(Bloomberg) — Taiwan Semiconductor Manufacturing Co. expects a return to solid growth this quarter and gave itself room to raise capital spending in 2024, suggesting the world’s most valuable chipmaker anticipates a recovery in smartphone and computing demand.
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The main chipmaker to Apple Inc. and Nvidia Corp. projected revenue growth of at least 8% to $18 billion to $18.8 billion in the March quarter, versus expectations for around $18.2 billion. And it’s budgeting capital expenditure of $28 billion to $32 billion, potentially up from 2023’s $30 billion.
The Taiwanese company’s outlook, while not quite surpassing the most bullish estimates, comes after a years-long slump in tech demand. But signs of a recovery for the chipmaking sector have emerged in recent weeks. The Semiconductor Industry Association estimated chip sales increased in November after more than a year of declines. Chief Executive Officer C. C. Wei reiterated he expects a return to “healthy growth” this year.
TSMC, which also counts Android chipmaker Qualcomm Inc. among its biggest customers, got a boost from frenzied demand for Nvidia’s artificial intelligence chips in 2023. It reported net income for the fourth quarter of NT$238.7 billion ($7.6 billion), beating the average analyst estimate. Revenue was $625.5 billion, TSMC reported earlier, matching the previous holiday quarter and arresting a series of falls.
“Our business has bottomed out on a year-over-year basis, and we expect 2024 to be a healthy growth year for TSMC,” Wei said.
Click here for a liveblog on the numbers.
What Bloomberg Intelligence Says
TSMC could lead global chip foundries through 2023-24 industry headwinds thanks to growing AI chip demand and migration to next-gen process nodes such as N3 in 2H23 and N2 by 2025. Although the smartphone and PC chip market remains stagnant, TSMC’s advanced packaging tech, both 2.5D and 3D, fortifies its position in the contract-chipmaking market, allowing a potential return to a 53% gross margin following a brief 2H downturn.
— Charles Shum, analyst
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TSMC’s revenue should grow in the low- to mid-20% range this year, Wei said. That’s a rebound from the modest decline of last year.
Over the course of 2023, TSMC moderated its capital expenditure plans as the consumer electronics industry grappled with a glut of unsold inventory.
But uncertainty persists. This month, fellow chipmaker Samsung Electronics Co. posted its sixth successive quarter of declining operating profit, as it weathered the impact of muted consumer demand in its own smartphone and memory businesses.
Questions also overshadow China, the world’s largest computing, smartphone, internet and chip market.
Apple — long one of TSMC’s most important customers — faced headwinds with its latest iPhone generation. Several analysts downgraded Apple on expectations of soft demand, and Jefferies has said the iPhone sales slump in China is likely to deepen. The US company has also been hit by a widening ban on foreign-device use among Chinese agencies and state-owned companies.
Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City.
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Strong retail sales U.S. retail sales came in higher than expected for the last month of 2023 in a sign that holiday shopping picked up. Retail sales for December increased 0.6% vs. the 0.4% rise expected in a Dow Jones estimate. The rise was driven by clothing, accessories and online shopping.
Dimon in Davos JPMorgan Chase CEO Jamie Dimon was one of the more highly anticipated guests at the World Economic Forum in Davos, Switzerland. Dimon discussed a variety of topics ranging from financial to geopolitical risks. He was also seen praising former U.S. President Donald Trump’s stance on the U.S. economy, immigration and taxes.
Apple Watch sales banned in U.S. again The U.S. Court of Appeals for the Federal Circuit reinstated a sales ban on Apple’s watches with blood oxygen sensors. The ban will take effect Thursday, affecting both the Apple Watch Series 9 and Ultra 2 models. The injunction stems from an intellectual property dispute with medical device maker Masimo.
[PRO] Cheap energy stocks The pros say some pockets of the energy market are poised for a jump after taking a beating last year. The energy sector was the second biggest loser on the S&P 500 last year. The CNBC Pro Screener Tool says they could still do well as companies in the sector are cheap and are seen rising over 10% their average price targets.
It’s only the third week of the new year and markets are slowly heading into a cycle of good data being received as bad news — at least from an equity standpoint.
Treasury yields, however, have risen this week boosted by comments from Federal Reserve Governor Christopher Waller on Tuesday. The yield on the benchmark 10-year Treasury note continued to trade higher Wednesday, crossing the 4% mark on the back of better-than-expected U.S. retail sales for December.
The data showed American consumers somewhat loosened their purse strings in the last month of 2023. But for Wall Street, that was hardly any reason to celebrate based on how aggressively markets have been pricing in interest rate cuts by the Federal Reserve.
Waller’s comments on Tuesday at Davos about the U.S. central bank taking its time to cut rates this year, came as a sharp contrast to markets expecting the Fed’s first rate cut of 2024 to come as early as March.
“The Fed was already hammering away on its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.
About 55% of traders tracked by the CME Group’s FedWatch tool expect a 25 basis point rate cut in March, falling from 63% a day earlier.
Wall Street analysts revealed bold predictions on four portfolio stocks this week, as investors digested the latest inflation data and December earnings season kicked off. Here’s a summary of each report, along with the Club’s updated take on each. Morgan Stanley Wall Street’s take: HSBC cut Morgan Stanley’s rating to hold from buy on Monday, citing weaker guidance for the firm’s wealth management business. “We have cut our earnings estimates notably for Morgan Stanley in recent months even as the share price has risen, leading to a material increase in the PE (c15x 2024e) despite a softening outlook for wealth management (a higher multiple business) revenue,” analysts wrote ahead of the bank’s Jan. 16 earnings release. MS 1Y mountain Morgan Stanley 1 year The Club’s take: We don’t blame analysts for stepping to the sidelines. Bank stocks have had a stellar performance over the past couple of months, and when expectations are high heading into earnings it can lead to sell-the-news events. And to be fair, weakness in its Wealth Management unit was the driver behind the stock’s near 7% decline on earnings in October. Still, Morgan Stanley has strong growth prospects from its investment banking segment, a business we see improving on a better macroeconomic outlook and a pickup in deal activity. The company is scheduled to report its fourth-quarter earnings next Tuesday before the opening bell. Apple Wall Street’s take: Redburn Atlantic downgraded shares of Apple to neutral from buy on Wednesday, citing limited growth opportunities. “While we expect the iPhone to return to growth in CY24, we see little room for upside over the next few years, and an anticipated underwhelming March quarter could impact confidence in this outlook. At the same time, there appears to be rising regulatory risk that may impact Apple’s ability to monetize its ecosystem,” analysts argued. AAPL 1Y mountain Apple 1 year The Club’s take: After Apple’s nearly 50% gain in 2023, it’s fair to assume shares may cool off in the new year. In fact, we trimmed our Apple position, along with seven other tech holdings, in anticipation of investors allocating to other high-quality areas of the market. Still, our “hold it, don’t trade it” mantra on the company stands. Ongoing services revenue growth and the upcoming launch of the Vision Pro have the potential to change the narrative around sluggish iPhone sales. Palo Alto Networks Wall Street’s take: Morgan Stanley named Palo Alto Networks the bank’s top cybersecurity pick on Wednesday. The firm highlighted “multiple growth drivers” for the stock, along with rising security threats, regulatory guidelines and generative artificial intelligence as tailwinds for the sector broadly in 2024. “PANW remains our top security pick, given our confidence in durability of growth, broader platform adoption and low expectations with valuation increasingly attractive at 22X EV/CY25 FCF for 20%+ FCF CAGR,” analysts contended in the research note. “Our most recent checks indicate a notable demand uptick in CQ4 vs CQ3, with Next-Gen offerings (Cortex XSIAM, SASE) contributing more meaningfully to topline growth. Given recent underperformance and relatively mixed investor sentiment, we see a more favorable setup here.” PANW 1Y mountain Palo Alto Networks 1 years The Club’s take: We’ve said time and time again that Palo Alto will outperform its peers and gain market share as businesses consolidate their security budgets around providers that offer a full suite of solutions. This multiyear theme has helped the company become the first in its group to record a $100 billion market cap , a long-held goal by management. But $100 billion won’t be the ceiling due to Palo Alto’s leadership in one of the most important investment categories of IT spending. Salesforce Wall Street’s take: Baird analysts upgraded Salesforce stock to buy from hold on Thursday. “We underestimated the company’s willingness to deliver margins, which drove strong performance last year. With current valuation (~25x NTM FCF) near historical lows, top-line growth and expectations muted (Street +11% next two years), we see upside from current levels,” the analysts wrote. “Price increases, the potential return of front office spend, and crisper sales execution should drive upside.” CRM 1Y mountain Salesforce 1 year The Club’s take: Baird’s comments were a call made too late. The cloud software stock already surged 98% in 2023 as CEO Marc Benioff & Co. embraced the input of activist investors and committed to margin expansion. But after a historic run like this, investors shouldn’t jump the gun as gains of this size are bound to be followed by a breather. (Jim Cramer’s Charitable Trust is long AAPL, PANW, CRM, MS, WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023.
