Technology

Smaller tech grapples with end of Big Tech put

12 Jul 2024

Software developers are trading at premium valuations, fueled at least in part by the idea that larger rivals will scoop them up. Alphabet’s decision not to buy $25 bln HubSpot, and greater antitrust resistance, indicates such outcomes are less assured. More disappointment 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.

Salesforce signals CEO pay is easy come, easy go

2 Jul 2024

In 2023, the $246 bln software giant’s stock price returned four times the S&P. Year-to-date, it has underperformed. Now shareholders have rejected boss Marc Benioff’s pay plan. A shift in spending to AI is haunting Salesforce. Shareholders get antsy when bosses get complacent.

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.

Ola sets a mileage test for India’s EV market

27 Jun 2024

Investors are resisting the electric scooter maker's mooted IPO price-tag. At $7 bln, it's 30% higher than the SoftBank-backed company's last fundraise. Bhavish Aggarwal's startup has an early-mover advantage and deserves a premium valuation but peers are catching up fast

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.

Tiny Singapore’s chip hub retains a big punch

21 Jun 2024

NXP and Vanguard's new $8 bln factory in the country follows recent investments from GlobalFoundries and others. Singapore has an impressive edge in the semiconductor industry despite high costs and a shortage of space. Its neighbour Malaysia will soon test that advantage.

AI inverts tech’s growth and value buckets

14 Jun 2024

As the software boom’s easy growth fades, once-racy giants like Salesforce - and their valuations - look stodgier. Yet aged rival Oracle added $45 bln in market value on artificial intelligence-driven growth. The latest mania is flipping tech investors’ taste for new over old.

Apple aims to be tech’s AI sniper

10 Jun 2024

The $3 trln giant is making its assistant Siri more effective, stitching together and using personal information on users’ phones. Partnering with OpenAI is a smart hedge on its relationship with Alphabet too. Success depends on patience and picking the right targets.

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.

Salesforce 2.0 benefits will download soon enough

30 May 2024

The software developer lost nearly $50 bln of market value after its revenue outlook fell short of what analysts were expecting. Chasing growth, which has been around 20% for a decade, would be a bad idea, though. Boss Marc Benioff’s profitability quest is a solid update.

Snowflake’s growth story is worryingly typical

23 May 2024

The $55 bln software firm’s revenue is growing rapidly, partly because of AI initiatives, and investors are rewarding it. But marketing costs and stock-based pay are high, and semiconductors costs are rising. As tech newbies show, excitement based on sales growth often thaws.

JD sends out bullish signal on China stocks

22 May 2024

The tech company's $1.8 bln convertible debt deal is the largest out of the People's Republic since 2021. The notes, which swap into equity at a 35% premium to the current share price, suggest optimism is returning to Chinese markets. Whether big IPOs will follow is less clear.

China’s cars fine-tune their driving skills

21 May 2024

Automakers in the country are touting autonomous driving, and Tesla is preparing to join the fray. On this week’s Exchange podcast, Maxwell Zhou, CEO of Alibaba-backed DeepRoute.ai, explains why progress is accelerating and how that is already changing consumers’ expectations.

Crypto’s virtuous cycle is more of a spiral

15 May 2024

Bitcoin ETF approvals have boosted the cryptocurrency, helping FTX customers recover funds and prompting firms like $44 bln Block to hoard more of the digital coins. But it also fuels a new type of speculation. With companies getting deeper into crypto, a new bubble is inflating.