Connect with us

Published

on

Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., speaks during the company’s event at Mobile World Congress Americas in Los Angeles, California, U.S., on Monday, Oct. 21, 2019.

Patrick T. Fallon | Bloomberg | Getty Images

Forget about the debt ceiling. Tech investors are in buy mode.

The Nasdaq Composite closed out its fifth-straight weekly gain on Friday, jumping 2.5% in the past five days, and is now up 24% this year, far outpacing the other major U.S. indexes. The S&P 500 is up 9.5% for the year and the Dow Jones Industrial Average is down slightly.

related investing news

Excitement surrounding chipmaker Nvidia’s blowout earnings report and its leadership position in artificial intelligence technology drove this week’s rally, but investors also snapped up shares of Microsoft, Meta and Alphabet, each of which have their own AI story to tell.

And with optimism brewing that lawmakers are close to a deal to raise the debt ceiling, and that the Federal Reserve may be slowing its pace of interest rate hikes, this year’s stock market is starting to look less like 2022 and more like the tech-happy decade that preceded it.

“Being concentrated in these mega-cap tech stocks has been where to be in this market,” said Victoria Greene, chief investment officer of G Squared Private Wealth, in an interview on CNBC’s “Worldwide Exchange” Friday morning. “You cannot deny the potential in AI, you cannot deny the earnings prowess that these companies have.”

Greene: The tech rally is likely to continue due to earnings power and the potential of AI

To start the year, the main theme in tech was layoffs and cost cuts. Many of the biggest companies in the industry, including Meta, Alphabet, Amazon and Microsoft, were eliminating thousands of jobs following a dismal 2022 for revenue growth and stock prices. In earnings reports, they emphasized efficiency and their ability to “do more with less,” a theme that resonates with the Wall Street crowd.

But investors have shifted their focus to AI now that companies are showcasing real-world applications of the long-hyped technology. OpenAI has exploded after releasing the chatbot ChatGPT last year, and its biggest investor, Microsoft, is embedding the core technology in as many products as it can.

Google, meanwhile, is touting its rival AI model at every opportunity, and Meta CEO Mark Zuckerberg would much rather tell shareholders about his company’s AI advancements than the company’s money-bleeding metaverse efforts.

Enter Nvidia.

The chipmaker, known best for its graphics processing units (GPUs) that power advanced video games, is riding the AI wave. The stock soared 25% this week to a record and lifted the company’s market cap to nearly $1 trillion after first-quarter earnings topped estimates.

Nvidia shares are now up 167% this year, topping all companies in the S&P 500. The next three top gainers in the index are also tech companies: Meta, Advanced Micro Devices and Salesforce.

The story for Nvidia is based on what’s coming, as its revenue in the latest quarter fell 13% from a year earlier because of a 38% drop in the gaming division. But the company’s sales forecast for the current quarter was roughly 50% higher than Wall Street estimates, and CEO Jensen Huang said Nvidia is seeing “surging demand” for its data center products.

Nvidia said cloud vendors and internet companies are buying up GPU chips and using the processors to train and deploy generative AI applications like ChatGPT.

“At this point in the cycle, I think it’s really important to not fight consensus,” said Brent Bracelin, an analyst at Piper Sandler who covers cloud and software companies, in a Friday interview on CNBC’s “Squawk on the Street.”

“The consensus is, on AI, the big get bigger,” Bracelin said. “And I think that’s going to continue to be the best way to play the AI trends.”

Microsoft, which Bracelin recommends buying, rose 4.6% this week and is now up 39% for the year. Meta gained 6.7% for the week and has more than doubled in 2023 after losing almost two-thirds of its value last year. Alphabet rose 1.5% this week, bringing its increase for the year to 41%.

One of the biggest drags on tech stocks last year was the central bank’s consistent interest rate hikes. The increases have continued into 2023, with the fed funds target range climbing to 5%-5.25% in early May. But at the last Fed meeting, some members indicated that they expected a slowdown in economic growth to remove the need for further tightening, according to minutes released on Wednesday.

Less aggressive monetary policy is seen as a bullish sign for tech and other riskier assets, which typically outperform in a more stable rate environment.