Brendan Mcdermid | Reuters
Wall Street analysts revealed bold predictions on four portfolio stocks this week, as investors digested the latest inflation data and December earnings season kicked off. Here’s a summary of each report, along with the Club’s updated take on each.
Apple CEO Tim Cook, left, and Microsoft CEO Satya Nadella.
Reuters
Microsoft ended Friday’s U.S. trading session as the most valuable publicly traded company, surpassing Apple after briefly topping the iPhone maker during intraday trading Thursday.
Shares of Microsoft climbed more than 3% for the week, bringing the company’s market cap to $2.89 trillion, while Apple’s stock dropped by over 3%, lowering its valuation to $2.87 trillion.
Redburn Atlantic Equities analyst James Cordwell downgraded Apple to neutral from buy on Wednesday, citing “little room for upside over the next few years” in iPhone growth and an “anticipated underwhelming March quarter.”
Apple said Thursday that former Vice President Al Gore will retire from the company’s board next month after serving as a director since 2003.
Microsoft, meanwhile, got a vote of confidence Thursday after discussing its artificial intelligence capabilities to developers at an event in San Francisco. Piper Sandler analysts told clients in a note that they were “encouraged by the momentum around the most mature AI products” and mentioned that GitHub website traffic has accelerated year over year for three months in a row. The analysts have the equivalent of a buy rating on Microsoft shares.
Apple had been the most valuable public company for over a year, following brief periods when that distinction was held by Saudi Aramco and Microsoft.
There are plenty of stocks other than the so-called “Magnificent Seven” that are appealing right now, top money managers told CNBC on Thursday. The mega-cap tech stocks that make up the ” Magnificent Seven ” — Apple , Alphabet , Meta , Microsoft , Amazon , Nvidia and Tesla — each gained at least 48% last year. They make up about a quarter of the S & P 500’s total market share. While you can still have high growth in those stocks, there should be a broadening out of the rally and other stocks that should do well, said Bryn Talkington, managing partner at Requisite Capital Management, in a CNBC Pro Talks interview with Bob Pisani. For one, software stocks such as Salesforce are adjacent to the Magnificent Seven, have done well and have a “very long trajectory,” she said. Outside of that, she likes the Invesco S & P 500 Equal Weight ETF (RSP) to get that broad access. “We bought it this year, because we’re saying, ‘Hey, these are cheap stocks. We’re going to own 500 large-cap stocks, we just treat them equally,'” Talkington said. Meanwhile, Kevin Simpson, founder and chief investment officer at Capital Wealth Planning, likes “old school” technology names such as Broadcom , Cisco and IBM . “They have made acquisitions that bring them into the 21st century,” he said. “While you’re waiting for things to have that breadth, getting a very solid, consistent and increasing dividend is something that makes us very comfortable as shareholders.” Talkington also likes dividend names, such as energy stocks. One name on her list is Diamondback Energy . “This company is a juggernaut of … free cash flow yield,” she said. The energy names Simpson owns are Chevron and ConocoPhillips .
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Mondays’ key moments. 1. U.S. stocks were mixed Monday as markets regrouped after last week’s losses. Gains were concentrated in the tech sector. The Nasdaq shot up more than 1% after the opening bell. Major winners in the group included Nvidia , which hit an all-time high early Monday. Amazon and Apple shares bounced and pushed the Nasdaq higher, too. The S & P 500 was up modestly while the Dow Jones Industrial Average edged a bit lower. 2. Wall Street analysts came to Apple’s defense after a series of new year downgrades . Evercore ISI told clients to buy last week’s dip in a new research note. Morgan Stanley analysts also said to stick with Apple on generative artificial intelligence efforts. To be sure, the Club trimmed positions in our Magnificent Seven positions (we own all of them except Tesla ) and others last week, including a small sale of Apple after last year’s rally outsized the position relative to the rest of our portfolio. We remain bullish on Apple because of its solid underlying fundamentals and growth prospects. 3. Big banks will begin to report quarterly earnings this week. Wells Fargo is slated to post fiscal results on Friday. Baird downgraded the Club name to neutral from buy ahead of the release. Analysts said the risk/reward for Wells Fargo is more balanced after the stock’s recent run-up. We feel the same way heading into the release, preferring to see expectations low rather than high. (Jim Cramer’s Charitable Trust is long NVDA, AMZN AAPL, WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A ‘now hiring’ sign is displayed in a retail store in Manhattan on January 05, 2024 in New York City.
Spencer Platt | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Hot jobs market The U.S. labor market added 216,000 jobs in December. That’s much more than the 170,000 expected by economists surveyed by Dow Jones, and the downwardly revised 173,000 jobs added in November. The unemployment rate held steady at 3.7%, defying estimates of a 10-basis-point rise. Meanwhile, average hourly earnings rose 4.1% from a year earlier, higher than the 3.9% forecast.
Losing week U.S. stocks inched up slightly Friday, but couldn’t reverse a weekly decline. Treasury yields ticked up for the second day, with the 10-year yield closing at 4.051%. The pan-European Stoxx 600 index retreated 0.27%. Retail stocks fell 1.1%, leading sector losses, after data showed German retail sales fell 2.5% for the month, much more than estimates of a 0.1% slide.
