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US weighs Google break-up in landmark antitrust case
Justice department could seek ‘structural remedies’ such as forced product sales after judge’s ruling of illegal monopoly in search
 Jonathan Kanter, the top US antitrust enforcer, left, and Google chief Sundar Pichai © FT montage/Bloomberg
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Stefania Palma in Washington and Stephen Morris in San Francisco
41 minutes ago
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The US government is considering asking a district judge to break up Google for its antitrust violations in online search, in what would mark federal prosecutors’ boldest effort yet to rein in one of the world’s most powerful tech companies.
The US Department of Justice is “considering behavioural and structural remedies” that would prevent Google from using products such as the Chrome browser, Play app store and Android operating system to give its search engine an edge over competitors or new entrants, according to a court document filed on Tuesday.
Prosecutors could also seek to force Google to share users’ search data with rivals and restrict its ability to use search results to train new generative artificial intelligence models and products.
“For more than a decade, Google has controlled the most popular distribution channels, leaving rivals with little-to-no incentive to compete for users,” the DoJ said. “Fully remedying these harms requires not only ending Google’s control of distribution today, but also ensuring Google cannot control the distribution of tomorrow.”
The DoJ identified four areas that its remedies framework needed to address: search distribution and revenue sharing; generation and display of search results; advertising scale and monetisation; and gathering and use of data.
Google hit back at the proposals, calling them “radical and sweeping”, beyond the scope of the legal issues in the case and a threat to “consumers, businesses and American competitiveness”.
Shares of parent company Alphabet were little changed in after-hours trading and have risen 19 per cent this year to give it a market value of $2tn, the fourth largest for a listed company in the world.
The DoJ’s 32-page filing is its initial remedy proposal, which is subject to change. It comes after Amit Mehta, the judge presiding over the case, in August labelled Google a “monopolist” when he ruled that the company had spent tens of billions of dollars on exclusive deals to maintain an illegal dominance over search.
Tuesday’s filing advances the trial’s second phase, in which Mehta will determine the remedies to be imposed on Google.
The DoJ and Google are set to file their proposed final judgments and witness lists on November 20 and December 20, respectively. Mehta has set hearings for the remedy requests in April and has said he aims to hand down a decision by August 2025. Google has vowed to appeal against the decision as far as the US Supreme Court, which could take years longer.
In addition to potential spin-offs, prosecutors said remedies could include banning the exclusive contracts at the heart of the case — in particular the $20bn that Google pays Apple each year to be its default search engine — as well as imposing “non-discrimination” measures on Google products such as its Android operating system and Play app store.
The DoJ is also considering requiring Google to share its vast trove of data gathered to improve search ranking models, indices and advertising algorithms, which prosecutors argue was accumulated unlawfully.
To address any data privacy concerns that result, Google could be “prohibit[ed] from using or retaining data that cannot be effectively shared with others”.
The DoJ also recognised the disruptive impact that AI would have on online search. Prosecutors are concerned that Google will “leverage its monopoly power” to feed its AI features and want websites to be able to opt out of being used to train Google’s AI models or inclusion in its AI-generated summaries.
Finally, the filing said Google’s dominance over search text ads needed to be addressed by lowering barriers to would-be rivals or licensing its ad feed to others, independently from search results.
The Google case could potentially be the biggest antitrust victory for the DoJ since a judge ordered the break-up of Microsoft 24 years ago for illegally squashing competition.
However, that ruling was overturned on appeal a year later, making the Google lawsuit a second chance for the DoJ to fundamentally dismantle a Big Tech company’s dominance of a key sector.
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The remedy trial’s outcome will be a critical test for Jonathan Kanter, who inherited the case and has ushered in a tougher enforcement policy in the past three years as head of the DoJ’s antitrust unit.
Kanter has sued Apple and has a second case against Google’s ad tech business in progress. Big Tech critic Lina Khan, chair of the Federal Trade Commission, has challenged Amazon and Meta in separate cases.
The filing comes close on the heels of other legal defeats for Alphabet. A California judge on Monday ordered the company to open its Android operating system to rivals, allowing them to create their own app marketplaces and payment systems to compete with Google Play. Google said it would appeal against the verdict.