Still, some investors are concerned that the tech rally has gone too far given the vulnerabilities that remain in the economy and in government. The divided Congress is making a debt ceiling deal difficult as the Treasury Department’s June 1 deadline approaches. Republican negotiator Rep. Garret Graves of Louisiana told reporters Friday afternoon in the Capitol that, “We continue to have major issues that we have not bridged the gap on.”

Treasury Secretary Janet Yellen said later on Friday that the U.S. will likely have enough reserves to push off a potential debt default until June 5.

Alli McCartney, managing director at UBS Private Wealth Management, told CNBC’s “Squawk on the Street” on Friday that following the recent rebound in tech stocks, “it’s probably time to take some of that off the table.” She said her group has spent a lot of time looking at the venture market and where deals are happening, and they’ve noticed some clear froth.

“You’re either AI or you’re not right now,” McCartney said. “We really have to be ready to see if we don’t get a perfect debt ceiling, if we don’t get a perfect landing, what does that mean, because at these kinds of levels we are definitely pricing in the U.S. hitting the high note on everything and that seems like a terribly precarious place to be given the risks out there.”

WATCH: CNBC’s full interview with UBS’ Alli McCartney

Watch CNBC's full interview with UBS' Alli McCartney

Continue Reading

Technology

Xiaomi releases electric car $4K cheaper than Tesla’s Model 3 as price wars heat up

Published

on

By

Xiaomi releases electric car K cheaper than Tesla's Model 3 as price wars heat up

Chinese consumer electronics company Xiaomi revealed Thurs., Dec. 28, 2023, its long-awaited electric car, but declined to share its price or specific release date.

CNBC | Evelyn Cheng

BEIJING — Chinese smartphone company Xiaomi said Thursday it will sell its first car for far less than Tesla’s Model 3, as price wars heat up in China’s fiercely competitive electric car market.

Xiaomi CEO Lei Jun said the standard version of the SU7 will sell for 215,900 yuan ($30,408) in the country — a price he acknowledged would mean the company was selling each car at a loss.

Tesla’s Model 3 starts at 245,900 yuan in China.

Lei claimed the standard version of the SU7 beat the Model 3 on more than 90% of its specifications, except on two aspects that he said it might take Xiaomi at least three to five years to catch up with Tesla on. He also said the SU7 had a minimum driving range of 700 kilometers (nearly 435 miles) versus the Model 3’s 606 kilometers. The company said orders had exceeded 50,000 cars in the 27 minutes since sales started at 10 p.m. Beijing time Thursday.

Deliveries are set to start by the end of April, Lei said. Lei also claimed that Xiaomi’s car factory, for which all “key” steps are fully automated, can produce an SU7 every 76 seconds. It was not immediately clear whether the factory was fully operational.

Earlier this week, the Xiaomi CEO said on social media the SU7 would be the best sedan “under 500,000 yuan” ($69,328).

The car is entering a fiercely competitive market in China, where companies are launching a slew of new models and cutting prices in order to survive. Chinese telecommunications giant Huawei has partnered with traditional automakers, most notably launching the Aito brand whose vehicles are often on display in Huawei smartphone showrooms.

Tesla‘s Model 3 is the best-selling new energy sedan in China that has a driving range of at least 600 kilometers (372 miles) and costs less than 500,000 yuan, according to data from industry website Autohome.

Xiaomi targets 20 million premium users for its new electric vehicle, says president

BYD‘s Han sedan starts at 169,800 yuan, according to Autohome.

Nio‘s ET5 starts at 298,000 yuan, while Xpeng‘s P7 starts at 209,900 yuan, the data showed. Geely-owned Zeekr’s 007 sedan starts at 209,900 yuan, according to Autohome.

Sales of new energy vehicles, which include battery-only powered cars, have surged in China to account for about one-third of new passenger cars sold, according to the China Passenger Car Association.

Accessories

The heads of competing electric car startups Nio, Xpeng and Li Auto were among the featured guests at the Xiaomi SU7 launch event.

