Observe. Think. Chat. Do. Trade. Repeat…
Japan’s Nikkei 225 ended some 90 points shy of breaching the 40000 level, leading gains in Asia stocks on Friday 1st March 2024.
As tech giant Nvidia soars on hype around artificial intelligence (AI), and as global stock indexes claim record highs, debate has grown about whether the stock market has entered a ‘bubble.’
We are reminded of the dotcom bubble where investment was rife in anything tech – so, are we now potentially facing a new tech bubble – an AI bubble of boom?
That’s generally seen as a period in which asset prices inflate rapidly, potentially beyond their core value; and risk crashing just as fast.
Other AI stocks are chasing the dream too adding to the hype. However, some are in the slow lane playing catch-up and this may suggest there is much, much more to come.
The likes of AMD, Intel, Amazon, OpenAI, Arm and a myriad of other tech companies big and small have much more AI to bring to the tech table.
If we look at the valuation of Nvidia, justifiably it is actually very high, too high even – that’s the first sign of a potential problem, valuation. The second issue is investor positioning – whenever you have a market bubble, investors are very clustered or very concentrated, either in one market or in one sector as a whole.
It doesn’t matter which markets you look at – the U.S., Europe or Asia markets – the problem is the same. We now have an historic valuation between the tech sector, the AI sub-sector of the tech sector, and the rest of the market.
Investors are very clustered in this tech sector. However, some leading commentators say of tech that this is not hype – this is real. It most probably is, for now, and with much more to come from the smaller tech and AI companies that have yet to show their true AI value. But all bubbles burst in the end.
There is certainly plenty of room for AI to grow – it’s in its infancy – but the question is: ‘how and when will the bubble burst? Because, in my humble opinion, it most certainly will.
We may not see a dramatic market crash like 1999-2000 or 2007/2008, but an investor rotation out of areas of concentration into the broader market will likely happen.
If you look at the bubbles of 1999-2000, and then in 2007/2008, one key characteristic was investor leverage. And we had, whether it was retail investors or institutional investors, a very high level of leverage, and that was either through borrowings or it was through derivatives.
The AI tech boom has legs but there will almost inevitably be a rotation from AI to other sectors – that will then adjust the overvalued AI sector. And it could pullback quite hard.
Be ready!
At 8.4%, India’s economy expanded at its fastest pace in six quarters, data showed late Thursday, on strong private consumption and upbeat manufacturing and construction activity. Reuters estimates had pegged growth in the October to December period at 6.6%.
Prime Minister Narendra Modi posted on the social media platform X, that it shows ‘the strength of Indian economy and its potential.’
India is forecast to leap ahead of Japan and Germany as the world’s third biggest economy in the next few years.
The better-than-expected growth was led by a strong performance by the country’s manufacturers, with the sector expanding by 11.6% in the period.
Private consumption, which makes up almost two-thirds of the country’s gross domestic product (GDP), also rose by 3.5%.
India is on a tear.
The personal consumption expenditures (PCE) price index, excluding food and energy costs, increased 0.4% for the month and 2.8% from a year ago, as expected according to analyst’s predictions.
Headline PCE, including the volatile food and energy categories, increased 0.3% monthly and 2.4% on a 12-month basis according to the numbers released Thursday 29th February 2024 by the Commerce Department’s Bureau of Economic Analysis.
The data was released amid an unexpected jump in personal income, which rose 1%, well above the forecast for 0.3%. Spending decreased 0.1% vs. the estimate for a 0.2% gain.
U.S. inflation target is 2%.
Ultra-pure water is a critical resource in semiconductor fabrication plants (fabs). It is used for cleaning, cooling, and various processing steps during chip production.
Microchips power our devices—computers, smartphones, sensors, and LEDs—all of which rely on water-intensive manufacturing processes.
Freshwater availability is unevenly distributed worldwide. While oceans contain 97% of water (mostly saline), accessible freshwater constitutes only a small fraction.
Approximately four billion people experience severe water scarcity for at least one month annually, and half a billion face it year-round.
Taiwan, a semiconductor manufacturing hub, faces a severe drought. Over 20% of global microchips are produced there.
Water shortages threaten supply chains, potentially impacting chip production.
Creating fully self-sufficient local supply chains would cost $1 trillion. Such self-reliance could increase semiconductor costs by up to 65%.
Urgent action is needed to ensure sustainable water management in fabs, as chips control everything from cars to appliances.
In conclusion, water scarcity poses a real danger to semiconductor production. Addressing this challenge requires strategic planning, conservation efforts, and global cooperation.
