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Blinklab Signs Partnership for Clinical Trial with European INTER-PSY, Supporting US and EU Regulatory Approval and Future Market Adoption
Partnership with INTER-PSY to run a prospective clinical trial on early-diagnosis of autism.
BlinkLab Limited (ASX:BB1) (“BlinkLab” or the “Company”), an innovative digital healthcare company developing smartphone-based AI powered sensory assessments to aid in the diagnosis of neurodevelopmental conditions including autism and ADHD, is pleased to announce a research and clinical partnership with the INTER-PSY (“Agreement”) in the Netherlands (https://interpsy.interpsygroep.nl/).
Highlights
- Prospective clinical data in young children with autism will optimise BlinkLab’s experimental and AI algorithms.
- Partnership will accelerate BlinkLab’s path to US and European regulatory approval for autism and clinical adoption.
- Partnership will support adoption of BlinkLab as a diagnostic tool within the autism diagnostic community in Europe.
- As part of the larger SCANNER consortium in Europe, this study will also specifically address a need for accelerated autism diagnosis in females.
- Commencement of FDA 510(k) registration trial on track for later this year.
As part of the Agreement, INTER-PSY will run a prospective study on the ability of the BlinkLab app to aid in diagnosis of autism in children between 2-6 years of age that are referred to INTER-PSY. By analysing the behavioural and physiological responses collected via the app, BlinkLab will aim to identify autism characteristics, potentially offering patients a more rapid, accessible and objective assessment method.
Through this partnership, INTER-PSY will use BlinkLab’s technology to evaluate whether the technology can enhance their diagnostic accuracy and efficiency in the clinic. This partnership between BlinkLab and INTER-PSY demonstrates the potential of an AI mobile health platform to improve and accelerate mental health diagnostics.
INTER-PSY Study and Preparations for FDA 510(k) Regulatory Trial
The INTER-PSY study, which mirrors the design of the upcoming FDA regulatory trial, will be conducted as a single-site, prospective, double-blind, within-subject comparison study (pre- registered). Data gathered from this collaboration will be pivotal in refining the final experimental parameters and optimising machine learning algorithms for BlinkLab’s 510(k) FDA registrational study, specifically targeting diagnostic applications. INTER-PSY is a large autism expertise centre in the Netherlands, offering diagnostics, guidance, and treatment for young children, adolescents, adults, and the elderly with psychological and psychiatric complaints.
Els Blijd-Hogewys, INTER-PSY, commented:
“INTER-PSY is committed to supporting young children with autism in an efficient and effective manner. Our goal is to implement a ‘no waiting time policy’ between diagnosis and the start of therapy, working collaboratively with clients to help them take control of their lives and minimise the impact of autism on daily tasks. Integrating objective measurements can help in the diagnostic process, offering significant benefits to children, their families, and our providers. We believe that BlinkLab's innovative AI platform presents a promising solution for sensory assessments in autism, delivering a short, pleasant and child-friendly test experience. Research will be conducted at INTER-PSY's Expertise Team for Young Children (<6 years). In the future, the instrument could also be valuable for adults with autism.
Unfortunately, the waiting lists for autism assessment for adults in the Netherlands are often as long as 2 to 3 years. Such an instrument may help accelerate this process.”
Mr. Brian Leedman, Chairman BlinkLab, commented:
“Australia has comparable wait times for diagnosis of autism as experienced in Europe and the US. Our BlinkLab technology has the potential to significantly reduce wait times through early diagnosis resulting in treatment at a formative age where early intervention can lead to better outcomes for children and their caregivers.”
Dr. Henk-Jan Boele, CEO BlinkLab, commented:
“Our collaboration with INTER-PSY is one of the final steps in the prospective validation of BlinkLab’s platform before we commence our FDA registration trial later this year. I’m deeply appreciative of INTER-PSY’s partnership on this critical journey. As part of the large SCANNER consortium in Europe, this study with INTER-PSY will also specifically address autism diagnosis in females. Our BlinkLab team is in the final phase of fine-tuning our AI models and algorithms to ensure they meet the highest standards of accuracy, safety, and efficiency. We remain fully committed to executing our strategy and delivering long-term value to all our stakeholders.”
