Tobias

Nvidia CEO Jensen Huang stated at the APEC CEO Summit that AI has entered a “virtuous cycle,” driving exponential growth through increased investment and model sophistication. He highlighted how better AI leads to more usage, profit, and infrastructure, fueling continuous improvement. Big Tech’s massive AI investments reflect this dynamic. Huang also views AI as revolutionizing the computing landscape, shifting from CPUs to GPUs, requiring a transition in existing computing infrastructure. He predicts AI will transform industries worth $100 trillion globally.

This report covers several key market trends: Amazon’s stock surge driven by AWS growth and increased capital expenditure in AI, Apple’s steady performance with moderate AI investment and strong iPhone 17 sales, and Netflix’s stock split aimed at boosting retail investor participation. The U.S. government shutdown is impacting airlines and costing billions. Chevron outperformed expectations, while Exxon Mobil’s revenue fell short. Automakers are bracing for a semiconductor shortage due to geopolitical tensions. Finally, chocolate prices have surged, impacting Halloween candy sales.

A JLL survey reveals a significant acceleration in AI adoption within the commercial real estate (CRE) sector. While initial focus was on cost reduction, CRE firms now view AI as crucial for revenue generation and competitive advantage. Over 88% of investors and 90% of occupiers have initiated AI pilot programs, but only 5% have achieved all objectives. Companies are shifting from simple automation to leveraging AI for complex challenges, like enhancing investment risk models. This requires significant organizational changes and investment in strategic advisory services and cybersecurity infrastructure.

Affirm and New York Life are expanding their partnership, with New York Life committing up to $750 million to purchase Affirm’s installment loans through 2026, supporting ~$1.75B in annual loan volume. Building on nearly $2B invested in Affirm’s assets since 2023, this deal reflects a growing trend of insurance companies investing in consumer finance assets for higher yields. Affirm, having facilitated over $100B in transactions with high customer retention, secures financial stability amid economic complexities. The partnership highlights Affirm’s robust model and attracts substantial investment.

Nvidia CEO Jensen Huang defends selling advanced semiconductors to China, citing mutual benefits despite national security concerns and U.S. export controls. He acknowledges China’s AI leadership and significant market potential, estimating it at $50 billion this year. Huang also highlights Huawei’s technological prowess, emphasizing that underestimating China’s capabilities would be “foolish”. He believes collaboration serves both countries’ interests amid rising tensions.

Tech giants like Alphabet, Meta, Microsoft, and Amazon are significantly increasing AI investments, projecting over $380 billion in combined capital expenditures. This shift aims to meet surging demand for AI services, driven by advancements in generative AI and machine learning. While Amazon and Alphabet saw positive investor response, Microsoft’s shares dipped slightly, and Meta’s plummeted due to unease regarding its AI strategy and revenue prospects. Concerns remain about a potential AI bubble and the long-term sustainability of these massive investments.

Amazon’s Q3 earnings exceeded expectations, driving shares up nearly 11%. Cloud sales (AWS) surged 20% to $33 billion, contributing significantly to operating profit. Digital advertising revenue jumped 24% to $17.7 billion. Total sales increased 13% to $180.17 billion, with EPS at $1.95. Amazon raised its spending forecast to $125 billion for AI, demonstrating its commitment to the sector. Despite strong performance, 14,000 corporate employees will be laid off as part of a restructuring effort focused on efficiency. Q4 sales are projected between $206 billion and $213 billion.

Getty Images (GETY) shares fell over 6% after announcing a multi-year licensing agreement with AI search engine Perplexity AI. Perplexity will integrate Getty’s images into search results with attribution, enhancing result quality and user trust. Getty’s VP Nick Unsworth touted the partnership’s benefits for AI platforms. While the deal monetizes Getty’s content and gives Perplexity a vast image library, the market reacted negatively, possibly due to a lack of disclosed financial details, demonstrating investor uncertainty about the agreement’s long-term financial impact.

Reddit (RDDT) shares jumped 7% following strong Q3 earnings, beating revenue and EPS estimates with a 68% revenue increase to $585 million. Daily active users grew 19% to 116 million. The company anticipates Q4 revenue of $655-$665 million. Reddit credits strategic automation investments for boosting advertising return, seeing growth across verticals. Active advertiser growth surged 75%. While AI poses potential challenges, data licensing partnerships are expanding revenue streams.

The AI arms race is evolving into a billing battle, with tech giants bundling AI tools into subscription tiers, potentially forcing users to pay for unwanted or underutilized features. Companies like Microsoft, Meta, Google, and Adobe are integrating AI across their suites, often increasing prices without clear justification. Experts highlight concerns about “perceived value bias” and the lack of consumer control, suggesting usage-based pricing as a potential solution amid growing consumer awareness of accumulating costs. The shift to subscription models and the underlying infrastructure costs of AI are also key factors.