It’s official: Apple has entered the AI arms race
The most important news stories of the week influencing the tech trade
Welcome to this week’s edition of The Pilane Capital newsletter where we spotlight the top tech news stories to help you become a better large-cap tech investor. Did someone send you this newsletter? Sign up here.
On the agenda this week:
The model portfolio beats the S&P 500 and the NASDAQ 100. Again.
It’s official: Apple has entered the AI arms race
NVIDIA’s venture into AgTech
NASDAQ to get its second crypto exchange
Microsoft’s latest AI investment
Robinhood beats expectations amid potential legal woes
Chipmaker shares dumped after Arm’s revenue guidance
Consumers expect higher for longer
McDonald’s offers help for constrained American consumers
Biden is increasing taxes for the wealthy
📈 The Large-Cap Tech Investor
Weekly stats up to 10th May:
Pilane Capital Model Portfolio: (PILTECHX): 4.13%
S&P 500 (SPDR® S&P 500® ETF Trust - SPY): 3.00%
NASDAQ 100 (First Trust NASDAQ-100 - QTEC): 2.04%
The Large-Cap Tech Investor is a monthly premium newsletter that gives you direct access to in-depth stats, an intensively researched tech stock portfolio, holdings, time-sensitive alerts, and more. Click here for your 7-day free trial.
📱 It’s official: Apple has entered the AI arms race
Apple’s positioning within the AI arms race among large-cap tech has been strengthened this week after the WSJ revealed a partnership between Taiwan Semiconductor Manufacturing Co. and the iPhone maker on developing chips to run artificial intelligence software in data centres and generative AI into its ecosystem. The news will cheer investors who felt aggrieved that Apple was behind the AI arms race when compared to its big tech peer group.
🧑🌾 NVIDIA’s venture into AgTech
In 2020, Carbon Robotics, a Seattle ag-tech start-up launched “LaserWeeder”, a certified organic robotic farm machine that relies on artificial intelligence to differentiate between weeds and crops and destroy the weeds with a precision laser. It is powered by 24 Nvidia GPUs processing 4.7 million high-resolution images per hour. The venture capital arm of NVIDIA - NVentures - has invested in the weed-zapping start-up at an undisclosed amount. “With this investment, and using the power of AI, we can help farmers create farms and food systems of the future that are more productive, efficient, healthy, and profitable”, Carbon Robotics founder and CEO Paul Mikesell
🏛️ NASDAQ to get its second crypto exchange
Well, maybe. Coincheck, a Japanese cryptocurrency exchange, ‘expects’ its listing on Nasdaq via a merger with special purpose acquisition company (SPAC) Thunder Bridge Capital Partners IV (THCP) to be completed in the second or third quarters. The merger was announced over two years ago (March 2022), with initial plans to complete in the second half of that year. The date was pushed to July 2023 and then extended by 12 months. Exactly when it will happen is subject to approval by Thunder Bridger IV's stockholders, the U.S. Securities and Exchange Commission and Nasdaq.
🤖 Microsoft’s latest AI investment
President Biden trumpeted plans for a $3.3 billion investment by Microsoft into a data centre that will be built on the same land as a failed Trump plan for a $10 billion investment from Taiwanese electronics manufacturer Foxconn six years ago. Trunp’s plan was meant to create 3,000 manufacturing jobs, but “after 100 homes and farms were bulldozed to make way for the manufacturing plant and over $500 million in taxpayer dollars were invested to prepare the site, no such investment materialized.” Microsoft wants Southeast Wisconsin to become a stronger hub for AI innovation, and job creation. This includes an AI skilling initiative to equip more than 100,000 of the state's residents with essential AI skills.
🏹 Robinhood beats expectations amid potential legal woes
Robinhood beat expectations this week announcing stronger-than-expected first-quarter results. Reported net income of $157 million, or 18 cents per share, for the first quarter. Last year for the same period, the company posted a net loss of $511 million, or 57 cents per share. EPS: 18 cents v 6 cents expected. Revenue: $618 million v $549 million expected. Cryptocurrency transactions accounted for $126 million in revenue in the quarter. Regulatory uncertainty has clouded the future of the business amid the SEC’s crackdown on anything crypto: Robinhood stated that the Securities and Exchange Commission has issued a Wells Notice to the firm, signalling potential legal action over Robinhood’s cryptocurrency business.
📉 Chipmaker shares dumped after Arm’s revenue guidance
Shares of AI chipmakers sank after Arm's future guidance for fiscal 2025 missed analysts' expectations. Arm forecast revenue between $875 million and $925 million, with a midpoint of $900 million, compared with an average analyst estimate of $857.5 million. Guidance for full-year revenue is between $3.8 billion and $4.1 billion, with a midpoint of $3.95 billion. The consensus estimate is $3.99 billion. Forecast full-year earnings per share is between $1.45 and $1.65, compared with average analyst estimates of $1.54. This is despite Arm’s revenue for the fourth quarter of fiscal 2024 being $928 million, a 47% year-over-year increase and above analysts' projections. Net income came in at $224 million or 21 cents per share, up from $3 million or 0 cents per share in the same period last year.
🛍️ Consumers expect higher for longer
The University of Michigan consumer sentiment survey showed a 13% decline in overall sentiment during May. The index reading came in at 67.4, its lowest level in six months, below economist expectations of 76.2. Year-ahead inflation expectations hit 3.5% in Friday's report, up from 3.2% in the month prior.
🍔 McDonald’s offers help for constrained American consumers
In a clear nod to the increased pressure American consumers are under, McDonald’s is working on a value meal in U.S. stores to help offset an increasingly challenging environment for consumers. The $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink.
🧾 Biden is increasing taxes for the wealthy
“It’s clear we need to end the 2017 tax breaks for the ultra-wealthy and scale back costly permanent corporate tax breaks” - White House national economic advisor Lael Brainard. Brainard also said that the Biden administration wants to quadruple the tax on stock buybacks and add a 25% minimum income tax for billionaires.
For $99 a year, get access to the Pilane Capital Technology Growth Portfolio, portfolio holdings, the premium archive, an invite to a private angel investing group, an interactive model portfolio, and more. You’ll get 100x the value of a subscription guaranteed or your money back.