AI Generates News: A Look at the Headlines That Speak to Our Stocks
We've rounded up key reports and stories that speak to our investments at the Pro Portfolio.
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As the September-ending quarterly earnings reports start coming in, we're seeing more and more about artificial intelligence. We saw AI news with Digital Realty Trust DLR and SK Hynix this week, and now with Chipotle CMG, Vodafone VOD, and Honeywell HON discussing their adoption of AI. It should come as little surprise then that folks are starting to catch on to the impact all that AI demand will have on digital infrastructure.
Here are the latest headlines and reports on AI and other trends that are impacting our Pro Portfolio:
Artificial Intelligence
“Microsoft Corp. is launching a set of artificial intelligence tools designed to send emails, manage records and take other actions on behalf of business workers, expanding an AI push that intensifies competition with rivals like Salesforce Inc.” Read more here
“Founded by New York-based serial entrepreneur Willem Simons, Daze offers a freestyle messaging app that takes its clues from social media. Similar to crafting an Instagram story using a variety of fonts, styles, graphics, and more, users’ chats are no longer limited to blue and green bubbles. Instead, multi-colored messages can float across the screen complemented by photos, graphics, stickers, GIFs, drawings, decorated backgrounds, and more. In addition, the app is currently leveraging AI to help power some of its creative tools; it plans to deeply integrate more AI-based technology in the future.” Read more here
“Artificial intelligence is fueling explosive growth in the tech industry, with companies from chip manufacturers to security startups reporting soaring revenues and attracting significant investment. Taiwan Semiconductor Manufacturing Co. posted a 54% jump in quarterly profits on strong AI chip demand, while AI security firm AITX saw a 348% revenue surge. Governance platform Relyance AI secured $32.1 million in funding to help enterprises navigate the complex landscape of AI implementation and data protection.” Read more here
“Vodafone, a major proponent of generative artificial intelligence (GenAI) technologies to support operational and service improvements, has just signed a new deal with Google that it clearly hopes will enable it to stand out from the crowd. The U.K.-based operator and Google on Tuesday said they had deepened their existing strategic partnership with a 10-year, billion-dollar-plus deal to bring the tech giant’s GenAI-powered devices to more Vodafone customers across Europe and Africa, supported by Google Cloud and Google’s Gemini (formerly Bard) models.” Read more here
“Google Gemini, the flagship generative AI from Alphabet, is being tapped by Honeywell to provide insights across the industrial giant’s massive data set that can lead to reduced maintenance costs, increased productivity and opportunities to upskill employees.” Read more here
“Southern land-grant scientists are utilizing artificial intelligence to help farmers save on labor costs and time through research on precision spraying, disease detection, food quality control, animal health and wheat production.” Read more here
“Chipotle has introduced a new artificial intelligence hiring platform created by Paradox that the company said will make the onboarding process simpler, faster, and more automated for its more than 3,500 restaurants. The system, called Ava Cado, comes as Chipotle ramps up its fall hiring efforts – its second largest hiring period of the year behind “Burrito Season,” which is from March to May.” Read more here
“We continue to see great momentum in AI as our models are trusted, fit-for-purpose, and lower cost, with performance leadership,” he said in a statement, calling out that IBM’s book of business for generative AI amounts to more than $3 billion, marking a $1 billion-plus sequential improvement.” Read more here
Position: Elastic ESTC, Alphabet GOOGL, Microsoft MSFT, Meta META, Amazon AMZN, ServiceNow NOW.
Artificial Intelligence, Data Privacy
“The Biden administration is mulling new policies for federal agencies that buy data on Americans from commercial data brokers, citing increased risks posed by the increased use of artificial intelligence in government IT systems.” Read more here
Position: First Trust Nasdaq Cybersecurity ETF CIBR.