That judgment was the result of a lawsuit from Epic, maker of the popular video game Fortnite, which argued that Google had suppressed competition in Android apps and used its monopoly to charge excessive fees.
Copyright The Financial Times Limited 2024. All rights reserved.
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covertaction
8 minutes ago
Good. AI ruined Google.
It has become annoying. Any company that makes their products worse in order to fleece their customers deserves the same.
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PedroSnapChess
23 minutes ago
About time. Then, let’s move onto Meta, apple, Microsoft and Amazon.
These gatekeepers have squatted on the biggest monopolies in history and are not going to give that up without an incredible squeal.
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Argus
23 minutes ago
(Edited)
Is there a case to be made that Google is substantially more valuable broken up than held together? YouTube huge value. Android is the MSFT windows for phones. Cloud. Maps. Gmail. A AI spin off to rival ChatGPT. Plus all the bloated spending and off target moon shots it would avoid in the future.
Maybe shareholders should be teaming up with government to push its break up.
Thoughts from informed readers welcome.
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Melon Duks
14 minutes ago
(Edited)
In reply to Argus
This is web 1.0 thinking. User data is at the very core of the business, collected by and shared across services. Combine this with AI, you get incredible value for the users across the services for a personalized experience AND of course incredible knowledge to influence them through razor sharp precision marketing.
As it was said in the 2000s, Google will know you better than yourself.
This is what is at stake here. Huge risk for shareholders.
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Dubh
5 minutes ago
In reply to Melon Duks
incredible value for the users? pure speculation by those who can only see the world as it is, not as it could be.
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An observer
28 minutes ago
Baby-Bells…
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Yessey
28 minutes ago
(Edited)
Android can have other app stores and install apps from other sources easily. Samsung has their own app store for example. I didn't think that was a problem? Exclusivity deals are, and I assume the dominance of their position in combination is the issue
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Zac Rogers
28 minutes ago
Markets are ill-informed if they are not pricing-in Kanter’s chances of pulling this off.
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| To: Johnny Canuck who wrote (60321) | 10/9/2024 2:39:40 AM | | From: Johnny Canuck | | | |
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Artificial intelligence
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China’s AI start-ups race to crack US market
MiniMax, ByteDance and 01.ai launch apps overseas to boost revenue growth
 MiniMax, ByteDance and 01.ai are among a group of Chinese AI companies that have launched AI products overseas © FT montage/Getty Images
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Eleanor Olcott in Beijing
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Chinese artificial intelligence start-ups are trying to crack the US market to drive rapid revenue growth, in an effort to emulate TikTok’s success abroad amid a sluggish domestic industry.
MiniMax, ByteDance and 01.ai are among a group of Chinese AI companies that have launched AI products overseas, particularly targeting the US, which has a larger pool of high-spending users than in their home market.
Shanghai-based MiniMax, which is backed by HongShan, Alibaba and Tencent, has made inroads over the past year. The three-year-old unicorn has told investors it will net about $70mn in sales this year, a lofty projection by the standards of AI start-ups that have struggled to monetise their technology.
The bulk of the sales comes from MiniMax’s avatar chatbot app Talkie, which has proved popular with US teenagers, according to three people familiar with the matter.
TikTok-owner ByteDance has also launched a series of AI apps overseas as well as integrating AI features into its existing apps over the past year, such as photo-editing app Hypic. Beijing-based start-up 01.ai is behind the productivity tool PopAi and is beta testing an AI search app, according to one person familiar with the matter.
It underscores the potential for Chinese groups to launch competitive AI apps in the US, despite Washington’s chip restrictions and intense scrutiny of the sector. Experts believe China has a competitive advantage in launching products such as avatar chatbots, which do not require as much computing resources because they are trained on smaller amounts of data than productivity chatbots.
But it also highlights the challenges Chinese AI start-ups face in their domestic market in generating revenues to pay for the high compute costs associated with model training, at a time when the pace of fundraising has eased following a frenzy of activity last year.
The slower pace of financing has put AI groups under pressure to show they can quickly scale up revenues, pushing them into overseas markets where they have a better chance of making money than in China where consumers tend to shy away from subscriptions.
Chinese AI companies are at a “critical turning point”, according to Adina Yakefu, a China AI expert at machine learning platform Hugging Face. “Expanding overseas is a necessary choice given difficulties they have making money in China and fierce competition in the domestic market,” she added.
