Tag: Alphabet

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AI creates paradigm shift in computing – programming AI is like training a person

Teaching or programing?

At London Tech Week, Nvidia CEO Jensen Huang made a striking statement: “The way you program an AI is like the way you program a person.” (Do we really program people or do we teach)?

This marks a fundamental shift in how we interact with artificial intelligence, moving away from traditional coding languages and towards natural human communication.

Historically, programming required specialised knowledge of languages like C++ or Python. Developers had to meticulously craft instructions for computers to follow.

Huang argues that AI has now evolved to understand and respond to human language, making programming more intuitive and accessible.

This transformation is largely driven by advancements in conversational AI models, such as ChatGPT, Gemini, and Copilot.

These systems allow users to issue commands in plain English – whether asking an AI to generate images, write a poem, or even create software code. Instead of writing complex algorithms, users can simply ask nicely, much like instructing a colleague or student.

Huang’s analogy extends beyond convenience. Just as people learn through feedback and iteration, AI models refine their responses based on user input.

If an AI-generated poem isn’t quite right, users can prompt it to improve, and it will think and adjust accordingly.

This iterative process mirrors human learning, where guidance and refinement lead to better outcomes.

The implications of this shift are profound. AI is no longer just a tool for experts – it is a great equalizer, enabling anyone to harness computing power without technical expertise.

As businesses integrate AI into their workflows, employees will need to adapt, treating AI as a collaborative partner rather than a mere machine.

This evolution in AI programming is not just about efficiency; it represents a new era where technology aligns more closely with human thought and interaction.

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Could DeepSeek deliver another shock to the stock market and to tech stocks in particular?

AI

DeepSeek’s impact probably isn’t yet fully reflected in U.S. stocks

The ramifications of the Chinese startup DeepSeek, with its promise of delivering cheaper and more energy-efficient alternatives to harness artificial intelligence (AI), have yet to be fully reflected in U.S. equities.

If DeepSeek ends up delivering a less costly way forward – it will make it much easier and cheaper for smaller more typical companies to create AI ‘agents’ or AI opportunities for their businesses.

Under this scenario there will be ‘useful’ and meaningful benefits from DeepSeek that could bring huge earnings potential for a broader mix of companies beyond the current AI heavyweights through greater efficiencies and productivity from less-expensive AI solutions.

AI spending race

When DeepSeek’s chatbot launched earlier this month in the U.S., it shocked Wall Street, prompting a historic $600 billion one-day wipeout for AI chip developer Nvidia.

It also put huge sums being pledged for AI infrastructure by U.S. mega cap tech companies under a microscope. Rather than back down, the U.S. spending race has intensified.

  • Meta’s Chief Executive Mark Zuckerberg spoke a week ago of spending ‘hundreds of billions of dollars’ on AI infrastructure in the coming years, after pledging $60 billion to $65 billion on AI this year.
  • Alphabet announced AI investment for 2025, a bigger figure than Wall Street was anticipating.
  • Google forecast $75 billion in capital expenditures in 2025, a bigger figure than Wall Street was anticipating.
  • Microsoft reported its cloud and AI spending grew 95% in its fiscal second quarter to $22.6 billion.
  • Amazon has reported big AI investment too.

The spending frenzy on anything AI sends the market into a spin. How much more has to be spent before we see capital expenditures reduced or decrease is anyone’s guess right now – but current levels of AI expenditure are high, and returns will be expected.

“When is enough, enough?”

Or more to the point you might ask – when is ‘enough’ too much?

Fresh AI-spending commitments helped lift shares of Nvidia on while we saw a slump for Tesla shares in the week.

China this week saw the U.S. slap new 10% tariffs, while Canada and Mexico saw Trump threaten but delay 25% tariffs by 30 days. China retaliated in kind.

Catching up with the ‘Magnificent Seven’

Despite the high scrutiny on AI stocks, there is also much renewed focus from investors on other areas of the market.

