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Nov 22, 2023, 10:36 am EST
Sam Altman is returning to OpenAI but power at the artificial-intelligence start-up is still set to be held by its board. The members who fired Altman are largely out and their replacements suggest the new board will be less inclined to slow or block the development of AI technology.
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OpenAI has reached an “agreement in principle” for Sam Altman to return to his post as chief executive officer alongside a new board, just days after his ousting, the company said on Wednesday.
In a posting on X, the tech group behind ChatGPT said former Salesforce CEO Bret Taylor will serve as chair, joined on the board by former Treasury Secretary Larry Summers and Quora co-founder and CEO and current director Adam D’Angelo.
The…
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Updated Nov. 20, 2023 6:34 am ET
SAN FRANCISCO—Microsoft said it is hiring Sam Altman to helm a new advanced artificial-intelligence research team, after his bid to return to OpenAI fell apart Sunday with the board that fired him declining to agree to the proposed terms of his reinstatement.
Microsoft Chief Executive Satya Nadella posted on X (formerly Twitter) late Sunday that Altman and Greg Brockman, OpenAI’s president and co-founder who resigned Friday in protest over Altman’s ouster, will lead its team alongside unspecified colleagues. Nadella said Microsoft was committed to its partnership with OpenAI and that it would move quickly to provide Altman and Brockman with “the resources needed for their success.”
Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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OpenAI announced Friday afternoon that CEO Sam Altman has departed the company, saying the executive “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”
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OpenAI said Friday that Sam Altman is no longer its chief executive, with the ChatGPT parent adding that said Altman had not been “consistently candid in his communications with the board.”
“The board no longer has confidence in his ability to continue leading OpenAI,” the company said in a blog post.
In a tweet Friday, Altman said he “will…
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Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
SCHW,
made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.
But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.
Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:
Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:
On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.
Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.
Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools
FactSet
Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
BX:TMUBMUSD03M
having higher yields than 10-year Treasury notes
BX:TMUBMUSD10Y.
There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.
As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.
In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.
In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.
For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.
Getty Images
Ford Motor Co.’s
F,
credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.
Courtesy Everett Collection
By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
SPX
: Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Amazon.com Inc.
AMZN,
Nvidia Corp.
NVDA,
Alphabet Inc.
GOOGL,
GOOG,
Meta Platforms Inc.
META,
and Tesla Inc.
TSLA,
With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
SPY,
which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:
| Company | Ticker | % of SPY portfolio | 2023 total return | 2022 total return | Total return since end of 2021 |
| Apple Inc. |
AAPL, |
7.2% | 37% | -26% | 1% |
| Microsoft Corp. |
MSFT, |
7.1% | 46% | -28% | 5% |
| Amazon.com Inc. |
AMZN, |
3.5% | 64% | -50% | -17% |
| Nvidia Corp. |
NVDA, |
3.0% | 198% | -50% | 48% |
| Alphabet Inc. Class A |
GOOGL, |
2.1% | 44% | -39% | -12% |
| Meta Platforms Inc. Class A |
META, |
1.9% | 158% | -64% | -8% |
| Alphabet Inc. Class C |
GOOG, |
1.8% | 45% | -39% | -11% |
| Berkshire Hathaway Inc. Class B |
BRK.B, |
1.8% | 13% | 3% | 17% |
| Tesla Inc. |
TSLA, |
1.7% | 77% | -65% | -38% |
| UnitedHealth Group Inc. |
UNH, |
1.4% | 2% | 7% | 9% |
| Eli Lilly and Company |
LLY, |
1.3% | 60% | 34% | 115% |
| Sources: FactSet, State Street (for SPY holdings) | |||||
Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.
Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.
More from Hulbert: These dividend stocks and ETFs have healthy yields that can lift your portfolio
A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.
The MarketWatch 50 series is back, with articles and video interviews starting this week, including:
MarketWatch/PayPal
After the market close on Wednesday, PayPal Holdings Inc.
PYPL,
announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.
In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.
A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook
Mario Tama/Getty Images
Here’s more of the latest corporate financial results and reactions. First the good news:
And now the news that may not be so good:
AP
It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.
Here’s more reaction and coverage of the virtual-currency industry:
Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.
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DALLAS, TX – RobotLAB, an award-winning robotics integrator that delivers impactful technological innovations and solutions for educators and business owners across the globe, has inked a momentous partnership with the American Samoa Department of Education. RobotLAB will provide more than 150 technology carts to the nation’s public schools, each including humanoid robots, virtual reality headsets, laptops, tablets and lesson plans that will expose students to age-appropriate technology and encourage a mastery of computer science, artificial intelligence, automation, STEM and robotics.
“We’re honored to bring enhanced STEM education and robotics to American Samoa, as we’ve seen the positive impact these technologies have had on students over the last 15-plus years,” said RobotLAB Founder and CEO, Elad Inbar. “After working with the American Samoa Department of Education to identify the best programs and packages for their needs, we’re excited to introduce students in American Samoa to best-in-class education technologies that will challenge and encourage them to master the interconnected world of robotics and automation through hands-on learning.”
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The art of improv comedy is to create a scene from nothing but a suggestion. An actor can never say or do anything that will be wrong. There are no bounds to how a scene can develop.
Immersive, experiential technology is transforming how both students and teachers learn. Augmented and Virtual Reality (AR and VR) provide deeper engagement, opportunities for collaboration.
From the moment they first set up shop centuries ago, businesses have depended on word-of-mouth to build their customer base–and today, word-of-mouth marketing is still the main driver of sales.
Dr. Jesus Jara is a passionate educator who serves as Superintendent of Clark County School District (CCSD), the 5th largest school district in the nation educating more than 300,000 students.
The evidence for learning in nature is compelling, robust, and growing. Reduced stress. Improved attention and cognitive function. More physical fitness. Fewer behavioral challenges. Higher engagement.
A significant trend is growing among high school graduates in the class of 2023, with 55 percent opting out of the traditional four-year college route, according to a new survey from YouScience.
