Can AI keep Big Tech alive?
Tuesday morning’s Nasdaq futures are rising ahead of a bumper crop of big tech profits that will begin with Microsoft and Alphabet reporting second-quarter results after the closing bell. There is one question on the minds of many investors. Is the artificial intelligence hype that has sent the stocks of tech giants soaring in recent months justified, or is a new bubble brewing?
Wall Street is deeply divided on AI rallies. Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley apologized to the customer He wrote on Monday that he had taken a pessimistic view of the stock market but failed to see through the surge in AI-related stocks. (For example, the chipmaker’s Nvidia stock has tripled in price since January.) Citigroup analyst They stick to their bullish claims against such companies.
Marco Kolanovic, chief market strategist at JPMorgan Chase, said: unconvincing Tech enthusiasm will help avoid a sharp market selloff this year.
Focus on Microsoft and Alphabet. They are at the forefront of the commercialization of generative AI, the technology behind chatbots like ChatGPT that captivated the public imagination. Both companies have incorporated AI into their wide range of products, and Microsoft, which has invested billions in OpenAI, hopes the technology will help aid AI. Establish your position on Google In major businesses such as search.
Meta’s turn is Wednesday. The parent companies of Facebook and Instagram are also betting big on the technology, including making the code of their cutting-edge AI projects available to the public for free. (Analysts also want to know how Meta plans to monetize Twitter’s new rival Threads, which has rebranded itself to X.)
Macroeconomic factors still weigh on these companies. Inflation and an uncertain outlook hit the company hard last year as customers cut back on software purchases and advertising spending and laid off thousands of employees.
Investors will want evidence that the worst is over for the sector, although recent data has shown that inflation is starting to ease and these stocks have been on the rise in recent weeks. The Fed is widely expected to raise rates by a quarter of a percentage point at Wednesday’s rate meeting, but Wall Street is unsure if the Fed will stop there or continue to raise borrowing costs and risk a recession.
And that’s not just true for tech stocks. This is the busiest week of the current earnings season, with 39% of S&P 500 companies reporting earnings. The next few days will provide important insights into the overall health of American companies. Consumer leaders such as Coca-Cola and McDonald’s and industrial giants such as Boeing will report.
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Unilever says inflation has peaked. Shares of consumer goods giants rallied Tuesday morning. Reports strong second-half sales outlookThe company expects slowing price increases will lead to more consumer purchases. But he warned that the war in Ukraine could drive up agricultural prices, raising costs.
UBS has agreed to pay a $387 million fine for Credit Suisse’s blunder. UBS has reached an agreement with US and UK regulators to resolve investigations into the supervisory missteps that cost Credit Suisse $5.5 billion in the 2021 bankruptcy of investment firm Arquegos. UBS acquired a struggling rival this year and inherited a mountain of legal troubles.
Senators are turning new scrutiny on the relationship between Leon Black and Jeffrey Epstein. The Senate Finance Committee is investigating whether the $158 million paid by Black to disgraced investors under the guise of tax and estate planning services was part of a tax avoidance scheme, The Times reported. Separately, the US Virgin Islands accused JPMorgan Chase. Compensation for former executivesJess Staley, a trip to see Epstein.
The IRS has done away with unannounced visits to homes and businesses. The agency announced it would end the practice, which has been a pillar of its efforts to collect unpaid taxes. The move comes as the IRS rethinks its operations and faces increased political scrutiny and intimidation of its staff by Republicans.
The US is reportedly scrutinizing Abu Dhabi’s proposed takeover of Fortress Investment Group. The Committee on Foreign Investment in the United States said the $3 billion deal by Mubadala, the emirate’s sovereign wealth fund, raise national security concerns, according to the Financial Times. At issue is the relationship between the United Arab Emirates and China.
Cryptocurrencies have serious SEC questions
Cryptocurrencies and climate change have long been associated with issues in terms of how carbon-intensive they are in generating new digital tokens. But the crypto industry also wants to piggyback on the legal doctrine central to last year’s Supreme Court ruling involving the Environmental Protection Agency.
Coinbase is using the EPA losses as a legal defense. Last summer, the Supreme Court overruled emissions regulations by the Environment Agency, citing the so-called Major Question Doctrine, a principle that contends Congress does not give regulators the power to independently decide on important political or economic issues.
Currently, Coinbase claims it cannot be prosecuted because it does not have the power to regulate cryptocurrencies. The exchange also said that Congress is actively working to enact legislation to oversee the industry. Coinbase Chief Legal Officer Paul Grewal told DealBook, “It’s more clear than ever that the Supreme Court is focusing specifically on key issues in our economy and the role of regulators.”
The SEC counters that Coinbase misses the mark. In recent court filings, EPA attorneys said the EPA case: rule making, not prosecution powers of the regulator. Critics added that it is not clear whether crypto regulation counts as a major issue given that the crypto industry has a smaller market capitalization than Apple, Microsoft and Alphabet.
Business advocates seem undaunted by these arguments. “At the moment, the main questionable principle seems to be built for cryptocurrencies.” Katie HornThe cryptocurrency investor and former federal prosecutor recently tweeted:
Separately, the U.S. Chamber of Commerce, which represents a broader range of businesses, has expressed willingness to use key court questions to limit the authority of the Federal Trade Commission’s anti-competition proposals.
“Babenheimer” in numbers
Driven by “Barbie” and “Oppenheimer,” the North American box office had its biggest weekend since 2019 and its fourth-best ever. Here’s how to superimpose this phenomenon with other weekend performances dominated by single blockbusters.
Was X’s debut successful?
Elon Musk’s rebranding of Twitter to ‘X’ came as a surprise last weekend, but the sudden name change is predictably making headlines these days. Users and advertisers were divided over the move to do away with the company’s long-standing bird logo, even though it had some trouble removing the old sign.
This change was immediately reflected at Twitter headquarters. The X logo has been projected onto the cafeteria in the San Francisco office, and conference rooms have been renamed to include “eXposure” and “s3Xy,” according to The Times.
But efforts to remove Twitter’s name from the building faltered, with the San Francisco Police Department stopping employees for “unauthorized work.” As of this morning, the letter “er” is still visible from the road.
People disagree about whether the move will cost the company much. Skeptics said they would do away with Twitter’s name and famous bird logo. most famous property — can cost as much $20 billion worth. (among them: Esther Crawforda former Twitter executive who temporarily joined one of Mr. Musk’s executives), some users lamented the switch to the more generic-sounding X.
Others have said the rebranding would allow the company to let go of years of baggage associated with the Twitter name, an idea shared by none other than everyone else. Jack Dorsey, co-founder of the company. Some ad agency executives said the change wouldn’t significantly kick out potential advertisers, but others said Mr. Musk had at least managed to boost his platform’s advertising after Metaz Thread’s splashy debut.
Speaking of meta… Facebook’s parent company owns the social networking X trademark, which is associated with a specific blue and white logo. Musk’s company now uses black and white marks, but trademark attorneys said they rely on simple letters. will almost certainly lead to legal challenges.
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The Saudi football team, which is majority-owned by a Saudi sovereign wealth fund, has offered a record $332 million for a contract for French star Kylian Mbappe. (New York Times)
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Blackstone’s flagship real estate fund Sell Simply Self Storage at $2.2 billion to continue to limit investor withdrawals. (Bloomberg)
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Johnson & Johnson said it plans to Decrease stake in Kenvue, a consumer health business that it spun off earlier this year, made at least 80% of its profits through exchange offers. (CNBC)
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