There has been a bit of a rotation – while tech has been under pressure, defensive and rate-sensitive parts of the market have been gaining. This seems to be an emerging pattern.

​But there should be reason for caution. For one thing, the growth rate of ‘Magnificent Seven’ earnings has been tailing off in recent quarters, especially since the group reached a 61% yearly rate in the fourth quarter of 2023 – the spend on AI investment has yet to fully appreciate the full return.

Forward analysts’ expectations have this percentage reportedly closer to 16% to 18% for the end of this year. 

But that also would move the group closer ​to the roughly 12% to 13% yearly growth rate expected for the rest of the companies in the S&P 500 index, potentially making the high valuations of the ‘Magnificent Seven’ tougher to justify.

One of the most surprising things of the past couple of weeks, given the news around DeepSeek and shocks on the trade front, is the fact that stocks were still close to their all-time highs.

The market is pretty resilient right now, but tech stocks are sitting at a very high valuation – a pullback is due, even a correction (in my opinion).

The arrival of DeepSeek creates an alternative ‘cheaper’ AI option and that will unravel the status quo.

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Google’s advertising business goes on trial

Google

The U.S. government is targeting the heart of Google’s vast wealth – its highly profitable monopolising advertising technology business

A trial scheduled to begin on Monday 9th September 2024 will scrutinise the Department of Justice’s (DoJ) claims that Alphabet, the parent company of Google, is unlawfully sustaining a monopoly in the marketplace.

In the previous year, the firm amassed over $200 billion (£152 billion) through the placement and sale of online advertisements.

Alphabet attributes its success to the ‘effectiveness’ of its business. Conversely, prosecutors contend that the company has leveraged its market control to stifle competition.

The legal action, launched by the Department of Justice (DoJ) and several states in 2023, charges Google with dominating the digital advertising market and employing its influence to obstruct innovation and competition.

Google asserts that it is simply one of numerous companies that arrange digital advertisement placements for consumers.

The corporation argues that the digital advertising industry is increasingly competitive, citing the growing advertising revenues of entities like Apple, Amazon, and TikTok as proof, as mentioned in a blog post responding to the DoJ’s lawsuit in 2023.

The contentions will be laid out before the U.S. District Judge who is expected to deliver a verdict.

This trial comes on the heels of a notable decision in a separate antitrust lawsuit against Google by the Justice Department last month. Judge Amit Mehta ruled that Google had illegally stifled competition in its online search services.

He reportedly stated that, “Google is a monopolist and has acted as such to maintain its monopoly.”

Alphabet one year chart

Alphabet one year chart
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Company says it can cut data centre energy use by 50% as AI boom places increased strain on power grids

Power hungry data centre

Major technology corporations such as Microsoft, Alphabet, and Meta are channelling billions into data centre infrastructures to bolster generative AI, which is causing a spike in energy demand.

Sustainable Metal Cloud has announced that its immersion cooling technology is 28% less expensive to install compared to other liquid-based cooling methods and can cut energy use by up to 50%.

The surge in artificial intelligence has increased the need for more robust processors and the energy to cool data centres.

This presents an opportunity for Sustainable Metal Cloud, which runs ‘sustainable AI factories’ consisting of HyperCubes located in Singapore and Australia.

These HyperCubes house servers equipped with Nvidia processors immersed in a synthetic oil known as polyalphaolefin, which is more effective at dissipating heat than air. The company claims this technology can reduce energy consumption by as much as 50% when compared to the conventional air-cooling systems found in most data centres.

Additionally, the Singapore-based company states that its immersion cooling technology is more cost-effective to install by 28% than other liquid cooling options. The HyperCubes are modular and can be integrated into any data centre, utilising spaces that are currently unoccupied within existing facilities.

What is a Hypercube?

  • Structure: A hypercube topology connects nodes in a way that each node is connected to others in a manner similar to the geometric hypercube. For example, in a 3-dimensional hypercube (a cube), each node is connected to three other nodes.
  • Scalability: This structure allows for efficient scaling. As the number of dimensions increases, the number of nodes that can be connected grows exponentially.
  • Fault Tolerance: Hypercube networks are known for their robustness. If one connection fails, there are multiple alternative paths for data to travel, ensuring reliability.