An annual E-rate report reveals a strong consensus among respondents for cybersecurity services to be included in the federal program, considering their critical role in safeguarding educational institutions against cyber threats.
A new survey of K-8 teachers and students from LEGO Education found that nearly all (98 percent) of students say purposeful play helps them learn and the majority (96 percent) of teachers believe it’s more effective than traditional methods
Teacher burnout is a real and growing challenge for US K–12 schools. Last year, school district leaders reported a 4 percent increase in teacher turnover according to a nationally representative survey from RAND.
Want to share a great resource? Let us know at submissions@eschoolmedia.com.
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What do Elon Musk, Warren Buffett, Shawn Fain and Lina Khan have in common? On the surface, it might not seem like much — one is an impetuous tech-bro genius, another is a buy-and-hold nonagenarian investor, and the other two are a tough union boss and a business-busting regulator.
But each of them are having a serious impact on your money. They all appear on this year’s MarketWatch 50 list of the most influential people in markets. The MarketWatch 50 is our tally of the investors, CEOs, policymakers, AI players and financial…
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Securities and Exchange Commission Chair Gary Gensler has plenty to worry about as he seeks to bring order and fairness to America’s $100 trillion capital markets, and there are few issues that cause him more concern than the spread of artificial-intelligence technology.
In an exclusive interview with MarketWatch, the regulator argued that generative AI technologies in the vein of ChatGPT have the potential to revolutionize the way we invest by leveraging large data sets to “predict things that were unimaginable even 10 years ago,” but that these new powers will come with great risks.
“A growing issue is that [AI] could lead to a risk in the whole system,” Gensler said. “As many financial actors rely on one or just two or three models in the middle … you create a monoculture, you create herding.”
This herding effect can be dangerous if there is a flaw in the model that might reverberate through markets during a time of stress, causing abrupt and unpredictable price changes in markets. Gensler pointed to the examples of cloud computing and search engines as markets for tech products that have quickly become dominated by one or two major players, and he said he worries about similar concentration in the market for AI technology.
The regulator said this issue is especially difficult because of the fragmented nature of the U.S. regulatory apparatus, which relies on the SEC to oversee securities markets while other agencies have responsibility for banks or commodity markets.
“This is more of a cross-entity issue,” Gensler said. “That’s the challenge for these new technologies.”
As SEC chair, Gensler has escalated his regulatory agency’s crackdown on the cryptocurrency industry in 2023 by launching lawsuits against Binance and Coinbase, the two largest digital asset exchanges in the world by trading volume. The SEC alleges the two companies are operating unregistered securities exchanges in the U.S., but the companies say they are not running afoul of securities laws.
Gensler is simultaneously pushing forward the most fundamental market-structure reform measures in a generation. Gensler lands on The MarketWatch 50 list of the most influential people in markets.
But AI is another issue that Gensler is starting to ring alarm bells over. There’s a little bit of irony because the promise of AI has largely been responsible for the S&P 500’s
SPX
gains in 2023. The SEC chair said that his agency is already contemplating new rules to regulate artificial intelligence. For example, the SEC proposed a rule this summer to address conflicts of interest associated with stock brokers and investment advisors that leverage algorithms to predict and guide investor decisions through their smartphone applications or web interfaces.
The industry is pushing back on the proposal, arguing that existing rules are sufficient to prevent harm to investors and that a new rule would prevent brokers from using technology to create a better experience for clients.
Gensler said that the SEC benefits from such feedback, but still believes that regulators must be vigilant about the impact of these so-called predictive analytical tools. “If they do that to suggest a certain movie on a streaming app, okay,” he said. “But if they’re doing that about your financial help … we should address those conflicts.”
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Microsoft Corp. and Alphabet Inc. both reported mostly strong results Tuesday, but the disparate reactions from investors showed that Wall Street only cares about artificial intelligence right now.
While Microsoft shares
MSFT,
rose 4% in after-hours trading following the company’s latest report, Alphabet shares
GOOG,
GOOGL,
dropped 6% as Wall Street got the sense that AI is manifesting differently in the companies’ cloud businesses.
Microsoft surprised investors with 28% constant-currency growth in its Azure cloud-computing business, above the company’s own forecast and the projection for 25.6% growth that analysts were modeling on average. While Microsoft continues to see “optimization” challenges as customers remain conscious about their spending, the company is also benefiting from AI tailwinds in the cloud.
Companies looking to beef up their AI offerings are often looking to add AI services for their customers through additional cloud services, so they don’t have to do as much internal development themselves. In addition, AI offerings ranging from chatbots to tools that can streamline the writing of reports require ever more computing power, and both Azure and Google Cloud are starting to offer new software applications to address those needs.
Microsoft Chief Executive Satya Nadella called AI a “unique and different” factor that was helping Azure trends. “Given our leadership position, we are seeing complete new project starts, which are AI projects,” he said in response to an analyst question about the sustainability of cloud growth rates.
In addition, Microsoft, which has invested heavily in ChatGPT-creator OpenAI, offers an Azure OpenAI service that more than 18,000 organizations are now using. Some of these customers are new to Azure.
Microsoft Chief Financial Officer Amy Hood forecast that Azure revenue growth should be around 26% in constant currency in the fiscal second quarter, driven by new workload trends and with the growing contributions from AI.
Investors seem less confident that Alphabet is seeing the same tailwinds in its Google Cloud business, especially as that segment showed its slowest quarterly growth since Google began breaking out results that way back in 2019. Cloud revenue of $8.4 billion, with growth of 22%, was $250 million shy of consensus estimates on Wall Street, according to Colin Sebastian, an analyst with Baird. That overshadowed an upbeat performance in the company’s advertising business.
When one analyst asked Alphabet executives about the deceleration in the revenue growth of its cloud business, Chief Executive Sundar Pichai was vague but said that customers are being selective of where they are spending their IT budgets.
“On cloud, what I would say is overall, we have definitely started seeing customers looking to optimize spend,” Pichai said. “We leaned into it to help customers, given some other challenges they were facing, and so that was a factor.”