Grounded airplanes The U.S. Federal Aviation Administration has ordered a temporary grounding of the Boeing 737 Max 9 aircraft, which means airlines won’t be able to use those particular Boeing models for flying. The directive comes after a piece of the aircraft blew out in the middle of an Alaska Airlines flight, leaving a gaping hole on the side of the plane.
Potential Apple lawsuit Apple just can’t catch a break. Fresh off a downgrade to its shares by Barclays and Piper Sandler, the technology giant is potentially facing an antitrust lawsuit by the U.S. Department of Justice, according to a report from The New York Times. The lawsuit could target how the Apple Watch works exclusively with the iPhone, as well as the company’s iMessage service, which excludes non-Apple devices.
[PRO] Numbers to watch The U.S. consumer price index report comes out Thursday this week, and will be the major catalyst for markets as investors assess if the U.S. Federal Reserve is edging closer to its goal of keeping inflation at 2%. But don’t neglect Friday, which is jam-packed with earnings reports from big banks such as JPMorgan Chase, Citigroup and Bank of America.
The headline number on the U.S. jobs report’s undeniably startling — 216,000 new jobs in December, compared with an expected 170,000. The unemployment rate defied forecasts for it to fall, while average hourly earnings were higher than estimates too.
The data suggests the U.S. labor market’s still running hot despite the 11 interest-rate hikes implemented by the Federal Reserve.
But the numbers aren’t so drastic that rate hikes could be back on the table. Look more closely and you’ll find pockets of weakness in the report.
The headline number, expectation-busting as it is, probably won’t persuade the Fed to resume hiking.
“While the Dow Jones estimate is for a nonfarm payrolls gain of 170,000, Art Hogan, chief market strategist at B. Riley Financial, said the acceptable range is really something like 100,000-250,000,” CNBC’s Jeff Cox noted.
Consider also how October and November’s jobs numbers were downwardly revised, which point to a weaker-than-expected labor market last quarter. And when viewed on an annual basis, 2023 saw job growth of 2.7 million, dramatically lower than 2022’s addition of 4.8 million jobs.
The theme of growth continuing — but slowing — was also seen in December’s ISM services index, which measures business activity, such as price and inventory levels. The reading came in at 50.6%, indicating growth in the service sector, but that’s nearly two percentage points below expectations as well as November’s reading.
That’s probably why stocks managed to eke out small gains Friday, despite the shock of the headline jobs number.
But those marginal increases couldn’t prevent major indexes from registering their first negative week in 10. For the week, the S&P fell 1.52%, the Dow lost 0.59% and the Nasdaq slumped 3.25%, its biggest decline since September.
Investors hoping for a positive catalyst for markets will be keeping their fingers crossed, hoping December’s consumer price index report comes in cooler than expected.
Apple suppliers’ shares have come under pressure over forecasts for weak demand from the iPhone maker this year. That follows Apple’s shares falling 3.6% on Tuesday after Barclays downgraded Apple’s stock to a sell-equivalent rating. The Wall Street bank cited lower iPhone 15 sales, which is meant to signal a softening of demand for the yet-to-be-released iPhone 16. As the world’s most valuable company with more than $380 billion in annual sales, any drop in demand will be felt across the company’s supply chain worldwide. The table below lists the Apple suppliers whose shares trade highly correlated to Apple’s own, according to data from FactSet. That means those stocks win when Apple shares rise and lose when the iPhone maker falls. A correlation of 1 suggests that when Apple’s share price rises, the supplier’s stock should also increase by the same proportion. Conversely, a correlation of -1 would indicate that when the supplier’s stock rises, Apple’s shares fall by the same proportion. Investors should note that future returns can be uncertain as the correlation analysis relies on historical stock price performance and company disclosures of their relationship with Apple.
Apple CEO Tim Cook attends the annual session of China Development Forum (CDF) 2018 at the Diaoyutai State Guesthouse in Beijing, China March 26, 2018.
Jason Lee | Reuters
Apple shares slipped more than 2% in pre-market trading Tuesday, after Barclays downgraded the stock to underweight and slightly trimmed its price target from $161 to $160.
Barclays analyst Tim Long wrote in a note to clients Tuesday that the iPhone 15’s currently “lackluster” sales, specifically in China, presaged similarly weak iPhone 16 sales — weakness that Long expects will hold true for Apple’s hardware sales broadly.
“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables,” Long wrote. Analysts and investors had noted specific weakness in China iPhone sales as far back as October.
Bloomberg has previously reported that the Chinese government has issued informal guidance forbidding state employees from using iPhones. The Chinese government has denied issuing such guidance.
Long expects that Apple’s lucrative services business will also see decelerated growth, in part due to regulatory scrutiny. Gross margin in Apple’s services businesses is roughly double the margin Apple makes on all its hardware products, and Apple CEO Tim Cook highlighted “better-than-expected” growth in that unit on an earlier investor call.
But Barclays doesn’t necessarily believe that growth is reliable in the long term.
“In 2024, we should get an initial determination on the Google TAC, and some app store investigations could intensify,” Long wrote, referring to the payments Google makes to Apple to retain its default search status.
Shares of Apple Inc. are starting 2024 with a selloff, after Barclays analyst Tim Long said it was “time for a breather,” citing weak hardware sales as iPhone 15 demand disappoints.
“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables,” Long wrote in a note to clients. “The biggest takeaway from the latest checks is incrementally worse [iPhone] 15 data points out of China, together with developed markets remaining soft.”
He cut his rating on the stock AAPL, -0.54%
to underweight from neutral, and trimmed his price target to $160 from $161. The new target implies about 17% downside from Friday’s closing price of $192.53.
The stock slumped 1.8% in premarket trading Tuesday, putting it on track to open at a seven-week low.
Long said iPhone 15 sales have been “lackluster” and believes Phone 16 sales will be the same, as he expects other hardware categories to remain weak. He said it’s time for investors to take a “breather” on the stock, as he doesn’t think it can keep rallying in the face of downbeat demand data, like it did in 2023.
“We expect reversion after a year when most quarters were missed and the stock outperformed,” Long wrote.
He expects Apple to report “in-line” fiscal first-quarter results, which runs through December, but he trimmed his second-quarter to further below consensus expectations.
He now expects earnings per share and revenue for the quarter through March to be down in the low-single-digit percentage range, while the FactSet consensus calls for EPS to be up 2.6% at $1.57 and revenue to rise 1.1% to $95.8 billion.
Apple’s stock surged 48.2% in 2023, or almost double the S&P 500 index’s SPX
gain of 24.2%, even as revenue for each quarter of fiscal 2023 through September was below that of a year ago.
Long is now one of just four of the 44 analysts surveyed by FactSet who are bearish on Apple’s stock, while 27 (61%) are bullish and 13 are neutral. His $160 price target is 19.2% below the average target of $197.92.
The Nasdaq MarketSite in the Times Square neighborhood of New York, on Tuesday, May 31, 2022.
Michael Nagle | Bloomberg | Getty Images
Tech stocks rebounded from a disastrous 2022 and lifted the Nasdaq to one of its strongest years in the past two decades.
After last year’s 33% plunge, the tech-heavy Nasdaq finished 2023 up 43%, its best year since 2020, which was narrowly higher. The gain was also just shy of the index’s performance in 2009. Those are the only two years with bigger gains dating back to 2003, when stocks were coming out of the dot-com crash.