Benefits in data centres

  • High Performance: The multiple pathways in a hypercube network reduce latency and increase data transfer speeds, which is crucial for big tech companies handling vast amounts of data.
  • Efficient Resource Utilisation: The topology allows for better load balancing and resource allocation, optimising the performance of data centres.
  • Flexibility: Hypercube networks can easily adapt to changes in the network, such as adding or removing nodes, without significant reconfiguration.
  • Big Tech Companies: Companies like Google, Amazon, and Microsoft likely use hypercube topologies in their data centres to ensure high performance and reliability.
  • High-Performance Computing (HPC): Hypercube networks are also used in supercomputers and other HPC environments where efficient data transfer is critical.
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Judge ruling says Google’s monopoly of online searches is illegal

Judge

Too much monopolistic power held by too few

A U.S. judge has ruled that Google illegally maintained a monopoly in online searches and related advertising. The lawsuit, brought by the Department of Justice, charged Google with controlling around 90% of the online search market.

It was reportedly noted by the judge that Google’s billions of dollars in investments to become the default search engine on smartphones and browsers could be anticompetitive.

The decision, issued on Monday 5th August 2024, could potentially change how tech giants operate.

It was reported that in his extensive 277-page decision, Judge Mehta remarked, “Google has acted as a monopolist and engaged in anticompetitive practices to maintain its monopoly.”

This represents a significant victory for federal antitrust enforcers who have pursued similar cases against other leading technology companies for illegal monopolistic behaviours.

Companies like Meta Platforms, which operate Facebook and WhatsApp, as well as companies like Amazon and Apple., have also faced lawsuits from federal regulators.

The judgment comes after a 10-week trial where it was argued that Google’s substantial payments to remain the primary search engine have impeded the competition’s ability to challenge effectively.

This is a seismic shift in the way search engines and advertising may operate in the future. Already with the advent of AI, search engines look and feel different.

Recently, OpenAI launched ‘SearchGPT’ – and Microsoft have named it a competitor in the world of search engines.

Times are changing.

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$1 trillion rout as Markets punishes tech stocks

Stocks drop

The seven most valuable U.S. tech companies experienced a combined loss of $1 trillion in market value at the start of Monday’s trading session – 5th August 2024

The Nasdaq declined over 3% following its sharpest three-week drop in two years.

Nvidia’s shares fell approximately 6%, while Apple’s dropped more than 4%.

On Monday, as the U.S. markets commenced trading, the market capitalization of the largest tech companies plummeted by about $1 trillion, exacerbating a decline that pushed the Nasdaq into correction territory the previous week.

Markets go up and markets go down

In early trade Nvidia’s market cap decreased by over $300 billion, but it swiftly regained about half of that loss. The chipmaker’s shares ultimately closed down 6.4%, equating to a $168 billion loss. Apple and Amazon saw their valuations fall by $224 billion and $109 billion at market open. Apple’s market cap finished 4.8% lower, a $162 billion decrease. Amazon’s valuation fell by 4.1% at closing, a $72 billion reduction.

Including significant drops in Meta, Microsoft, Alphabet, and Tesla, the top seven tech giants saw a $995 billion loss in market value in the initial moments of trading, although they did recover somewhat as the day went on.

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OpenAI announces a search engine called SearchGPT

A new powerful search engine

OpenAI on Thursday 25th July 2024 announced a prototype of its search engine, called SearchGPT, which aims to give users “fast and timely answers with clear and relevant sources.”

The company has announced plans to eventually incorporate the tool, presently in testing with a select user group, into its ChatGPT chatbot.

The introduction of ChatGPT could have significant implications for Google’s search engine dominance. Since ChatGPT’s debut in November 2022, there has been growing concern among Alphabet’s investors that OpenAI may capture a portion of Google’s market share by offering consumers innovative methods to obtain information on the internet.