Alphabet is seeing “a lot of interest in AI,” but it remains to be seen whether that’s contributing materially to its financial performance just yet.
“Google Cloud missed consensus revenue expectations (although in line with Baird) on slowing growth, and we believe consistent with the view that newer Gen-AI workloads will take time to move the needle,” Sebastian wrote in a note to clients.
Insider Intelligence senior analyst Max Willens added that Google Cloud is facing tough competition, and while the business seems to have traction with AI startups that “may bear fruit in the long run, it is not currently helping Google Cloud enough to satisfy investors.”
Wall Street clearly is looking to AI to fuel better growth rates and help offset sluggish macroeconomic trends. The poster child for that dynamic is Nvidia Corp.
NVDA,
which is expected to single-handedly drive earnings growth for the information technology sector thanks to booming demand for its AI hardware.
Given economic pressures, it’s becoming obvious that companies without much of an AI story to contribute this quarter will continue to fall out of favor with investors.
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Nearly a year ago, OpenAI released ChatGPT 3 into the world, and investors got visions of dollar signs in their heads as they imagined the ways that artificial intelligence could make big money for businesses.
Wall Street’s now coming to terms with the fact that those sorts of paydays are going to take time. As investors have already seen from the past two quarters of earnings, AI has only really delivered financial benefits for a select few hardware companies so far — while spurring new costs for many others.
“The AI boom has already bifurcated into the contenders and pretenders,” said Daniel Newman, chief executive and principal analyst of Futurum Research. And while Advanced Micro Devices Inc., Intel Corp. and Arm Holdings PLC
ARM,
have stirred up interest, Nvidia Corp.
NVDA,
has established itself as far and away the greatest “contender,” with AI driving strong demand for its chips tuned for AI training.
Nvidia last quarter reported record earnings, including a 141% jump in revenue for its graphics chips used in AI infrastructure building up data centers. Nvidia, which reports near the end of earnings season on Nov. 21, posted record revenue of $13.5 billion last quarter and is expected to easily top that with $16 billion in the most recent quarter, a surge of 170% versus a year ago. Those estimates include $12.3 billion of revenue coming from data-center sales.
Other chip companies could post gains from AI as well, but to far lesser extents. Candidates include Broadcom Corp.
AVGO,
and system maker Super Micro Computer Inc.
SMCI,
as well as Marvell Technology Inc.
MRVL,
which last quarter told analysts that it expects to end the year at a revenue run rate of about $800 million this year from cloud/data-center chips related to AI.
“This is well above what we had outlined last quarter. Put this in perspective: This would put us at the run rate we had previously communicated for all of next year,” Marvel Chief Executive Matthew Murphy told analysts.
Super Micro is also riding the AI wave with its customized data-center servers that are designed to consume less power. But revenue in the September quarter is forecast to rise just 15% from a year ago and drop on a sequential basis, as supply constraints from Nvidia likely hampered Super Micro’s ability to meet all its demand.
Much as Advanced Micro Devices Inc.
AMD,
and Intel Corp.
INTC,
want to be in the AI conversations with the graphics chips they hope will be used for AI data-center applications, they won’t see much of an impact yet from AI revenue. Plus, those companies are experiencing a slowdown in PC sales that may overshadow any small benefit from AI chips.
The AI boom in chips is clearly not providing enough of a boost to lift finances for the overall semiconductor sector, which is forecast to see earnings fall 3.3% in the third quarter and post a revenue decline of 0.6%, according to FactSet. The industry is being dragged down in part by Micron Technology Inc.
MU,
which reported a 40% drop in revenue and a whopping fiscal fourth-quarter loss in late September for the quarter ended Aug. 31, which is included in FactSet’s third-quarter data. Even so, the company called a bottom to the memory-chip downturn.
Read also: Micron’s AI focused chip won’t help financial results anytime soon.
“Most of the consumer-based tech is still struggling, [including] PCs, laptops and to a certain extent smartphones,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. Wall Street has tempered expectations related to the impact of Apple Inc.’s
AAPL,
iPhone 15 launch on the quarter, as estimates call for an overall 1% drop in September-quarter revenue. Last quarter, Apple executives forecast that both Mac and iPad sales would be down by double-digits and that revenue performance would be similar to its June quarter, when revenue fell 1.3%
In addition, when asked about AI, Apple CEO Tim Cook said the company views AI and machine learning “as core fundamental technologies that are integral to virtually every product that we build.” Those comments, though, can also apply to the bulk of tech companies, where AI is built into software as another layer to improve a product. Internet companies such as Meta Platforms Inc.
META,
and Alphabet Inc.
GOOG,
GOOGL,
incorporate AI into their software and algorithms but don’t treat it as a specific, revenue-generating product.
Other software companies are building AI into their products as separate features or add-ons, but they are still in the early stages of seeing whether or not customers will pay more for them. Take Microsoft Corp.,
MSFT,
which has showed off Copilot, an extra AI feature for customers of Microsoft 365.
“[Microsoft] can distinguish itself by providing more details around its AI revenue
ramp since we don’t expect much information from Google, who really doesn’t seem
to have the monetization plan for Bard and AI-assisted search (SGE) ready to
articulate yet,” Melius Research analyst Ben Reitzes said in a note to clients this week. He also noted that the cost of offering AI products to consumers is steep, and requires lots of investment.
“There are sophisticated issues to contend with for Microsoft, including balancing the potential for higher revenue from Copilots with the high costs per query and much-needed investment,” Reitzes said. “The balance of AI adoption vs. cost was implied when Microsoft guided to flat operating margins year over year for fiscal 2024.”
Earlier this year, the Information reported that OpenAI, the creator of ChatGPT and recipient of a hefty investment from Microsoft, has costs of up to $700,000 a day, because the massive amounts of computing power needed to run queries. In February, OpenAI launched ChatGPT Plus, for $20 a month, a service that will give subscribers access to its AI during peak times and faster response times.
Another example is Adobe Inc.