The Nasdaq is now just 6.5% below its record high it reached in November 2021.
Across the industry, the big story this year was a return to risk, driven by the Federal Reserve halting its interest rate hikes and a more stable outlook on inflation. Companies also benefited from the cost-cutting measures they put in place starting late last year to focus on efficiency and bolstering profit margins.
“Once you have a Fed that’s backing off, no mas, in terms of rate hikes, you can get back to the business of pricing companies properly — how much money do they make, what kind of multiple do you put on it,” Kevin Simpson, founder of Capital Wealth Planning, told CNBC’s “Halftime Report” on Tuesday. “It can continue into 2024.”
While the tech industry got a big boost from the macro environment and the prospect of lower borrowing costs, the emergence of generative artificial intelligence drove excitement in the sector and pushed companies to invest in what’s viewed as the next big thing.
Nvidia was the big winner in the AI rush. The chipmaker’s stock price soared 239% in 2023, as large cloud vendors and heavily funded startups snapped up the company’s graphics processing units (GPUs), which are needed to train and run advanced AI models. In the first three quarters of 2023, Nvidia generated $17.5 billion in net income, up more than sixfold from the prior year. Revenue in the latest quarter tripled.
Jensen Huang, Nvidia’s CEO, said in March that AI’s “iPhone moment” has begun.
“Startups are racing to build disruptive products and business models, while incumbents are looking to respond,” Huang said at Nvidia’s developers conference. “Generative AI has triggered a sense of urgency in enterprises worldwide to develop AI strategies.”
Consumers got to know about generative AI thanks to OpenAI’s ChatGPT, which the Microsoft-backed company released in late 2022. The chatbot allowed users to type in a few words of text and start a conversation that could produce sophisticated responses in an instant.
Developers started using generative AI to create tools for booking travel, creating marketing materials, enhancing customer service and even coding software. Microsoft, Google, Meta and Amazon touted their hefty investments in generative AI as they embedded the tech across product suites.
Amazon CEO Andy Jassy said on his company’s earnings call in October that generative AI will likely produce tens of billions of dollars in revenue for Amazon Web Services in the next few years, adding that Amazon is using the models to forecast inventory, establish transportation routes for drivers, help third-party sellers create product pages and help advertisers generate images.
“We have been surprised at the pace of growth in generative AI,” Jassy said. “Our generative AI business is growing very, very quickly. Almost by any measure it’s a pretty significant business for us already. And yet I would also say that companies are still in the relatively early stages.”
Amazon shares climbed 81% in 2023, their best year since 2015.
Microsoft investors enjoyed a rally this year unlike anything they’d seen since 2009, with shares of the software company climbing 58%.
In addition to its investment in OpenAI, Microsoft integrated the technology into products like Bing, Office and Windows. Copilot became the brand for its broad generative AI service, and CEO Satya Nadella described Microsoft last month as “the Copilot company.”
“Microsoft’s partnership with OpenAI and subsequent product innovation through 2023 has resulted in a market dynamic shift,” Michael Turrin, a Wells Fargo analyst who recommends buying the stock, wrote in a Dec. 20 note to clients. “Many now view MSFT as the outright leader in the early AI wars (even ahead of market share leader AWS).”
Meanwhile, Microsoft has been cranking out profits at a historic rate. In its latest earnings report, Microsoft said its gross margin exceeded 71% for the first time since 2013, when Steve Ballmer ran the company. Microsoft has found ways to more efficiently run its data centers and has lowered reliance on hardware, resulting in higher margins for the segment containing Windows, Xbox and search.
Microsoft CEO Satya Nadella (R) speaks as OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. Altman delivered the keynote address at the first ever Open AI DevDay conference.
Justin Sullivan | Getty Images
After Nvidia, the biggest stock pop among mega-cap tech companies was in shares of Meta, which jumped almost 200%. Nvidia and Meta were by far the two top performers in the S&P 500.
Meta’s rally was sparked in February, when CEO Mark Zuckerberg, who founded the company in 2004, said 2023 would be the company’s “year of efficiency” after the stock plummeted 64% in 2022 due largely to three straight quarters of declining revenue.
The company cut more than 20,000 jobs, proving to Wall Street it was serious about streamlining its expenses. Then growth returned as Facebook picked up market share in digital advertising. For the third quarter, Meta recorded expansion of 23%, its sharpest increase in two years.
Like Meta, Uber wasn’t around during the dot-com crash. The ride-hailing company was founded in 2009, during the depths of the financial crisis, and became a tech darling in the ensuing years, when investors favored innovation and growth over profit.
Uber went public in 2019, but for a long time battled the notion that it could never be profitable because so much of its revenue went to paying drivers. But the economic model finally began to work late last year, for both its rideshare and food delivery businesses.
That all allowed Uber to achieve a major investor milestone earlier this month, when the stock was added to the S&P 500. Members of the index must have positive earnings in the most recent quarter and over the prior four quarters in total, according to S&P’s rules. Uber reported net income of $221 million on $9.29 billion in revenue for its third quarter, and in the past four quarters altogether, it generated more than $1 billion in profit.
Uber shares climbed to a record this week and jumped 149% for the year. The stock, which is listed on the New York Stock Exchange, finished the year as the sixth-biggest gainer in the S&P 500.
Despite the tech rally in 2023, there was a dearth of new opportunities for public investors during the year. After a dismal 2022 for tech IPOs, very few names came to market in 2023. The three most notable IPOs — Instacart, Arm and Klaviyo — all took place during a one-week stretch in September.
For most late-stage companies in the IPO pipeline, more work needs to be done. The public market remains unwelcoming for cash-burning companies that have yet to show they can be sustainably profitable, which is a problem for the many startups that raised mountains of cash during the zero-interest days of 2020 and 2021.
Even for profitable software and internet companies, multiples have contracted, meaning the valuation startups achieved in the private market will require many of them to take a haircut when going public.
Byron Lichtenstein, a managing director at venture firm Insight Partners, called 2023 “the great reset.” He said the companies best positioned for IPOs are unlikely to debut until the back half of 2024 at the earliest. In the meantime, they’ll be making necessary preparations, such as hiring independent board members and spending on IT and accounting to make sure they’re ready.
“You have this dynamic of where expectations were in ’21 and the prices that were paid then,” Lichtenstein said in an interview. “We’re still dealing with a little bit of that hangover.”
—CNBC’s Jonathan Vanian contributed to this report
Apple CEO Tim Cook stands next to a new Apple Vision Pro headset displayed during the Apple Worldwide Developers Conference in Cupertino, California, June 5, 2023.
Justin Sullivan | Getty Images
Apple’s stock rallied in 2023, but its performance was outshined by all of its mega-cap tech peers, as the company suffered four straight quarters of declining revenue. It’s the longest such slide for Apple since the dot-com bust of 2001.
But Apple also dealt with some company-specific issues. Apple didn’t release new iPad models in 2023, the first time that’s happened in a calendar year since the product was launched in 2010. Without new models, Apple has less to promote, and older versions of the product don’t see official price cuts that boost sales.