For example, MiniMax has struggled to monetise its domestic version of the Talkie app, Xingye, as successfully as its foreign counterpart, according to two people familiar with the matter. MiniMax declined to comment.
The group generates most of its sales from advertising on Talkie, but it also has a premium subscription that allows users to continue with lengthier conversations with avatars.
One person cautioned the group’s revenue forecast was liable to change given fluctuating demand. MiniMax was last valued at $2.5bn in a funding round announced in March, which led to it raising $600mn.
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Chinese AI groups are attempting to avoid the problems ByteDance is facing with Washington over a potential ban of TikTok by incorporating their entities overseas, either in Singapore, Hong Kong or the US.
These then operate the overseas apps on servers outside China, according to several people with knowledge of the matter. MiniMax uses overseas AWS data centres to run inference for its Talkie app.
According to data provider SensorTower, Talkie was the 12th most downloaded AI app worldwide from January to August this year, just behind US-based rival Character.ai.
Other Chinese-owned apps have also made inroads globally. ByteDance-owned Hypic and Question AI, the homework assistant run by edtech company Zuoyebang, are in the top 20 most downloaded list.
Additional reporting by Cristina Criddle in San Francisco
Copyright The Financial Times Limited 2024. All rights reserved.
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rightarmfast
1 hour ago
Standard rule is to avoid Chinese tech companies and their products.
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MesserWolf
1 hour ago
I just opened Talkie to see what is about, now I understand why it popular with teenagers…
I see a lot of potential for it to be very unhealthy ( see movie Her)
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CH
1 hour ago
No thank you. The data warehouse might be located outside of China but whatever you input can and likely will be replicated and stored in China. Plus their model was train in China, where CCP has free access to everything. Past mistakes like TikTok have proven to be difficult to remedy. This time they should be blocked from the get go.
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ETF Strategist
ETF Strategist
Warren Buffett’s S&P 500 bet paid off. Experts weigh in on whether it’s still a winning strategy
Published Wed, Oct 9 20249:30 AM EDT
Lorie Konish
WATCH LIVE
Key Points
- When it comes to stock investing, it can be difficult to beat an S&P 500 index fund.
- Warren Buffett once won a decade-long bet that he could outperform hedge fund managers with a simple S&P 500 index fund.
- Yet some experts warn you could be missing important opportunities to diversify if you pick the same strategy.
Warren Buffett, Berkshire Hathaway CEO and chairman.
Cnbc | Nbcuniversal | Getty Images
In 2007, Warren Buffett made a $1 million bet that he could outperform hedge fund managers over the course of a decade by investing in an S&P 500 index fund.
In 2017, he won.
Some individual investors are making similar bets on the S&P 500 with their money, whether it be through exchange-traded funds or mutual funds.
True to its name, the S&P 500 index includes 500 large U.S. companies. The index is market cap-weighted, with each listed company’s weighting based on the total value of all its outstanding shares. The index is rebalanced quarterly.
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The three biggest ETFs track the S&P 500 index, according to Morningstar.They are the SPDR S&P 500 ETF Trust, which trades under the ticker SPY; iShares Core S&P 500 ETF, with ticker IVV; and Vanguard S&P 500 ETF, which trades as VOO. Together, those funds make up almost 17% of the U.S. ETF market, according to Morningstar.
In 2024, VOO has been the leader of those three funds in attracting new money, with $71 billion in net inflows over the first nine months, according to Morningstar, beating the record SPY set in 2023 by $20 billion.
Future index performance could be ‘muted’
The S&P 500 index has continued to make headlines for new all-time highs in 2024. Year to date, the index is up around 20% as of Oct. 8. Over the past 12 months, it has climbed 33%.
That performance has bested some experts’ predictions for the index heading into this year, owing in part to a stronger U.S. economy than had been anticipated.
“That elusive recession everybody was looking for never materialized,” said Larry Adam, chief investment officer at Raymond James.
Now, the St. Petersburg, Florida-based firm is predicting a soft landing for the U.S. economy. Yet the run-up in stocks may not be as strong.
“I think you’re going to see more muted performance — still upward, but more muted,” Adam said.
