Technology

Nvidia’s half-a-trillion dollar wipeout leaves global chip stocks volatile

Published

4 months ago

June 25, 2024

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The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan, May 30, 2017.

Tyrone Siu | Reuters

Global semiconductor stocks saw volatile trading Tuesday after a slump in shares of Nvidia during the previous session.

Shares of chip firms in Europe and Asia fell in early trade as investors reacted to Nvidia losing more than $500 billion in market capitalization over three trading days. Some of the stocks recouped losses, however, as shares in the U.S. chipmaking giant rose around 5.5% as of Tuesday 11:40 a.m. ET.

Switzerland-based semiconductor firm STMicroelectronics‘ shares ended the day down more than 1.4%.

In Europe, ASML, the Dutch chip equipment giant, reversed losses earlier in the day to close up 0.18% as Nvidia shares recovered. ASML is a key player in the global semiconductor market. The firm makes and sells extreme ultraviolet lithography (EUV) machines, which chipmakers use to manufacture integrated circuits.

Soitec, meanwhile, slipped 0.1%, while ASMI climbed 0.6% after falling earlier in the session. The pan-European Stoxx 600 closed around 0.3% lower.

Asian semiconductor shares also had a volatile day. Taiwanese chip firm MediaTek’s shares fell 1.8%, while South Korean firm Samsung slipped 0.3%.

TSMC, the world’s largest chipmaker, and SK Hynix managed to dodge the negative sentiment, rising 0.5% and 0.9%, respectively.

Nvidia shares rebound

It comes after a sharp slide in shares of Nvidia over three consecutive sessions, falling 13% from Thursday’s all-time highs.

On Monday, Nvidia closed down 6.7% — its second-steepest drop of the year — but the shares started to rebound in early trade Tuesday.

The company last week topped Apple and Microsoft as the most valuable U.S. company, reaching a market capitalization over $3.4 trillion. By the end of Monday, Nvidia had seen more than $540 billion erased from its market value after hitting an intraday record on Thursday.

For its part, Nvidia says that demand for its prized artificial intelligence graphics processing units, or GPUs, remains high.

Companies including Microsoft, Google, Amazon, Oracle and Meta are buying billions of dollars worth of its chips to power their data centers and cloud services.

Later this year, Nvidia will start shipping its next-generation AI chips, called Blackwell, which some analysts say could kick off another cycle of significant growth for the chipmaker and its partners.

— CNBC’s Kif Leswing contributed to this report.

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Technology

Jeff Bezos and OpenAI invest in robot startup Physical Intelligence at $2.4 billion valuation

Published

2 hours ago

November 4, 2024

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Jeff Bezos and OpenAI invest in robot startup Physical Intelligence at .4 billion valuation

Sam Altman, CEO of OpenAI, attends the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 18, 2024 (L), and Amazon CEO Jeff Bezos speaks during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021.

Reuters

Physical Intelligence, a robot startup based in San Francisco, has raised $400 million at a $2.4 billion post-money valuation, the company confirmed Monday to CNBC.

Investors included Amazon founder Jeff Bezos, OpenAI, Thrive Capital and Lux Capital, a Physical Intelligence spokesperson said. Khosla Ventures and Sequoia Capital are also listed as investors on the company’s website.

Physical Intelligence’s new valuation is about six times that of its March seed round, which reportedly came in at $70 million with a $400 million valuation. Its current roster of employees includes alumni of Tesla, Google DeepMind and X.

The startup focuses on “bringing general-purpose AI into the physical world,” per its website, and it aims to do this by developing large-scale artificial intelligence models and algorithms to power robots. The startup spent the past eight months developing a “general-purpose” AI model for robots, the company wrote in a blog post. Physical Intelligence hopes that model will be the first step toward its ultimate goal of developing artificial general intelligence. AGI is a term used to describe AI technology that equals or surpasses human intellect on a wide range of tasks.

The news comes days after OpenAI launched a search feature within ChatGPT, its viral chatbot, that positions the AI startup to better compete with search engines like Google, Microsoft‘s Bing and Perplexity. Last month, OpenAI also closed its latest funding round at a valuation of $157 billion.

Physical Intelligence’s vision is that one day users can “simply ask robots to perform any task they want, just like they can ask large language models (LLMs) and chatbot assistants,” the startup wrote in the blog post. In case studies, Physical Intelligence details how its tech could allow a robot to do laundry, bus tables or assemble a box.

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Technology

Barry Diller calls timing of The Washington Post’s non-endorsement a ‘blunder’

Published

5 hours ago

November 4, 2024

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Barry Diller calls timing of The Washington Post's non-endorsement a 'blunder'

Watch CNBC's full interview with IAC and Expedia chairman Barry Diller

To Barry Diller, a friend of Amazon founder Jeff Bezos, the decision for The Washington Post not to endorse a candidate in tomorrow’s presidential election was “absolutely principled” — and poorly timed, he said Monday on CNBC’s Squawk Box.

“They made a blunder — it should’ve happened months before, and it didn’t, and that’s the issue with it,” Diller said.