Earlier this month, all current model iPads were shipping from Apple’s website in a day, according to Morgan Stanley analysts. That’s a sign of weak demand because with the hottest products, Apple doesn’t have enough supply to ship that quickly.
In fiscal 2023, which ended in September, Apple’s iPad revenue dropped 3.4% to $28.3 billion. On a unit basis, iPad sales were even worse, falling 15%, according to a recent estimate from Bank of America analyst Wamsi Mohan. Apple doesn’t report unit sales.
To make matters worse, new Apple Watch models were removed from Apple stores in the U.S. days before Christmas over an intellectual property dispute. After a late December appeal, the devices have been returned to store shelves, but Morgan Stanley analysts estimate Apple lost about $135 million in sales per day during the brief ban.
Even for Apple’s new products, like Mac computers, consumers showed less interest in opening their wallets for devices with minor upgrades. Sales of Mac PCs and laptops fell nearly 27% to $10.2 billion in fiscal 2023. Unit sales declined 11%, according to Bank of America’s estimate.
Apple shares still managed to jump 49% for the year as of Thursday’s close, topping the Nasdaq’s 44% gain. However, investors were better off betting on any of the other most-valuable tech companies. Nvidia shares more than tripled this year, and Meta climbed almost 200%. Tesla’s stock more than doubled, Amazon rose 83%, Alphabet jumped 59% and Microsoft gained 57%.
In order to return to revenue growth and support its $3 trillion market cap, Apple needs some new products to hit and global demand for smartphones and laptops to recover.
A big test will come early next year, when Apple’s first mixed-reality headset — the $3,499 Vision Pro — hits the market.
“We believe success with the Vision Pro is less about 2024 and more about its longer-term potential,” Morgan Stanley analyst Erik Woodring wrote in a note this month.
Assuming Apple ships 400,000 headsets, Vision Pro revenue could be about $1.4 billion next year, according to an estimate from UBS analyst David Vogt. He called the sum “relatively immaterial.”
Enthusiasm will be the key. The Vision Pro is Apple’s first completely new device since it announced the Apple Watch, and it will be sold through Apple stores. The headset could generate foot traffic and buzz for Apple’s existing products. And there’s a chance that it catches on enough to show that Apple has the lead when it comes to the future of computing.
Looking overseas, Apple would like to see an easing of tensions between the U.S. and China.
In 2023, Apple made significant progress diversifying its centers of production away from mainland China and into countries like Vietnam and India. But its moves to expand its supply chain appear to have awakened an impulse in the Chinese government to classify Apple as a foreign company. The White House called reports that Chinese government agencies told their employees not to bring iPhones to work “retaliation.”
The Chinese government has denied them. Yet analysts are starting to worry that Chinese demand for iPhones, especially in the current quarter, is flagging. The iPhone remains Apple’s most important hardware product, accounting for about half of total company revenue.
“Heading into the holiday season, iPhone unit demand remains the key near-term debate amidst macro woes and concerns around potential share loss in China on the resurgence of Huawei,” Citi analyst Atif Malik wrote in a note this month.
Despite its struggles, Apple remains a juggernaut. The company recorded $383 billion in total revenue in fiscal 2023 and earned nearly $97 billion in net income.
Because the smartphone and PC markets were in retreat, Apple gained market share in some countries, where rivals saw steeper declines. In February, Apple said it had 2 billion devices in use, a closely watched metric that investors see as a predictor of future sales from software and services.
Apple is preparing new iPads for next year, which could boost demand, according to Bloomberg. The company has submitted a software update for its watches to the U.S. government that it hopes will clear up the intellectual property dispute that briefly banned sales. IPhones still have a speed advantage over Huawei’s new devices, partially thanks to import restrictions on chips and chip equipment.
In November, Apple CFO Luca Maestri said the company’s December quarter — its biggest of the year — will be flat compared with last year. He warned that Macs, Wearables and iPads would see a sales drop.
But according to analyst estimates, the total sales declines are in the rearview mirror, with mild growth expected in the first half of the year and acceleration after that.
“Overall, the downturn appears to be over, and we believe it is time to see mild growth,” Bank of America analyst Simon Woo wrote in a report this month.
Chinese smartphone company Xiaomi revealed on Dec. 28, 2023, its forthcoming electric car, the SU7 sedan.
CNBC | Evelyn Cheng
BEIJING — Chinese consumer electronics company Xiaomi on Thursday detailed plans to enter China’s oversaturated electric vehicle market and compete with automaker giants Tesla and Porsche with a car model it says it spent more than 10 billion yuan ($1.4 billion) to develop.
The company’s car model, known as Xiaomi SU7, “is in trial production and it will hit the domestic market in a few months,” CEO Lei Jun said in a Tuesday post on the X social media platform, formerly known as Twitter. “The price has not been finalized yet.”
Pronounced “Sue Qi” in Mandarin, the Xiaomi SU7 beats Porsche’s Taycan and Tesla’s Model S on acceleration and other metrics, Lei said during a three-hour presentation on Thursday.
He laid out bold ambitions to become an industry leader, including in autonomous driving and noted that the SU7 design team previously worked at BMW and Mercedes Benz.
Sales are due to begin in 2024, after more than three years of development— during which electric vehicles have taken off in China’s highly competitive market, and domestic automakers have begun to differentiate their products through ambitious offerings of car-compatible tech.
This is an area of potential advantage for Xiaomi, which is best known for its smartphones and home appliances and previously said it wants to create a “‘Human x Car x Home’ smart ecosystem.”
The SU7 is integrated with Xiaomi’s smartphones and internet-connected home appliances, Lei announced Thursday. He emphasized the company’s efforts to ensure data privacy among the devices and create a car that surpasses U.S. safety standards for rear-end collisions.
Lei said the vehicle will also be compatible with Apple’s iPhone, iPad, CarPlay and AirPlay. The U.S. giant has yet to release a car despite widespread speculation of such plans.
The document described the cars as purely battery powered, with driving range of 628 kilometers (390 miles) to 800 kilometers. The ministry listed a subsidiary of state-owned BAIC Group as the manufacturer for the Xiaomi SU7.
While the car isn’t yet available, Xiaomi has started selling its flagship smartphone and smart watch in the “aqua blue” and “olive oil green” colors of the SU7 sedan.
A price for the SU7 has yet to be revealed, but Lei hinted the purchase would not be cheap and dismissed rumors of a 99,000 yuan or 140,000 yuan price tag.
Read more about China from CNBC Pro
The Xiaomi car tech event comes as several domestic EV players have recently revealed new electric vehicles.
Nio on Saturday debuted its 800,000 yuan ($113,090) ET9, set to begin deliveries in the first quarter of 2025.
Huawei’s Aito brand on Tuesday unveiled its M9 SUV — starting at 469,800 yuan and due to begin mass deliveries in late February 2024.
Zeekr, backed by Geely, on Wednesday announced its 007 sedan would start at 209,000 yuan with deliveries beginning on Jan. 1.
Xiaomi shares closed 0.25% lower in Hong Kong trading on Thursday. The company’s Hong Kong-traded shares are up by more than 40% so far this year. The business claimed record sales of more than $3 billion across various e-commerce platforms during this year’s Singles Day shopping festival.