About the SCANNER Consortium
The SCANNER Consortium in Europe, of which BlinkLab is a member, was recently awarded with a 5.3M Euros grant from the Dutch Research Council. The mission of this consortium is to investigate sex differences in autism at a gene, brain and behaviour level. Autism is diagnosed four times more often in men than in women (Autism Spectrum Disorder, APA, 2013). However, little is known about the biological mechanisms behind this disparity, or to what extent this overrepresentation in males is due to bias in the medical research that is also present during the diagnostic process.
Historically, female participants have often been excluded from medical studies, resulting in data being collected primarily from men and generalised to women (Merone et al., 2022).
Similar biases are present in basic research, where men are overrepresented due to the lack of the estrus cycle, resulting in a large gap in our basic biological and clinical knowledge.
This translates into real-life disadvantages for women with neurodivergent conditions, as doctors often ignore the behaviours presented by women. This means that women are less likely to be referred for diagnostic tests and receive timely support, with long-lasting negative consequences for their quality of life. It is therefore crucial to involve women at all levels of research.
Dr. Aleksandra Badura, Lead Investigator SCANNER, commented:
“Within SCANNER we aim to understand how genetic, neurophysiological and behavioural sex differences contribute to autistic traits, and distinguish these biological factors from possible diagnostic bias. Our long-term goal is to improve the diagnostic process for autism and other neurodivergent disorders by taking sex differences into account at all levels of research and diagnosis.”
In addition to INTER-PSY, BlinkLab collaborates in the SCANNER Consortium with Vrije Universiteit Amsterdam; Karakter - Academic Center for Child and Adolescent Psychiatry; Radboud University; Medical Center, Radboud University; Universiteit Utrecht; HAS green academy; Erasmus MC; Netherlands Institute for Neuroscience; Nivel – Netherlands Institute for Health Services Research; University of Twente; Philips Medical Systems Nederland B.V. (Philips MR); Nederlandse Vereniging voor Autisme; Arivis, Noldus Information Technology; Sophia Foundation; WOMEN Inc.; Female Autism Network of the Netherlands; Netherlands Autism Register; Generation R; National association of general practice mental health professionals; Alliantie Gender & Gezondheid; National network autism in young children; National network of child and adolescent psychiatry; Special Olympics Netherlands.
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This article includes content from Blinklab Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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BlinkLab’s transformative AI-based healthcare technology is at the forefront of innovations in the global medical field that are quickly gaining traction among keen investors.
Overview
BlinkLab (ASX:BB1) offers a smartphone-based diagnostic platform that leverages computer vision, artificial intelligence (AI) and machine learning (ML). A company started by neuroscientists at Princeton University, Blinklab has developed its novel technology over several years, providing an app-enabled, smartphone-based diagnostic tool for evaluating children with neurodevelopmental conditions such as autism and ADHD.
The app turns a smartphone into a diagnostic tool that helps to conduct remote and rapid tests that can assist in diagnosing neurodevelopmental conditions. BlinkLab’s smartphone app provides a screening tool that can help with diagnoses much earlier than the age that children are typically assessed at present (approximately 5-6 years old). It is also a remote (i.e., accessible) and inexpensive means of beginning the assessment process, which can typically be very costly and take up to multiple years currently.
BlinkLab’s smartphone app facilitates early diagnosis, reduces costs, and improves accuracy.
BlinkLab’s smartphone-based technology, which uses AI and machine learning (ML), makes it attractive to investors. Like other industries, AI is becoming very popular in the healthcare sector. According to Statista, the AI healthcare market is expected to proliferate from $11 billion in 2021 to $187 billion in 2030. The increasing use of AI is driven by advanced ML algorithms, access to data, and use of 5G technology. AI and ML technologies can evaluate and analyze enormous volumes of data faster than humans.
