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| Here’s your daily business briefing. - 🌐 Google I/O 2024 announcements
- 💰 Deep Dive: Mid-sized IPOs key for U.S. market rebound
- 🛒 Consumers prefer cheaper online goods: report
Thanks for reading! Shriram
p/Shriram | |
| 1 | | At its annual I/O developer conference, Google unveiled several AI products, including new search and chat features and AI hardware for cloud customers. Updates to Gemini 1.5 Pro allow it to handle larger datasets while introducing the smaller Gemini 1.5 Flash AI model that caters to quicker tasks. More: - Google ($GOOGL) introduced "Veo" for high-definition video creation, "Imagen 3" for high-quality text-to-image conversion, and "Audio Overviews" for generating audio discussions from text.
- Google Search's latest features encompass "AI Overviews" for intricate queries and assistant-like planning functions, integrating images and videos for a multimodal experience.
- Google Workspace's "AI Teammate" will curate searchable collections of work spanning different documents and messages.
- Google's DeepMind is developing Project Astra, a prototype AI assistant set to debut in Gemini, offering real-time conversational support akin to Marvel's J.A.R.V.I.S.
- Additionally, the firm introduced Trillium, its latest TPU for complex AI tasks, slated for cloud release in late 2024, and reaffirmed its partnership with Nvidia for advanced AI hardware.
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What the numbers say: Of the 76 U.S. IPOs in 2024, those raising between $100M and $500M represented about 29% of total volume, a notable decline from the decade-long average of 50%. Large IPOs, raising $500M or more, accounted for roughly 67% of the $16.8B raised in U.S. first-time share sales this year. Relevance: The lack of mid-sized IPOs suggests a departure from past patterns, indicating that smaller firms may be cautious amidst numerous large IPO contenders. While larger private companies drive the market resurgence, smaller firms appear to be awaiting more favorable conditions, although mid-sized deals could resurface if market sentiment remains buoyant. More data: In April, the IPO market rebounded, raising $5.7B, the highest since September, featuring significant listings like Viking Holdings Ltd., UL Solutions Inc., and Rubrik Inc. Some IPOs, such as Ibotta Inc., priced higher than expected, indicating strong investor appetite for smaller-cap offerings. This suggests a resurgence in small-cap stocks, as reflected by the 18% increase in the Russell 2000 Index over the past year. | | | |
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| 3 | | E-commerce spending hit around $332B in the first four months of the year, marking a 7% rise from the previous year, while Adobe Analytics predicts a 6.8% growth in e-commerce sales for the first half of the year, exceeding $500B. The surge in online shopping for lower-priced items is attributed to inflation, leading to a notable increase in the share of affordable products consumers purchase. More: - Personal care products saw a 96% YoY sales growth, followed by electronics at 64% and apparel at 47%.
- Sales of home and garden products grew by 42%, while furniture, bedding, and grocery purchases increased by 42% and 33%, respectively.
- Adobe forecasts mobile shopping to dominate the holiday season, accounting for 52.5% of online shopping revenue.
- In 2023, mobile shopping revenue during the holidays surpassed desktop for the first time, hitting a record $222.1B, up 4.9% YoY.
- Research indicates that shoppers are increasingly inclined to buy more online, driven by convenience and competitive pricing.
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| 4 | | Goldman Sachs analyzed power usage in Virginia, the world's largest data center market, noting a 37% increase from 2016 to 2023, diverging from trends in other states. This surge, particularly evident after November 2022, aligns with the launch of ChatGPT and suggests that American AI data centers' energy demand could soon rival that of new U.S. solar farms. More: - In 2023, Virginia's data centers increased their power usage by 2.2 gigawatts, sufficient to energize 1.5 million households or match the output of two nuclear reactors.
- Virginia's data centers represent only 0.5% of total U.S. power usage, and their future energy demands seem less significant than those of electric vehicles, industrial electrification, and air conditioning.
- Goldman Sachs predicts a surge in total U.S. power demand from 470GW in 2023 to 567GW in 2030, with data center power needs projected to triple from 15GW to 45GW.
- The 15GW figure matches the capacity of all U.S. utility-scale solar farms installed in the preceding year.
- With 20% of U.S. electricity from renewables and 60% from fossil fuels, there's a push for solutions like nuclear fusion to tackle environmental concerns.
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| 5 | | Alibaba's fourth-quarter profit plummeted by 86% to $452M, mainly attributed to equity investment valuation changes, while its revenue of $30.733B surpassed expectations. Consequently, after the earnings announcement, Alibaba's U.S.-listed shares ($BABA) dropped 5.6% in early trading. More: - Alibaba intends to elevate its secondary listing in Hong Kong to primary status by August while maintaining its primary listing in New York.
- The company's restructuring into six units and a renewed focus on core businesses like domestic e-commerce led to a 7% increase in overall revenue.
- Taobao and Tmall Group, the domestic commerce arm, experienced a 4% revenue increase and double-digit growth in order volume.
- Alibaba's international digital commerce division achieved 45% revenue growth, surpassing expectations, but incurred nearly double the losses, reaching $567M.
- The cloud segment saw AI-related revenue from external clients triple year-over-year, indicating significant growth.
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| 6 | | Tencent exceeded Q1 revenue expectations at $22.094B, slightly above the projected $21.94B, with net profit reaching $5.8B, surpassing the anticipated 5.07B. Adjusted net profit surged by 62% YoY, marking the fastest growth since Q1 2021, while revenue experienced a 6% YoY increase. More: - Tencent, known for WeChat, is rebounding from its first annual revenue dip in 2022 through cost-cutting and emphasis on core sectors like gaming, advertising, and cloud computing.
- Tencent's Chinese gaming revenue fell by 2% YoY, with some improvement from the previous quarter due to weaker content monetization and specific gaming events.
- International gaming revenue, up 3% YoY, was driven by PUBG Mobile and Supercell games, yet overall gaming sector growth remains slow.
- Online ad revenue soared 26% to $3.67B, boosted by WeChat engagement and AI ad tech.
- Tencent's fintech and business services, like WeChat Pay and cloud computing, grew revenue by 7% to $7.24B, with a 42% increase in gross profit YoY.
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| 7 | | Quick Hits: - Netflix will stream NFL games on Christmas Day for three years, marking its first venture into live sports alongside agreements for WWE's "Raw" and a Mike Tyson-Jake Paul boxing match.
- Amazon Web Services, the top revenue generator for Amazon, will have a new CEO as Adam Selipsky steps down next month, to be succeeded by Matt Garman, currently the VP of sales, marketing, and global services.
- Australia and the U.S. have unveiled prototype uncrewed underwater vehicles named Ghost Shark and Manta Ray, signaling potential advancements in Pacific naval defenses.
- Walmart confirms corporate layoffs and mandates relocation for most remote workers and employees at offices in Dallas, Atlanta, and Toronto to its Arkansas headquarters.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Shriram Jeevakumar | |
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