#AI

Elon Musk announced Tesla may build its own “gigantic” chip fabrication plant (“Tesla terra fab”) to meet growing AI and robotics demands. Currently relying on TSMC and Samsung, Tesla could also partner with Intel. Musk envisions a capacity of 100,000 wafer starts per month, scaling to 1 million, potentially disrupting the semiconductor landscape. This signifies a major shift to vertical integration. Musk also announced the production of Cybercab in April, reinforcing Tesla’s commitment to AI and robotics as drivers of economic growth.

Recent equity market pullback, especially in AI stocks, has sparked valuation and contagion concerns. Warnings about a potential market drawdown are increasing. BOE Governor Bailey cautioned about an AI bubble and speculative risks. Despite this, data center construction remains strong, and some see buying opportunities in tech. However, SoftBank’s losses and Michael Burry’s short positions signal waning AI appetite. Strategists suggest caution on US equities, favoring emerging markets benefiting from AI.

Tech giants are investing heavily in AI infrastructure, sparking debate over whether these investments will drive cost savings or strain near-term returns. Increased capital expenditure guidance from Amazon, Microsoft, and Google fuels both optimism about AI’s potential and concern about profitability. Analysts debate whether short-term profitability concerns hinder long-term strategic advantages in AI. The key question is whether AI investments translate into productivity and value or remain unproven promises. Managing the short-term financial implications will be crucial for sustaining growth and investor confidence.

Datadog’s shares surged 23% after exceeding Q3 earnings expectations, reporting $885.7 million in revenue, a 28% year-over-year increase. Fueled by strong demand for its AI-powered security solutions, Datadog forecasts Q4 revenue between $912 million and $916 million, surpassing Wall Street estimates. The company’s strategic investments in AI, including Bits AI Agents and LLM Observability enhancements, are driving growth. Datadog’s adjusted EPS reached 55 cents, and customers with over $100,000 ARR increased by 16%.

Pony.ai and WeRide, Chinese autonomous driving firms, experienced stock declines in Hong Kong after raising a combined $1.17 billion in IPOs. The companies aim to use the capital to advance Level 4 autonomy, expand globally, and compete with Baidu’s Apollo Go and Alphabet’s Waymo. Regulatory hurdles in the U.S. and allegations between the companies add to the challenges. They also aim to partner with Uber and expand in China, the Middle East, Europe and Asia.

Duolingo’s shares fell 27% after releasing weaker-than-expected guidance, signaling a focus on user growth over immediate revenue. While Q1 revenue surged 41% to $272M, exceeding estimates, bookings guidance for the next quarter disappointed. Despite a rise in paid subscribers to 11.5 million, daily and monthly active user numbers missed expectations. The company is leveraging AI for new features and courses but the market reacted negatively to the profitability outlook amid increased investment in long-term user acquisition.

Pinterest (PINS) shares plummeted 21% after its Q3 earnings report revealed advertising revenue challenges impacted by tariffs. While revenue met expectations at $1.05 billion, adjusted EPS fell short at 38 cents. Analysts cite limited customer diversification and sensitivity to macroeconomics. Q4 revenue forecast also disappointed. Despite short-term concerns and increasing competition, many analysts maintain a positive outlook, citing Pinterest’s investments in AI and unique visual discovery platform. The platform aims to leverage AI to enhance user experiences and drive commerce.

OpenAI’s AI browser debut raises questions about the AI investment boom, tied to ad tech giants like Google, Meta, and Amazon who are heavily investing in AI infrastructure. They aim to enhance existing advertising models, though AI could disrupt these models. While pushing for AGI is a long-term goal, the immediate urgency is to protect ad-driven revenue streams from competitors like OpenAI and Microsoft, which rely less on advertising. The sustainability of this AI investment, crucial to the tech ecosystem, hinges on its impact on the established advertising-centric economy.

Apple is reportedly integrating a customized version of Google’s Gemini into Siri, a move that could cost Apple $1 billion annually. This upgrade aims to enhance Siri’s summarization and planning capabilities by leveraging Gemini’s 1.2 trillion parameter model. A hybrid approach is planned, with Apple’s Private Cloud Compute ensuring data privacy. The collaboration reflects Apple’s strategy to bridge AI capability gaps and stay competitive, while intending to develop its own technology long-term. The updated Siri, codenamed “Linwood,” is expected in iOS 26.4.

Qualcomm reported strong fiscal Q4 results, exceeding expectations with adjusted EPS of $3.00 and revenue of $11.27 billion. They forecast strong Q1 revenue and EPS, driven by handsets, automotive, and upcoming AI offerings. Facing the anticipated loss of Apple as a modem customer, Qualcomm is diversifying into PCs, VR/AR, and AI chips, directly challenging Nvidia and AMD in the data center AI space with new AI accelerator chips. Handset and automotive revenue saw significant growth, while licensing revenue declined slightly.