Tag: Software

Block’s stock has been a laggard lately. Will management shakeup provide a needed jolt?

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Block Inc.’s stock has been a sizable laggard this year, and now it’s losing the leader of a critical business — albeit one that hasn’t necessarily lived up to investor expectations lately.

Alyssa Henry, the head of Block’s
SQ,
-2.99%
Square merchant business, is stepping down after a long tenure with the company, and Jack Dorsey will assume her role while continuing to lead Block on the whole, the company announced in a Monday filing.

The announcement comes as Block shares have declined 18% so far this year, while the S&P 500
SPX
has risen 16%. Other payment-technology stocks, including Shift4 Payments Inc.,
FOUR,
-0.54%
Toast Inc.
TOST,
+1.34%
and even PayPal Holdings Inc.
PYPL,
-1.98%
have logged better year-to-date performances.

Block’s stock closed at its lowest level since April 7, 2020 on Monday, according to Dow Jones Market Data. It was down about 2% in after-hours trading.

The stock is also down 82% from its all-time closing high achieved Aug. 5, 2021.

See also: PayPal’s ‘fresh start’ isn’t enough to help its stock, analyst cautions

The performance of the Square merchant business, which includes payment processing and other tools for sellers, has been a sore point for investors recently. Wolfe Research analyst Darrin Peller notes that Block’s second-quarter U.S. gross payment volume (GPV) was up 10% from a year earlier, a four-point spread above Visa Inc.’s
V,
+1.49%
domestic growth. Historically, the spread has been in double digits, he said.

Additionally, while the 12% overall growth in Square’s GPV “continues to imply that Square is a market-share gainer, we note that this growth spread relative to the industry has trended lower and also suggests slightly softer growth trends versus competitors like Clover,” which is part of Fiserv Inc.
FI,
+0.12%,
whose shares are up 20% on the year.

“While some of Square’s success over the years should be attributed to Alyssa’s execution, the company’s more recent performance remains a concern for investors (and we suspect for management, internally),” Peller wrote.

He pointed to “mixed” feedback from investors thus far.

“Bulls argue that this change is positive, indicating that management is taking change seriously,” Peller said. “Further, it’s worth noting that Jack has been more receptive to cost management and other adjustments. Meanwhile, bears are citing that Alyssa was the ‘face’ of Seller and was more receptive to changes in Square’s business model compared to Jack (particularly around outsourced distribution).”

Block, for its part, said in its filing that Henry “provided significant contributions” to the company during a tenure that spanned more than nine years.

UBS downgraded Block shares earlier this month, in part due to concerns about the Square business. Analyst Rayna Kumar said she was concerned about a potential slowdown in gross-profit growth owing to a moderation in consumer spending.

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September 18, 2023
Klaviyo reportedly raises price range of its upcoming IPO

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Klaviyo Inc. is reportedly raising the target of its upcoming initial public offering to more than $550 million.

Bloomberg News reported late Sunday that Klaviyo has decided to raise the target range for its shares to $27 to $29, up from its previously stated range of $25 to $27 a share. At the top of that new range, the IPO would raise $557 million, with the company valued at about $8.7 billion, according to Bloomberg.

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September 17, 2023
Alibaba CEO warns of being ‘displaced’ if the Chinese tech giant doesn’t keep up in AI

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Signage at the Alibaba Group Holding Ltd. booth at the Smart China Expo in Chongqing, China, on Monday, Sept. 4, 2023.

Qilai Shen | Bloomberg | Getty Images

Alibaba needs to be “user first” and “AI-driven,” new CEO Eddie Wu told employees on Tuesday, as he laid out the strategic priorities for the Chinese tech giant.

Wu, who is just three days into the job as Alibaba chief executive, called for the e-commerce firm to “adopt a start-up mindset” as he looks to steer the company back to growth following one of the most tumultuous times in its 24-year history.

“Times are changing, and so must Alibaba! As the world progresses, Alibaba needs to evolve even faster!,” Wu said in a letter to employees that was seen by CNBC.

Wu, one of Alibaba founder Jack Ma’s close confidants, started as CEO on Sept. 10, taking over from Daniel Zhang, who stepped down from the role to focus on heading up the cloud computing business. However, in a surprise move, Zhang this week quit as CEO of the cloud business with Wu taking over in the interim.

It comes months after Alibaba split its company into six different business groups, the biggest shakeup in its history.

Wu said Alibaba’s two main strategic focuses will be “user first” and “AI-driven.” The company will “reinforce” its strategic investments in three areas.

