Big Tech Had a Stellar Week Thanks to A.I.

Market Movers

• Big tech companies had an absolutely stellar week. Meta, Alphabet, and Microsoft reported earnings for the first quarter and all beat Wall Street’s expectations. AI was a huge talking point for their earnings call. Microsoft ($MSFT) said that AI will account for 1% of growth in their cloud business. Meanwhile, Alphabet also talked about Bard AI. Mark Zuckerberg spent 6 minutes discussing AI and only  90 seconds about the metaverse. Source(11:39)

• Amazon says cloud growth is slowing. Shares fell as the company revealed in a call with investors that ($AMZN) Amazon Web Services, or AWS—long a central engine of the tech company’s profitability— has seen revenue growth in April fall to about 11%, down from the nearly 16% increase in the first quarter.* The January-to-March growth rate at AWS was the lowest year-over-year increase.

• Intel reports largest quarterly loss in company history. Last year, Intel swung to a net loss of $2.8 billion, or 66 cents per share, from a net profit of $8.1 billion, or $1.98 per share. Excluding the impact of inventory restructuring, a recent change to employee stock options, and other acquisition-related charges, Intel said it lost 4 cents a share, a narrower loss than the analyst had expected.

• Lyft says it will cut more than 1,000 people in new round of layoffs. Lyft said it is also scaling back on hiring and eliminating over 250 open roles. In a securities filing, the company said it would incur $41 million to $47 million in severance* and other related costs in the quarter that ends June 30. The company also outlined plans to restructure.

• Dropbox to lay off 16% of workforce. The artificial intelligence push is among the reasons* for job reductions. Chief Executive Drew Houston also said in a letter to staff that while Dropbox remains profitable, headwinds from a downturn in the economy have put pressure on the business and made some of its investments unsustainable.

What to Watch

• Short sellers bet against Blackstone and Starwood Mortgage REITs. Short interest in the largest mortgage real estate investment trusts focused on business properties*, including Blackstone Mortgage Trust Inc. and Starwood Property Trust Inc., hit post-pandemic highs in the past month, according to data compiled by S&P Global Market Intelligence.

• First Republic shares gain on reports of potential rescue plans. Shares of the San Francisco-based bank rose as much as 14% in New York. The stock has plunged 95% this year through Thursday as the company struggles to navigate the turmoil in the aftermath of the collapse of Silicon Valley Bank* and two other regional banks in March.

• A new challenger emerges in the weight-loss drug race. The antidiabetic drug made by Eli Lilly that helps patients shed pounds could dethrone Wegovy (the weight-loss version of Ozempic) as the favorite among celebrities and wealthy people on a diet, according to new clinical trials. Eli Lilly expects the FDA to approve Mounjaro for weight loss soon—perhaps by the end of the year.

• Getty Images has a buyout offer on the table from an eager suitor. Getty's suitor is investment firm Trillium Capital, which offered $10 per share to acquire the company. Trillium holds a stake in Getty and has been an activist investor, calling for the company to change its strategy and to put itself up for sale.

• Generative AI could add $200 trillion to the economy by 2030. Cathie Wood's Ark Investment Management presented a major bullish call on artificial intelligence in its "Big Ideas 2023" report. The firm suggests AI could add $200 trillion to global economic output by 2030. The firm believes the cost to train generative AI models to GPT-3 capability will decline by 70% per year between now and then.