ADBE,
which has a few AI offerings, including a subscription service called Generative Credits, tokens that let customers turn text-based prompts into images. Another is Firefly, a generative AI service for images, and an AI option in Photoshop, currently called Photoshop Beta AI, to help users fill in images and other collaborative tools. Adobe did not provide any forecasts on potential revenue generation during its analyst day earlier this month.
Toni Sacconaghi, a Bernstein Research analyst, said AI could drive a massive increase in enterprise productivity, and companies could dramatically increase IT spending on servers in order to invest in productivity-enhancing AI. “However, we note that enterprise adoption appears to be in early stages,” he said in a recent note to clients, adding that it was feasible that spending on AI infrastructure could take money away from other IT projects in process. “We do worry that projected AI infrastructure build out may be occurring too quickly, necessitating a digestion period, which could result in a commensurate stock pullback in AI-related names.”
Overall, the information-technology sector itself is expected to see anemic revenue growth this quarter. The consensus on FactSet forecasts a meager 1.35% revenue uptick in the third quarter, with earnings growth of 4.65%. FactSet’s estimates for IT companies exclude internet companies like Meta and Alphabet, which are under the category of communications/interactive media services. That sector is expected to see sales growth of 12%, and earnings growth of 51%, thanks to a 116% boost in Meta’s net income, after it hit a low point in the year-ago quarter.
Amazon.com Inc.
AMZN,
in the category of consumer discretionary/broadline retail, is forecast to see earnings growth of 109%, and revenue growth of 11%. Amazon’s cloud services business, AWS, is expected to also see a potential uplift from customers spending money on AI projects, according to a TD Cowen & Co. survey, in which 41% of respondents said they were “highly considering” allocating a budget for generative AI.
“This trend could bode well for Amazon’s AWS,” TD Cowen analyst John Blackledge said in a recent report, adding that he expects AWS revenue growth to reaccelerate in the second half of this year and in 2024, boosted by the move of additional workloads to the cloud, possibly including generative AI.
As companies build up their infrastructure, or their spending on cloud computing to add or improve AI capabilities, they are seeing higher costs, which is affecting margins — especially if revenue has slowed down, as it has in some sectors. Across both the broader S&P 500
SPX,
and the IT sector, earnings are lower than a year ago.
As Newman of Futurum pointed out, “AI stole the budget this year.” And that is a mixed bag for tech.
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LOS ANGELES — Leaders of the screenwriters union declared their nearly five-month-old strike over Tuesday after board members approved a contract agreement with studios, bringing Hollywood at least partly back from a historic halt in production.
The governing boards of the eastern and western branches of the Writers Guild of America and their joint negotiating committee all voted to accept the deal, two days after the tentative agreement was reached with a coalition of Hollywood’s biggest studios, streaming services and production companies. After the vote they declared that the strike would be over and writers would be free to start on scripts at 12:01 a.m. Wednesday.
Late-night talk shows — the first to go dark when writers walked out on May 2 — are likely the first shows that will resume. Scripted shows will take longer to return, with actors still on strike and no negotiations yet on the horizon.
The writers still have to vote to ratify the contract themselves in early October, but lifting the strike will allow them to work during that process, the guild told members in an email.
After Tuesday’s board votes, the contracts were released for the first time to the writers, who had not yet been given any details on the deal, which their leaders called “exceptional.”
The three-year agreement includes significant wins in the main areas writers had fought for — compensation, length of employment, size of staffs and control of artificial intelligence — matching or nearly equaling what they had sought at the outset of the strike.
The union had sought minimum increases in pay and future residual earnings from shows of between 5% and 6%, depending on the position of the writer. The studios had wanted between 2% and 4%. The compromise deal was a raise of between 3.5% and 5%.
The guild also negotiated new residual payments based on the popularity of streaming shows, where writers will get bonuses for being a part of the most popular shows on Netflix
NFLX,
Max and other services, a proposal studios initially rejected. Many writers on picket lines had complained that they weren’t properly paid for helping create heavily watched properties.
The writers also got the requirement they sought that shows intended to run at least 13 episodes will have at least six writers on staff, with the numbers shifting based on the number of episodes. They did not get their desire for guaranteed staffs of six on shows that had not yet been ordered to series, settling instead for a guaranteed three.
Writers also got a guarantee that staffs on shows in initial development will be employed for at least 10 weeks, and that staffs on shows that go to air will be employed for three weeks per episode.
On artificial intelligence, the writers got the regulation and control of the emerging technology they had sought. Under the contract, raw, AI-generated storylines will not be regarded as “literary material” — a term in their contracts for scripts and other story forms a screenwriter produces. This means they won’t be competing with computers for screen credits. Nor will AI-generated stories be considered “source” material, their contractual language for the novels, video games or other works that writers may adapt into scripts.
Writers have the right under the deal to use AI in their process if the company they are working for agrees and other conditions are met. But companies cannot require a writer to use AI.
Still-striking members of the Screen Actors Guild-American Federation of Television and Radio Artists returned to the picket lines earlier Tuesday for the first time since the writers struck their tentative deal, and they were animated by a new spirit of optimism.
“For a hot second, I really thought that this was going to go on until next year,” said Marissa Cuevas, an actor who has appeared on the TV series “Kung Fu” and “The Big Bang Theory.” “Knowing that at least one of us has gotten a good deal gives a lot of hope that we will also get a good deal.”
Writers’ picket lines had been suspended, but they were encouraged to walk in solidarity with actors, and many were on the lines Tuesday, including “Mad Men” creator Matthew Weiner, who picketed alongside friend and “ER” actor Noah Wyle as he has throughout the strikes.
“We would never have had the leverage we had if SAG had not gone out,” Weiner said. “They were very brave to do it.”
The Alliance of Motion Picture and Television Producers, which represents the studios in negotiations, chose to deal with the longer-striking writers first, and leaders of SAG-AFTRA said they had received no overtures on resuming talks. That’s likely to change soon.
Actors also voted to authorize their leadership to potentially expand their walkout to include the lucrative videogame market, a step that could put new pressure on Hollywood studios to make a deal with the performers who provide voices and stunts for games.
