Tech Fire SALE. Huge discounts! While stocks last!
1 August 2024
Welcome to AI Collision 💥,
In today’s collision between AI and our world:
Is it time to fill your boots?
Friend Wars
Boomers stay, Fridays are in!
If that’s enough to get the wacky waving inflatable tube guy waving, read on…
AI Collision 💥
Two weeks ago semiconductor company ASML released its earnings. Overall it was a good release. I covered it in AI Collision 💥 (you can revisit that article here).
But I noted that even though ASML had beat earnings, it was the forward-looking statements the market didn’t like.
As such the stock dropped from a price of around $1,067 to as low as $856 in trading this week – nearly 20% lower.
Of course it is not the only semiconductor and AI-related stock that’s been heading south as earnings continue to come out from big tech companies.
But when ASML’s results came in (and ASML was pretty early with its release) and the stock was hammered, it became pretty clear that even with an earnings beat, it was going to take a lot to shoo away the market bears.
In fact at the time I wrote to you saying,
So, strap in, because other companies are about to drop earnings in the next few weeks, from Taiwan Semiconductor to Texas Instruments, Apple, Amazon, Google and Netflix… it’s all incoming and it’s going to make the market nice and volatile.
But if they “do an ASML” and beat expectations but give a dour forecast, get ready for some big and mega-cap stocks trading at a handy discount.
Well, Microsoft just beat earnings expectations.
Not by much. But they beat. $64.7 billion revenue for the quarter. Earnings per share of $2.95. This is one profitable, money-making giant. And then the stock was down as much as 8% in after-market hours.
If you walked into the local shops and things were trading at 8%, 10%, 15%, 20% discounts, you know what they’d be...?
They’d be on SALE!
Right now, I think that’s exactly what is going on with AI and tech. It’s on SALE!
The market will probably spike higher in the next trading session (at the time of writing) due to the increasing likelihood of rates starting to get cut within the next year from central banks across the world.
China already cut, the UK is pretty close to it, the US Federal Reserve is merely months away from it, Australia is now (unexpectedly) likely to cut early in the new year. Cheaper money is coming back and the market loves it.
But off all of that, Microsoft is likely to trade lower because of “fears” of slowing growth.
Gimme a break!
Microsoft is just getting hammered because of fears that expenditure now won’t lead to a future pay-off in AI.
Well, the good news is companies like Microsoft can spend up big now for the future pay-off later. They’re building the AI infrastructure that all future AI gets built off.
One of the drags on Microsoft is slowing Azure (cloud) growth. The money Microsoft spends on AI now is like building cloud in its earliest days. In fact, the two are likely to co-exist and the cloud becomes AI.
Do you remember that time about 18 months or two years ago when Google, Meta and Microsoft were all slashing jobs, trimming the fat and reorganising for growth again after the bloat of Covid?
That paid off in spades. These companies all hit new, fresh all-time highs year to date. That is the delay to expect with AI spending now. Expect that pay off to really hit 18 to 24 months from now.
So if you've holding or looking at a stock that is spending up big on AI infrastructure and hardware, be happy. And if it’s “doing an ASML or Microsoft” then now might be a great time to fill your boots (as a mate of mine would say!).
Oh, and just one more thing (that I'll dive into a little more next week). It’s not all bad... AMD dropped its results too and smashed it out of the park.
That’s right. Smashed it. And the company is the closest competitor to Nvidia. What does that tell us?
I'll tell you on Tuesday.
AI gone wild 🤪
AI and devices. It’s the market that everyone wants to crack.
Everyone wants to have that next great product that launches a tech unicorn and becomes the next Apple.
Only problem is it took Apple around 30 years to actually deliver something that completely changed the world.
But right now it seems like there’s a race on to deliver the first useful AI-based consumer product that isn’t a smartphone with AI inside.
We’ve already seen the hype and subsequent crash and burn of the Humane.ai “AI pin” and now we’ve got two new entrants to the market.
The only thing with these two AI devices is that they’re both called “Friend”, they’re both AI necklaces and they’re, well, pretty much exactly the same.
Except they’re from different builders, different ambitious founders and right now they’re both about to go to war.
Just one more thing before I explain a little more... they’re also destined for the trash heap.
First off here is Friend, an AI necklace that is being built and brought to market by Nik Shevchenko and his company Based Hardware.