The first it calls “technology-driven internet platforms.” Wu said that Alibaba’s business should “seek out the most open and collaborative relationships,” even with competitors. This is a different approach from Alibaba which has tended to try to keep users within its ecosystem of products.

Wu also touted the need to invest in artificial intelligence. Alibaba’s cloud unit has tried to position itself as a leader in AI inside China as it looks to reignite growth in the business.

“Each of our businesses generates massive numbers of use cases; therefore, we must transform these use cases into applications for AI technology, driving breakthrough user experience and business models through technology innovation,” Wu said.

“If we don’t keep up with the changes of the AI era, we will be displaced.”

Alibaba Cloud has its large language model called Tongyi Qianwen, released earlier this year. An LLM is an AI model trained on huge amounts of data and underpins chatbot applications. It’s the same type of model that OpenAI’s ChatGPT is based on.

Wu also said Alibaba needs to continue to invest in “globalization.”

Alibaba will also look to promote younger talent. Within the next four years, the company will promote those born after 1985 and the 1990s “to form the core of our business management teams,” Wu said.

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September 12, 2023
Oracle stock sinks as revenue outlook falls below Wall Street consensus

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Oracle Corp. shares dropped in extended trading Monday after the software company’s revenue forecast for the current quarter fell short of Wall Street expectations.

Oracle
ORCL,
+0.31%
shares, which had been down about 5% after hours when its earnings call started, dropped more than 9% after Oracle Chief Executive Safra Catz forecast its outlook for the quarter.

On the conference call with analysts, Catz forecast second-quarter earnings of $1.30 to $1.34 a share on revenue growth of 5% to 7%, or $12.89 billion to $13.13 billion.

Analysts surveyed by FactSet had estimated earnings of $1.34 a share on revenue of $13.28 billion.

Catz added that if “currency exchange rates remain the same as they are now,” currency should have a 2% positive effect on total revenue and a 3 cent-a-share positive effect on earnings.

Oracle reported fiscal first-quarter net income of $2.42 billion, or 86 cents a share, compared with $1.55 billion, or 56 cents a share, a year ago.

Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.19 a share, compared with $1.03 a share in the year-ago period.

Revenue rose to $12.45 billion from $11.45 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast earnings of $1.15 a share on revenue of $12.57 billion.

Oracle reported cloud services and license support revenue of $9.55 billion, while analysts, on average, had forecast $9.43 billion; and cloud license and on-premise license revenue of $809 million, while the Street expected $967 million.

Hardware revenue came in at $714 million, while analysts expected $748 million; and services revenue was $1.38 billion, while the Street expected $1.43 billion.

Oracle shares finished up 0.3% during Monday’s regular session to close at $126.71.

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September 11, 2023
Oracle stock falls after in-line revenue report

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Oracle Corp. shares fell in the extended session Monday after the software company reported in-line revenue for the quarter, and earnings were slightly higher than expected.

Oracle
ORCL,
+0.31%
shares fell as much as 5% after hours, following a 0.3% rise in the regular session up to close at $126.71.

Oracle reported fiscal first-quarter net income of $2.42 billion, or 86 cents a share, compared with $1.55 billion, or 56 cents a share, a year ago.

Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.19 a share, compared with $1.03 a share in the year-ago period.

Revenue rose to $12.45 billion from $11.45 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast earnings of $1.15 a share on revenue of $12.45 billion.

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September 11, 2023
Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

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The second week of September, as in the NFL, marks a kickoff of sorts for the tech year.

Headlined by Apple Inc.’s
AAPL,
+0.72%
seminal iPhone event on the second Tuesday of the month at Apple Park, and anchored by Salesforce Inc.’s
CRM,
+0.33%
wildly popular Dreamforce conference up the road in San Francisco, these several days set a tempo as well as establish a road map for the industry over the next 12 months. They also open the floodgates on tech conference season, with shows stacked up over the next several weeks for Facebook parent Meta Platforms Inc.
META,
+3.33%,
Microsoft Corp.
MSFT,
+1.21%,
and Oracle Corp.
ORCL,
+0.32%.

Oh, and there’s that initial public offering from Arm Holdings Plc, the chip designer owned by SoftBank Group Corp.
9984,
+3.86%
that is expected to value Arm at $50 billion to $54.5 billion on a fully diluted basis. Another IPO candidate, delivery startup Instacart, also plans a public offering that would value it at $7.5 billion. Both deals could jump-start what has been a somnolent tech IPO market the past few years.