The Screen Actors Guild-American Federation of Radio and Television Artists announced the move late Monday, saying that 98% of its members voted to go on strike against videogame companies if ongoing negotiations are not successful. The announcement came ahead of more talks planned for Tuesday.
Acting in videogames can include a variety of roles, from voice performances to motion capture work as well as stunts. Video game actors went on strike in 2016 in a work stoppage that lasted nearly a year.
Some of the same issues are at play in the video game negotiations as in the broader actors strike that has shut down Hollywood for months, including wages, safety measures and protections on the use of artificial intelligence. The companies involved include gaming giants Activision Blizzard
ATVI,
Electronic Arts
EA,
Epic Games, Take 2 Productions
TTWO,
as well as Disney
DIS,
and Warner Bros.′
WBD,
videogame divisions.
“It’s time for the videogame companies to stop playing games and get serious about reaching an agreement on this contract,” SAG-AFTRA President Fran Drescher said in a statement.
Audrey Cooling, a spokesperson for videogame producers, said they are “continuing to negotiate in good faith” and have reached tentative agreements on more than half of the proposals on the table.
So far this year, U.S. consumers have spent $34.9 billion on videogames, consoles and accessories, according to market research group Circana.
The threat of a videogame strike emerged as Hollywood writers were on the verge of getting back to work after months on the picket lines.
The alliance of studios, streaming services and producers has chosen to negotiate only with the writers so far, and has made no overtures yet toward restarting talks with SAG-AFTRA. That will presumably change soon.
SAG-AFTRA leaders have said they will look closely at the writers’ agreement, which includes many of the same issues, but it will not effect their demands.
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There are more signs that investors are cooling a bit on the hot artificial intelligence play, though no one appears ready to let go of their Nvidia stock just yet.
That’s according to Vanda Research analysts, who shared a chart of their latest weekly data showing how retail investor’s net purchases of AI-themed stocks is “steadily waning”:
Marco Iachini, senior vice president, Giacomo Pierantoni, head of data and Lucas Mantle, data scientist at Vanda, said they’ve also noticed fewer news stories covering the sector as well, in their Vandatrack weekly comment that published Thursday.
The fervor for AI-related stocks and technology took off earlier this year, with a pinnacle moment in May when Nvidia
NVDA,
made big predictions on a boom for demand for its AI-related chips. Shares of the company are still up 211% so far this year, but enthusiasm for many tech stocks faded in August as China and interest rate-hike worries cropped up and some companies stressed AI benefits might not happen right away.
That said, Vanda analysts don’t expect Nvidia will feel the hurt of any such waning interest. They point out that short interest in the chip maker has seen a “considerable decline,” in line with its soaring stock price.
“This phenomenon suggests that bearish institutional investors, including long/short hedge funds, may have been compelled to cover their short positions,” said Iachini and his team. “As a result they are unlikely to want to sell the stock in the near term barring strong conviction to do so.”
“It is crucial to recognize that a slowdown in retail demand, by itself, is improbable to trigger substantial price movements, without active bearish participation from institutional investors,” they added.
However, the story is different for smaller AI-related companies such as smaller-cap C3.ai
AI,
as seen in their chart:
For C3.ai, they see a selling trend persisting in coming weeks. The AI software group’s shares are up 154% so far this year, but down 9% this month, taking a hit recently from solid quarterly results that came with forecasts for a bigger-than-expected full year loss. Analysts aren’t quite giving up — among 10 covering the company tracked by FactSet most have hold or a similar rating.
“We believe C3.ai is taking the proper steps to capitalize on Generative AI, but it will take time to prove out,” said a team of analysts at Oppenheimer led by Timothy Horan, after those results were released on Sept. 7. They rate the company perform.
Vanda analysts said another exception to an AI buying slowdown has been IonQ
IONQ,
“a relatively small quantum computing company that has been outperforming its AI-related counterparts.” They noted “remarkably resilient” demand for the stock, as short interest also increases rapidly.
“This juxtaposition raises a cautionary flag, as a potential weakening of retail interest, coupled with speculative institutional investors accumulating short positions, could create a demand-supply imbalance, potentially triggering a selloff,” they said. Shares of IONQ have soared 422% year-to-date. The company lifted its lifted full-year bookings guidance last month as it reported blowout second-quarter sales.
Young Money blogger Jack Raines highlighted the slowing interest in AI in a post on Thursday , citing data from analytics firm Similarweb that showed ChatGPT traffic down 3.2% in August, after 10% declines in June and July.
“While ChatGPT will probably experience a resurgence this fall as students return to the classroom and expedite their homework via chatbot, it seems like talks of AI disrupting/replacing anything and everything have cooled down,” he said, adding that the “initial euphoria was a bit much.”
Deutsche Bank strategists hopped on the topic in a note to clients entitled “Even hype needs a summer break,” on Thursday, noting how AI interest waned as investors went to the beach and the media turned its attention to extreme weather and “silly season” stories.
“Under the surface, though, there have been important developments indicating a slow maturing of the cycle, of the underlying technologies and of attitudes to a revolution in waiting,” said a team led by analyst Adrian Cox.
Those include Ai being the “elephant in the earnings room,” this summer that also brought a steady stream of AI-related tech announcements. Another theme “Your job is safe..for now,” came via fresh evidence that AI might boost rather than replace white-collar jobs, while yet another saw U.S. politicians also got involved.
This week saw Tesla CEO Elon Musk telling Capital Hill politicians that a new federal agency to oversee AI development is a must.
Another big theme that erupted this summer was the chatter by contrarian commentators questioning the hype around generative AI. Cox alluded to the Similarweb report that got everyone excited as it showed Chat GPT traffic falling to 1.4 billion visitors in August from 1.8 billion in May.
“The bigger picture is that open.ai had zero visitors before the launch of ChatGPT less than a year ago and is now No. 28 in the world, according to Similarweb,” said the Deutsche Bank team.