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Fundstrat’s Tom Lee on 6,000 S&P 500 year-end target: Setup into year-end has a lot of tailwinds
Historically, from the start of October through Election Day, the market tends to be down, on average, by about 1.5% or so, he said.
“The reason for that is the market doesn’t like uncertainty,” Adam said.
The good news is the market tends to recoup those losses and move higher, he said.
Goldman Sachs just raised its S&P 500 index forecast for 2024 to 6,000 up from 5,600 to reflect expected earnings growth. Tom Lee, Fundstrat Global Advisors managing partner and head of research, also recently told CNBC he’s calling for a target of 6,000 for the S&P 500 by year-end.
S&P 500 ‘hard to beat in the long run’
Investing in the S&P 500 index is a popular strategy.
“There are reasons why it works so well that will never change,” said Bryan Armour, director of passive strategies research at Morningstar.
Among the advantages: It’s low cost, it captures a large portion of the opportunities available to active managers and it’s “hard to beat in the long run,” he said.
“In general, I would say the S&P 500 is better, more well diversified than most investment strategies,” Armour said.
That can allow you to take a set-it-and-forget-it approach and avoid trying to time the market, he said.
However, there are definite risks that come with exclusively investing in an S&P 500 index fund on the equity side of a portfolio.
“The S&P 500 has been the absolute best thing [investors] could have been doing the past seven or eight years,” said Sean Williams, a certified financial planner and principal at Cadence Wealth Partners in Concord, North Carolina.
“There’s a lot of people who have that mentality of, ‘Why would I do anything differently?’” he said.
Generally, it is not a good idea to have everything in any one position, even if it is big U.S. companies that have done very well in the past decade, Williams said.
It always helps to have exposure to other areas, he said, such as international, small- and mid-cap companies, and real estate, for example.
Investing in an S&P 500 index strategy comes with concentration risk. For example, information technology comprises 31.7% of the index, with companies including Apple, Microsoft, Nvidia and Broadcom.
To mitigate that risk, investors may consider moving to a total market portfolio like the Vanguard Total Stock Market ETF, which trades under the ticker symbol VTI, which can provide less concentration at the top of the portfolio, Armour said.
Additionally, to get broader exposure, investors may also consider buying a small value ETF, an area that Morningstar analysts currently think is “pretty significantly undervalued,” Armour said.
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| To: Johnny Canuck who wrote (60323) | 10/9/2024 1:37:03 PM | | From: Johnny Canuck | | | | 
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3 High-Yield Stocks for Growing Dividend Income
Sneha Nahata - Barchart - Wed Oct 9, 9:53AM CDT + Follow
Dividends - Dividends and dollars by MarkgrafAve via iStock
Investing in high-yield stocks with solid dividend payouts and a history of dividend growth can help investors collect regular passive income for decades. These companies typically have relatively resilient business models, consistent earnings growth, and a commitment to rewarding shareholders with regular and growing dividend payments.
In this context, Pfizer (PFE), Ares Capital Corporation (ARCC), and BCE (BCE) emerge as top choices. Each of these companies boasts a solid track record of paying and raising dividends, with yields exceeding 5%. They not only provide reliable income, but also have the potential to increase their dividend payouts further.
Let’s dive deeper to see why these high-yield stocks are compelling investments for those seeking growing dividend income.
#1. Pfizer (PFE) Investors can rely on the shares of Pfizer (PFE), a leading biopharmaceutical company, for steady income. The company’s capital allocation strategy revolves around increasing its dividend, reinvesting in the business, and repurchasing shares after reducing debt.
 www.barchart.comIn December 2023, Pfizer announced an increase in its quarterly cash dividend, marking the 15th consecutive year of dividend hikes.
Pfizer's dividend payouts are well-supported by a robust revenue base. The company has five products with sales exceeding $1 billion, demonstrating its strong market position. Moreover, the activist investor target has an impressive pipeline of 113 development projects, which will bolster its growth trajectory in the coming years.
The company has initiated a manufacturing optimization program aimed at reducing costs across its production network. The first phase of this program, which focuses on operational efficiencies, is expected to generate approximately $1.5 billion in savings by the end of 2027. These savings will help maintain healthy profit margins and support even higher dividend payouts.
In the first half of 2024, Pfizer paid $4.8 billion to shareholders via dividends. Moreover, it offers a high yield of over 5.7%.