For that reason alone, this jam-packed tech week might hold even more import, and consequences, than previous years. A confluence of legal tussles, macroeconomic conditions, a trade war with China, and regulatory bluster have raised the stakes.

“It’s a tale of two cities with this week’s events highlighting both the issues and opportunities in tech,” Silicon Valley analyst Maribel Lopez said in an interview, assessing the week. “Arm’s IPO showcases the strength of tech and AI at a time when the AI forum and Google-DoJ shine a light on the concern that a few companies are wielding tremendous power for the future of the world.”

Consider: Hours before Apple is expected to unveil a new crop of iPhones more noteworthy for pricing than features, Alphabet Inc.’s
GOOGL,
+0.51%

GOOG,
+0.47%
Google faces off with the Justice Department in a federal court in Washington, D.C.

Justice Department officials argue that Google illegally leveraged agreements with phone makers such as Apple and Samsung Electronics Co.
005930,
+0.71%
and with internet browsers like Mozilla to be the default search engine for their customers, thus preventing smaller rivals from gaining access to that business.

“This is a backwards-looking case at a time of unprecedented innovation, including breakthroughs in AI, new apps and new services, all of which are creating more competition and more options for people than ever before,” Google General Counsel Kent Walker said in a statement.

The following day, Wednesday, Senate Majority Leader Chuck Schumer, D-N.Y., convenes an all-star panel of CEOs from Meta, Microsoft, Google, OpenAI and Palantir Technologies Inc.
PLTR,
+4.82%.

As lawmakers ruminate on how to harness AI responsibly, bipartisan legislation is in the works. Sens. Richard Blumenthal, D-Conn., and Josh Hawley, R-Mo., are among those crafting a bill.

Even Apple and Salesforce aren’t immune from recent events: Apple has endured a relatively rough patch of disappointing (for them) revenue and iPhone sales while balancing risk/reward with its huge investment in China, and Salesforce CEO Marc Benioff has threatened to relocate Dreamforce to Las Vegas after more than two decades in his hometown of San Francisco if drug use and homelessness disrupt this year’s event.

The most pressing concern, when all is said and done, is AI — which hovers like the Death Star over the tech landscape.

“The biggest concern is the forum is behind closed doors, which could lead to regulatory capture, where dominant players in the industry help influence the regulations being imposed,” Kimberlee Josephson, associate professor of business administration at Lebanon Valley College (Pa.), said in an interview. “It’s almost as if it puts them in the hot while giving them a seat at the table at the same time.”

“At the very least, it sends the signal that something is being done,” she said. “Antitrust cases are so subjective. What constitutes barriers to entry? DoJ adds a level of seriousness.”

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September 11, 2023

Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

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Investors in index funds have been well rewarded by a high concentration in the largest technology companies over the past decade. But there are also continuing warnings about the risk of such heavy concentrations, even in index funds that track the S&P 500. Solutions are offered to limit this risk, but if you expect Big Tech to continue to drive the broad market returns over the coming years, why not make an even more focused bet?

Comparisons of three index-fund approaches highlight how successful concentration in the “Magnificent Seven” has been.

The Magnificent Seven are Apple Inc.
AAPL,
+0.16%,
Microsoft Corp.
MSFT,
+0.72%,
Nvidia Corp.
NVDA,
-2.03%,
Amazon.com Inc.
AMZN,
+2.17%,
Alphabet Inc.
GOOGL,
-0.27%

GOOG,
-0.32%,
Tesla Inc.
TSLA,
+9.37%
and Meta Platforms Inc.
META,
+1.67%.
We have listed them in the order of their concentration within the Invesco S&P 500 ETF Trust
SPY,
which tracks the S&P 500
SPX.
The U.S. benchmark index is weighted by market capitalization, as is the Nasdaq Composite Index
COMP
and the Russell indexes.

SPY is 27.6% concentrated in the Magnificent Seven. One way to play the same group of 500 stocks but eliminate concentration risk is to take an equal-weighted approach to the index, which has worked well for certain long periods. But here, we’re focusing on how well the concentrated strategy has worked.

Let’s take a look at the group’s concentration in three popular index approaches, then look at long-term performance and consider what happened in 2022 as rising interest rates helped crush the tech sector.