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Talking about AI alone has been pixie dust for big technology stocks this year. And as executives look for any way to shoehorn AI into their business plans, more S&P 500 index companies during their second quarter earnings calls mentioned “AI” than at any point since at least 2010, according to a report published on Friday.
What’s more, according to the report from FactSet, the companies talking about AI — even the ones that aren’t the big, obvious tech names — have seen their stocks fare better than shares of companies that haven’t.
For S&P 500 companies that mentioned “AI” on their second-quarter earnings calls, shares on average since June 30 dipped 0.8%, while rising 13.3% since Dec. 31, FactSet said. For companies that didn’t talk about AI on those calls, shares on average fell a bit more since the end of June — 2.3% — while inching only 1.5% higher since the end of last year.
“Even excluding the ‘Magnificent Seven’ (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla), the S&P 500 companies that cited ‘AI’ still outperformed the S&P 500 companies that did not cite ‘AI’ on average during these periods,” FactSet Senior Earnings Analyst John Butters said in the report.
Meanwhile, Wall Street has long believed corporate America’s profits would rebound for the second half of 2023, after a year ruled by anxieties over inflation’s impact on the economy. Still, that collective bounce-back, as it has through this year, will hinge on strong results from the world’s biggest tech players.
Wall Street analysts expect S&P 500 companies to eke out a 0.5% gain in per-share profit growth during the third quarter, according to the FactSet report. If that number holds, it would be the first quarter of earnings growth since the third quarter of last year.
Those potential gains, however, will largely depend on results from Amazon.com Inc.
AMZN,
Meta Platforms Inc.
META,
and Alphabet Inc.
GOOG,
GOOGL,
— outsized companies with outsized influence on markets and S&P 500 company financials overall. Financials for those companies have rebounded this year, after big tech retrenched amid a drop-off in pandemic-related digital demand from people spending more time at home and online.
Three years of supply disruptions have upended the economy and driven prices higher, forcing the Federal Reserve to embark on a delicate effort to bring them lower by discouraging borrowing and spending through a series of interest-rate hikes. But what about the impact on bowling? For answers, we turn to results this week from bowling-alley chain Bowlero Corp.
BOWL,
which saw a jump in demand following the economy’s reopening but now faces questions about that demand as it shows signs of returning to Earth. Convenience-store chain Casey’s General Stores Inc.
CASY,
and homebuilder Lennar Corp.
LEN,
also report.
Adobe results: Digital-media, analytics and design firm Adobe Inc. reports quarterly results on Thursday. But Mizuho analyst Gregg Moskowitz said his focus was on the company’s broader digital transformation.
He cited stronger Web traffic, the potential for more deals with bigger customers, signs of improving trends in Adobe’s
ADBE,
analytics segment, as well as the segment that includes design tools like Photoshop. But he said the company’s moves in generative AI could be “a significant growth driver.” Adobe this year unveiled Firefly, an AI image and text-enhancement model that can be incorporated into Adobe’s software. Moskowitz said that “while very early, our checks indicate an already high level of large customer interest in GenAI projects, including Firefly for Enterprise.” However, he said the company’s $20 billion acquisition of online design platform Figma was still “a big question mark,” as costs and regulatory scrutiny accumulate.
Oracle results, supply situation: Cloud and IT-network developer Oracle Corp.
ORCL,
reports results on Monday. Like much of the tech world, Wall Street sees the company as an AI play. But UBS analysts said that as businesses race to secure the components that power AI, Oracle could have an “underappreciated edge” over rivals.
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Nvidia Corp. shares rallied in the extended session Wednesday after the maker of graphics processing units that is leading the AI-hardware charge reported a 141% surge in data-center sales and record results.
Nvidia
NVDA,
shares rallied 9% after hours, following a 3.2% rise in the regular session to close at $471.16, less than 1% below the stock’s record closing high of $474.94, set on July 18, according to FactSet data. A close at such levels on Thursday would mean a new record high for the stock.
The Santa Clara, Calif.-based company reported second-quarter net income of $6.19 billion, or $2.48 a share, compared with $656 million, or 26 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.70 a share, compared with 51 cents a share in the year-ago period.
Revenue surged to a record $13.51 billion from $6.7 billion in the year-ago quarter, driven by a 141% leap in data-center revenue to $10.32 billion.
Analysts surveyed by FactSet had forecast earnings of $2.08 a share on revenue of $11.19 billion, and data-center sales of $8.03 billion.
Nvidia forecast third-quarter revenue of $15.68 billion to $16.32 billion.
Analysts had estimated third-quarter earnings of $2.40 a share on revenue of $12.59 billion, with $9.15 billion of that from data-center sales. For the year, Wall Street, on average, expects earnings of $8.29 a share on $44.54 billion in revenue, a 71% increase from fiscal 2023’s $26.97 billion, with $32.41 billion of that in data-center sales.
“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and chief executive of Nvidia, in a statement. “Leading enterprise IT system and software providers announced partnerships to bring Nvidia AI to every industry. The race is on to adopt generative AI.”
Right after the report, Lopez Research analyst Maribel Lopez told MarketWatch that Nvidia’s “numbers prove just how much money there is in the AI hardware opportunity.”
“While cloud companies are selling AI services, Nvidia is walking away with a bulk of the revenue and profits,” Lopez said. “Nvidia’s minting cash with no apparent slowdown in sight.”
Nvidia shares are up more than 222% on a year-to-date basis, compared with a 42% surge in the PHLX Semiconductor Index
SOX,
a 15.5% rise by the S&P 500
SPX
and a 31% gain by the tech-heavy Nasdaq Composite
COMP
over the same span.
Nvidia, which has stood as the largest publicly traded chip maker by market cap since February, having traded that title back and forth with Taiwan Semiconductor Manufacturing Co.
TSM,
since late 2020, closed above the $1 trillion mark officially for the first time on June 14. Nvidia ended Wednesday with a valuation of $1.164 trillion, and one analyst thinks it could be the most valuable U.S. company in a few years.
Nvidia currently stands as the fifth-largest U.S. company by market cap behind Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Alphabet Inc.