Lei on Thursday showed off a range of accessories such as an in-car refrigerator, a custom front-window shade, and a smartphone holder, some available for free with a car purchase before the end of April, and others for a separate price.

The SU7 supports Apple’s Car Play and can integrate with the iPad, Lei said. He also revealed driver-assist tech for highways and cities, set to be fully available in China in August.

Tesla’s Autopilot for driver assist on highways is available in China, but the company’s “Full Self Driving” for city streets has yet to be released in the country.

Despite saying Xiaomi wanted to compete with Porsche at a car tech event in December, Lei acknowledged that the SU7 had longer to go before it might be able to compete at this more premium level. He announced that the “Max” version of the SU7, aimed as a competitor with Porsche’s Taycan, would sell for 299,900 yuan.

Ecosystem of devices

The rapid rise of Chinese electric vehicle maker BYD

Continue Reading

Technology

FTX founder Sam Bankman-Fried sentenced to 25 years for crypto fraud, pay $11 billion in forfeiture

Published

on

By

FTX founder Sam Bankman-Fried sentenced to 25 years for crypto fraud, pay  billion in forfeiture

FTX founder Sam Bankman-Fried sentenced to 25 years in prison for massive crypto fraud

FTX founder Sam Bankman-Fried was sentenced to 25 years in prison on Thursday for the massive fraud and conspiracy that doomed his cryptocurrency exchange and a related hedge fund, Alameda Research.

The sentence in Manhattan federal court was significantly less than the 40 to 50 years in prison that federal prosecutors wanted for Bankman-Fried. But it was much more than the five to six-and-a-half years suggested by his attorneys.

“There is a risk that this man will be in position to do something very bad in the future,” Judge Lewis Kaplan said before sentencing the 32-year-old and ordering him to pay $11 billion in forfeiture to the U.S. government.

“And it’s not a trivial risk at all,” Kaplan added.

The judge said that in 30 years on the federal bench, he had “never seen a performance” like Bankman-Fried’s trial testimony.

If Bankman-Fried was not “outright lying” during cross-examination by prosecutors, he was “evasive,” Kaplan said.

Jurors at trial likewise did not buy Bankman-Fried’s version of events, convicting him in November of seven criminal counts and holding him responsible for losing about $10 billion in customer money due to the securities fraud conspiracy.

Kaplan on Thursday said the quarter-century prison term has “the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”

Before being sentenced, Bankman-Fried spoke contritely even as he suggested that the billions of dollars customers lost was the result of a “liquidity crisis” or “mismanagement,” not fraud.

Indicted FTX founder Sam Bankman-Fried leaves the U.S. Courthouse in New York City, July 26, 2023.

Amr Alfiky | Reuters

“My useful life is probably over,” he said while wearing a beige jailhouse jumpsuit. “It’s been over for a while now since before my arrest.”

“They built something really beautiful and I threw all of that away,” he said of his co-workers at FTX, a company once valued at $32 billion. “It haunts me every day.”

“A lot of people feel really let down. And they were very let down,” he said. “And
I’m sorry about that. I’m sorry about what happened at every stage.”

“It’s been excruciating to watch this all unfold,” he told Kaplan. “Customers don’t deserve this level of pain.”

“I was the CEO of FTX and I was responsible.”

But even as he took some responsibility, Bankman-Fried suggested that customers eventually would get back the money they placed with his exchange, and blamed a federal bankruptcy court for not making those customers whole yet.

Kaplan appeared to stop paying close attention at that point.

In response, Bankman-Fried crossed his arms and began rapidly tapping his right foot as he continued speaking.

Assistant U.S. Attorney Nicholas Roos, arguing for a prison sentence of up to five decades, scoffed at the picture painted by Bankman-Fried and his lawyers.

FTX’s collapse was not due to “a liquidity crisis or act of mismanagement,” Roos said. “It was the theft” of billions of dollars of customer money around the world, the prosecutor said.

“It was a loss that affected people significantly.”

Manhattan U.S. Attorney Damian Williams, in a statement after the sentencing, said, “Samuel Bankman-Fried orchestrated one of the largest financial frauds in history.”

“His deliberate and ongoing lies demonstrated a brazen disregard for his customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence,” Williams said.