Artificial intelligence, and particularly machine learning, has the potential to serve as the great equaliser for many behavioural healthcare concerns like autism. According to recent data, 97 percent of adults in the United States own a cellular device, and nine in ten own a smartphone. A 2022 Global State of Digital report by We Are Social shows 66.9 percent, or about 5.34 billion, of the world’s population are mobile users. As these percentages continue to rise and internet-powered devices become ubiquitous, access to digital health services can become democratised on a global scale. While autism spectrum disorder (ASD) services are currently restricted to relatively privileged populations, digital solutions powered by emerging data, science, and methodologies can make access to autism therapy more accessible.
Large players are investing in this segment to tap into the vast potential of these new technologies. One such example was Pfizer’s acquisition of ResApp. In October 2022, Pfizer acquired Queensland University startup ResApp Health for $179 million. ResApp developed a smartphone technology to detect respiratory diseases using cough analysis accurately.
Furthermore, big tech companies such as Apple, Amazon, Microsoft and Alphabet are also now venturing into the AI healthcare market.
Company Highlights
- Australia-based BlinkLab (ASX:BB1) is focused on transforming mental healthcare through an AI-enabled smartphone application, a breakthrough technology developed with Princeton University.
- The company’s innovative approach leverages the power of smartphones, AI and machine learning to deliver screening tests specifically designed for children as young as 18 months old. This marks a significant advancement, considering traditional diagnoses typically occur around five years of age, often missing the crucial early window for effective intervention.
- Once approved by regulators, this cutting-edge digital technology is poised to capture the imagination of both investors and major pharmaceutical companies, eager to embrace transformative solutions in healthcare.
- BlinkLab is led by an experienced management team and leading experts in the field of machine learning, autism and brain development, bridging the most advanced technological innovations with groundbreaking scientific research. The company is chaired by Brian Leedman, an experienced biotechnology entrepreneur and founder of ResApp Health, a digital diagnostic company recently acquired by Pfizer.
Key Technology and Applications
Neurobehavioral assays of brain function can reveal fundamental mechanisms underlying neuropsychiatric conditions, but typically require centrally located equipment in a laboratory test facility. Consequently, these tests are often unpleasant for participants, as they often require instruments attached to their face and cannot be used at scale in daily clinical practice, particularly with paediatric patients.
BlinkLab has developed a smartphone-based software platform, known as ‘BlinkLab Test’, to perform neurobehavioural testing that is free from facial instruments or other fixed location equipment.
This AI-based platform is designed to be used at home or in similarly comfortable environments, either independently or with the assistance of a caregiver, while following instructions from the smartphone application. The tests include, but are not limited to, eyeblink conditioning (EBC), which is a form of sensory-motor associative learning, prepulse inhibition of the acoustic startle response (PPI), which measures the ability to filter out irrelevant information through sensorimotor gating, startle habituation, which measures the ability for the intrinsic damping of repetitive stimuli and sensory adaptation, and habituation of the eye blink response, which serve as biomarkers for neurological and psychiatric disorders.
The BlinkLab Test App combines a smartphone’s ability to deliver stimuli and acquire data using computer vision with a secure cloud-based portal for data storage and analysis. In the tests, each audio and/or visual stimulus is presented with millisecond-precise control over parameters such as timing, amplitude and frequency. To maintain participant attention, an entertaining movie of choice is shown with normalised audio levels. Participants’ responses are measured by the smartphone’s camera and microphone, and are processed in real time using state-of-the art computer vision techniques. Response data is then fully anonymised, and transferred securely to the analysis portal. There, BlinkLab’s in-house AI/ML algorithms then perform clustering and statistical analysis to identify the prediction value of the experiment in the particular data set.
BlinkLab Test was initially developed as a prescription diagnostic aid to healthcare professionals (HCP) considering the diagnosis of ASD in patients 18 months through 72 months of age that are at risk for developmental delay. In collaboration with Princeton University in the United States and Erasmus Medical Center in the Netherlands, the company has conducted several trials using BlinkLab Test as an early assessment tool for autism. Autism represents a global challenge, with 1 in 36 children in the U.S. having autism, up from the previous rate of 1 in 44. With no early tests currently available to detect the condition, many children are diagnosed with the condition as late as the age of five.
Blinklab’s mobile app can aid in early detection, facilitating diagnoses as early as two years of age and resulting in earlier personalised interventions and monitoring. The testing process is also far more comfortable than traditional means of diagnoses, as the child can watch their favourite movie or cartoon on the phone, and the app will record their reactions, providing key information on the functioning of the brain.