Currently you can buy the developer kit and start tinkering away with what it can do. The fancier looking thing above is the expected production version slated for release later this year.
Then in the link below you’ll find... Friend.
It too is an AI necklace that just dropped a (weird) promo video and a handy link to the (very expensive) domain, friend.com.
Rumours are the company spent around $1.8 million of the $2.5 million it’d already raised just to acquire the friend.com domain!
You can watch the video for yourself as to whether or not these are the next great things in the AI world.
But I'm here to tell you, they aren’t. I guess that’s not exactly any great revelation. However, I've got good reason to say this.
And it relates to this:
This is my Myo Armband, which I got around 2015 or 2016. It was one of the most hyped-up “wearable tech” products of the time. It would connect to your devices and enable you to perform tasks, Minority Report style.
Even Time did an article on it, such was the hype.
Only problem... it kind of sucked. Real-world use and application was, well, average at best. It didn’t make operating devices any easier. If anything, it became a burden.
It has sat in my collection of “promising tech that never made it” pile ever since.
These AI pins or AI necklaces, they’re all destined for the same heap. So in short, don’t waste your energy, time or money bothering with these things.
There will be something in our future that does change the game again. Something that will inherently be all about AI. Something that will move from the pile of promising tech, to the display cabinet for game-changing tech (like my Nintendo Entertainment System, Game Boy, iPhone, iPod, Ledger Nano and Minidisc player)...
But these are not it.
Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom 📈
Appen (ASX:APX) up 47%
Predictive Oncology (NASDAQ:POAI) up 6%
Vicarious Surgical (NYSE:RBOT) up 5%
Bust 📉
Teradyne (NASDAQ:TER) down 20%
Nvidia (NASDAQ:NVDA) down 15%
AMD (NASDAQ:AMD) down 10%
From the hive mind 🧠
AI is going to replace a LOT of jobs. No doubt about that. But fears are massively overblown. And you know how I know that? Food. AI will never be as good as humans at things like cooking. So if you’re a chef, rest easy my friend, your culinary skills are safe as houses.
When is parody, parody? And when is parody an intentional attempt as misinformation? It’s a fair conversation to have. You can use parody to great effect, and in fact it’s a staple of human civilisation. But also some people hide behind parody for more sinister reasons. Where does the line exist? And who is (or isn’t) trying to really censor speech?
There’s a lot of social media coverage of Apple Intelligence right now, some good, some bad, it’s a mixed bag really. We’ll see for ourselves in the coming weeks and keep an eye on it. But the reports are already filtering through as to how it seems to be working.
Artificial Polltelligence 🗳️
I asked and ye hath spoken!
The other week I asked if you’d prefer to get AI Collision sent to you on Tuesdays and either Thursday or Friday.
The Tuesday slot I like, and that will remain, but I was thinking of spacing out our second send on a Friday right before the weekend.
And here’s what you voted for...
There you have it. Friday it is.
That means next week, you’ll get AI Collision sent to your inbox on Tuesday and Friday.
I also asked what you thought about one of our regular sections, the “Boomers & Busters” section. Here we take a look at some of the better performing stocks and some of the losers of the rolling week.
That means over the week to that day, what stocks are significantly up, and which ones are down. The reason of this section is to give you a feel for the broader AI stocks market.
I wasn’t sure how much you did, or didn’t, like that section, so I wanted to know if we should keep it or get rid of it.
Once again, you gave your vote...
In full respect of the democratic process (no mail-in votes here!) you’ve made your choice, so the Boomers & Busters section stays.
Now, as it is Thursday, the last Thursday that we'll send AI Collision to you, here’s a new poll to get us through to next week.
Weirdest AI image of the day
The sarcastic wine glass producers aren't even trying anymore – r/weirddallee
ChatGPT’s random quote of the day
“Don’t worry about failure; you only have to be right once.”
— Drew Houston, 2013
Thanks for reading, and don’t forget to leave comments and questions below,
Sam Volkering
Editor-in-Chief
AI Collision
Hi Sam,
I am fully loaded with your recommendations, as well as John Butler and James Altucher. The conundrum for me is that I would have to sell to purchase high cost shares, but I definitely think this is a great investment opportunity for these quality companies.
Regards
Jim Hollands
P.S.
I should be receiving my Ledger Flex wallet tomorrow. Will need to revisit your book as well.