Analysts have a “Moderate Buy” consensus rating on Pfizer stock. With its commitment to maintaining and growing dividends, alongside initiatives to streamline operational expenses and reduce costs, Pfizer is a compelling choice for those seeking a dependable income stock.
 www.barchart.com#2. Ares Capital Corporation (ARCC) Ares Capital Corporation (ARCC) is a top player in the specialty finance space. It focuses on direct loans and strategic investments in private middle-market companies in the U.S. This market remains underserved, providing ARCC with great growth potential.
 www.barchart.comFurther, its portfolio is highly diversified across multiple asset classes and industries. Also, the company consistently delivers solid credit and investment performance. These attributes help Ares to grow its earnings and support its dividend payouts.
Over the past 15 years, Ares Capital has maintained and increased its dividends, reflecting its focus on rewarding its shareholders. Further, it currently offers a high yield of over 9%, which makes it a top stock for collecting passive income.
Ares Capital’s focus on the underserved private middle market is a key growth driver. The demand for funding in this segment remains high due to the absence of large traditional lenders and regulatory constraints. This scarcity of funding sources opens up significant opportunities for ARCC to expand.
ARCC stock has a “Moderate Buy” consensus rating, and its high dividend yield and history of dividend growth make it a reliable choice for investors seeking steady income.
 www.barchart.com#3. BCE (BCE) With its high yield of over 8% and solid dividend distribution and growth history, BCE (BCE) is an attractive stock for steady income.
BCE is Canada’s largest communications company. As the market leader in several key areas, including local phone services, broadband, and wireless operations, it has built a solid competitive position in the industry. This dominance gives BCE a reliable income stream, helping to support its generous dividend payouts.
 www.barchart.comBCE seeks to deliver shareholder returns through dividend growth. Earlier this year, the company increased its dividend by 3.1%, bringing the total annual payout to $3.99 per share. This marked the 16th consecutive year of dividend growth, which shows BCE’s strong financial health and commitment to rewarding shareholders.
It’s worth noting that BCE has been able to cut expenses while maintaining its market-leading position, allowing it to offset challenges from competitors and economic headwinds. These cost savings boost profitability, enabling BCE to generate the earnings required to sustain its high dividend payouts.
Moreover, the company has been evolving and expanding into tech services and digital media. BCE is tapping into fast-growing markets by offering cloud services, security solutions, and advertisement solutions.
Analysts have rated BCE as a “Moderate Buy.” The stock's high yield, strong dividend growth history, and focus on growing dividends make it an attractive option for generating passive income.
 www.barchart.com
More Stock Market News from Barchart
On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Related Symbols
SymbolLastChg%Chg| BCE | 33.38 | -0.13 | -0.39% | | BCE Inc | | PFE | 30.22 | +1.04 | +3.56% | | Pfizer Inc | | ARCC | 21.02 | +0.01 | +0.05% | | Ares Capital Corp |
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| To: Johnny Canuck who wrote (60325) | 10/9/2024 2:32:54 PM | | From: Johnny Canuck | | | | Is Starwood Property Trust, Inc. (STWD) the Most Undervalued REIT Stock to Buy Now?
Zarah Hamid
Tue, Oct 8, 2024, 7:11 AM PDT5 min read
In this article:
We recently compiled a list of the 8 Most Undervalued REIT Stocks To Buy Now.In this article, we are going to take a look at where Starwood Property Trust, Inc. (NYSE:STWD) stands against the other undervalued REIT stocks.
Historically, REITs are a major beneficiary of rate cuts. They tend to outperform markets if cuts are followed by a recession while they perform in line with the S&P in the case of no recession. Laurel Durkay, Morgan Stanley Investment Management head of global listed real assets, previously mentioned to CNBC that the REITs that are going to benefit the most from a rate cut would be net lease companies that would experience an improved acquisition spread and a better cash flow growth as a direct result of the rate cut.
Furthermore, REITs are more resilient as they continue to capitalize on the trends that persist regardless of the volatility in conventional real estate. For instance, data center REITs benefit from AI trends, health care REITs benefit from an aging demographic, and housing REITs benefit from the housing affordability issues persistent in the United States.
