Welcome to the first edition of my newsletter with the top stories from the last week focused on particular tech trends I found interesting.
Earnings
Meta (NASDAQ: META):
1Q revenue up 27% YoY to $28.65B. Net income more than doubled from a year earlier to $12.37B. EPS landed at $4.71 beating analyst consensus.
Despite an overall great earnings performance, the stock initially dropped more then 10% on weak 2Q guidance and increasing capital expenditures. It turns out there is some limit to the amount you can spend on AI.
Threads now has move then 150M MAUs, up from 130M in February 2024. Impressive growth, especially in just a few months. While there is still a long way to go to get to the billion user level, does provide another advertising opportunity. Business Insider reported that Threads now has more DAUs in the U.S. than X.
IBM (NYSE: IBM):
1Q revenue up 1% YoY to $14.46B vs $14.53B consensus; software revenue up 5.5% YoY to $5.9B, and net income of $1.6M (up from $927M YoY).
Despite the beat on EPS, the miss on revenue and overall slower start to 2024 initially sent the stock down (-5%), well below the stock’s last 21-day and 50-day moving averages.
Overall positive sentiments from most analysts on the AI strategy, but tempering of expectations for 2024 despite IBM reaffirming full-year guidance.
Amazon (NASDAQ: AMZN):
Revenue up 13% YoY to $143.3B; amazing growth in net income ($10.4B vs. $3.2B YoY) and operating income ($15.3B vs $4.8B YoY).
AWS continues to see enormous growth and is not a $100B+ annualized business (up from $90.4B in 2023); growth to 17% (vs 12% YoY).
Also of note is the ads business generated $11.8B in revenue last quarter with 24% YoY growth. For comparison, YouTube’s total ad revenue over the same time period was $8.1B.
SK Hynix (KRX: 000660):
Revenue of $9B which more than doubled YoY. Beat analyst expectations for operating income ($2B) and the largest quarterly in 2 years.
Last week, the company announced new investment with TSMC to develop new next-gen, high-bandwidth memory for Nvidia (HBM4) to deliver at scale in 2026.
SK Hynix is the #2 memory manufacturer in the world behind Samsung; combined the two companies have 70%+ of the global market. Memory is critical to AI workloads in particular (in reality, all computing), and there are really only a few significant players in the market that can deliver the high performance memory needs. A lot of focus has been on the core CPU and GPU fabs, but memory is something to watch.
AI
NIST GenAI: NIST announced a new program to evaluate Generative AI with focus on many of the challenges of this class of technology. Key initiatives focus on text and image “content authenticity” detection systems and support software development of guardrails and detection tools. This is one of the first major actions from NIST around the Biden AI executive order. I am cautiously optimistic as there are clearly a lot of issues with deepfakes, misleading AI generated content, etc., but unfortunately it is unclear how much funding this new unit will have to drive real impact. Many of the announced initiatives are pilots right now with results published as soon as February 2025. LINK; PRESS RELEASE
NYT profile on Hassibis and Suleyman: Profile of Demis Hassibis (Google DeepMind) and Dr. Mustafa Suleyman (Microsoft AI) who both grew up in London and are now leading some of the most important AI organizations in the world. LINK
Snowflake Arctic: The company announced a new LLM optimized for tasks such as SQL generation, coding, etc. under an Apache 2.0 license. Open sourcing the model is a further sign that the LLM itself isn’t really the differentiator in the market these days, but the tools to build, run, and manage models on your platform are. LINK, HUGGING FACE
Apple OpenELM: Apple announced a new family of LLMs with 270M-3B parameters designed to run on-device and pre-trained and fine-tuned on public datasets. Apple is finally starting to bring some more focus to leveraging the power of the in-house silicon to support on-device AI, but I presume are likely running into limitations on RAM for larger LLMs, especially on the lower end device configurations. Truly an age-old computing constraint- you can truly never have too much RAM. LINK
Meta’s Llama 3: Mark Zuckerberg shared his company’s latest LLM was downloaded over 1.2M times in the first week. LINK
Bain GenAI survey: Interesting survey on how and where companies are deploying Generative AI. Overall most use is focused on short-term cost savings and small improvements to products and services. Significant, transformative use cases are less common. Lots of focus on build vs buy as well. LINK
M&A & Venture
IBM acquires HashiCorp: IBM announced the acquisition of the cloud infrastructure management company for $6.4B with the target close by EOY 2024. There were rumors HashiCorp was considering a sale earlier this year. Hashicorp has not won too many fans in the engineering or partner community after changing the Terraform license model from open source license to Business Source License model in 2023. The company perviously went public via IPO in 2021, and unfortunately has faced questions of how to expand revenue growth since- another case study in how hard it is to build a business based on open source. IBM is hoping to boost their cloud infrastructure product portfolio in addition to the Red Hat unit. IBM stated HashiCorp will remain a standalone subsidiary after the transaction closes later this year. ANNOUNCEMENT; WSJ