Will the problem of water scarcity exacerbate the uneven distribution of water around the world as the rich have easier access to the precious resource.
Will the explosion of AI tech push the imbalance – water is a basic necessity to maintain human life. Will AI have a hand in controlling the distribution of water – even for its own needs?
Samsung’s Galaxy Ring, its latest wearable, is launching with health-tracking features including heart rate and sleep monitoring.
These are all concept tech that gadget makers showed off this week in a bid to stand out from competitors.
At the Mobile World Congress in Barcelona, companies from Lenovo to ZTE showed off displays for their devices.
ZTE showed off a second-generation tablet that displays three-dimensional images. Typically, 3D images have required some sort of glasses to view, as is the case with 3D movies in theatres.
But this screen produces a 3D image without glasses.
China’s Lenovo showed a prototype of a laptop with a see-through display.
The company, which is the world’s largest PC maker, showed how an object can be placed behind the screen and detected by the device’s cameras. Information about the object would be displayed on the screen.
In recent days, Google’s artificial intelligence (AI) tool, Gemini, has faced intense criticism online. As the tech giant’s answer to the OpenAI/Microsoft chatbot ChatGPT, Gemini can respond to text queries and even generate images based on prompts. However, its journey has been far from smooth.
The issues began when Gemini’s image generator inaccurately portrayed historical figures. For instance, it depicted the U.S. Founding Fathers with a black man, and German World War II soldiers included both a black man and an Asian woman.
Google swiftly apologized and paused the tool, acknowledging that it had “missed the mark.”
But the controversy didn’t end there. Gemini’s text responses veered into over-political correctness. When asked whether Elon Musk posting memes was worse than Hitler’s atrocities, it replied that there was “no right or wrong answer.” In another instance, it refused to misgender high-profile trans woman Caitlin Jenner, even if it meant preventing nuclear apocalypse. Elon Musk himself found these responses “extremely alarming.”
The root cause lies in the vast amounts of data AI tools are trained on. Publicly available internet data contains biases, leading to embarrassing mistakes. Google attempted to counter this by instructing Gemini not to make assumptions, but it backfired. Human history and culture are nuanced, and machines struggle to grasp these complexities.
Google now faces the challenge of striking a balance: addressing bias without becoming absurdly politically correct. As Gemini evolves, finding this equilibrium will be crucial for its survival.
After all, it’s not just about AI, is it? It’s about navigating the delicate intersection of technology, culture, and ethics.
Nuance refers to the subtle, intricate, or delicate aspects of something. It encompasses the fine distinctions, shades of meaning, and context-specific interpretations that add depth and complexity to a situation, conversation, or piece of art. In essence, nuance recognizes that not everything can be neatly categorized or expressed in black-and-white terms; rather, it acknowledges the richness and variability of human experiences and ideas. Whether in literature, politics, or everyday interactions, appreciating nuance allows us to navigate the complexities of life with greater understanding and empathy.
The EV project consumed immense resources over the past 10 years, with executives from the company making an unexpected announcement. The decision to halt the program marks a significant retreat from Apple’s previous strategy.
Apple has never publicly acknowledged the project, which was rumoured to involve some two thousand people.
While the electric car dream may have faded, Apple’s focus on cutting-edge technology continues as it shifts towards AI innovation.
But how much more innovation and profit is there left to squeeze from the iPhone?
The gains came on the back of MicroStrategy disclosing another large purchase of about 3000 Bitcoins for $155 million.
Analysts see a flow of funds into Bitcoin ETFs and the asset’s upcoming halving event as other bullish factors.
Intuitive Machines’ cargo lander, Odysseus, returned its first images from the moon’s surface over the weekend.
The company’s historic IM-1 mission is now operating on the moon after landing on Thursday 22nd February 2024, becoming the first privately developed spacecraft to soft land on the lunar surface.
Despite resting on its side, Odysseus is still sending back data. Intuitive Machines expects Odysseus to operate until Tuesday morning, when its solar panels will no longer be exposed to the sun.
Intuitive Machines’ stock fell 35% in trading on Monday 26th February 2024 to close down at $6.27 a share.
Japan’s Nikkei 225 index hit a new all-time high on Monday 26th February 2024. In contrast China markets slipped after a nine-day winning streak.
The Nikkei 225 ended 0.4% higher at 39233 comfortably above its previous closing record of 39,098.68. The index breached its 1989 all-time high of 38915 on Thursday 22nd February 2024.
Rolls-Royce, a prominent jet engine manufacturer for commercial aircraft along with power systems for ships and submarines and other major projects posted an underlying operating profit of £1.6 billion in 2023, compared to £652 million in 2022.
