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Big Tech keeps stock market rally goingOn Wednesday, shares of Apple, Microsoft and Nvidia surged, sending both the S&P 500 and Nasdaq to record highs, while the Dow Jones Industrial Average, which is less heavily weighted to tech stocks, moved 300 points shy of its all-time high of $40,077, reached in May.
The main drivers of the stock market surge in 2024 have been Apple, Microsoft, and Nvidia. Apple's market capitalization hits a record high of $3.57 trillionThe company became the first company to surpass a $3.5 trillion valuation, while NVIDIA wrote that it hit a three-week high of $3.32 trillion. Forbes By Derek Saul, Senior Reporter. Taiwan Semiconductor Manufacturing Co. (TSMC), a maker of silicon chips, is on its way to becoming the next trillion-dollar company. The company's shares rose 3.5% on Wednesday, giving it a market capitalization of $991 billion.
The reason for this rise, like many in recent months, is enthusiasm for AI. Apple has told suppliers and partners that it Shipments of the new iPhone 16 are expected to increase by about 10% Before Apple unveiled its AI platform, Apple Intelligence, in June for the final quarter of the year, the company's shares had been falling due to slowing iPhone sales, especially in China, Bloomberg reported.
Both the iPhone 16 and Apple Intelligence are months away from reaching consumers. Given the widespread adoption of the iPhone, Apple Intelligence is likely to drive greater use and access to generative AI than any platform released to date, but the current rally is purely speculative. It will be interesting to see whether investors continue to attach value to these technology companies. After all, they may be looking to buy even more after their planned AI is actually available to the public. Apple, Microsoft, and Nvidia already have huge valuationsThat's more than last year's combined GDP of Germany and Japan, and the combined market capitalization of the 350 smallest companies in the S&P 500.
As the market clearly shows, many investors are putting money into AI. But what does that mean in practical terms?What's in store for the technology and for the companies that want to adopt it? I spoke to Ronnie Gurion, a longtime business growth analyst and COO at Clio, about this issue. Excerpts of our conversation appear later in this newsletter.
Featured News
Lionel Bonaventure/AFP via Getty Images
As stock prices rose this week, Microsoft also made a surprise move. He gave up his seat on the OpenAI board of directors.Apple, which played a comparable role, did the same. Microsoft has a close partnership with OpenAI, investing $10 billion in the company last year and signing a profit-sharing agreement that will reportedly see the company own 49% of the company. When OpenAI's board of directors temporarily fired co-founder and CEO Sam Altman last November, Microsoft announced it had hired Altman to lead a new AI project, and more than 700 OpenAI employees signed a letter of intent to join Altman. Microsoft filled the non-voting positions on OpenAI's board of directors after the reorganization and Altman's return.
Microsoft's withdrawal likely has nothing to do with business strategy or a desire to work with popular AI developers. It has to do with regulatory oversight.The United States and the EU have both announced that they are investigating the relationship between the two companies. The EU dropped its investigation last month, but the Federal Trade Commission's investigation remains open. A FTC official told Reuters that Microsoft's withdrawal is unlikely to affect its investigation, but Alex Hafner, a competition law partner at British law firm Fladgate, said: Forbes The survey showed that older businesses wanting to work with companies specialising in new technologies “will need to consider carefully how they structure these arrangements in the future”.
Policies + Regulations
Ismail Aslandag/Anadolu via Getty Images
Meta's attempts to circumvent EU rules on sharing personal information for advertising purposes violate those rules.The European Commission announced last week that a preliminary investigation found the model to be “unsafe.” Meta introduced a “pay or consent” model for Facebook and Instagram in EU markets late last year, offering either a monthly subscription to an ad-free version of the social network or free access to a personalized, ad-supported version, but the Commission found that the model essentially “forces users to consent to the combination of their personal data.”
The ruling is provisional and Mehta will have the opportunity to defend himself in writing before a final decision is made in March 2025. Mehta said he believes the subscription model his company offers complies with the law.Mehta said it would continue a “constructive dialogue” with regulators on the issue as it “complies with the directions of the European Supreme Court.”
Meta is the latest US company to face an adverse ruling in the EU.European regulators last month published preliminary findings that Apple's App Store stifles competition by not allowing developers to freely navigate non-Apple payment methods and content.
artificial intelligence
HPE's Antonio Neri and Nvidia's Jensen Huang, seen small on a wraparound screen inside The Sphere, presented their companies' joint proposal for an AI private cloud.
Moore Insights & Strategy
While the AI plans of big companies like Apple and Microsoft tend to dominate the headlines, Several other companies have also deployed AI solutions in recent weeks.Hewlett Packard Enterprise plans to release a turnkey HPE Private Cloud AI solution based on NVIDIA hardware and HPE software, storage, servers and cloud. At an event in Las Vegas last month, HPE and NVIDIA executives demonstrated how easy it would be to orchestrate, the company wrote. Forbes “The entire product is so deeply integrated that it only takes a few clicks to get started,” said Patrick Moorhead, Senior Contributor. “And because it includes the full stack of software, it makes it easy to manage your AI systems right out of the box.”
