Inklings #031 📧
With the Anthropic S-1 now official, it feels like... a pretty awkward time to go public! Money is rapidly rotating out of Big Tech, good earnings or not. Following major Google and Amazon trust falls this week, Intel is down 30% today. Everyone was busy worried about the US mid-terms causing volatility, but this is clearly a more pressing concern at this point.
Then again, maybe it's good to get this correction of the way, to pave the way for yet another comeback leading up to the actual Anthropic listing in a few weeks? I mean, that has to be the hope at this point?
I Note...
🎢 Big Tech AI Earnings Roller Coaster Continues – The market judging "winners" and "losers" on a quarterly basis is getting more extreme. Google crashed 10%+ (the second worst stock dip in history, in terms of market cap lost – $500B+ – only behind one NVIDIA swing). Microsoft shares surged. Ditto Oracle. Meta shares jumped initially – "Muse, Muse, Muse, Muse, Muse" – but have since continued their recent downward spiral. Ditto SpaceX. And now Amazon is seemingly also going to see a bloodbath when shares open for trading today. What's weird is how there are conflicting reasons and narratives for each jump and/or fall. Generally speaking, the market seems to appreciate a pause in CapEx spend at the moment, but they also appreciate showing some returns to indicate the AI push is working – I mean, duh, except that Google Cloud is arguably the biggest beneficiary of this, to the point where it's closing in on Azure and may become the 2nd largest cloud next year (though it's hard to do an apples-to-apples comparison given Microsoft's new reporting structure), but again, the market puked on Google and yet loved Microsoft. Google, of course, has other concerns – notably, AI Mode cannibalizing traditional Search and monetized at a far lower rate – but there's just so much whiplash in the market at the moment. Microsoft, on the other hand, seemingly benefitted from showing strong free cash flow – unlike Google, Meta, and Amazon which are all now fully negative – but a lot of that is simply because various data center projects are taking longer to complete (so cash outlays are delayed). Have I mentioned they just offered a buyout to 60,000 employees?! And then, of course, the mark-ups and mark-downs are confusing all of this when it comes to "profit" reporting – and all of these companies investing in one another continues to ramp. Meanwhile, Intel is currently down 25% in pre-market! [NYT]
🚀 SpaceXsla – I realize I haven't commented on the notion of SpaceX and Tesla merging yet – even though I've been writing about the possibility for a decade. Obviously this is happening, and Elon Musk isn't even being coy about it any longer. And from a Tesla perspective, the timing seems pretty perfect as the cracks are finally starting to show with the promises of tomorrow continually not coming. That's not to say Tesla is worthless, it's just worth less than $1.6T. But when it merges with SpaceX – itself boosted to $2T thanks to getting into the AI race – we'll have a company which is suddenly the 3rd or 4th or 5th largest company in the world from a market cap perspective. One where, yes, even the Optimus robot project makes sense for a range of reasons. Who else is going to do maintenance on those data centers in space when they're actually a reality in 20+ years... [WSJ 🔒]
🎤 AI Spotify – My guess is that any AI backlash will be kicked into yet another gear if Spotify is able to launch their AI remix service early next year. On paper, it makes sense: let fans make remixes of their favorite music, which will allow the artists to benefit (since streams will count towards their song counts). But in practice, a lot of people are going to hate the notion of doing this to one of the most popular and oldest "sacred" art forms. It's one thing to use AI to make new music (though yes, the big debate is how much it was trained on human-made music – on top of the flooding-the-zone elements, which perhaps literally drowns out human-music), but using it to augment already popular music is another level because it's obviously far more likely to be actually listened to at scale. The obvious guess would be that currently popular artists largely say "no" while up-and-coming artists largely say "why not" and past-their-prime artists largely say "hell yes". Obviously, there will be extremes in all those cases, but Spotify execs equating it to covers of songs is a smart way to try to defuse the controversy. I mean, it won't work, and the fact that Spotify will charge extra for this will lead to a lot of incentive questions. I suspect we won't see Apple do the same, and they may benefit with many popular artists as a result... [FT 🔒]