GOOG,
GOOGL,
and Amazon.com Inc.
AMZN,
While all have a big stake in the future of AI, the latter three companies are scrambling to outfit their cloud-service provider data centers with new AI gear amid tight supply.
While Nvidia is considered the overwhelming leader in the AI chip market, Advanced Micro Devices Inc.
AMD,
is considered a distant second. AMD’s data-center numbers declined in the company’s recent earnings report, although the company didn’t have comparable AI chip sales in its results.
Shares of AMD and TSMC were both up more than 3% after hours Wednesday.
See also: Nvidia ‘should have at least 90%’ of AI chip market with AMD on its heels
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“‘You could ask who is really running the show? Jerome Powell or Jensen Huang? Amazingly, it may not be Powell, but Jensen Huang who is driving Fed expectations.’”
Those are the words of Ben Emons, a senior portfolio manager and the head of fixed income at NewEdge Wealth in New York, who identifies reasons why artificial-intelligence leader Nvidia Corp.
NVDA,
is demonstrating central-bank-like powers.
It starts with the idea that the Santa Clara, California-based chip designer — which reports fiscal second-quarter earnings on Wednesday — acts as a bellwether for AI-capital expenditures that are likely to boost productivity across the U.S. economy. And in the bond market, a surge of AI-related expectations is translating into higher real yields, which reflect inflation-adjusted growth in gross domestic product and productivity, he said.
Read: Nvidia’s stock snaps losing streak and sits 1% below record close as earnings optimism builds
Higher real yields in the U.S. are a key reason why 10-
BX:TMUBMUSD10Y
and 30-year Treasury yields
BX:TMUBMUSD30Y
climbed to multi-year highs through Monday. Real yields, as measured by rates of Treasury inflation-protected securities, offer a glimpse of how the market expects the U.S. to perform when inflation isn’t a factor.
Read: Rise in Treasury yields is almost entirely due to one factor, strategist says
“The bigger macro story behind Nvidia as the bellwether of artificial intelligence is the role it plays in the economy, which is proving to be stronger than anyone thought it would be,” Emons said via phone on Tuesday. “People connect AI to productivity and productivity leads to growth, and to some extent this is impacting interest-rate expectations today.”
Amid growing anticipation over Nvidia’s upcoming earnings announcement and Friday’s speech by Federal Reserve Chairman Jerome Powell in Jackson Hole, Wyo., “the probability of a rate hike is creeping higher,” the senior portfolio manager wrote in a note this week. “With each additional dollar increase of NVDA EPS estimates, the probability of a hike by November goes up. NVDA is gaining Fed-like power.”
Need to Know: Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs
A chart provided by Emons shows how the median estimate of analysts for Nvidia’s earnings-per-share in the fiscal second quarter has been rising alongside the market-implied probabilities of a November Fed rate hike.
In addition, the yield on one of Nvidia’s own corporate bonds, issued in 2020 and maturing in April 2040, has been rising in relation to the 10-year TIPS or real yield “because of the company’s broader effect on the economy,” Emons said.
As University of Pennsylvania Wharton School finance professor Jeremy Siegel explained in a separate interview with MarketWatch, real interest rates track real growth. Improving productivity and stronger growth “mean the Fed won’t be able to cut rates as much as it would otherwise be able to.”
On Tuesday, Treasury yields finished mixed, while Nvidia’s shares closed down by 2.8%, as traders and investors await the company’s earnings report on Wednesday followed two days later by Powell’s remarks.
Analysts expect Powell to address what’s known as the real neutral rate of interest — or the inflation-adjusted level which is likely to prevail when the economy is operating at full strength and price gains are stable — as a way of justifying the higher-for-longer theme in U.S. interest rates.
See also: How higher-for-longer rates are playing out as 10-year yield hits 15-year high
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Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
SPX
and Nasdaq Composite
COMP.
That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.
Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.
Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.
“We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.
Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
NVDA,
Microsoft
MSFT,
or Meta
META,
“The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.
While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.
Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”
Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.
“For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.
Here is a taster of their long-term AI beneficiaries basket:
And a few more:
Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn
U.S. stocks
SPX
COMP
are trading mixed. The yield on the 10-year Treasury
BX:TMUBMUSD10Y
is steady at 4.33%.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
Microsoft
MSFT,
has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
ATVI,
buyout. Activision shares and Ubisoft
UBI,
surged in Paris.
On the heels of a 7% surge, EV-maker Tesla
TSLA,
is up 1.8%.
Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat
Lowe’s shares
LOW,
are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.
Among Monday’s late earnings news: Fabrinet
FN,
is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
ZM,
is up 4% after reporting an earnings jump and guidance.
Read: Why Amazon is this analyst’s top internet stock pick
The world’s biggest miner BHP
BHP,
reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.
Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.
Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.
New video shows the day police raided 98-year old Kansas newspaper owner’s home.
Hitler’s birth house in Austria will be turned into a police station with a human rights training center.
These were the top tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
NVDA, |
Nvidia |
|
AMC, |
AMC Entertainment |
|
NIO, |
Nio |
|
APE, |
AMC Entertainment Holdings preferred shares |
|
TTOO, |
T2 Biosystems |
|
GME, |
GameStop |
|
AAPL, |
Apple |
|
MULN, |
Mullen Automotive |
|
AMZN, |
Amazon.com |
Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
XLK
:
“It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report.
“We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.
No, Tropical Storm Hilary didn’t flood Dodger Stadium.
These thirsty beer-drinking thieves are raccoons.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.
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State regulators on Thursday opened the floodgates for more robotaxis on the streets of San Francisco.
After a contentious, seven-hour meeting, the California Public Utilities Commission — which oversees taxis and autonomous vehicles, among things — approved two resolutions to broadly expand driverless taxi service from Alphabet’s
GOOG,
GOOGL,
Waymo and GM’s
GM,
Cruise.
On a pair of 3-1 votes, regulators approved allowing Waymo and Cruise to offer fared driverless rides across San Francisco, at all hours of the day, with an unlimited number of vehicles.