The latest Apple Watches are available again after the company scored a legal victory Wednesday.
“We are thrilled to return the full Apple Watch lineup to customers in time for the new year,” Apple AAPL, +0.05%
said in a statement to MarketWatch. “Apple Watch Series 9 and Apple Watch Ultra 2, including the blood-oxygen feature, will become available for purchase again in the United States at Apple Stores starting today and from apple.com tomorrow by 3 p.m. ET.”
A U.S. appeals court earlier Wednesday temporarily blocked a government commission’s import ban on popular Apple Watch models following a patent dispute with medical-technology firm Masimo Corp. MASI, -4.57%.
The court’s order allows Apple to temporarily resume selling the Apple Watch Series 9 and Apple Watch Ultra 2. Both watches were pulled from Apple’s website last week and off store shelves this week when the ban went into effect. The appeals court is weighing a longer halt on the import and sales ban.
Masimo declined to comment.
On Tuesday, the tech giant filed an emergency request for the U.S. Court of Appeals for the Federal Circuit to halt the ban at least until U.S. Customs and Border Protection decides whether redesigned versions of its watches infringe Masimo’s patents.
The appeals court’s decision will allow the U.S. Customs department to consider Apple’s redesign of the offending Apple Watch models. A fix is expected by Jan. 12. Apple said in the motion Tuesday it could “suffer irreparable harm” if the ban is kept in place while the appeal is ongoing.
Apple smartwatches ads are displayed as customers take a look at smartwatch accessories at the Apple store in New York, U.S., December 26, 2023.
Eduardo Munoz | Reuters
Apple will be able to sell the latest Apple Watches after an import ban was temporarily paused by an appeals court on Wednesday, in a major victory for the iPhone maker.
Apple stopped selling its Series 9 and Ultra 2 watches last week in response to an International Trade Commission order in October that found the blood oxygen sensor in the devices had infringed on intellectual property from Masimo, a medical technology company that sells to hospitals.
“The motion for an interim stay is granted to the extent that the Remedial Orders are temporarily stayed,” a court filing on Wednesday said.
On Monday, the Biden Administration declined to pause the ITC ban. Apple filed the appeal to the U.S. Court of Appeals for the Federal Circuit on Tuesday. The ITC will need to reply by Jan. 10.
The stay means Apple will be able to sell the latest models of one of its most important products during the busiest time of the year.
The sales pause did not affect the Apple Watch SE, an older model that cannot read blood oxygen levels. The latest Apple Watch models also continued to be available from retailers like Best Buy or Amazon as long as they had stock.
Apple Watch sales are reported as part of Apple’s wearables business, which reported $39.8 billion in sales in Apple’s 2023, which ended in September. The category was down 3% on an annual basis.
An Apple representative didn’t immediately return a request for comment.
In November, CNBC visited Apple’s campus in Cupertino, California, to get a look inside one of the company’s many chip labs. CNBC also got a rare chance to talk with the senior vice president of hardware technologies, Johny Srouji, and Apple’s senior vice president of hardware engineering, John Ternus, about the company’s push into the complex business of custom semiconductor development, which is also being pursued by Amazon, Google, Microsoft and Tesla.
Unlike traditional chipmakers such as Nvidia and Intel,Apple is not making silicon for other companies.
“Because we’re not really selling chips outside, we focus on the product,” Johny Srouji said. “That gives us freedom to optimize, and the scalable architecture lets us reuse pieces between different products.”
Watch the full interview to hear the executives speak about AI, its latest A17 Pro chip, working with manufacturing partner Taiwan Semiconductor Manufacturing Company and more.
Shortly after the murder of George Floyd at the hands of Minneapolis police in 2020, Google was among many tech companies that set up new programs aimed at supporting Black employees. The goal, CEO Sundar Pichai wrote, was “to build sustainable equity for Google’s Black+ community, and externally, to make our products and programs helpful in the moments that matter most to Black users.”
Google’s vocal commitments included improving representation of underrepresented groups in leadership by 30% by 2025; more than doubling the number of Black workers at nonsenior levels by 2025; addressing representation issues in hiring, retention and promotions; and establishing better support for the mental and physical health for Black employees.
The move was part of a broader trend in the wake of the Floyd killing, which sparked societal unrest and drew attention to the power imbalances in corporate America and the tech industry specifically. Corporations pledged to invest millions of dollars to improve diversity in their ranks and support external groups doing work on diversity, equity and inclusion, or DEI.
But in 2023, some of those programs are in retreat.
By mid-2023, DEI-related job postingshad declined 44% from the same time a year prior, according to data provided by job site Indeed. In November 2023, the last full month for which data was available, it dropped 23% year over year.
That’s a sharp contrast with the period from 2020 to 2021, when those postings expanded nearly 30%.
In line with this broader trend, both Google and Meta have cut staffers and downsized programs that fell under DEI investment.
The year’s cuts have also impacted smaller, third-party organizations who counted on big tech clients for work, despite the continued growth of those tech giants.
“Whenever there is an economic downturn in tech, some of the first budgets that are cut are in DEI, but I don’t think we’ve seen such stark contrast as this year,” said Melinda Briana Epler, founder and CEO of Empovia, which advises companies and leaders to use a research-based culture of equality.
“When George Floyd began to become the topic of conversations, companies and executives doubled down on their commitments and here we are only a couple years later, and folks are looking for opportunities to cut those teams,” said Devika Brij, CEO of Brij the Gap Consulting, which works with tech companies’ DEI efforts. Brij said some of her clients had cut their DEI budgets by as much as 90% by midyear.
However, more than just broken promises are at stake, experts told CNBC in a series of interviews.
The cuts come at a time when technology companies are forging ahead on the biggest technology shift in a decade: artificial intelligence. If diverse people are not included in AI development, that may result in even greater power imbalances for both corporate workers, as well as consumers who will use their products.
“Our commitment to DEI remains at the center of who we are as a company,” a Meta spokesperson wrote in a statement to CNBC. “We continue to intentionally design equitable and fair practices to drive progress across our people, product, policy and partnerships pillars.”
“Our workforce reductions and company-wide efforts to sharpen our focus span the breadth of our business,” said a Google spokesperson, saying that the company remains committed to underrepresented communities and DEI work. “To be absolutely clear, our commitment to that work has not changed and we invested in many new programs and partnerships this year.”
The Google spokesperson did not dispute any specifics in this story, but pointed to new investments in partnerships this year, including committing more than $5 million to historically Black colleges and universities to help build a stronger pipeline to the tech industry for underrepresented talent, and launching the Google for Startups Women Founders Fund to help women entrepreneurs.
In 2021,after facing complaints about pay equity in its Engineering Residency program, Google said it would be sunsetting the program and replacing it with a new one called Early Career Immersion, or ECI, which is aimed at helping underrepresented talent develop skills. (Google said sunsetting Engineering Residency was an unrelated business decision.)
But Google decided not to hire a 2023 cohort of ECI software engineers, citing an uncertain hiring outlook, according to correspondence viewed by CNBC. It also laid off some staffers associated with the program.
Participants in a separate Google program called Apprenticeships also lodged complaints about a lack of pathways and pay inequities in the last year, CNBC found.