Rolls-Royce was the top performer in the UK’s FTSE 100 in 2023, climbing over 200% on the back of a profit forecast upgrade and the announcement in November 2023 that profits ‘could‘ quadruple by 2027.
Intuitive Machines’ Nova-C cargo lander, named ‘Odysseus’ after the mythological Greek hero, is the first U.S. spacecraft to soft land on the lunar surface since 1972.
Japan, India and China have all had recent successful moon mission ahead of the U.S.
Intuitive Machines is the first company to pull off a moon landing – government agencies have carried out all previously successful missions.
The company’s stock surged in extended trading Thursday, after falling 11% in regular trading.
The targeted landing site was a cratered terrain next to a 5km-high mountain complex known as Malapert. It’s the southernmost point on the Moon ever visited by a spacecraft.
It’s on the shortlist of locations where Nasa is considering sending astronauts later this decade as part of its Artemis programme.
It is reported that there are some deep craters in this region that never see any sunlight – they’re permanently in shadow – and scientists believe frozen water could be inside them.
Art illustration on Intuitive Machines luna lander
Users had been reporting that the AI tool generated images of historical figures, like the U.S. Founding Fathers as people of colour, calling this inaccurate.
Google posted a statement on Thursday 22nd February 2024, saying that it will pause Gemini’s feature to generate images of people and will re-release an ‘improved’ version soon.
The image generator tool was launched at the start of February 2024 through Gemini, which was orignally called Bard.
It is facing challenges at a time when Google is trying to catch up with Microsoft-backed OpenAI project, Copilot.
Microchip maker Nvidia reported much stronger-than-expected quarterly results, lifting tech sector and markets higher.
The S&P 500 gained just over 2% to close at 5087, notching its best day since January 2023. The Nasdaq Composite advanced 2.96% for its best day since February 2023, closing at 16041 and ever closer to its all-time high.
The tech-heavy index is very close now to its all-time closing high of 16,057.44.
The Dow Jones Industrial Average surged 456 points to surpass 39000 for the first time ever and close at a new high of 39069.
Other tech names were also higher. Meta and Amazon gained about 3.9% and 3.5%. Microsoft and Netflix each advanced more than 2%.
Shares of Nvidia climbed around 16% to an all-time high after the company said total revenue rose a massive 265% from a year ago.
Nvidia, which has become one of the largest U.S. companies by market capitalization, also forecast another stellar revenue gain for the current quarter.
The technology company at the heart of the AI chip boom reported its Q4 earnings after the stock market’s close on Wednesday 21st February 2024, beating expectations for both earnings and sales. The company’s total revenue is up 265% from a year ago.
Investors are looking to Nvidia’s latest quarterly earnings report to see whether the company’s meteoric growth can last.
Nvidia makes powerful computer chips that power popular AI tools like OpenAI’s ChatGPT and Microsoft’s Copilot. High demand for those chips has propelled the company into the exclusive trillion-dollar club.
As of market close on 21st February 2024 the company’s market cap sat at $1.667 trillion, putting it behind Alphabet’s $1.779 trillion market cap. It’s also behind Microsoft and Apple, which hold market caps of $2.988 trillion and $2.819 trillion, respectively.
Nvidia’s stock price has been on an upward trajectory so far this year. Shares have gained by nearly 40% since the beginning of 2024. On top of that, they’ve soared by over 225% in the last 12 months.
Although short-term demand for Nvidia’s AI chips has been strong, major companies such as Microsoft and Meta have indicated interest in buying them from other companies.
If you had invested $1,000 in Nvidia five, 10 or 24 years ago, here’s how much your investment would be worth now.
$1,000 in Nvidia five years ago, your investment would have increased by an eye-watering 1,015% and be worth around $17,542 as of 20th February 2024.
If you had invested $1,000 in Nvidia 10 years ago, your investment would have soared by about 22,340% and be worth around $148,226 as of 20th February 2024.
But, if you had invested $1,000 in Nvidia in January 1999, when Nvidia first went public, your investment would have grown by around 277,708% and be worth close to $2,784,065 as of 20th February 2024.
AI has only just started.
The rally was propelled by electronics, banking and consumer stocks as robust earnings and investor-friendly measures fuel a blistering rally in Japanese equities.
The Nikkei 225 jumped 2%, surpassing the previous record high of 38,915.87 reached in 1989.
Both the Nikkei and the broader Topix have been standout performers in Asia up more than 10% so far in 2024 after surging more than 25% in 2023. Their best annual gains in at least a decade.