Here are the portfolio weightings for the Magnificent Seven in SPY, along with those of the Invesco QQQ Trust
QQQ,
which tracks the Nasdaq-100 Index
NDX
and the Invesco S&P 500 Top 50 ETF
XLG
:

Company	Ticker	% of SPY	% of QQQ	% of XLG
Apple Inc.	AAPL, +0.16%	7.05%	10.85%	12.46%
Microsoft Cor.	MSFT, +0.72%	6.65%	9.53%	11.76%
Amazon.com Inc.	AMZN, +2.17%	3.30%	5.50%	5.84%
Nvidia Corp.	NVDA, -2.03%	3.02%	4.44%	5.33%
Alphabet Inc. Class A	GOOGL, -0.27%	2.17%	3.12%	3.83%
Alphabet Inc. Class C	GOOG, -0.32%	1.88%	3.11%	3.32%
Tesla Inc.	TSLA, +9.37%	1.79%	3.10%	3.17%
Meta Platforms Inc. Class A	META, +1.67%	1.77%	3.60%	3.12%
Totals		27.63%	43.25%	48.83%
Sources: Invesco Ltd., State Street Corp.

The same group of seven companies (eight stocks with two common share classes for Alphabet) is at the top of each exchange-traded fund’s portfolio, although the top seven for QQQ aren’t in the same order as those for SPY and XLG. QQQ’s weighting was changed recently as the underlying Nasdaq-100 underwent a “special rebalancing” last month.

Here’s a five-year chart comparing the performance of the three approaches. All returns in this article include reinvested dividends.

FactSet

QQQ has been the clear winner for five years, but it is also worth noting how well XLG has performed when compared with SPY. This “top 50” approach to the S&P 500 incorporates many stocks that aren’t listed on the Nasdaq and therefore cannot be included in QQQ, which itself is made up of the largest 100 nonfinancial companies in the full Nasdaq Composite Index
COMP,
+0.45%.

Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
BRK.B,
+0.77%,
Johnson & Johnson
JNJ,
+0.79%,
Procter & Gamble Co.
PG,
+0.94%,
Home Depot Inc.
HD,
-0.12%
and Nike Inc.
NKE,
-0.42%.

Now let’s go deeper into long-term performance. First, here are the total returns for various time periods:

ETF	3 Years	5 Years	10 Years	15 Years	20 Years
SPDR S&P 500 ETF Trust SPY	40%	69%	223%	370%	531%
Invesco QQQ Trust QQQ	41%	113%	430%	882%	1,158%
Invesco S&P 500 Top 50 ETF XLG	41%	85%	262%	404%	N/A
Source: FactSet

Click on the tickers for more about each ETF, company or index.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

There is no 20-year return for XLG because this ETF was established in 2005.

For five years and longer, QQQ has been the runaway leader, but for 5, 10 and 15 years, XLG has also beaten SPY handily, with broader industry exposure.

Something else to consider is that during 2022, when SPY was down 18.2%, XLG fell 24.3% and QQQ dropped 32.6%.

For disciplined long-term investors, the tech pain of 2022 may not seem to have been a small price to pay for outperformance. And it may have been easier to take the pounding when holding SPY or even XLG that year.

Here’s a look at the average annual returns for the three ETFs:

ETF	3 years	5 years	10 years	15 years	20 years
SPDR S&P 500 ETF Trust SPY	11.8%	11.0%	12.4%	10.9%	9.6%
Invesco QQQ Trust QQQ	12.0%	16.3%	18.2%	16.4%	13.5%
Invesco S&P 500 Top 50 ETF XLG	12.2%	13.1%	13.7%	11.4%	N/A
Source: FactSet

So the question remains — do you believe that the largest technology companies will continue to lead the stock market for the next decade at least? If so, a more concentrated index approach may be for you, provided you can withstand the urge to sell into a declining market, such as the one we experienced last year.

Here is something else to keep in mind. In a note to clients on Monday, Doug Peta, the chief U.S. investment strategist at BCA, made a fascinating point: “The only novel development is that all the heaviest hitters now hail from Tech and Tech-adjacent sectors and are therefore more prone to move together than they were at the end of 2004, when the seven largest stocks came from six different sectors. “

Nothing lasts forever. Peta continued by suggesting that investors who are tired of big tech taking all the glory “need only wait.”

“[I]f history is any guide, their time at the top of the capitalization scale will be short,” he wrote.

Don’t miss: These four Dow stocks take top prizes for dividend growth

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September 11, 2023

Just how much is the AI discourse helping stocks? An analyst scoured earnings calls for clues

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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,
+0.28%,
Meta Platforms Inc.
META,
-0.26%
and Alphabet Inc.
GOOG,
+0.73%

GOOGL,
+0.83%
— 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.