🧠 The Memory Tables Turn on Apple – Maybe the most wild thing about the end of Tim Cook's tenure atop Apple was how the company misread the market for memory chips. Sure, it's a "100-year flood" situation driven by the AI boom, but it also was at least somewhat foreseeable – especially, you'd imagine, for a company that previously held such a grip over the market. Of course, that grip led the memory makers to grow to hate Apple and their terms. Now it's payback time – both literally and figuratively. Whereas Apple used to buy double the memory chips of the rest of big tech – combined – now the AI "hyperscalers" are buying at a rate double that of Apple. And they're doing so at prices that are 5x or more what Apple was paying just a couple years ago. It's supply and demand mixed with the fact that the chips are a smaller drop in an overall data center cost bucket. Again, you'd think Apple could have seen this coming at least somewhat, but they were also sort of blind to AI so... Great dive into the situation by Rolfe Winkler – from his Kioxia executive shooting iPods with rifles (!) lede on down to all the shakedown stories about 'The Blevinator' – Apple's hard-charging procurement legend (who, by the way, was forced out in 2022). [WSJ 🔒]
👽 The Alien 'David' Trilogy May Yet Be Completed – Writer Aaron Guzikowski is on board, which is notable because he's the creator of the short-lived HBO Max show Raised by Wolves. And that's notable because Ridley Scott was the executive producer of that series – and directed the first two episodes. So while there is currently no director attached to this project, come on, if the script is good, Ridley Scott – who, it must be pointed out, is 88 years old – is directing this. And if he's directing this, it's going to tie the bow around his Alien prequels centered around the android David. Michael Fassbender isn't yet connected but... This is all setting up quite nicely. There has long been a debate whether Wolves was a part of the Alien universe itself, with seemingly some parallels, but Guzikowski has only said he was heavily influenced by Prometheus and that perhaps you could view it as a "close cousin" to that universe. Perhaps there's even a way to tie this into the Alien: Earth show? Let's just get a move on, to get the movie on, everyone! [THR]
I Wrote...
M.G. Siegler
M.G. Siegler
I Quote...
"A cheeseburger would not fit in my definition of Peter Rice."
– Joe Pichirallo, a professor at N.Y.U.’s Tisch School of the Arts (and a former Fox Searchlight executive), talking about Netflix's new Chief Content Officer, while referencing an old quote from their last Chief Content Officer, Bela Bajaria, who once compared their content to a "gourmet cheeseburger". It's certainly a shake-up.
Thoughts On...
🔗 Amazon's Apple Strategy • Apple's Touching MacBook Backtrack
Asides...
- Speaking of SpaceX, it's a clear sign of the times that their largest customer is no longer the US government but Anthropic, as they shift into a neocloud business with rocket launches on the side. [Bloomberg 🔒]
- Perhaps related, it's fascinating that Anthropic only lists two competitors in their S-1: OpenAI and Google. The latter is of course a massive partner (and part-owner) of theirs as well! [Verge]
- As expected, Samsung again set a new record for quarterly profit – $80.5B! – but almost as wild, SK Hynix jumped to third all-time, just behind NVIDIA last quarter. Also, Samsung shares sank on the news as the 632.1% jump merely matched those expectations; investors are worried this memory chip boom is another blip. [CNBC]
- Long the corporate profit king, Apple's best quarter ever – last holiday quarter – would only be the 6th-highest profit on this list. This plus the above link almost makes you think they should get into making chips for others...
- Speaking of remixing old content with AI, another test may be in cutting up an old Australian Margot Robbie show into a new micro-drama. [NYT]
- Feels like Elvis won't be one of those artists making his music available for AI remixing anytime soon as his estate is now suing Anthropic. AI Shook Up? [NYT]
- I know Google and others have done it for their foldables, but I still can't believe Apple went with adhesive for the iPhone Duo Case. Yuck. (At least the Folio case is fully magnetic.) [MacRumors]
- Is it weird that Snap is enlisting Iron Man to sell Specs just as he's about to turn into Doctor Doom? They're fully going for broke here, perhaps literally. [THR]
- Um, documentarian Errol Morris has been sitting on a two-hour interview with Elizabeth Holmes filmed during the peak of her fraudulent powers. A prequel to the mesmerizing You Can See Everything of sorts! [Variety]
As the Apple Terns...
M.G. Siegler
M.G. Siegler
I Spy...
Lisan al-Gaib! Back like Duncan Idaho, the popcorn bucket that launched a thousand popcorn buckets (including this gem from A24). Now with 2x the power. Desert power.
🎶 Listening to "Last To Know" by The Menzingers
🍺 Enjoying a Harbour Session IPA
🇬🇧 Sent from New Forest, England