“Apprentices become part of our mission to build great products for every user, and their different experiences help ensure that our products are as diverse as our users,” Google’s Apprenticeships website states.
But Apprenticeships participants complained they were getting paid less than other engineers during the course of the 20-month program despite doing similar work. They said they were doing “Level 3” work with L3 expectations and contributing significantly to Google’s codebase while earning half of full-time L3 software engineers’ base salary, according to internal correspondence seen by CNBC.
The apprentices even confronted the executive sponsor of the program, Aparna Pappu, vice president of Google Workspace, pointing out the executive’s prior stated goal “to increase representation of underrepresented talent across Google.”
The company said that apprentices are paid a salary for the learning and training they receive as part of the program, and that it reviews compensation annually to ensure alignment with the market.
The Apprenticeships program, which included real-work job training for underrepresented backgrounds, followed other failed efforts to improve diversity. In 2021, for instance, Google said it shut down a long-running program aimed at entry-level engineers from underrepresented backgrounds after participants said it enforced “systemic pay inequities.” That same year, CNBC found the company’s separate program that worked with students from historically Black colleges, suffered extreme disorganization, racism and broken promises to students.
Google and Meta also made cuts to personnel who were in charge of recruiting underrepresented people, according to several sources and documentation.
Nearly every member of Meta’s Sourcer Development Program, more than 60 workers, was let go from the company as part of its layoff of over 11,000 workers, CNBC learned. They claimed to have received inferior severance packages compared with other workers who were laid off in the same time period. Meta’s Sourcer Development Program was intended to help workers from diverse backgrounds obtain careers in corporate technology recruiting.
Google also cut DEI leaders who worked with Chief Diversity Officer Melonie Parker, while Meta made cuts to several DEI managers — some of whom it hired in 2020.
Layoffs at Google and Meta also included employees who held leadership roles in their respective Black employee resource groups, known as ERGs.
“There’s a lowering of physiological safety with layoffs or impending layoffs, and holding ERGs accountable for that is not fair and can lead to even more burnout,” Epler said.
In addition to cutting staff who worked on DEI programs and ERGs, both Meta and Google cut planned learning and development training for underrepresented talent, according to multiple sources who asked not to be named due to fear of retaliation. Meta said that learning and development programs were “merely streamlined to make them more impactful.”
“There’s a consistent amount of folks who have completely failed, mostly because they don’t have the internal teams to keep the mission forward,” said Simone White, who is a senior vice president at Blavity, a media organization that focuses on content for the Black community, and puts on AfroTech, which became a popular tech conference for Black tech talent and companies seeking to hire them.
While internal DEI programs have suffered, the cuts were arguably even harder for external organizations who expected the same amount of corporate sponsorship and support from tech companies in 2023 as they had the prior few years.
In early 2023, big tech leaders, including Google and Meta were among companies that lessened their work with third parties that were counting on projects, according to several organizations and sources who spoke with CNBC.
Brij, CEO of Brijthe Gap Consulting, explained how the steep cuts have affected her firm, which consults with companies on building an effective workforce for underrepresented workers and includes workshops and programs.
“Right now with these budgets being entirely limited or cut, we’re just really backpedaling on so much of the work that we’ve done.”
Brij said some companies have even asked her to provide work for free.
“A lot of companies we worked with started to make progress before the cuts,” Epler said. “Now, it’s like some of them are essentially wiping away that work.”
Stefania Pomponi, founder of Hella Social Impact, said executives have blamed cost-cutting as they’ve canceled contracts with the firm, which consults with companies’ leadership to create more inclusive workplaces through programs and training.
“I’ve been telling them, ‘look, your bottom line is also your people and these types of cuts are going to impact your business'” Pomponi said, pointing to various studies on diverse teams producing higher performance outcomes.
“As I talk to my colleagues across the space, some of the monies that were set aside around the time of George Floyd’s murder have not been fully extended, and that says to me that organizations like ours are needed now more than ever,” said Brenda Wilkerson, CEO of AnitaB.org, which puts on Grace Hopper, the largest women’s tech conference, which took place in September.
Some large tech companies, including Meta, pulled back from sponsorship or attendance for employees to attend Grace Hopper 2023, according to sources who asked to remain anonymous because they are not authorized to speak to the media. Some companies, including Microsoft, ended up sending some leaders to attend virtually so they wouldn’t have to pay for travel, according to two sources who wished to remain anonymous.
Microsoft said it still sent some employees physically, and both Microsoft and Meta told CNBC that Grace Hopper’s virtual option allowed more employees to participate.
Other companies such as Google, which still had a presence at the conference, retracted travel for some employees who had previously been approved to attend, according to several sources who asked to remain anonymous. Google is also among companies to reduce their spending with Blavity, the organization that puts on AfroTech, according to sources who asked not to be named due to being unauthorized to speak.
“We do have a significant amount of our existing corporate partners that are telling us ‘Hey, we can’t participate this year because our DEI team doesn’t even exist anymore,'” said Blavity’s Simone White, who declined to name specific companies. “Week to week, we have new contacts at companies, and folks we worked with for years to organize this work are no longer there.”
“To say our progress is not in peril would not be truthful,” AnitaB.org’s Wilkerson said, although she’s optimistic the tide could turn around in 2024. “We’re working with multiple challenges in our society, so we have made a lot of the progress but some of that was erased in the last year. Then you have this backlash against racial reckoning.”
The backlash she referred to includes things like the Supreme Court’s June decision to end affirmative action at colleges, as well as backlash against DEI programs in conservative circles. “You have this ‘wokeism’ drama.” Wilkerson said, pointing to Florida legislation such as banning books and downplaying Black history, as well as laws impacting the LGBTQIA+ community.
Because of that backlash, 2023 will be the last year the organization will hold Grace Hopper in Florida, Wilkerson said. It will be held in Philadelphia next year.
A Meta spokesperson said that it increased its engagement with some third-party organizations such as The Executive Leadership Council, which aims to increase Black leadership in C-suites.
Wilkerson was among experts who told CNBC that DEI work is more important than ever given the growing work on artificial intelligence, which hit breakneck speed in 2023.
“We’re in a big technology inflection point, and what happens is as AI begins to take off and if organizations are less inclusive, the product is not reflective of the users,” Wilkerson said.
Apple, Google and other tech giants are still grappling with displaying and identifying images accurately. A New York Times investigation this year found Apple and Google’s Android software, which underpins most of the world’s smartphones, turned off the ability to visually search for primates for fear of labeling a person as an animal.
“We know that AI is trained on historic data and that historic data is missing critical segments of the population, and having women and noncentered folks as decision-makers is going to be critical to making sure it doesn’t happen again,” Wilkerson said.
White said companies who made cuts this year may have a difficult time building future relationships with DEI stakeholders, and it may impact their ability to attract and retain talent, should they decide to build up again in the future.
“Younger generations increasingly care who has a seat at the table,” White said. “And they’re going to remember who did what they said they were going to do.”