BlinkLab will be subject to regulatory oversight as a medical device and must clear clinical studies. Previous clinical trials completed by Blinklab have shown impressive indicators of success, achieving sensitivity levels of 85 percent and specificity levels of 84 percent. The company notes that these trials are very similar to those that are required by the United States Food and Drug Administration (FDA) for approval and have shown much higher levels of accuracy compared to currently approved products.
In order for the BlinkLab Test technology to be used as a clinical aid in the diagnosis of ASD, BlinkLab will need to complete a pivotal registrational study, and subsequently apply for FDA registration and reimbursement for the tests. The registrational study intends to recruit up to 500 subjects. Enrolment for this study is expected to begin in 2024, with study completion expected by mid-2025. The potential to participate in a disruptive and scalable AI-powered technology close to regulatory approval should attract attention from big medical technology companies.
Research and clinical studies
BlinkLab engages and partners with research and medical institutions across the globe to further test and develop its technology.
In May 2024, BlinkLab initiated a clinical study in partnership with US-based Turning Pointe Autism Foundation to enroll up to one hundred children previously diagnosed with autism and one hundred children without an autism diagnosis. The data obtained during this collaboration will be used to finalise the data collection and processing algorithms and AI/ML models ahead of the FDA registrational study.
The company is also participating in a clinical study of patients with spinocerebellar ataxias, conducted by Columbia University, New York, to study the effect of aerobic physical exercise on neuroplasticity in adults with spinocerebellar ataxias (SCA).
To further improve and accelerate the diagnostic evaluation of ADHD, BlinkLab forged a major research and clinical partnership with Mental Care Group (MCG) in The Netherlands, the fifth largest outpatient mental health care provider in Europe.
To validate BlinkLab’s platform for the assessment of functional neurological disorder (FND), the company has partnered with Bates College in Maine for a clinical study that aims to characterise the behavioural time course of Pavlovian eyeblink conditioning and acoustic startle habituation. It will validate the BlinkLab smartphone test for use as a remote neurobehavioral testing and diagnostic tool for FND.
At Erasmus University Medical Center, BlinkLab’s smartphone-based remote assessment, including eyeblink conditioning and prepulse inhibition of the acoustic startle reflex, is being used, among other tools, in a clinical study to set-up an overarching at-home testing lab, named the Digital Dementia Lab, to identify, develop and test a variety of digital biomarkers
measuring clinically relevant behaviour for improving early accurate diagnosis of dementia.
BlinkLab is also working with Monash University in Australia to evaluate BlinkLab as a medical device for monitoring the therapeutic effects of ketamine on cognitive processes whereby sensory information is converted into decision making. Results from this study can help facilitate cognitive behavioural therapy outcomes in patients with psychiatric conditions such as depression, schizophrenia, epilepsy, and post-traumatic stress disorder.
BlinkLab also recently signed a partnership for more clinical trialling with INTER-PSY, a large centre in the Netherlands that specialises in autism, offering assistance with diagnostics and treatments. This study also mirrors the study design of the Company’s developing FDA regulatory trial, which will be needed for future approval of BlinkLab Test as an approved diagnostic tool in the United States.
Management Team
BlinkLab is led by an experienced management team and directors with a proven track record in building companies and vast knowledge in digital healthcare, computer vision, AI and machine learning. The company’s chairman, Brian Leedman, is an experienced biotechnology entrepreneur and founder of ResApp Health, a digital diagnostic company for respiratory conditions, which was recently acquired by Pfizer for $179 million before reaching FDA approval for their main diagnostic product.
Dr. Henk-Jan Boele – Founder and Chief Executive Officer
Henk-Jan Boele is an assistant professor of neuroscience at the Medical Center of Erasmus University and a researcher at Princeton University. He obtained his PhD from Erasmus University in 2014. Boele has always been pushing scientific and methodological boundaries, and received numerous government and industry grants in the field of neuroscience.