This week in earnings

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,
-3.43%,
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,
+0.85%
and homebuilder Lennar Corp.
LEN,
+0.50%
also report.

The call to put on your calendar

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,
-0.02%
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.

The number to watch

Oracle results, supply situation: Cloud and IT-network developer Oracle Corp.
ORCL,
+0.98%
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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September 10, 2023
White House Situation Room gets renovated — here’s what a $50 million makeover looks like

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A storied part of the White House complex — the Situation Room — has emerged from a $50 million makeover, with President Joe Biden taking part in a ribbon-cutting ceremony earlier this week to mark the occasion.

The White House Situation Room is actually a highly secure complex of rooms on the West Wing’s ground floor, including a reception area, a main conference room known as the “JFK room,” a smaller conference room, breakout rooms and a 24-7 operations center called the “watch floor.”

The operations room is shown in the photo above, while the main conference room is shown in the photo below.

The main conference room for the White House Situation Room is shown here.

White House handout

Biden shared a video on Friday that shows the ribbon-cutting ceremony and his tour of the revamped facility, writing in a post on X, formerly known as Twitter, that it’s “incredible.”

The renovation involved digging five feet underground to make more room and install cutting-edge technology allowing White House officials to bring together intelligence from different agencies with the push of a few buttons. The goal is to never need a complete renovation again, as now panels can be removed and updated and new technology swapped in.

The Situation Room’s yearlong renovation came up in July when cocaine was found in a heavily traveled part of West Wing. Biden’s national security adviser, Jake Sullivan, criticized what he described as “questionable reporting” on the room’s connection to the incident.

“The Situation Room is not in use and has not been in use for months because it is currently under construction. We are using an alternate Situation Room in the Eisenhower Executive Office Building,” Sullivan told reporters in July. “There was no issue with the Situation Room relative to this. “

The Associated Press contributed to this report.

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September 8, 2023
Sorry, Elon, a ‘super app’ is never going to fly in the U.S.

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“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.

That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.

“I…

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September 7, 2023
C3.ai, GameStop, UiPath, ChargePoint, Yext, BlackBerry, and More Stock Market Movers
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/stock-market-movers-3fac9192
Updated Sept. 7, 2023 6:33 am ET / Original Sept. 7, 2023 4:37 am ET

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September 7, 2023
Google reaches tentative settlement over alleged app store monopoly

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Thirty-six states and the District of Colombia have reached an agreement in principle with Google to settle a lawsuit filed in 2021 over the tech giant’s alleged monopolistic control of app distribution for the software that runs most of the world’s cellphones.

The agreement, cited in a court filing late Tuesday by both sides, is subject to approval by the state attorneys general and the board of directors of Google’s parent company, the execution of an agreement and court approval.

Terms of the temporary agreement bar the parties from disclosing its details for now, according to the Utah attorney general’s office, the lead plaintiff. “We don’t have a comment at this time,” said Google spokesperson Peter Shottenfels.

A trial date had been set for Nov. 6.

The complaint filed in a Northern California federal court echoed similar allegations that mobile game maker Epic Games made against Google that is scheduled to go to trial in November.

Apple prevailed in a separate suit Epic filed against it over the separate app store it runs exclusively for iPhones, with a federal appeals court upholding in April its sole control of app distribution.

Google still faces several major antitrust lawsuits filed by the Department of Justice and other government agencies across the U.S. focused on alleged search-related and advertising market monopolistic behavior. Justice’s search-related case is set for trial on Sept. 12.

In November, Google settled with 40 states over the tracking of user location, paying $391 million.

The Utah-led suit was among actions taken in recent years to try to curtail the enormous power amassed by Google, Apple, Facebook and Amazon, which have built unprecedented digital empires by corralling consumers into services with minimal competitors.

Like the Epic lawsuit, the states’ lawsuit focused primarily on the control Google exerts on its Play app store so it can collect commissions of up to 30% on digital transactions within apps installed on smartphones running on the Android operating system. Those devices represent more than 80% of the worldwide smartphone market.

Although its app commissions are similar to Apple’s, Google has tried to distinguish itself by allowing consumers to download apps from other places than its Play store. Apple, by contrast, doesn’t allow iPhone users to install apps from any other outlet than its own store.

But the states’ lawsuit took issue with Google’s claim that its Android software is an open operating system that allows consumers more choices. It contended Google has set up anticompetitive barriers to ensure it distributes more than 90% of the apps on Android devices — a market share that the attorneys general argued represented an illegal monopoly.