Tech stocks may have been the play for 2023, but for next year Bank of America Securities likes their debt. The bank called investment-grade corporate bonds of technology companies one of its top 10 trades for 2024. “Own tech balance sheets, but not tech EPS in ’24,” investment strategist Michael Hartnett wrote in a Nov. 19 note. The “Magnificent 7” tech stocks — Apple , Alphabet , Amazon , Microsoft , Meta Platforms , Nvidia and Tesla — led the market higher this year. Nvidia, for instance, has skyrocketed a staggering 229% year to date, while Meta is up 190% so far this year. The tech-heavy Nasdaq has gained 39% year to date. Hartnett said his call on the bonds of big U.S. tech companies is a “great, underappreciated contrarian hedge” in a year that will likely see rate cuts from the Federal Reserve and either a “hard landing” or “soft landing” for the economy. “How do you position for unexpected events next year? A decent hedge would be the bonds of companies that have a lot of cash,” he added. “The Magnificent 7 have a lot of cash.” That unexpected event would be a hard landing, according to Harnett. He says the consensus view is a soft landing, or a gradual easing of inflation and the labor market in response to the Fed’s rate hikes. But Harnett expects there is a greater risk than expected that the economy will slow down abruptly. If a hard landing is underpriced by investors, then this outcome unquestionably will be negative for equities, Harnett explained. With the biggest positions in equities in the Magnificent 7, a hard landing would lead to deleveraging of those stocks, he added. It would also be positive for bonds. “You would get some rotation into high quality corporate bonds — and there is nothing more high quality in the corporate bond market than large-cap U.S. tech,” Hartnett said. Overall, he expects money to flow into bonds next year. Buying investment-grade tech corporate bonds is just one side of the firm’s barbell strategy in the asset class, he said. “You certainly want exposure to what we would call the diamonds in the rough — the best house in the worst neighborhood, like banks,” Hartnett said. — CNBC’s Michael Bloom contributed reporting.
Parcels are seen in a street nearby UPS and FedEx trucks in a street of the Manhattan borough in New York City on December 4, 2023.
Charly Triballeau | AFP | Getty Images
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Worst day in months U.S. markets fell Wednesday, with all major indexes snapping their winning streaks in one of their worst trading sessions in months. Still, U.S. Treasury yields continued to dip. Asia-Pacific markets lost ground Thursday, following Wall Street lower. South Korea’s Kospi Index slipped 0.77% even as the country’s producer prices rose at their slowest pace in four months.
Clock’s ticking on watch ban Apple has failed in its bid to delay a ban on sales of Apple Watch, according to an International Trade Commission filing. That means only a White House intervention will let Apple continue selling its watches in the U.S. Joe Kiani, CEO of Masimo — the company involved in the intellectual property dispute with Apple — told CNBC on Monday that Apple had not reached out to settle.
Tesla’s the “it” stock Out of all securities on the U.S. market, Tesla’s on pace to attract the most amount of individual investor dollars in 2023, according to data from Vanda Research. That means inflows into the stock will surpass the SPDR S&P 500 ETF Trust, which tracks the largest index in the world. To put Tesla’s popularity in perspective, it wasn’t even among the top 20 stocks retail investors bought before 2019.
[PRO] Diversify your portfolio The upcoming year presents several challenges to investors. A recession might hit the U.S. economy, geopolitical risks might escalate and inflation might rebound. CNBC Pro spoke to three investment experts to find out how to create a diversified portfolio that can hedge against volatility in 2024.
FedEx‘s performance is often seen as a bellwether for the general economy. When businesses ship fewer parcels, it tends to indicate a slowdown in economic activity.
So, when FedEx issued a worse-than-expected forecast for its current fiscal year, and reported disappointing second-quarter results, it wasn’t solely a warning for investors in the company. FedEx, whose stock sank 12.05%, may also signal trouble for the broader market, according to Wolfe Research.
″[W]hile volatile at times, the correlation between FDX and the S&P has been a solid one,” Wolfe Research managing director Rob Ginsberg wrote on Monday. “Now, it probably won’t derail the year-end melt-up, but given the multitude of overbought conditions and stretched indicators, a market pricing in perfection just got a bit of troubling news.”
And markets indeed had a bad day. The S&P 500 tumbled 1.47%, the most it’s lost in one session since September. Meanwhile, the Dow Jones Industrial Average fell 1.27% and the Nasdaq Composite lost 1.5% — both indexes snapped their nine-day winning streaks in their worst day since October.
That disappointing showing, however, doesn’t necessarily mean the start of a prolonged slide for markets. Treasury yields are still dipping, which tends to boost stocks. There were also pockets of strength amid the sell-off yesterday. Alphabet, for instance, gained 1.24% and touched a new 52-week high during the session. Consumer confidence in December also picked up, according to the Conference Board.
Keith Buchanan, senior portfolio manager at Globalt Investments, said market losses were “more technical than fundamental,” meaning it was more the breakneck pace at which stocks had been rallying that posed a risk, rather than their intrinsic value.
“Markets were becoming overbought, and a pullback like this is natural given those conditions,” Buchanan said.
As any recipient of a FedEx package knows, a delayed delivery isn’t the end of the world; you just have to move past the hiccup. The same goes for markets.
The Apple Watch Ultra 2 is seen as people lined up to buy the newly launched iPhone 15 and other Apple products at an Apple store in Palo Alto, California, on Sept. 22, 2023.
Tayfun Coskun | Anadolu Agency | Getty Images
Apple has lost a bid to delay an impending Apple Watch import ban, according to an International Trade Commission filing, meaning only a last-minute White House intervention can prevent a pause in sales of some of the devices in the U.S.
Apple said earlier this week it will stop selling two Apple Watch models released this year, the Apple Watch Series 9 and Apple Watch Ultra 2, on its website starting Thursday, and in Apple stores starting after Sunday. The company will still sell older models.
The move is in response to orders issued by the ITC in October that found that the Apple Watch’s blood oxygen sensor had infringed on intellectual property from Masimo, a medical technology company that sells to hospitals.
On Wednesday, the ITC denied Apple’s motion to stay while the original decision was being appealed, which would have allowed Apple to continue selling the devices.
The decision means Apple is closer to being prevented from selling one of its most important products in its largest market during the busiest time of the year for Apple sales. Previously imported Apple Watches can still be sold if retailers have them in stock.
Apple shares are down less than 1% since the company announced its plans to pause sales on Monday. Shares were flat in extended trading Wednesday.
President Joe Biden can still veto the ban but has not given an indication that he will.
“We’re tracking this case and the Dec. 25 deadline,” White House press secretary Karine Jean-Pierre told reporters Tuesday.
The U.S. Trade Representative “has the President’s delegated authority to make these determinations,” Jean-Pierre said, adding that Ambassador Katherine Tai is “carefully considering all of the factors in this case.”
In addition to the infringement claims, Masimo CEO Joe Kiani has accused Apple of misleading his company by engaging in acquisition and partnership talks before systematically poaching his technical staff.
Kiani told CNBC on Monday that Apple had not reached out to settle.
“I don’t care that much about the Apple leadership, given about what I know about how they run the company,” Kiani said. “I still extended the olive branch and offered to work with them for the betterment of people and our shareholders, and not even a call.”
An Apple representative declined to comment. A company spokesperson previously told CNBC that Apple was taking “all measures” to return the product to the market in the U.S.