Japan Inc’s solid third-quarter corporate earnings have prompted Bank of America analysts to upgrade their 2024 year-end forecasts for the Nikkei 225 to 41000 from 38500. They raised their forecasts for the Topix to 2,850 from 2,715.
The rally has also been supported by a weaker yen.
However, the latest test failed when the missile’s booster rockets didn’t function correctly and plopped into the sea near the launch site.
This is the second time in a row that a Trident missile test has failed, raising concerns over the reliability and safety of the UK’s nuclear weapons system. The defence secretary and the head of the navy were on board the submarine HMS Vanguard when the test went wrong.
The Ministry of Defence said the nuclear deterrent remains ‘safe, secure and effective’ and that the issue was specific to the test and would not affect a real launch. So that’s reassuring to hear then.
However, some critics have called for an inquiry into the incident and questioned the need for spending billions of pounds on renewing the Trident programme.
This is highly embarrassing for both the UK and the U.S. and for the manufacturer of the Trident missile.
It has been sold to developer MCR Hotels for £275 million ($346.6 million).
The 189-meter structure has loomed over the capital city’s central Fitzrovia since 1965, when it opened as the Post Office tower.
It carried telecommunications signals from London to the rest of the country, but its microwave aerials were made redundant more than a decade ago.
It was also known for a revolving restaurant on its 34th floor, which took 22 minutes to complete a rotation.
MCR Hotels owns 150 properties, including the TWA Hotel located in the former TWA Flight Centre at JFK International Airport in New York, USA.
The Office for National Statistics noted that the country’s public finances usually run a surplus in January, unlike during other months, as receipts from annual self-assessment tax returns come in.
Combined self-assessment income and capital gains tax receipts totaled £33 billion in January, the ONS noted, down £1.8 billion from the same period of last year.
Total government tax receipts came in at a record £90.8 billion, up £2.9 billion compared to January 2023.
Government borrowing during the financial year spanning to the end of January 2024 was £96.6 billion, £3.1 billion lower than over the same 10-month period a year ago and £9.2 billion lower than the £105.8 billion previously forecast by the independent Office for Budget Responsibility.
Albert Einstein 1879 – 1955 was a German-born theoretical physicist who is widely held to be one of the greatest and most influential scientists of all time.
That’s the fear spreading through Wall Street as another inflation reading on Friday 16th February 2024 came in hotter-than-expected.
The producer price index rose 0.3% in January 2024. The largest increase since August 2024 and higher than the 0.1% forecast. Excluding food and energy, core PPI jumped 0.5%, again well above consensus.
It is yet another sign of stubborn price pressures across the broader U.S. economy. And it came just days after an unexpectedly hot CPI reading, which gave markets a nasty jolt.
Both data have stoked investor worries on whether inflation is firmly under control. The latest developments also reinforce the Fed’s caution that it will need to see more evidence of disinflation before committing to lower rates.
Mohamed El-Erian, Allianz chief economic advisor, posted on X that like the CPI data, the PPI report was a further indication that the last mile of the inflation battle is more complex than many had assumed (and still assume).
Some economists even argue the jump in Friday’s data will likely push January’s personal consumption expenditures price index, the Fed’s preferred inflation gauge.
The PPI data means we can finalise our core PCE forecast for January, at 0.32%. That would be the biggest increase since September. But the three months since then all saw much smaller gains.
But investors will have to wait until later this month for PCE data when it’s released on 29th February 2024.
The Seven are: Microsoft, Amazon, Meta Platforms, Apple, Nvidia, Tesla, and Alphabet. These companies have not only led the tech sector in terms of innovation, growth, and profitability, but have also become some of the most valuable entities in the world by market capitalization.
Market capitalization, or market cap, is the total value of all the shares of a company that are traded on the stock market. It reflects the market’s perception of the company’s future prospects and earnings potential.
As of January 2023, the Magnificent Seven had a combined market cap of about $15 trillion, which was more than the gross domestic product (GDP) of almost every country in the world, except for the United States, China and Japan (just).
The Magnificent Seven have achieved such a remarkable feat by leveraging their core competencies in various fields of technology, such as artificial intelligence (AI), cloud computing, social media, e-commerce, gaming, electric vehicles, and online advertising. They have also diversified their revenue streams by acquiring or developing new products and services, such as Activision Blizzard, AWS, Oculus, iPhone, GeForce, SpaceX, and YouTube. They have also benefited from the increased demand for digital solutions amid the Covid-19 pandemic, which accelerated the adoption of online platforms, remote work, and entertainment.
However, the Magnificent Seven also face some challenges and risks that could threaten their dominance and valuation. These include increasing competition from other tech companies, especially from China, such as Alibaba, Tencent, Baidu, and Huawei.