Lawsuits the Mountain View, California, company is still fighting include a landmark case brought by the U.S. Justice Department in 2020 focused on alleged abuses of Google’s dominant search engine and its digital ad network, which generates some $100 billion in annual revenue for its corporate parent, Alphabet Inc.

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September 6, 2023
EU targets Apple, Amazon, Alphabet, ByteDance, Meta, Microsoft in next phase of digital crackdown

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LONDON — The European Union is targeting Apple, Amazon, Microsoft, Google parent Alphabet, Facebook owner Meta and TikTok parent ByteDance under new digital rules aimed at reining in the market power of online companies.

The six companies were classified Wednesday as online “gatekeepers” that must face the highest level of scrutiny under the 27-nation bloc’s Digital Markets Act.

The act amounts to a list of do’s and don’ts that seeks to prevent tech giants from cornering digital markets, with the threat of whopping fines or even forcing Big Tech companies to sell of parts of their business to operate in Europe.

It’s part of a sweeping update to the EU’s digital rulebook that’s starting to take force this year, and comes weeks after a companion package of rules aimed at keeping internet users safe, the Digital Services Act, started kicking in.

“The most impactful online companies will now have to play by our EU rules,” European Commissioner Thierry Breton, who’s in charge of the bloc’s digital policy, said on X, previously known as Twitter. “DMA means more choice for consumers. Fewer obstacles for smaller competitors. Opening the gates to the Internet.”

The EU’s executive Commission said digital platforms can be listed as gatekeepers if they act as key gateways between businesses and consumers by providing “core platform services.”

Those services include Google’s Chrome browser, Microsoft’s Windows operating systems, chat apps like Meta’s WhatsApp, social networks like TikTok, and others playing a middleman role like Amazon’s Marketplace and Apple’s App Store.

The companies now have six months to start complying with the Digital Markets Act’s requirements, which are spurring changes in how Big Tech companies operate.

Google said the new law will require it and other companies “to make various changes to the way their products and services work.”

One of the main goals is to break up the “closed environment where you are in a way locked in and you cannot go elsewhere, ” said Alexandre de Streel, a professor of European law at the University of Namur and an academic director at CERRE, a think tank in Brussels.

“Consumers will be better off because you will pay less and will be able to move more easily from one one platform to another,” de Streel said. “So that’s the endgame.”

For example, under the DMA tech companies can’t stop consumers from connecting with businesses outside their platforms.

That could put pressure on Apple to open its App Store further. Video game maker Epic Games and music streaming service Spotify have both complained that Apple wouldn’t let them bypass its Apple Pay payments system to avoid paying its 30% commission for subscriptions. Apple has since eased some of its longstanding restrictions.

Messaging services will be required to work with each other. That means Telegram or Signal users could exchange texts or video files with WhatsApp users.

Platforms are banned from ranking their own products or services higher than their rivals in search results. So, Amazon isn’t allowed to make its own-brand products easier to find than those from third-party merchants. The ecommerce giant already started giving European buyers more visible choices when it settled an EU antitrust probe last year, by offering them a second “buy box” with a different price or delivery offer for the same product.

Online services can’t combine a user’s personal data to build up a profile for targeted advertising. That means Meta can’t mix together a user’s data from Facebook, Instagram and WhatsApp services without clear consent.

Essential software or apps such as web browsers can’t be installed by default along with the operating system, in the way Google’s Chrome comes bundled with Android phones. Consumers will instead be given a choice screen for search engines and browsers to use on their devices. Google noted that it’s already doing this and said it would remind European users of their choices.

Violations could result in fines of up to 10% of a company’s annual global revenue, and up to 20% for repeat offenders, or even a breakup of the company.

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September 6, 2023
Chip design firm Arm sets share price between $47 and $51 for blockbuster U.S. IPO

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The Arm website on a laptop arranged in New York, US, on Wednesday, Aug. 23, 2023.

Gabby Jones | Bloomberg | Getty Images

Chip design firm Arm on Tuesday submitted an updated filing for its upcoming blockbuster initial public offering on the New York Stock Exchange, setting a price range between $47 and $51.

This is a breaking news story, please check back later for more.

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September 5, 2023
Strategist picks the small and mid-cap stocks he prefers over the ‘Magnificent Seven’

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Anthony Doyle of Firetrail outlines where he sees 'exceptional, compelling opportunities' outside of the 'Magnificent Seven' stocks

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September 4, 2023
Broadcom stock slips after earnings as forecast fails to bring upside

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Broadcom Inc. shares slipped 4.5% in the extended session Thursday after the chip and software company delivered a revenue forecast for the current quarter that failed to offer upside versus the consensus view.

