Cyber meltdown points to downsides of efficiency 19 Jul 2024 A software update by $83 bln CrowdStrike grounded flights and disrupted financial markets. That’s possible because businesses work with a small number of providers, seeking lower costs. It supports rich tech valuations, but also heightens the risks of a catastrophic failure.
Apple’s India ascent is a salve for China woes 19 Jul 2024 The iPhone-maker’s sales in the South Asian country surged to $8 bln thanks to a luxury boom. That pales next to the $73 bln of revenue from the People’s Republic, but stiff competition and sluggish consumption there are a headache. That makes India increasingly vital for Apple.
Meta stake may blur vision for Ray-Ban maker 18 Jul 2024 The $1.2 trln tech giant may buy 5% of eyewear group EssilorLuxottica. It’s a show of confidence in the companies’ smart glasses partnership. But the investment could complicate the Paris-listed firm’s governance and limit its options for working with rivals like Apple.
Silicon Valley daredevils ride or die with Trump 17 Jul 2024 Marc Andreessen, Elon Musk and other tech entrepreneurs are lining up behind the former US president. Maybe there’s ideological alignment, but naked self-interest and contrarian biases probably play a part, too. The downside in politics, however, is far bigger than in business.
Stripe would be an ugly pattern for Silicon Valley 16 Jul 2024 The fintech firm led by the Collison brothers has outlived most venture capital funds without going public. Its $70 bln valuation looks generous for a sluggish IPO market anyway. Sequoia cashing out older backers with newer funds buys time, but also distorts the investment model.
Microsoft opens windows onto AI antitrust paradox 10 Jul 2024 The software behemoth is ceding its non-voting board seat at OpenAI, the ChatGPT maker essential to its artificial intelligence plans. Building a silicon mind may take $1 trln, however, making deep pockets as powerful as governance rights. A bigger, messier crackdown looms.
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.
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.
Trillionaire club throws an indulgent theme party 20 Jun 2024 New $3.3 trln leader Nvidia and the five other US members are powered by AI hype. It makes chipmaker Broadcom a good prospect for induction soon. Eli Lilly could easily be the first anti-obesity joiner. Megatrends sparking giddy valuations also make the group much less exclusive.
Autodesk left a door ajar for its pushy investor 18 Jun 2024 Despite a plum niche developing software for architects, the $50 bln firm’s performance has sagged. Rabble-rouser Starboard Value has cookie-cutter fixes. But the company’s hand is weakened by poor disclosure that invites gripes about activists’ favorite target: executive pay.
Intel sketches promising factory blueprints 10 Jun 2024 The chipmaker struck an $11 bln deal with investment shop Apollo to help offset the expense of building a facility in Ireland. By 2040, the cost of such cutting-edge plants could quadruple to $100 bln. Given the solid investment return profile, similar partnerships will abound.
Autonomy’s legal endgame leaves few real winners 7 Jun 2024 A US court has cleared Mike Lynch of fraud connected to a $12 bln sale of the group he founded to Hewlett-Packard in 2011. It only heightens the sense that HP’s due diligence was lamentable. But the snail-pace of justice also cost Lynch over a decade of his career.
Trustbusters loom larger for Microsoft than Nvidia 6 Jun 2024 Tech is full of natural monopolies, and artificial intelligence may be no different. Regulators prefer to act quickly to stop abusive actions snuffing out competition. The $3 trln chipmaker’s dominance will be hard to dislodge. The software giant’s AI deals appear more fragile.
Elliott nudge may lead to slow-motion SoftBank LBO 5 Jun 2024 The US activist wants the $88 bln Japanese tech investor to boost its share price via a $15 bln buyback. That could raise SoftBank boss Masayoshi Son’s stake from a third to 40% and in time spur him to take the group private. The risk for Elliott is that he binges on AI instead.
The $5 trln AI boom could both succeed and fizzle 21 May 2024 Tech giants are making hefty investments in artificial intelligence in the hope of gigantic future profits while enjoying frothy valuations. Yet past frenzies in railways and telecom show capital-intensive innovations can change the world while leaving investors short-changed.