Peter Boele – Founder and Chief Technology Officer
Peter Boele holds a bachelor’s degree in history and philosophy from Leiden University. He has over 20 years of experience in software development and has worked with Erasmus University, Leaseweb, Kaboom Informatics and Insocial.
Dr. Anton Uvarov – Founder and Chief Operational Officer
Anton Uvarov holds a Ph.D. from the University of Manitoba and an MBA from the Haskayne School of Business. He has rich experience in bio-technology investments with a particular focus on neuroscience and has successfully led several IPOs. He started his career as a biotechnology analyst with Citigroup, US.
Dr. Bas Koekkoek – Founder and Chief Scientific Officer
Bas Koekkoek is an assistant professor at Erasmus Medical Center. Koekkoek has been working at the Department of Neuroscience mainly in the role of rapid prototype of new technology and techniques for neuroscience. He has numerous publications in the area of brain development including Nature and Science journals.
Professor Sam Wang – Founder and Chair of Advisory Board
Sam Wang holds a PhD from Stanford University. He is a professor of neuroscience at Princeton University, has published over 100 articles on the brain in leading scientific journals and has received numerous awards. He gives public lectures on a regular basis and has been featured in The New York Times, The Wall Street Journal, NPR, and the Fox News Channel.
Professor Chris de Zeeuw – Founder and Scientific Advisor
Chris de Zeeuw is chairman of the Department of Neuroscience at Erasmus MC in Rotterdam and vice-director at the Netherlands Institute for Neuroscience in Amsterdam. De Zeeuw has received over 100 grants, including the Pioneer Award from ZonMw and the ERC advanced grant. In 2006, he received the Beatrix Award for Brain Research from Her Majesty the Queen; in 2014, he became an elected member of the Dutch Academy of Arts & Science; and in 2018, he received the international Casella Prize for Physiology.
Tech 5: OpenAI Closes on US$6.6 Billion in Funding, Cerebras Files for IPO
Geopolitical tension clashed with uplifting jobs data, making for an interesting week on Wall Street.
Meanwhile, the crypto market went on a wild ride along with the greater stock market, and the US Securities and Exchange Commission (SEC) revived a nearly four-year-old case against Ripple Labs.
At OpenAI, a previously announced funding round wrapped up, bringing the company's valuation above estimated projections.
Stay informed on the latest developments in the tech world with the Investing News Network's round-up.
1. OpenAI concludes latest funding round, exceeding target
OpenAI is predicting its revenue will reach US$11.6 billion next year, significantly surpassing the estimated US$3.7 billion it is projected to make in 2024. A Reuters source says this growth will be driven by corporate sales of its AI features and subscriptions to ChatGPT.
Bloomberg reported on September 11 that the company was seeking US$6.5 billion in a new funding round, drawing interest from venture capital investors and industry peers. OpenAI ultimately raised US$6.6 billion, announced on Wednesday (October 2), resulting in a valuation of US$157 billion, according to a press release.
While OpenAI did not disclose the full list of investors, reports indicate participation from Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA) and SoftBank (TSE:9984), along with several venture capital firms. NVIDIA's contribution of roughly US$100 million marks the company’s first investment in OpenAI. Its share price surged over 3 percent from Wednesday’s close on Thursday (October 3) morning. The company gained 5.69 percent this week.
NVIDIA's performance, September 30 to October 4, 2024.
Chart via Google Finance.
While Apple (NASDAQ:AAPL) was rumored to be considering participation in the funding round, the Wall Street Journal reported on Monday (September 30) that the company ultimately decided not to invest.
Its share price is down over 2 percent for the week.
The funding round came in the form of convertible notes, with the stipulation of a successful restructuring to give majority control to a for-profit arm. There is also a clause to remove the cap on returns for investors and a condition that prevents inventors from backing rival companies, such as Elon Musk’s xAI, as reported by the Financial Times.
2. Crypto markets rally, end the week on a high note
Bitcoin’s record-breaking September came to an abrupt end on Tuesday (October 1), with the cryptocurrency falling 6.8 percent to US$61,279.47 on Friday (October 4) morning from its peak of US$66,078. Ether, Solana, Cardano, XRP and Ton also experienced losses this week, and hefty outflows from spot exchange-traded funds were observed.