The company reported fiscal third-quarter net income of $3.30 billion, or $7.74 a share, compared with $3.07 billion, or $7.15 a share, in the year-ago period.

After adjustments, Broadcom
AVGO,
+3.43%
earned $10.54 a share, compared with $9.73 a share in the year-ago quarter. Analysts tracked by FactSet were expecting $10.43 a share.

Revenue increased to $8.88 billion from $8.46 billion in the year-ago quarter, while analysts were modeling $8.85 billion.

See also: Dell’s stock soars as company easily beats on earnings

Chip sales rose 5% to $6.94 billion from the year-ago period, and infrastructure software sales also were up by 5%, to $1.94 billion. The FactSet consensus was for $6.97 billion in chip sales and $1.89 billion in software sales.

The latest results “were driven by demand for next-generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers,” Chief Executive Hock Tan said in a statement.

Broadcom generated $4.6 billion in free cash flow during its third quarter.

The company forecast fiscal fourth-quarter revenue of about $9.27 billion, in line with the FactSet consensus.

Read: Intel offers an upbeat update, and its stock is gaining

Year to date, Broadcom is up 65% and the PHLX Semiconductor Index
SOX,
+0.74%
is up 45%, while the S&P 500 index
SPX
is up 18% and the tech-heavy Nasdaq Composite
COMP
is up 35%.

See also: Nutanix’s stock soars 12% on revenue beat, strong sales guidance

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August 31, 2023
Shopify Is Offering Amazon’s ‘Buy With Prime.’ 3 Benefits From the Deal.

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Shopify

unveiled a deal that permits merchants on its platform to offer shoppers the choice to buy items using

Amazon

Prime perks. Analysts anticipate a boost in merchant usage, among other benefits for the tech firms involved.

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August 31, 2023
Salesforce ‘very thirsty’ to be AI CRM leader, Benioff says following strong outlook, improved margins

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Salesforce Inc. shares rallied in the extended session Wednesday after the customer-relations management software giant’s earnings outlook topped Wall Street expectations two weeks ahead of its annual confab.

Salesforce CRM shares rallied more than 6% after hours, and held steadily in that range during the conference call with analysts, following a 1.5% rise to close the regular session at $215.04.

The…

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August 30, 2023
OpenAI launches ChatGPT Enterprise, the company’s biggest announcement since ChatGPT’s debut

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OpenAI on Monday announced its biggest news since ChatGPT’s debut: It’s launching ChatGPT Enterprise, the AI chatbot’s business tier, available starting Monday.

The tool has been in development for “under a year” and had the help of more than 20 companies of varying sizes and industries, OpenAI COO Brad Lightcap told CNBC. ChatGPT Enterprise includes access to GPT-4 with no usage caps, performance that’s up to two times faster than previous versions, and API credits. Lightcap said that pricing would not be publicly announced and that it “it will depend, for us, on every company’s use cases and size.” Beta users included Block, Canva and The Estée Lauder Cos.

Earlier this year, Microsoft‘s expanded investment in OpenAI — an additional $10 billion — made it the biggest AI investment of the year, according to PitchBook, and in April, the startup reportedly closed a $300 million share sale at a valuation between $27 billion-$29 billion, with investments from firms such as Sequoia Capital and Andreessen Horowitz. Two months after ChatGPT’s launch in November, it surpassed 100 million monthly active users, breaking records for the fastest-growing consumer application in history: “a phenomenal uptake – we’ve frankly never seen anything like it, and interest has grown ever since,” Brian Burke, a research vice president at Gartner, told CNBC in May.

More than 80% of Fortune 500 companies had teams actively using ChatGPT, per Lightcap and OpenAI.

One key differentiator between ChatGPT Enterprise and the consumer-facing version: ChatGPT Enterprise will allow clients to input company data to train and customize ChatGPT for their own industries and use cases, although some of those features aren’t yet available in Monday’s debut. The company also plans to introduce another tier of usage, called ChatGPT Business, for smaller teams, but did not specify a timeline.

Lightcap told CNBC that rolling out the enterprise version first, and waiting on the business tier, “gives us a little bit more of a way to engage with teams in a hands-on way and understand what the deployment motion looks like before we fully open it up.”

OpenAI noted in a blog post that “We do not train on your business data or conversations, and our models don’t learn from your usage,” adding that clients’ conversation data would be encrypted both at transit and at rest. The company does, however, log aggregate data on how the tool is used, including performance metadata and more, as is relatively standard, Lightcap said.

