(#44) The magnificent 7: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla - part II
Adobe leveraging AI on all their products making indispensable for any heavy used, hence de-commoditizing itself
This week we continue the AI saga with the Magnificent 7: Meta and Amazon (part II)
In the dynamic realm of weekly updates, I'm thrilled to introduce a brand new section titled "Things Happen." Drawing inspiration from Matt Levine (Bloomberg), this segment is dedicated to presenting a curated list of informative links. These aren't just any links, though. Each one holds the potential to unravel a more profound narrative, laying the groundwork for an in-depth analysis. While these stories may initially seem disparate or unrelated, they represent the pulsating undercurrents of our times. I encourage you, dear readers, to dive into these links, form your perspectives, and stay tuned as some of these might soon evolve into comprehensive discussions in our subsequent newsletters.
Onto the update:
Strategy
Meta
Meta is leveraging AI to refine and personalize the content its users receive. This commitment to personalization emphasizes delivering tailored content via Meta's platforms.
Sam Lessin perfectly described the 5 stages of Social Media. The last stage is represented by ‘AI-generated content’. For that you need powerful chips, hence Meta’s huge investments in data centers & chips.
A key area of focus for Meta is the evolution of its advertising tools. AI has the potential to revolutionize this space, taking charge of tasks like generating content and A/B testing both copy and visuals. Given Meta's proficiency in scaling such capabilities, it's poised to lead in this domain.
It's worth noting that Meta's advertising approach is primarily geared towards initial consumer engagement. Their aim is to introduce consumers to new products, services, or apps, ensuring they become aware of offerings they weren't previously familiar with.
This experimental approach is particularly conducive to AI integration. Even though AI-driven content generation may have some associated costs, they are considerably lower than human-driven processes. LINK
Amazon
Amazon integrates artificial intelligence (AI) throughout its services. While the direct application of AI in consumer-oriented tasks like image and text creation may not be immediately apparent, Amazon Web Services (AWS) stands out as a significant player. AWS offers cloud-based access to high-powered graphics processing units (GPUs), some of which are utilized for training AI models. For instance, whenever a user creates an image using MidJourney or designs an avatar in a dedicated app, the AI inference process is executed on a cloud GPU.
However, AI processes, especially inference, come with associated costs. In simpler terms, employing AI to create or analyze something introduces incremental expenses. It's anticipated that as technology advances, these costs will decline. AI models are likely to become more resource-efficient, and the chips that power them are expected to improve in both speed and efficiency. Additionally, as cloud services grow and cater to a broader range of products, they're expected to reap the benefits of economies of scale, maximizing the return on their investments.
Yet, the extent to which an integrated full-stack approach might impact costs remains a topic of discussion. There's also the potential of shifting AI inference to local devices, reducing the reliance on cloud services.
Twitter needs a new business model
The company will start a trial $1 subscription model in New Zeeland and the Philipines:
“Under the scheme, new users will be required to verify their phone numbers and pay the $1 fee if they want to use core features like tweets, retweets, bookmarks and likes. Those who who don’t pay will only be able to use X in a “read only” mode.” - LINK
I made my case one year ago: “Twitter should change their business model”. LINK
Bytedance
The parent company of TikTok made $85 bn in 2022 (+38% YoY), with an estimated market capitalization of $224 bn. My estimation for 2023 was that the company’s valuation would surpass $1 trillion. I guess it will not happen this year. LINK
Adobe’s bet: AI, of course.
The company’s strategy in 3 steps:
1/ Acquire Figma for $20 bn because of the risk of being commoditized (ie. through Figma’s APIs)
2/ Acquisition is pending due to competition questions/approval
3/ Adobe leveraging AI on all their products making indispensable for any heavy used, hence de-commoditizing itself.
Lesson: Built a direct relationship with the user.
Well done! LINK
Artificial intelligence
The Techno-Optimist Manifesto, by Marc Andreessen. LINK
AI makes us more productive. LINK
Nassim Nicholas Taleb's conversation with Bernard Avishai on connectivity, tail events, debt, & LLM. LINK
LLMs and Microsoft
Microsoft are losing a lot of money on AI, but it is just a matter of time until it understands patterns and consumption to address pricing. Also, the company can subsidize the product for mass adoption. LINK
State of AI Report
The Report is produced by AI investors Nathan Benaich and the Air Street Capital team. LINK
Another great article from FT on how generative AI works. LINK
How Google is using AI to combat floods, wildfires, and extreme heat. LINK
Data
The state of VC in 2023, by Sam Lessin. LINK
Trade still goes to Russia. LINK
JP Morgan - one of the 8 banks “too big to fail” has delivered better than expected results. The App Economy did a great job showing the revenue streams. LINK
IT&C in Europe
In 2022, there were 3.0 million people employed with an ICT education in the EU. LINK
Highest shares of young people in:
🇸🇰 Slovakia (83.8%)
🇷🇴 Romania (82.4%)
🇭🇷 Croatia (79.3%)
Emerging technology trends in Asia. LINK
Things happen
The iPhone 15 Pro Max costs $588 to manufacture. LINK
The list of Apple’s suppliers for the iPhone 15, according to Quartr. LINK
Peter Thiel on America:
“Companies started since 1990 worth $100B+. 11 are in the US, 6 in China. Zero everywhere else.”
The Daily Mail is very active & successful on TikTok. LINK
Goldman Sachs profits dropped 36% after a pullback from retail banking. LINK
What a great story about the carbon credits industry…in Zimbabwe. LINK
A secret deal to put a real rifle in “Call of Duty”. LINK
No one’s going into accounting anymore. LINK
Sales of non-alcoholic beer are soaring in the US. LINK
Outside Interest
Israel Freezes 100 Binance accounts over suspected Hamas links. LINK
Kelvin Kiptum just ran a record marathon time of 2:00:35 in Chicago. LINK
In China, life coaches are seeing booming demand from Gen-Zers. LINK
Was Dracula a vegan? LINK
AI reads an ancient scroll under the ash at Mount Vesuvius. The ML model detected the Greek letters on several lines of the rolled-up papyrus, including πορϕυρας (porphyrias), meaning ‘purple.’ I look forward to understanding the Etruscan language. LINK
Daughters increase the longevity of fathers, but daughters and sons equally reduce the longevity of mothers. LINK
Interesting newsletters 💡
The Weekly Blend (by Laurentiu Vana) - Financial education, stock market, macroeconomics & more.
Product evolution (by Bulent Duagi) - Here you will find a curated mix of resources that your Product team can use to level up.
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