Diller is chairperson of both online travel company Expedia and IAC, which owns media platforms and websites like Dotdash Meredith and Care.com. He and Bezos appear to have been close friends for years, with Diller and his wife, fashion designer Diane von Furstenberg, hosting Bezos’s engagement party to fiancee Lauren Sanchez.

The decision not to endorse a presidential candidate in the 2024 race or for future presidential races came directly from Bezos, the paper’s owner, according to an article published by two of the Post’s own reporters.

The move prompted public condemnation from several staff writers, a flood of at least 250,000 digital subscription cancellations and the resignations of at least three editorial board members.

Bezos defended his position in his own op-ed late last month, calling the move a “meaningful step in the right direction” to restore low public trust in media and journalism.

“Presidential endorsements do nothing to tip the scales of an election,” Bezos wrote, emphasizing that the decision to not endorse a candidate was made “entirely internally” and without consulting either campaign. “I wish we had made the change earlier than we did, in a moment further from the election and the emotions around it.”

Diller said he spoke to Bezos following the decision.

“I think it was absolutely principled,” Diller said. “The mistake they made — and it was a mistake admitted by him — was timing.”

Technology

AppLovin’s 300% surge in 2024 leaves ad-tech company with big expectations for earnings

Published

8 hours ago

November 4, 2024

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AppLovin's 300% surge in 2024 leaves ad-tech company with big expectations for earnings

While Nvidia’s spectacular surge remains the biggest story in the technology industry, the AI chipmaker’s performance on the market has been dwarfed this year by a digital advertising company with a specialty in gaming.

AppLovin has soared 310% in 2024, beating every U.S. tech company with a market cap of at least $5 billion, according to FactSet data. Nvidia, which has led the artificial intelligence boom and become the world’s second-most valuable public company, is up 173% this year.

Founded 12 years ago, AppLovin went public in 2021, riding a Covid-era wave of excitement in online games. Now, the company’s games unit generates relatively slow growth, but its online ad business is bustling from advancements in AI that have improved ad targeting.

Great returns bring great expectations, and AppLovin has a lot to prove in its earnings report on Wednesday, as investors look for proof that the rally is warranted. In its third-quarter report, analysts are expecting revenue growth of 31% to $1.13 billion, according to LSEG, following two straight quarters of growth above 40%.

More than revenue, AppLovin has shown a massive increase in profit. Based on LSEG’s consensus, EPS is expected to more than triple to 92 cents, while analysts see operating income more than doubling to $424.2 million, according to FactSet.

AppLovin attributes much of its growth to its AI advertising engine called AXON, particularly since releasing the updated 2.0 version last year. The technology helps put more targeted ads on the mobile gaming apps the company owns, and works for other studios that license the software.

“AXON enhancements through ongoing self-learning and our dedicated development efforts have fueled robust business performance this quarter,” AppLovin said in its second-quarter shareholder letter in August. Revenue in the software business jumped 75% in the second quarter to $711 million, accounting for about two-thirds of total sales.

Analysts have gotten increasingly bullish.

Wells Fargo initiated AppLovin with the equivalent of a buy rating on Oct. 29, calling the company a share gainer. Analysts at BTIG lifted their price target last week to $202, the highest among firms tracked by FactSet. Oppenheimer, Stifel Nicolaus and Jefferies also raised their targets in October.

According to analysts at Wedbush, the ad opportunity in the mobile gaming industry will grow from $10 billion today to $50 billion over the next decade.

“Investors have bought into the story, driving APP shares to all-time highs, and we think that the rally is warranted,” Wedbush analysts wrote in a note on Oct. 11. They said the company’s “real opportunity” is to catch the influx in brand advertising towards mobile gaming from more conventional channels like social media or legacy broadcasting.

Because of its position in digital advertising, AppLovin faces potential competition from some of the most well-capitalized companies on the planet. In its latest annual filing, AppLovin named Google, Amazon and Facebook as competitors. The company also relies on a small set of mobile platforms, most notably from Apple and Google, for distribution.

AppLovin didn’t respond to a request for comment.

Among the biggest financial beneficiaries of AppLovin’s historic rally is founder and CEO Adam Foroughi, whose stake has soared to about $5 billion in value.

Things could’ve turned out very differently.

In September 2016, several years before the IPO, Foroughi agreed to sell a majority stake in AppLovin to Chinese investment firm Orient Hontai Capital in a deal valued at $1.4 billion. The transaction never materialized as the agreement came at a time when the U.S. government was clamping down on Chinese involvement in the domestic tech sector.

More recently, AppLovin was supposed to be on the other side of a deal that ultimately got scuttled. In 2022, AppLovin gave up on efforts to buy gaming software developer Unity Software for $20 billion, after Unity shareholders rejected the bid.

Unity has since struggled mightily, losing more than half its value. Over that same stretch, AppLovin’s market cap has ballooned by almost sixfold.

WATCH: AppLovin is ‘killing Unity’ says LightShed’s Brandon Ross