ChatGPT Enterprise’s debut comes as the AI arms race continues to heat up among chatbot leaders such as OpenAI, Microsoft, Google and Anthropic. In an effort to encourage consumers to adopt generative AI into their daily routines, tech giants are racing to launch not only new chatbot apps, but also new features. In May, OpenAI launched its iOS app, followed by the Android app in July. Google is regularly rolling out updates to its Bard chatbot, and Microsoft is doing the same with Bing, introducing features like visual search. Anthropic, the AI startup founded by ex-OpenAI executives, debuted a new AI chatbot, Claude 2, in July, months after raising $750 million over two financing rounds.

ChatGPT, like many large language models, is expensive to operate, with each chat likely costing OpenAI “single-digit cents,” according to a December tweet by CEO Sam Altman, suggesting that operating the service for 100 million people a month could cost millions of dollars.

The biggest obstacle to ChatGPT Enterprise’s development was figuring out how to prioritize features, Lightcap told CNBC.

Out of all the things shipping in the next couple of months, he said, “the prioritization of how you pulled forward those things based on how people are using the product — and what people really want and what’s empowering — was the topic of a lot of debate, I would say, on the team.”

One concrete example is Code Interpreter, a ChatGPT Plus feature that has since been renamed to Advanced Data Analysis. Lightcap said that the team questioned whether the feature was a priority for ChatGPT Enterprise and that it “sat stack-ranked in a list with a bunch of other things that we think are kind of equally or more exciting,” but companies’ feedback caused them to prioritize offering it sooner rather than later.

OpenAI plans to onboard “as many enterprises as we can over the next few weeks,” per the company’s blog post.

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August 28, 2023
Nasdaq futures jump after Nvidia results impress, while Dow futures flatline
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U.S. stock futures jump early Thursday as sparking Nvidia results boost risk appetite.

How are stock-index futures trading
- S&P 500 futures
  ES00,
  +0.52%
  rose 29 points, or 0.6%, to 4476
- Dow Jones Industrial Average futures
  YM00,
  -0.11%
  dipped 6 points, or 0.0%, to 34516
- Nasdaq 100 futures
  NQ00,
  +1.15%
  added 210 points, or 1.4%, to 15405
On Wednesday, the Dow Jones Industrial Average
DJIA
rose 184 points, or 0.54%, to 34473, the S&P 500
SPX
increased 48 points, or 1.1%, to 4436, and the Nasdaq Composite
COMP
gained 215 points, or 1.59%, to 13721.

What’s driving markets

Well-received earnings from AI chipmaker Nvidia
NVDA,
+3.17%
has triggered a bout of risk-on activity across markets. Futures indicate the tech-heavy Nasdaq 100 will open up 1.4% as Nvidia’s stock jumps 8% in premarket action.

“The market expectations were sky-high, the results went to the moon,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The Nvidia news has [had] a boosting effect on technology stocks…by confirming that all the talk around the AI-craze was not empty, after all.”

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, agreed: “Nvidia smashing the forecast ceiling has also lifted the mood elsewhere.”

Shares of Palantir Technologies
PLTR,
+4.29%,
Advanced Micro Devices
AMD,
+3.57%
and OpenAI investor Microsoft
MSFT,
+1.41%
rose in premarket action.

Dow Jones Industrial Average futures underperformed as shares in Boeing
BA,
-0.65%
fell nearly 2% on news of a defect identified on the 737 Max aircraft.

Falling implied borrowing costs were also helping the mood Thursday. The benchmark 10-year U.S. Treasury yield, which earlier this week hit a near 16-year peak of 4.36% has pulled back to 4.178% after survey’s of economic activity in Europe and the U.S., released Wednesday, suggested a deteriorating global economy.

“The rally in U.S. stocks and the retreat of Treasury yields followed underwhelming economic reports as the market fell back into the ‘bad news is a good’ mode,” said Stephen Innes, managing partner at SPI Asset Management.

“But encouragingly for equity investors, the weaker U.S. data lens more weight to the argument for the Federal Reserve to pause its interest rate hikes,” Innes added.

With that in mind traders will have an eye on the Jackson Hole economic policy symposium, which begins Thursday, and which on Friday is expected to deliver a speech by Fed Chair Jerome Powell.

U.S. economic updates set for release on Thursday include the weekly initial jobless claims and durable goods orders for July, both due at 8;30 a.m. Eastern.
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August 24, 2023