Artificial Intelligence, Digital Infrastructure
“At the end of the day, the data centers are going to have to add a lot more fiber-rich interconnects to accommodate the large language models that enable artificial intelligence to come true… Our initial estimates are at least five times more optical connections are going to be required in a data center as a result of the applications are going to access and want to use artificial intelligence… the reason for all this new fiber is the need to create an entirely new network to connect the AI servers to one another.” Read more here
Position: Nvidia NVDA, Marvell MRVL
Cash-Strapped Consumer
“Nearly 30% of middle-class homeowners have bought homes with monthly payments encompassing more than 30% of their income for 2022, a share that has more than doubled over the past 10 years. This trend is leaving more and more households with less money to spend on necessities, maintain their homes and save for emergencies.” Read more here
“A predicted slide in Halloween consumption is the latest blow for heavily-indebted retailers battling mounting overheads and the trend of consumers trading down to cheaper products. U.S. spending for the holiday will drop by 5% to $11.6 billion this year, according to the National Retail Federation. Sales of greeting cards and costumes are likely to see the greatest decline, a hit to merchants reliant on seasonal splurges in what’s already been a tough year for the industry. Read more here
“… people still haven’t gotten over how much higher prices are today than in 2020. People find it unsettling that price tags don’t look like they did before inflation took off during the pandemic, surging to the highest level in four decades. Even though the growth in prices has eased significantly, prices themselves aren’t getting lower.” Read more here
Position: Amazon AMZN, Costco COST
Cash-Strapped Consumer, Digital Payments
“Prescription savings platform GoodRx and its partner retail pharmacies will begin offering Affirm’s pay-over-time option directly to consumers in the coming months. With this new offering, approved consumers will be able to select an Affirm payment option for select medications at participating retailers on the GoodRx platform… “ Read more here
“In June, Apple discontinued its "buy now, pay later" service called Apple Pay Later, which let qualifying customers split a purchase made with Apple Pay into four equal payments over six weeks, with no interest or fees. Instead, Apple said customers in the U.S. would be able to apply for loans from select other "buy now, pay later" services when they check out with Apple Pay on the web and in apps on iOS 18 and iPadOS 18… OS 18 and iPadOS 18 users can select "Other Cards & Pay Later Options" when checking out with Apple Pay to access payment plans available from Klarna and Affirm.” Read more here
Position: Apple AAPL, Mastercard MA
Cybersecurity
“Japanese electric motor manufacturer Nidec has confirmed that various types of business and internal documents were stolen in an August 2024 ransomware attack. The incident, the company says, impacted its Vietnam-based subsidiary Nidek Precision (NPCV), and was discovered after the attackers contacted Nidec to demand a ransom payment.” Read more here
Position: First Trust Nasdaq Cybersecurity ETF CIBR
Digital Infrastructure
“Scientists have sent data through the air at speeds of up to 938 gigabits per second (Gbps) — setting a new record for wireless transmission speeds. The new record, closing in on 1 terabit per second (Tbps), is the equivalent of downloading a 30 gigabyte (GB) 4K Ultra HD movie in 0.26 seconds. In comparison, using the download would take approximately 17 to 29 minutes using average 5G connections in the U.S, which range from 140 to 230 megabits per second (Mbps).” Read more here
“According to a report by the Economic Daily News, U.S. chip giant Marvell Technology has announced that it will raise prices across its entire product line starting January 1 next year, marking the first major price hike in the optical communications sector.” Read more here
“The UK government has announced that four US cloud technology and data center operators—ServiceNow, CoreWeave, CyrusOne, and CloudHQ—will invest a total of up to GBP6.3 billion (approx. US$8.2 billion) in the development of related infrastructure… “ Read more here
Position: Marvell MRVL, Nvidia NVDA
Digital Payments
“One key advantage of mobile payment solutions is the ability to integrate personalized experiences, such as loyalty program benefits or personalized product recommendations, into the checkout process. For instance, if a customer frequently buys a certain product, a business can offer targeted discounts or suggest complementary items, enhancing the overall shopping experience.” Read more here
Position: Mastercard
Homebuilding & Materials
“A massive housing crisis in the United States is brewing mostly centered around the unavailability of homes in the largest metros of the country. The shortage of homes in metropolitan regions clearly shows the true picture of a housing crunch in the US, which is a big problem for the federal administration to address in the coming months. The pandemic, inflation and elevated interest rates have all contributed to the growing housing crisis in the US.” Read more here
Position: Builders FirstSource BLDR
Descriptions for our thematic strategies discussed above:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
Cash Strapped Consumer - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Cybersecurity - Companies that focus on protecting against the penetration of digital networks and the theft, ransom, corruption or destruction of data.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Digital Payments - This model focuses on companies benefitting from the accelerating structural adoption of digital payments and financial technology (FinTech).
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