Alphabet three month share price as of 25th July 2024

Alphabet three month share price as of 25th July 2024

OpenAI’s ChatGPT was incorporated into Microsoft’s search engine Bing as Copilot and the companies have kept market dominance with this shrewd AI move. Google, on the other hand, has struggled to keep up in the AI race and may now be suffering the effects.

This announcement could have implications for Microsoft’s Copilot as well.

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U.S. stocks slip as Nasdaq tumbles for worst day since 2022 – Tesla and Alphabet fall

Stocks in the red

Stocks sold off Wednesday 24th July 2024, blighted by underwhelming reports from Tesla and Alphabet – leading the Nasdaq Composite and the S&P 500 to post their worst sessions since 2022.

The S&P 500 index dropped to closing at 5427, while the tech-heavy Nasdaq slid around 3.65% to end at 17342. The Dow Jones Industrial Average shed 504 points closing at 39853.

Nasdaq Comp one day chart 24th July 2024

Nasdaq Comp one day chart 24th July 2024

Shares of Google parent company Alphabet fell 5% for their biggest one-day drop since 31st January, when they dropped 7.5%. Although Alphabet reported good numbers, YouTube advertising revenue came in below the consensus estimate causing share to dip.

Alphabet one day chart 24th July 2024

Tesla shares declined around 12% – their worst day since 2020 – on weaker-than-expected results and a 7% year-on-year drop in auto revenue.

Tesla one day chart 24th July 2024

Nasdaq Comp one day chart 24th July 2024
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Nvidia passes Microsoft in market cap – should investors be concerned about the meteoric rise?

GPU power for AI

Nvidia, traditionally recognised within the gaming community for its graphics chips, has become the world’s most valuable publicly traded company.

On Tuesday 18th June 2024, Nvidia’s shares rose by 3.6%, increasing its market cap to $3.34 trillion and overtaking Microsoft, now valued at $3.32 trillion. Earlier in the month, Nvidia’s valuation reached $3 trillion for the first time, surpassing Apple.

Nvidia $3.34 trillion market cap

Nvidia $3.34 trillion market cap

So far this year, Nvidia’s shares have surged over 170% and saw further gains after announcing first-quarter earnings in May 2024. Since the close of 2022, the stock has increased more than ninefold, paralleling the rise of generative artificial intelligence.

Apple’s shares dropped by 1.1% on Tuesday, resulting in a market value of $3.29 trillion for the tech giant.

Nvidia commands roughly 80% of the market share for AI chips in data centres, a sector that has expanded rapidly as companies like OpenAI, Microsoft, Alphabet, Amazon, and Meta have competed to acquire the necessary processors for constructing AI models and managing growing workloads.

In the latest quarter, Nvidia’s data centre business saw a 427% increase in revenue from the previous year, reaching $22.6 billion and comprising approximately 86% of the company’s total sales.

Established in 1991, Nvidia initially focused on hardware, selling gaming chips for running 3D games. The company has also ventured into cryptocurrency mining chips and cloud gaming services.

However, in the last two years, Nvidia’s stock has soared as investors recognised its pivotal role in the AI boom, a trend that continues to accelerate. This surge has increased the net worth of co-founder and CEO Jensen Huang to an estimated $117 billion, ranking him as the 11th richest individual globally, according to Forbes.

But is the rise too fast and is it time for a share price valuation adjustment in its meteoric rise, to bring it back down to Earth?

Nvidia share price one year chart 18th June 2024

Nvidia share price one year chart 18th June 2024
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Alphabet shares climbed 15% after issuing first-ever dividend

Alphabet

Alphabet announced on Thursday 25th April 2024 that it is issuing its first-ever dividend of 20 cents per share and that its board has authorised a stock repurchase of up to $70 billion.

This announcement follows Meta’s board authorising its own inaugural dividend in February. As of 31st March 2024, Alphabet, the parent company of Google, had $108 billion in cash and marketable securities.