Qualcomm has been working to improve on-device AI with its Snapdragon chips.,write Forbes Contributor Karl Freund writes that rival Arm has been improving its chips for both smartphones and PCs. Forbes Anshel Sag, contributor at Moor Insights and Strategy contributor group. Last month at Computex, Arm unveiled new CPUs that are optimized for performance and improve efficiency for regular processing and AI functions.
Bits + Bytes
Clio's Ronnie Gurion talks AI investments
Clio COO Ronnie Gulion.
Clio
There's been a lot of money pouring into AI lately, but what does it mean for investors and for companies looking for the best solutions for their business? I spoke about this with Ronnie Gurion, a business growth strategist with over 20 years of experience in a variety of technology-dependent companies and currently COO at legal SaaS provider Clio. This conversation has been edited for length, clarity, and continuity.
AI startups are some of the best-funded companies out there. Are these funds being allocated properly?
Glion: The nature of venture-backed, early-stage businesses means the entire model is predicated on a home run. By definition, most at-bats aren't home runs. Very clever. [investors]There's good reason why companies that have been through many innovation cycles in the past are pouring huge amounts of capital into this space, because it's where a lot of the most successful companies are going to come from.
Overall, I think we're in a good position, but as with any big innovation or early-stage investment cycle, there's a lot of risk involved. We're in that phase right now. It's still very early stages. A lot of these are pre-revenue, building cool technology.
But what's interesting is, what I think a lot of companies generally underestimate is the value and benefit of distribution. Even if you build a great technology, often the real challenge in scaling up and getting to the promised land is the challenge of distribution. That's why I think while you see a lot of early stage startups in this space, you also see articles every day of more established companies building and releasing really compelling AI capabilities. I think that's why incumbents like Clio are successful, combined with the trust and security, existing customer relationships, and the nature of integrating AI capabilities into existing workflows and existing capabilities. [can] It unlocks the superpowers of what AI can do and in many ways mitigates the risk, as some of these startups have to build everything from scratch.
As corporate valuations for AI plans and solutions rise, are we approaching a situation similar to the “dot-com bubble” of the early 2000s?
The AI bubble you're referring to is a natural part of the technology adoption curve. I started business school at Berkeley at the peak of Internet 1.0; I was right in the middle of it. By the time I graduated, the bubble had burst and things changed completely 180 degrees. Looking back, it was a huge learning experience. It was painful for a lot of people, but I think it was a great foundational thing that continues to this day, despite the massive decades of growth and rise in technology that we've seen in the last 20 years. I think when you go through a bubble burst like Internet 1.0, it stays with you for your entire career.
For those of us who have been through a few of these cycles, there is certainly a lot of pattern recognition here. I think we are in the middle of the next wave right now. And that's because there is so much opportunity. There are very smart investors and very smart business builders acting rationally, but there is also so much risk. That's the nature of business. It's a bit like a movie or a pop song. When you have hundreds of thousands of companies entering this space, it will aggregate to a certain number. We're in the early stages of figuring out who the winners are going to be. Ultimately, many of the companies will never get value.
This is still a viable endeavor because the size of the pie is so large that we believe there will be overall returns, even if not at the individual company level.
What advice would you give to companies considering adopting AI in terms of what they should look for, what they should invest in, and how to move from concept to solution?
I think you have to be really thoughtful and careful. Not only are these solutions extremely valuable, but they're also extremely powerful. You have to be really thoughtful about how you use the solutions that you put in place, how you educate your employees on the security protocols and governance that you need to put in place, and there are also costs that can be a surprise to employees when you put these in-house solutions in place if you don't understand them properly.
There are a lot of opportunities, but like anything, it needs to be well thought out and planned, and by working with more established players that you know have really thought it through and put in the extra effort around security, data privacy issues and quality of the solution. [could be valuable]rather than just rushing to market. Depending on your risk tolerance and the type of company you are, you need to really think about your internal operations around these things and which vendors you ultimately work with and how vetted they are.
Facts + Comments
China files more patent applications for generative AI tech According to a report by the World Intellectual Property Organization, this figure is more than all other countries combined.
38,210: Number of Chinese patent applications since 2014
6,276: US applications second only to China
“The number of patents does not necessarily reflect their quality or the impact of innovation.” Van An Le, assistant professor of intellectual property law at Durham University, said: Forbes
Strategy + Advice
AI is powerful, but Human intelligence remains crucialHere's how we can continue to harness the power of our people.
There are few regulations governing AI, Any solution must be ethicalHere's how to find out:
video
quiz
Starting in November, Google Chrome will no longer trust digital security certificates From which provider?
A. Consignment
B. DigiCert
C. Godaddy
D. SSL
Check here if your answer is correct.