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In recent news, Fed Chair Jerome Powell pointed towards further, smaller rate cuts saying that the Fed is not on any preset course. Two more rate cuts are to be witnessed this year in case the economy performs as expected. However, these cuts will be smaller and not as aggressive as the first half percentage point rate cut. The rate cut is taking center stage at the REIT conference in NYC, as reported by CNBC.
This rate cut is positive news for the REIT sector as seconded by Conor Flynn, CEO of Kimco Realty. In his opinion, the potential rate cut would change investor appetite in real estate investment trusts. He believes in a bright outlook for the sector and that the cut would benefit real estate in general as well as his business.
Our Methodology:
In order to compile our list, we first used stock screeners to identify REIT stocks that are trading with a forward P/E under 20, as of October 7. We listed stocks from all sub-segments of the REIT industry. From those, we picked the stocks which have the highest number of hedge fund holders. The 8 most undervalued REIT stocks to buy now have been ranked in ascending order of the number of hedge fund holders, as of Q2 2024.
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At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points ( see more details here).
A sky high view of the corporate headquarters indicating the large scale of the company.
Starwood Property Trust, Inc. (NYSE: STWD)Number of Hedge Fund Holders: 25
Forward P/E: 9.84
Starwood Property Trust, Inc. (NYSE:STWD) is an affiliate of the global private investment firm Starwood Capital Group. The firm was established when Starwood Capital witnessed a need for alternative commercial mortgage financings since traditional commercial lenders left amidst the financial crisis. Starwood Property Trust has expanded since then and currently qualifies as the largest commercial mortgage REIT in the United States. The firm has been organized into complementary business segments including real estate lending, real estate investing and servicing, property, and infrastructure lending.
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Starwood Property Trust, Inc. (NYSE:STWD) has a distinct position in the global real estate finance market as one of the world’s leading diversified real estate finance companies. The REIT has navigated multiple real estate cycles and has deployed more than $98 billion of capital since its inception, as of June 30. With the average size of its loans being approximately $100 million since inception, the scale of the firm is clear. Since Starwood Capital Group is one of the largest institutional real estate investors globally, Starwood Property Trust takes advantage of its global reach.
Since the firm has been diversified into investment cylinders other than commercial lending, it has outperformed in a relatively challenging global property market. However, the management believes that the hard phase is behind them, with an easing US and Europe market to be seen in the future. The firm’s access to capital and liquidity has further allowed it to invest across its businesses consistently.
Starwood Property Trust, Inc. (NYSE:STWD) is in an attractive spot with more than $4 per share of embedded gains in its owned property portfolio as well as $1.2 billion of liquidity. Since the firm’s founding 15 years back, it has also delivered a consistent dividend and an over 10% annualized return.
Overall STWD ranks 5th on our list of the most undervalued REIT stocks to buy. While we acknowledge the potential of STWD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than STWD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
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| To: Johnny Canuck who wrote (60326) | 10/9/2024 7:37:49 PM | | From: Johnny Canuck | | | | The one AI project which I scoped out looked at synthetic data. While it helps you get to a working result quicker it does assume you know what features the AI model is fixating on which essentailly defeats the idea that the model is self learning and should arrive to a solution on it own. It tends to produce a less robust model and becuase it pre-determinea features the model should look at it means you won't make new break throughs because the model is not looking for it.
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Tech
AI startup Writer, currently fundraising at a $1.9 billion valuation, launches new model to compete with OpenAI
Published Wed, Oct 9 2024•1:38 PM EDT|Updated 22 Min Ago
Hayden Field @haydenfield
Key Points
- Writer, a San Francisco-based AI startup, debuted a large AI model to compete with enterprise offerings from OpenAI, Anthropic and others.
- The approximate training cost for the new AI model was just $700,000 compared with estimates of $4.6 million for a similarly sized OpenAI model.
- Writer is currently raising up to $200 million from investors at a $1.9 billion valuation, nearly quadruple its valuation in September 2023, according to a person familiar with the situation.
CEO of writer.com May Habib attends the Harper's Bazaar At Work Summit, in partnership with Porsche and One&Only One Za'abeel, at Raffles London at The OWO on November 21, 2023 in London, England.
Dave Benett | Getty Images
San Francisco-based AI startup Writer debuted a large artificial intelligence model Wednesday to compete with enterprise offerings from OpenAI, Anthropic and others. But, unlike some of those competitors, it doesn't need to spend as much to train its AI.