After the announcement, which coincided with the release of first-quarter earnings that surpassed expectations, shares surged by 15% in after-hours trading.

Alphabet trading chart 25th April 2024

Alphabet trading chart 25th April 2024
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EU launches probe into Meta, Apple and Alphabet

EU flag

On Monday, 25th March 2024, the European Union initiated its first investigation under the new Digital Markets Act, targeting Apple, Alphabet, and Meta for potential tech legislation breaches.

Statement

“Today, the Commission has opened non-compliance investigations under the Digital Markets Act (DMA) into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search, Apple’s rules on steering in the App Store and the choice screen for Safari and Meta’s ‘pay or consent model” – the Commission said in a statement.

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Apple and Alphabet reportedly in Gemini AI talks

AI mobile phone

Apple playing AI catchup

Apple is reportedly engaged in negotiations to acquire a licence for Google’s Gemini, a generative AI platform, with the intention of integrating it into iPhones. These ongoing discussions may result in Gemini enhancing iPhone software with new features later this year.

The terms, branding, and implementation details have not been finalised. This potential partnership could significantly impact the AI capabilities of future iPhones.

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Google halts Gemini AI image generator after it created inaccurate historical content

Gemini chatbot illustration

Google on Thursday 22nd February 2024 said it is pausing its Gemini artificial intelligence (AI) image generation feature after saying it offers ‘inaccuracies’ in historical pictures

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.

Is Google struggling to keep up with the AI race?

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.

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Magnificent 7 company profits now exceed almost every country in the world

Magnificent Seven market cap at $15 trillion

The Magnificent Seven, or MAMA ANT, is a term coined by Bank of America to describe the seven most dominant tech companies in the world

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.

Valuation at $15 trillion

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).

Magnificent Seven

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.

Challenges

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.

Conclusion

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.

List of 10 countries by stock market capitalization

List of 10 countries by stock market capitalisation

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.

Should we worry?

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…

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Microsoft and Alphabet report good numbers but Nasdaq slides.

Stocks

Nasdaq 100 futures declined around 0.75%. S&P 500 futures were also down around 0.4%

In after-hours trading, shares of Alphabet dropped more than 5%, while Microsoft slipped 2% after the tech giants, part of the Magnificent Seven posted quarterly earnings. However, both companies achieved on both top and bottom lines. However, advertising revenue for Alphabet came short of analysts’ expectations. 

Tech powerhouse

The tech sector powered the market rally from 2023 into 2024 and is now trading at a relatively high valuation of nearly 29 times its 2024 earnings, according to recent figures. Investors will need to see earnings expansion in order for the tech companies to be able to maintain their elevated levels.

Results were good but not good enough according to Wall Street as stocks were priced for perfection and that wasn’t delivered.

Even though the results were better-than-expected, investors are likely selling because they just want to take some money off the table.

Absolute perfection comes at a price on Wall Street.

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Google releases Gemini, its latest AI venture

Chatbot

Pressure mounts on the Google to demonstrate how it plans monetize AI.

Google has launched its largest and most capable (by its own admission) artificial intelligence (AI) model on Wednesday 6th December 2023 pressure mounts on the company to answer how it’ll monetize AI.

Gemini

The large language model Gemini will include a suite of three different sizes: Gemini Ultra, its largest, most capable category; Gemini Pro, which scales across a wide range of tasks; and Gemini Nano, which it will use for specific tasks and mobile devices.

Cloud

Google is reportedly planning to licence Gemini to clients through Google Cloud to use in their own applications. Developers and enterprise customers can access Gemini Pro via the Gemini API in Google AI Studio or Google Cloud Vertex AI.

Android

Android developers will also be able to build with Gemini Nano. Gemini will also be used to power Google products like its Bard Chatbot and Search Generative Experience, which tries to answer search queries with conversational-style text.