Nvidia acquires Run:ai: The AI infrastructure and orchestration service company is being acquired for between $680M-720M. Run:ai had raised $118M in funding with the latest round ($75M Series C) in March 2022 valuing the company at $388M. Not entirely surprising since Nvidia and Run:ai have been working together since 2020, but does likely help focus resources and product roadmap on Nvidia’s DGX Cloud. Likely not as impactful of an acquisition for Nvidia as Mellanox, but does showcase the importance of software for the future of Nvidia. LINK
Augment: AI coding assistant startup raised a $277M Series B at $977M post-money valuation as it emerges from stealth. Investors include Eric Schmidt, Index, Sutter Hill, and Lightspeed. This follows the company’s $25M Series A led by Sutter Hill. Augment plans to roll out the tried and true SaaS GTM playbook. With the excitement and early successes of coding assistants, I would imagine they will see significant adoption. Their largest competition is Github Copilot right now, so I would presume Augment’s focus will be on SMBs to start. LINK
Silicon
Apple M4: Mark Gurman published a report on the upcoming Apple silicon, likely to debut in the new iPad Pro set to be announced at the March 7 event and make it into the new iMacs, MacBook Pros, and Mac minis later this year. Apple is on a breakneck pace in delivering new M-series chips. M1 shipped in 2020, M2 shipped in January 2023, and the M3 shipped in November 2023 (~10 months later!). I’m guessing that the M-series release schedule will ultimately start to ease into the annual A-series timing as soon as this year with a (hopefully) full refresh of the device lineup to follow. The byline here is that Apple is doubling down on on-device AI features with this generation of silicon in particular, though more to be told if these features are for all M-series or simply the M4 and successors. LINK
TSMC A16 process: The company announced a new chip manufacturing technology called A16 with plans to start producing 1.6nm chips by 2026. While Intel was the first to announce backside power (new approach to deliver power more efficiently to the chip) with their new 14A (1.4nm) process earlier this year, TSMC will likely come to market faster with this new process. TSMC owns roughly 60% market share for foundry services (for reference, Samsung comes in next at 13% market share). LINK
Qualcomm Snapdragon: The company announced details around the Snapdragon X Plus and X Elite chips. While initial benchmarks suggested similar performance to Apple M3, AMD Ryzen 9, and Intel Core Ultra 9, multiple sources are claiming that these benchmarks are likely not achievable especially with the claimed settings used. Qualcomm continues to be in catch-up mode. LINK
Legal
NY State AI Committee: The New York State Court system announced a new advisory committee around AI and the use of the technology by the courts themselves. While there is certainly a lot of promise here, there are significant risks, especially around the ethical implications, for some use cases. LINK
AI litigation merry-go-round: This will continue to be a topic to watch, but there was a new volley of motions to dismiss, reply briefs, and opposition. We really do not have, and likely won’t for some time, any resolution to these AI cases to give us direction within the U.S.. I expect more dismissals until we have more regulation.
Huckabee v. Bloomberg: Plaintiff filed opposition to the motion to dismiss. LINK
Intercept Media v. OpenAI: Both Microsoft and OpenAI filed motions to dismiss. LINK, LINK
Anderson v. Stability AI: Everyone submitted their reply briefs in support of the motion to dismiss. MIDJOURNEY, STABILITY AI, DEVIANTART, RUNWAYAI
Other news
Meta Oversight Board layoffs: Reports of pending layoffs at Meta's Oversight Board is a bit troubling, especially in an election year. Most people don’t realize this independent board exists, and is trying to bring more accountability to the Meta platforms. Unfortunately there has been a lot of criticism around how quickly they move to address issues like AI, censorship, etc. They have also had challenges raising funding outside of Meta to support their operations. Originally funded by Meta with a $130M grant in 2018 with another $120M grant in 2022. LINK
China State Secret Laws: New revisions to the State Secret laws requiring companies to delete leaked information and comply with investigations have been published. Tencent, Weibo, Douin, and other internet companies were likely the inspiration for these updates. More censorship and more spying. LINK
Data Center development backlash: Datacenter be built across the country, but some states are starting to introduce legislation to curtail the industry. Northern Virgina, Georgia, Arizona, Illinois, and Arkansas have either passed laws or restricted development. Concerns around energy use, water use, proximity to neighborhoods, and tax revenue. States clearly see the opportunity, but are trying to make sure continued development is both economically and politically worthwhile. LINK