Attorney General Merrick Garland said, “Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice. I

Bankman-Fried’s family, in a statement, said, “We are heartbroken and will continue to fight for our son.” Both Joseph Bankman and Barbara Fried, who are Stanford Law professors, were in court for the sentencing.

Barbara Fried and Allan Joseph Bankman, parents of FTX Co-Founder Sam Bankman-Fried, arrive at court in New York, US, on Thursday, March 28, 2024. Sam Bankman-Fried returns to court for sentencing after being convicted of a massive fraud that led to the collapse of his FTX exchange. 

Yuki Iwamura | Bloomberg | Getty Images

Before he sentenced SBF, Kaplan said he rejected “the entirety of defendant’s argument there was no loss” at FTX, calling that claim “misleading, logically flawed and speculative.”

Several victims of Bankman-Fried then talked about the damage to their lives from his crimes.

Bankman-Fried looked at the victims as they talked to the judge.

Bankman-Fried plans to appeal his conviction and sentence.

Three other people, who all testified against Bankman-Fried at trial, are awaiting their own sentencings after pleading guilty to criminal charges related to FTX and Alameda Research.

They are Caroline Ellison, the Alameda CEO who at one time dated Bankman-Fried, FTX engineering chief Nishad Singh and Gary Wang, the co-founder and chief technology officer of FTX.

WATCH: The collapse of FTX: Insiders Tell All

This is developing news. Check back for updates.

Continue Reading

Technology

Xi tells Dutch prime minister: No force can stop China’s tech advance

Published

on

By

Xi tells Dutch prime minister: No force can stop China’s tech advance

THE HAGUE, NETHERLANDS – MARCH 23:Dutch Prime Minister Mark Rutte meets with the President of the People’s Republic of China Xi Jinping at the Catshuis March 23, 2014 in The Hague, Netherlands. (Photo by Valerie Kuypers-Pool/Getty Images

Valerie Kuypers-Pool | Getty Images News | Getty Images

China’s technological progress cannot be stopped, Chinese President Xi Jinping told Dutch Prime Minister Mark Rutte when they met in Beijing Wednesday for talks on areas such as the critical semiconductor industry.

“The Chinese people also have legitimate development rights, and no force can stop the pace of China’s scientific and technological progress,” said Xi, according to Xinhua News Agency.

Xi said China will “continue to pursue a win-win approach.”

Relations between China and the Netherlands have been strained since the the Netherlands, together with the U.S., blocked exports of advanced chip technology to China over concerns they could be used for military purposes.

Semiconductor chips are critical components which can be found in everything from smartphones to automobiles.

Dutch tech giant ASML has been barred from exporting extreme ultraviolet lithography machines to China — it is the only company currently capable of making such machines To date, it has not shipped a single EUV machine to China yet.

Such EUV lithography machines are crucial for chip manufacturing and are used by companies like Taiwan’s TSMC to make the smallest and most sophisticated chips.

In January, the Netherlands barred ASML from exporting some of its deep ultraviolet lithography systems to China, which are used to make slightly less advanced chips.

Semiconductor chips: There's a 'three horse' race outside mainland China, analyst says

Beijing slammed the Dutch government’s move, urging the Netherlands to “uphold an objective and fair position and market principles” and “protect the shared interests” of the two countries and their companies.

“Creating scientific and technological barriers and severing industrial and supply chains will only lead to division and confrontation,” Xi said Wednesday, according to Xinhua state media.

He said cooperation is the only way and added that “decoupling and breaking the chain” is not an option.

Xi said China is ready to continue dialogue with the Netherlands and urged the Dutch side to “provide a fair and transparent business environment for Chinese enterprises.”

According to Reuters, Rutte said Wednesday the Netherlands tried to ensure that export restrictions, when related to semiconductor industry and companies like ASML, are never aimed at one country. “We always try to make sure the impact is limited,” he was quoted as saying.

Chinese state media reported that Rutte responded by saying decoupling is not a policy choice for the Dutch government either, “since any act undermining China’s development interests will only boomerang.”

Continue Reading

Trending