Ultra

Gemini Ultra is reportedly the first model to outperform human experts on MMLU (massive multitask language understanding), which uses a combination of 57 subjects such as math, physics, history, law, medicine and ethics for testing both world knowledge and problem-solving abilities, the company said in a blog post Wednesday 6th December 2023. 

It can supposedly understand nuance and reasoning in complex subjects.

Advanced

The company gave examples demonstrating Gemini being able to take a screenshot of a chart and analyse hundreds of pages from research and then updating the chart.

Another example was analyzing a photo of a person’s math homework and identifying correct answers and pointing out incorrect ones.

The future is artificial.

Definition of the word Gemini: Constellation, Astrological Sign or Twins in Latin.

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The Magnificent Seven Tech Stocks – STOCK WATCH

The Magnificent Seven

Top tech stocks

The Magnificent Seven is a term to describe seven tech’ stocks that have been surging in 2023.

  • Meta Platforms (formerly Facebook), the social media giant that also owns Instagram, WhatsApp, and Oculus.
  • Apple, the maker of the iPhone, iPad, Mac, Apple Watch, AirPods, and other popular devices and services including cloud and Apple TV streaming service.
  • Amazon, the e-commerce leader that also operates AWS, Prime Video, Alexa, and Whole Foods.
  • Alphabet, the parent company of Google, YouTube, Gmail, Google Cloud, and Waymo.
  • Microsoft, the software company that owns Windows, Office, Azure, LinkedIn, Xbox, and Teams.
  • Nvidia, the semiconductor company that produces graphics cards, gaming devices, data center solutions, and AI platforms.
  • Tesla, the electric vehicle maker that also develops solar panels, batteries, and autonomous driving technology.

Dominant

These seven stocks are considered to be dominant in their respective fields and have strong growth prospects driven by innovation and artificial intelligence (AI).

They have outperformed the broader market and attracted many investors who are looking for exposure to the tech’ sector. Some analysts believe that these stocks will continue to lead the market in the future, while others caution that they may face regulatory challenges, competition, or valuation issues.

Approximate combined market cap of the Magnificent Seven tech stocks

The approximate combined market cap value of the Magnificent Seven as of September 2023 is approximately $11.8 trillion.

  • Apple: $2.5 trillion
  • Microsoft: $2.3 trillion
  • Alphabet: $1.9 trillion
  • Amazon: $1.7 trillion
  • Nvidia: $0.8 trillion
  • Meta Platforms: $0.9 trillion
  • Tesla: $0.7 trillion

Note that these values will change over time as the stock prices fluctuate.

A way to trade the tech sector is through funds

There are many funds that can trade tech stocks, depending on your investment objectives, risk tolerance, and preferences.

Technology mutual funds: These are funds that invest in a diversified portfolio of technology companies across different industries, such as software, hardware, internet, cloud, biotech, and more. Technology mutual funds can offer exposure to the growth potential of the tech sector, as well as reduce the volatility and risk of investing in individual stocks. 

Some examples of technology mutual funds are Fidelity Select Technology Portfolio (FSELX), Columbia Global Technology Growth Fund (CGTYX), and Schwab U.S. Large-Cap Growth Index Fund (SCHG).

Which tech fund to invest in?

Technology exchange-traded funds (ETFs): These are funds that track an index of technology stocks and trade on an exchange like a stock. Technology ETFs can offer low-cost and convenient access to the tech sector, as well as allow investors to choose from different themes, such as cybersecurity, artificial intelligence (AI), cloud computing and more. 

Some examples of technology ETFs are Invesco QQQ Trust (QQQ), Technology Select Sector SPDR Fund (XLK), and VanEck Vectors Semiconductor ETF (SMH).

Technology index funds: These are funds that replicate the performance of a specific technology index, such as the Nasdaq 100, the S&P 500 Information Technology Index, or the Morningstar U.S. Technology Index. Technology index funds can offer broad and passive exposure to the tech sector, as well as low fees and high tax efficiency.

Some examples of technology index funds are Fidelity NASDAQ Composite Index Fund (FNCMX), Vanguard Information Technology Index Fund Admiral Shares (VITAX), and iShares Morningstar U.S. Technology ETF (IYW).