While the driverless vehicles are already ubiquitous on city streets, San Francisco is now set to become the first U.S. city with two fleets of robotaxis that will be able to fully compete with taxis and ride-hailing services.
“Today’s permit marks the true beginning of our commercial operations in San Francisco,” Tekedra Mawakana, co-CEO of Waymo, said in a blog post. “We’re incredibly grateful for this vote of confidence from the CPUC, and to the communities and riders who have supported our service.”
Waymo said it expects “incredibly high demand,” and will be expanding its robotaxi service incrementally.
Cruise CEO Kyle Vogt said he was “thrilled” by the votes. “It’s a huge milestone for the AV industry, but even more importantly a signal to the country that CA prioritizes progress over our tragic status quo,” he tweeted.
The expansion was opposed by San Francisco city officials, who say autonomous-driving technology is not ready for prime time, and that the companies need to be more transparent in how they operate. On Wednesday, the city’s fire department released details of 55 incidents so far this year where driverless cars interfered in emergency scenes.
Read more: Driverless cars are driving San Francisco crazy — ‘They are not ready for prime time’
That’s just the tip of the iceberg: Jeffrey Tumlin, the head of San Francisco’s transportation agency, told MarketWatch in July that the city was seeing “up to 90 incidents per month … of varying degrees, some are minor, some are major obstructions.” Those included instances of autonomous cars stopping in the middle of traffic, crashes and other driving hazards.
While acknowledging the positives of driverless technology — which its advocates say is much safer than human drivers — Tumlin said the city would like a more gradual expansion of autonomous cars, with limitations, like the next level of a “learner’s permit.”
Regulation of autonomous vehicles, however, is up to the state.
PUC Commissioner Genevieve Shiroma was the sole dissenter on Thursday’s votes, which were absent one member. She told the hearing that there was no rush to make a decision, and advocated delaying the vote again. She noted that Cruise and Waymo claim to have maintained a good safety record, but that there were discrepancies about the data submitted to regulators. “Passengers should not be endangered, first responders should not be prevented from doing their jobs,” she said.
Alice Reynolds, the president of the CPUC, argued that this was an incremental approval, echoing comments by Commissioner John Reynolds, a former managing counsel at Cruise who did not recuse himself from voting, that the California DMV has already given the companies a permit to operate.
“We do expect the autonomous-vehicle companies to engage with first responders,” Reynolds said. “In the meantime the resolutions before us to meet our requirements.”
Teamsters vice president Peter Finn blasted the decision, saying it was “irresponsible and shows a complete disregard for public safety.”
“Public safety decisions should not be made by regulatory bodies that are in the pocket of Big Tech,” Finn said in a statement, adding that the Teamsters support pending state legislation that would require a trained human operator in autonomous vehicles weighing over 10,000 pounds, which would include most trucks.
A number of companies have autonomous cars driving on San Francisco streets, but only Cruise and Waymo had been approved for taxi service, with limitations. Earlier this week, the two companies disclosed how many driverless vehicles they operate in San Francisco: Cruise runs 100 vehicles during the day and 300 at night, while Waymo has 250 robotaxis operating.
That number could soon grow significantly.
Cruise’s Vogt said in an earnings call last month that Cruise could add “several thousand” robotaxis to San Francisco in an effort to create a disruptive service resembling Uber.
Therese Poletti contributed to this report.
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““We tend to announce things as they come to market, and that’s our M.O.””
If Apple Inc.’s Thursday earnings call sounded a bit different than other recent ones from Big Tech players, perhaps that was due to a noticeable lack of artificial-intelligence discussion.
In fact, AI didn’t come up at all on Apple’s
AAPL,
call until an analyst brought up the topic in the question-and-answer portion, commenting that Apple executives “don’t talk too much” about their AI strategy or investments, unlike many tech peers.
“If you take a step back, we view AI and machine learning as core fundamental technologies that are integral to virtually every product that we build,” Chief Executive Tim Cook replied. AI helps power recently announced software features like live voicemails and the ability to replicate your voice digitally, as well as somewhat older features like automatic crash detection and fall detection.
AI technology has been “absolutely critical to us,” Cook said, and Apple has “been doing research across a wide range of AI technologies, including generative AI, for years,” something the company plans to continue.
But don’t necessarily expect Apple to start showboating around its AI efforts going forward: Cook said that Apple’s “M.O.” simply is to announce products when they’re ready for consumers.
“Apple’s reticence in being dragged into the AI hype is on-brand,” Forrester principal analyst Dipanjan Chatterjee said in emailed comments. “A maniacal focus on what Apple does for its customers and not how it does it is rooted so deeply in the brand’s DNA.”
In all, there were just six mentions of AI or artificial intelligence on Apple’s earnings call, all of which came during the Q&A exchange with Deutsche Bank analyst Sidney Ho. Compare that to 90 mentions of those terms on Alphabet Inc.’s
GOOG,
GOOGL,
earnings call last week, 73 mentions on Microsoft Corp.’s
MSFT,
and 62 mentions on Meta Platforms Inc.’s
META,
according to MarketWatch’s review of transcripts provided by AlphaSense/Sentieo.
Read: Microsoft and Google can’t stop talking about AI, and this chart proves it
Amazon.com Inc.
AMZN,
which joined Apple in posting results Thursday, falls somewhere in the middle. The topic of AI garnered 34 mentions on Amazon’s call.
Whereas Apple has been consistent with its scant mentions of the technology, Amazon executives have been ramping up the rhetoric: AlphaSense/Sentieo data shows just one AI mention on the earnings call Amazon held in February 2022, and then no mentions until the term came up 12 times on its April 2023 call. Volume was of course up considerably from there on Thursday’s call.
See also: The ‘stabilization’ of AWS may have been the most significant number for Amazon’s earnings
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Palantir Technologies
shares were getting a major boost Friday after Wedbush technology analyst Dan Ives launched coverage of the AI software company with an Outperform rating, setting a target price of $25. Ives contends Palantir is well-positioned to take market share in both the commercial and government analytics software markets.
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