10x Research attributes Bitcoin’s initial drop on Monday to overbought conditions and apprehension surrounding Tuesday’s monthly US ISM Manufacturing data, a key economic indicator.
Further losses across the crypto market were fueled by rising tensions in the Middle East and the dockworkers strike along the east coast of the US. These events quickly dashed hopes of a bullish “Uptober,” a term used to describe a historically positive period for cryptocurrency prices in October.
Amid these volatile trading conditions, on Wednesday crypto asset manager Bitwise filed a Form S-1 with the SEC to launch an ETF for Ripple Labs’ XRP token. This move came as the SEC filed a notice to appeal Judge Analisa Torres’ August 7 ruling on Ripple Labs. The ruling states that Ripple Labs was in violation of securities law only when tokens were sold to institutional investors, and the judge ordered the company to pay a fine of US$125 million for improper selling — just over 6 percent of the US$2 billion the SEC was seeking.
In a statement, an SEC spokesperson said, "We believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws and look forward to making our case to the Second Circuit."
Bitcoin's 24 hour price performance as of Friday at 4:00 p.m. PDT.
Chart via CoinGecko.
However, the tone shifted again on Friday afternoon as the US Department of Labor reported that the economy added 254,000 jobs in September, much higher than the expected 150,00. This provides a compelling rationale for the Federal Reserve to reduce interest rates gradually, which is good news for crypto markets. Bitcoin and Ether are up 2.3 percent and 3.4 percent, respectively, just after Friday's closing bell, marking the end of a turbulent first week of Q3.
3. California governor vetoes Senate Bill 1047
California Governor Gavin Newsom made a long-awaited decision regarding SB 1047, a comprehensive artificial intelligence policy that would have held developers responsible for “severe harm” caused by their technologies.
Describing the bill as “well-intentioned,” Newsom ultimately decided to veto the bill, authored by Senator Scott Weiner (CA-D). In a statement, the governor said the legislation would have applied “stringent standards to even the most basic functions” and that regulation should be based on “empirical evidence and science”. He also noted that a California-only approach to AI regulation could be warranted, “especially absent federal action by Congress."
However, SB 1047's focus on large, expensive AI models could mislead the public about the level of control over this rapidly evolving technology. It's possible that smaller, specialized models, not covered by the bill, could pose equal or greater risks, potentially stifling innovation that benefits the public.
The idea that overly stringent regulation would stifle progress and innovation in the field was the main argument made by opponents of the bill, which included former House Speaker Nancy Pelosi, Big Tech CEOs and venture capital firm Andreessen Horowitz, which has invested billions in AI.
4. AI startup Cerebras files for IPO
Cerebras Systems, an AI startup that builds specialized computer systems to facilitate deep learning, filed a registration statement for an initial public offering with the SEC on Monday. The company has experienced rapid growth and could one day challenge NVIDIA's dominance in the chip manufacturing industry in the US.
Cerebras' flagship product, the Wafer Scale Engine (WSE), is the largest chip ever made. Unlike traditional graphic processing units (GPUs), including NVIDIA's H100 GPU, which separate processing and memory, the WSE integration is designed to keep data on the chip rather than transferring it to different locations within a system or across a network.
The transfer of data creates what’s often called the Neumann bottleneck, a fundamental limitation that hinders performance by slowing down data access. Cerebras' architecture minimizes the distance data needs to travel, reducing latency and improving performance. This makes it an ideal solution for tasks that require massive data sets, such as genomic research, climate modeling, fraud detection and of course training large language models.
Recent filings show Cerebras' revenue surged nearly 70 percent in 2023 to US$78.7 million, compared to US$24.6 million the previous year. At the same time, losses narrowed from US$4.28 per share to US$2.92.
The company will list its Class A common stock on the Nasdaq under the symbol CBRS. The number of shares and the price range were not determined at press time.
5. Tesla stumbles after auto revenue declines
Shares of Tesla (NASDAQ:TSLA) are down 3.78 percent for the week following the company’s release of its Q3 results on Tuesday, which showed the company delivered 463,000 vehicles and produced approximately 470,000.