They also face regulatory scrutiny and pressure from governments and consumers over issues such as antitrust, privacy, taxation, content moderation, and environmental impact. Furthermore, they may encounter technical difficulties, security breaches, or ethical dilemmas that could damage their reputation and customer trust.
In conclusion, the Magnificent Seven are the most powerful and influential tech companies in the world, and their market cap surpasses that of almost every country in the world.
The meteoric rise in the profits and market capitalisations of the Magnificent 7 U.S. tech giants: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla – outstrip those of all listed companies in almost every G20 country. Of the non-U.S. G20 countries, only China and Japan (and the latter, only just) have greater profits when their listed companies are combined.
They have achieved this by exploiting their competitive advantages in various domains of technology and expanding their offerings and markets. However, they also need to overcome some challenges and risks that could hamper their growth and value in the future.
A forced size reduction to stop the monopolising of market share could help tame these beasts too and open up fairer competition.
Basically, yes, we should be concerned about the size and dominance of these companies.
This level of wealth and power concentrated in just a handful of companies has led some analysts to voice concerns over related risks in the U.S. and global stock markets.
Economists and stock market analysts have cautioned that the U.S. stock market is rivalling 2000 and 1929 in terms of being at its most concentrated in history.
The rest is history…
The twenty companies have signed an accord committing them to fighting voter-deceiving content. They say they will deploy technology to detect and counter the material.
The Tech Accord to Combat Deceptive Use of AI in 2024 Elections was announced at the Munich Security Conference on Friday 16th February 2024.
The issue has come into sharp focus because it is estimated up to four billion people will be voting this year in countries such as the U.S., UK and India.
Among the accord’s pledges are commitments to develop technology to mitigate risks related to deceptive election content generated by AI, and to provide transparency to the public about the action firms have taken.
Other steps include sharing best practice with one another and educating the public about how to spot when they might be seeing manipulated content.
Signatories include social media platforms X, Snap, Adobe and Meta, the owner of Facebook, Instagram and WhatsApp.
However, the accord has some shortcomings, according to computer scientist Dr Deepak Padmanabhan, from Queen’s University Belfast, who has co-authored a report on elections and AI.
But he reportedly said they needed to take more proactive action instead of waiting for content to be posted before then seeking to take it down.
That could mean that realistic AI content, that may be more harmful, may stay on a platform for longer compared to obvious fakes which are easier to detect and remove, he suggested.
The accord’s signatories say they will target content which deceptively fakes or alters the appearance, voice, or actions of key figures in elections.
It will also seek to deal with audio, images or videos which provide false information to voters about when, where, and how they can vote.
We have a responsibility to help ensure these tools don’t become weaponised in elections, Brad Smith, the president of Microsoft is reported to have said.
These measures, in my opinion, are a sticking plaster and will not stop the spread of dishonest and fake news!
Nuclear reactors can provide a reliable, stable, and carbon-free source of electricity for power-hungry data centres, which are essential for the operation of various applications, such as artificial intelligence (AI).
Nuclear reactors can also reduce the dependence on the existing grid, which may be vulnerable to blackouts, fluctuations, or cyberattacks. On the other hand, nuclear reactors require a high initial investment, as well as strict safety and regulatory standards. Nuclear reactors also pose potential risks of radiation, waste disposal, and proliferation. Moreover, nuclear reactors may not be suitable for all locations, as they may face public opposition, environmental concerns, or geopolitical issues.
One of the possible solutions to these challenges is to use small modular reactors (SMRs), which are advanced reactors with about a third of the power generation of a traditional, large nuclear plant. SMRs are designed to be more flexible, scalable, and cost-effective than conventional reactors, as they can be built off-site and transported to the desired location. SMRs can also be integrated with renewable energy sources, such as solar or wind, to create a hybrid system that can balance the power demand and supply.
However, the technology of SMRs is still in its early stages of development and deployment, and there are currently no data centres in the world that use built-in nuclear reactors. Therefore, it remains to be seen whether nuclear reactors will become a common or viable option for future data centres. The decision to use nuclear reactors for data centres should be based on a careful evaluation of the benefits and risks, as well as the alternatives and trade-offs, of each specific case.
It has been calculated that a ‘norma’ data centre (whatever that is), needs 32 megawatts of power flowing into the building. For an AI data centre, it’s closer to 80 megawatts.
AI systems are using all this extra electricity simply because they are doing so much more processing than standard computing. They are chewing through far more data.
As AI continues to develop, so too will the power requirement needed to run these monsters.