NOTE: These are not recommendations. Investments may go up or down. Your money is at risk!

Always do your own research…

REASEARCH! REASEARCH! RESEARCH!

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Arm looking for up to $52 billion valuation in U.S. IPO

Arm Holdings

Chip design firm Arm on 5th September 2023 submitted an updated filing for its upcoming initial public offering on the New York Stock Exchange, setting a price range between $47 and $51. Only 9.4% of Arm’s shares will be freely traded on the NYSE.

Arm was previously listed in London and New York, before SoftBank acquired it for $32 billion in 2016.

Chip design firm Arm on Tuesday is looking to acquire as much as $4.87 billion in its upcoming initial public offering on the New York Stock Exchange, according to the new filing.

The deal could value the company at as much as $52 billion

As a British company, Arm qualifies as a foreign private issuer in the U.S. and its shares will count as American depositary shares, or ADS’s. It is reported that the company will list some 95.5 million ADS’s at a price range of between $47 and $51. At the upper end of that range it is estimated that Arm will likely raise up to $4.87 billion. At the lower end, the IPO would fetch $4.49 billion of fresh capital for Arm. It could do even better.

Institutional funds

When the company floats in New York, it will look to enjoy a very deep pool of professional institutional funds. Arm seeks to ramp up its investments in research and development, particularly as it pursues growth in the artificial intelligence (AI) space with some of its newer chips. The company recently released new chips specifically targeted at AI and machine learning use cases.

Arm AI chip
Arm seeks up to $52 billion valuation in U.S. IPO

Upper end

At the upper end of the pricing range, Arm would also touch a total valuation of $52 billion or more. Only 9.4% of Arm’s shares will be freely traded on the New York Stock Exchange, with SoftBank expected to own roughly 90.6% of the company’s outstanding shares after the completion of the IPO.

Arm’s listing is set to be the biggest technology IPO of the year. Investors are hoping that the listing could breathe new life into an IPO market that has been ‘slack’ since 2022.

250 billion chips globally

Arm says its energy-efficient processor designs and software platforms are integrated into more than 250 billion chips globally, into products ranging from sensors and smartphones to supercomputers.

The company estimates it enjoys approximately 48.9% share of the market for semiconductor design. Other players, such as Intel and AMD, have raced to catch up on designing their own chip architectures, but have struggled so far.

U.K. misses out… again

The U.K. government had originally hoped Arm would list on the London Stock Exchange, but the company instead dealt a major blow to Britain’s ambitions to become the leading global tech hub by opting for New York. The U.S. financial center has a deep institutional investor base and analysts who have a close understanding of the technology sector.

BIG interest

Chip design firm Arm said in a Tuesday filing that Apple, Google parent Alphabet, Nvidia and other technology companies are interested in buying up to $735 million in its shares as it seeks to go public on Nasdaq.

The investments might not happen, but the fact that these companies are considering them underlines the importance of Arm, whose designs are used for processors in data center servers, consumer devices and industrial products.

ARM chip
Arm chip – some 250 billion chips globally

Chip makers Intel, Samsung and TSMC are interested in investing alongside the three trillion-dollar technology companies, along with AMD and MediaTek, which make chip designs based on Arm architectures. Cadence Design Systems and Synopsys, which make electronic design automation software for processor development, have also expressed interest, according to a revised prospectus for Arm’s shares sale. This IPO could easily be the biggest of the 2023!

As part of the deal, Arm could wind up with a $52 billion market capitalization and almost $5 billion in new cash.

This is likely to be the biggest IPO of 2023

It is estimated that there will be about 19 billion devices using the Arm processor in the world by the end of 2023.

Arm target

The market share of Arm across different technology markets worldwide, which was 90% for mobile application processors, 34% for embedded computing, and 5% for data center and cloud in 2019. 

Arm has a target of increasing its market share to more than 90%, 50%, and 25% respectively by 2028.