The company told CNBC it spent about $700,000 to train its latest model, including the data and GPUs, compared with the millions of dollars competing startups spend to build their own models. Its strategy has caught the attention of investors.
Writer is raising up to $200 million at a $1.9 billion valuation, according to a person familiar with the situation who spoke with CNBC. That's nearly quadruple the company's valuation in September 2023, when it raised $100 million at a valuation of more than $500 million.
The company cuts costs using synthetic data, or data created by AI. It's designed to mimic the real-world information that's usually fed into models without compromising privacy and is becoming a more popular method for training.
A study by AI researchers revised in June found that if current AI development trends continue, tech companies will "fully exhaust" the publicly available training data between 2026 and 2032, writing that "human-generated public text data cannot sustain scaling beyond this decade."
Amazon has used synthetic data in training Alexa, Meta has used it to fine-tune its Llama models, and Microsoft-backed OpenAI is incorporating it into its models, according to job descriptions posted by the company.
Some experts, however, have warned that synthetic data should be used cautiously, as it has the potential to degrade model performance and exacerbate existing biases.
Waseem Alshikh, Writer's co-founder and CTO, told CNBC that Writer has been working on its synthetic data pipeline for years.
"There's some confusion in the industry about the definition of 'synthetic' data," Alshikh said. "To be clear, we don't train our models on fake or hallucination data, and we don't use a model to generate random data. ... We take real, factual data and convert it to synthetic data that is specifically structured in a clearer and cleaner way for model training."
The company's generative AI allows corporate clients to use its large language models, or LLMs, to generate human-sounding text for anything from LinkedIn posts to job descriptions to mission statements, analyze and summarize data or text and build custom AI applications for market analysis and more. The company has more than 250 enterprise customers, including Accenture, Uber, Salesforce, L'Oreal and Vanguard, who use the tech across sectors such as support, IT, operations, sales and marketing.
The generative AI market is poised to top $1 trillion in revenue within a decade. To date in 2024, investors have pumped $26.8 billion into 498 generative AI deals, according to PitchBook, and companies in the sector raised $25.9 billion in 2023, up more than 200% from 2022.
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| To: Johnny Canuck who wrote (60328) | 10/10/2024 1:10:42 AM | | From: Johnny Canuck | | | | Skip Navigation
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Mad Money
Jim Cramer analyzes PepsiCo’s share movement in the wake of a revenue miss
Published Wed, Oct 9 20246:59 PM EDT
Julie Coleman @itsjuliecoleman
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Key Points
- As earnings season begins, CNBC’s Jim Cramer offered insight on how to consider stock movements before a report.
- He used PepsiCo as an example, saying Wall Street expected weak sales figures, so the stock didn’t get hit badly when it reported an earnings miss.
- “This is something you need to keep in mind as we head into earnings season: If a stock has already sold off hard going into the quarter, it’s very difficult for it to keep going down unless the numbers are shockingly horrible,” he said.
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When one downgrade moves the market, others start coming out of the woodwork, says Jim Cramer
CNBC’s Jim Cramer said Wednesday that as earnings season begins, it’s wise to keep in mind that sometimes bad news is baked into a stock’s price before the report.
Cramer pointed to Wall Street’s reaction to PepsiCo
in the lead-up to, and wake of, its Tuesday report. He noted how shares dipped but managed to recover even though the company posted a revenue miss.
“This is something you need to keep in mind as we head into earnings season: If a stock has already sold off hard going into the quarter, it’s very difficult for it to keep going down unless the numbers are shockingly horrible,” he said. “Nothing shocking about PepsiCo.”
Cramer pointed out that PepsiCo was hit with “an avalanche of negative research”going into the quarter, with analysts from Morgan Stanley
, Citi, Bank of America, RBC Capital and Barclays
expressing their concerns, with some worried about weak sales.
While the snack and beverage maker did miss on revenue, it managed to beat earnings expectations. The company lowered its full-year outlook for organic revenue, citing weak demand in North America as shoppers buy fewer snacks. PepsiCo also reported shrinking volumes abroad and felt the repercussions of a recall of its Quaker Oats products.
