn’t found practical use for it in some of his businesses. It’s a reality other CEOs will soon confront, too. Humans are still learning financial lessons the hard way.

Arm encounters the AI bubble’s ups and downs

9 May 2024

The $110 bln chip designer reported record revenue in the fourth quarter, but investors disliked a less punchy outlook. Big Tech’s AI-fuelled data centre land grab is powering Arm’s revenue and margins. But its toppy valuation means any perceived upset gets punished.

New ASML CEO’s job is harder than it might look

9 May 2024

The $360 bln Dutch firm is the sole maker of machines that produce the most advanced chips for Intel and TSMC. New boss Christophe Fouquet effectively runs a monopoly. But he still faces risks from staff retention, China-US spats, and as-yet-opaque risks to ASML’s domination.

France’s Atos entrée heads for fuzzy denouement

2 May 2024

The French state wants to buy the defence assets of the IT group, which is trying to restructure 4.9 bln euros of debt. It should then be easier to sell what’s left of Atos. But it’s unclear how or when Paris might marshal private buyers to recoup its outlay of up to 1 bln euros.

Thoma Bravo UK cyber deal looks a little too good

26 Apr 2024

The buyout firm finally agreed a takeover of long-term target Darktrace, an IT security specialist. Despite the generous-looking 44% premium on offer, the buyer’s returns seem juicy given a nascent US push. That may raise the chance of shareholders asking for more money.

UnitedHealth shows market power is double-edged

16 Apr 2024

The insurer’s reach in the US healthcare system drew an antitrust probe – and a ransomware attack that could cost $1.6 bln. It’s grist for trustbusters: dominance may let firms take their eye off the ball on cybersecurity, and make the systems that depend on them more fragile.

India’s tech engine is primed for an AI boost

9 Apr 2024

Companies like BMW are deepening ties to the country’s IT services sector, which boasts low costs and a steady supply of engineers. As global businesses adopt artificial intelligence, Tata and peers look well placed to capture a larger share of the $4 trln tech services trade.

Google will struggle with Apple-generated AI query

5 Apr 2024

Artificial intelligence presents the first serious threat to the search engine’s 25-year dominance. Parent Alphabet has the money and tech nous to fend off rivals. The bigger financial risk is its $120 bln relationship with the iPhone maker as trustbusters try to pry them apart.

AI might rewrite Samsung’s memory chip past

5 Apr 2024

The tech giant estimates quarterly operating profit surged 10-fold to $5 bln, as prices for standard data-storage semiconductors recover. New demand for specialised versions that support artificial intelligence might help the company better navigate the next boom-and-bust cycle.

US antitrust push invites creative dealmaking

4 Apr 2024

Policymakers and trustbusters are eyeing new restrictions on mergers and acquisitions. In this Viewsroom podcast, Breakingviews columnists unpack some imaginative workarounds being used by companies ranging from Big Tech to fast food.