Although the stock notched losses in the days leading up to the report, it crept back up in the aftermath and finished Tuesday’s session up 1.92%, according to FactSet. Cramer found several bright spots in the quarter he said were meaningful, including the company’s emphasis on providing better value for items like potato chips and efforts to broaden its portfolio to include healthier options.
“Stocks react to expectations, and when it comes to PepsiCo, everyone expected a real bad quarter, which is why the stock sold off so hard going into the report,” Cramer said. “But once we saw the numbers and heard the commentary, it was bad with ... a few bright spots, which allowed PepsiCo to rally anyway very nicely.”
PepsiCo did not immediately respond to a request for comment.
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| To: Johnny Canuck who wrote (60329) | 10/10/2024 1:58:25 AM | | From: Johnny Canuck | | | | In One ChartThe Dow is running hot. History says that’s usually a good sign.Buying pressure across time frames ‘is truly historic’: SentimenTrader
By
William Watts
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Published: Oct. 9, 2024 at 3:18?p.m. ET
 The Dow is showing impressive momentum across time frames.Photo: MarketWatch photo illustration/iStockphoto
No matter the time frame, the Dow Jones Industrial Average is running hot — and that momentum may bode well, at least over the coming months, according to a widely followed research firm.
The Dow DJIA has risen 152 times over the past 250 trading days, Jason Goepfert, senior research analyst at SentmenTrader, observed in a Wednesday note — a win rate of just under 61%. The only times it saw such consistency in the past came in April 2010 and May 2018, and both those instances preceded periods of around six months of choppy trading, he wrote.
The momentum, however, is more than a short-term phenomenon. Zooming out on the time frames, the blue-chip index has also risen in a little more than 60% of weeks over the past 100 weeks, he said, a reading that isn’t terribly extreme relative to the last 40 years but that represents continued improvement after a “miserable stretch” in 2022.
It’s also risen in 63% of the past 60 months, which also isn’t the most extreme but is toward the high end over the past 124 years, the analyst said. And it’s up in 80% of the past 15 years.
Put it all together and the Dow is showing “impressive and persistent momentum on daily, weekly, monthly, and yearly time frames,” Goepfert wrote.
“Because the momentum isn’t isolated to a time frame or two, the current level is historically extreme, ranking in the top 6% of all readings since 1900. If we exclude the 1995-2000 bubble, the current reading would rank in the top 2% all-time,” he said.
Goepfert noted that periods of extreme upside momentum have signaled exhaustion in the past for some sectors, such as utilities, but not for the Dow industrials. As shown by the chart below, at other times when the average of up periods across time frames topped 66%, losses were rare, with the Dow seeing particularly strong returns over the following nine-month periods.
 Illustration: SentimenTrader
Here’s another way to slice it: Goepfert observed that the Dow has risen at least 60% of the time across all four time periods — daily, weekly, monthly and yearly. That’s also exceptionally rare, he found, happening only six times. But the returns following the signal weren’t as pristine, largely due to the global financial crisis in 2018, he said. The period after the last signal in April 2018 also saw mediocre returns.
What happens if you put the two studies together? There have only been two instances when the Dow rose at least 60% of the time across all four time frames and when its average percentage of rising periods was 66% or higher, according to Goepfert.
When both signals were triggered in 1959, the Dow continued to rise for several months but then entered a period of wide swings, making no progress either way until beginning a new sustained trend in 1963, Goepfert found. It was a similar story in 2017-18, with the index extending its rise for a few months before falling into a years-long funk that was exited only after the pandemic surge.
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So what are investors to make of it all?
“The buying pressure the index has enjoyed across time frames is truly historic. And, for the most part, this has been a good sign, at least for another 6-9 months. After that, the precedents dwindle further, especially those that show sustained gains,” Goepfert said. “The 1995-2000 period is the only one that managed a prolonged, impressive continuation of the momentum, and bulls need to hope that the [artificial intelligence] revolution is comparable to the internet bubble.”
About the Author
William Watts
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William Watts is MarketWatch markets editor. In addition to managing markets coverage, he writes about stocks, bonds, currencies and commodities, including oil. He also writes about global macro issues and trading strategies. During his time at MarketWatch, Watts has served in key roles in the Frankfurt, London, New York and Washington, D.C., newsrooms.
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