Tesla also reported a 2 percent increase in annual revenue to US$25.50 billion, topping LSEG estimates of US$24.77 billion. However, auto revenue fell by a whopping seven percent compared to a year ago, topping out at US$19.9 billion. Earnings per share also fell short of estimates, coming in at US$0.52 compared to US$0.62.
The company has had a rocky year, facing increased competition in China and regulatory scrutiny in the US. In July, sources for Bloomberg revealed that time constraints forced the company to delay the unveiling of its highly anticipated robotaxi from August 8 to October 10.
Tesla's performance, September 30 to October 4, 2024.
Chart courtesy of Google Finance
Following the report's release right after Tuesday’s closing bell, Tesla stock fell by over 4 percent in after-hours trading. Its share price slid a further 2 percent after the market’s opened on Wednesday before recovering to around US$250, roughly three percent lower than Monday’s opening price. Tesla closed the week at US$250.08.
Don't forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Tech 5: Micron Shares Spike on AI Demand, OpenAI Speculation Swirls
A mix of economic data impacted Wall Street and the crypto market as the last full week of Q3 drew to a close.
Meanwhile, robust earnings from Micron Technology (NASDAQ:MU) boosted future artificial intelligence (AI) expectations, and Meta Platforms (NASDAQ:META) unveiled new AI features and products.
At OpenAI, executive departures and rumors about a restructuring have sparked speculation.
Stay informed on the latest developments in the tech world with the Investing News Network's round-up.
1. Strong US jobs data closes the week
The week began on a positive note as Wall Street’s major indexes opened slightly higher on Monday (September 23). The flash S&P Global Services Purchasing Managers' Index for September came in at 55.4, marginally ahead of the expected 55.2, reinforcing positive sentiment regarding the health of the economy.
However, Ladenburg Thalmann Asset Management CEO Phil Blancato cautioned that the market is anticipating more rate cuts that the US Federal Reserve is likely to deliver, which could lead to volatility in the coming weeks.
China announced aggressive stimulus measures to support its economy on Tuesday (September 24), including issuing special sovereign bonds worth about 2 trillion yuan, news that boosted stocks around the world.
The S&P/TSX Composite Index (INDEXTSI:OSPTX), S&P 500 (INDEXSP:.INX) and the Nasdaq Composite (INDEXNASDAQ:.IXIC) all set new closing records. Gains to chip stocks including Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC) boosted the PHLX Semiconductor Sector (INDEXNASDAQ:SOX) by 1.23 percent.
Stocks traded flat on Wednesday (September 25) morning, with the Nasdaq Composite dropping by 0.13 percent after the opening bell. By midday, gains in major players NVIDIA (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) had reversed earlier losses for the tech-heavy index. It ultimately closed just 0.17 percent above its opening score, while the S&P 500 and S&P/TSX Composite Index both lost ground.
Thursday’s (September 26) weekly initial jobless claims data for the US shows 218,000 new claims compared to estimates of 225,000, signaling a strengthening in the labor market.
The tech sector was among the top gainers by midday, boosted by Micron’s upbeat forecast, which the company shared just after Wednesday’s closing bell. The S&P/TSX Composite Index logged a new record close above 24,000, its second this week. Meanwhile, gains to chips stocks boosted the PHLX Semiconductor Sector by 3.77 percent, while the S&P 500 hit an intraday record of 5,767.37 before retreating slightly to 5,745.37, still up by 0.4 percent. However, it was the Russell 2000 (INDEXRUSSELL:RUT) that led gains on Thursday, closing 0.62 percent ahead.
Friday's (September 27) Personal Consumption Expenditures Price Index report shows inflation rose slightly in August, leaving stocks largely unchanged. The S&P 500 ended the week down 0.13 percent, while the Nasdaq Composite and Nasdaq-100 (INDEXNASDAQ:NDX) were down 0.39 percent and 0.53 percent, respectively. Small-cap stocks outperformed again, with the Russell 2000 ahead by 0.67 percent at the closing bell.
2. Bitcoin breaks free from price lock
The digital asset market opened the week buoyed by the Fed's rate cut. While US$65,000 was seen as a key resistance level, favorable market conditions and historical price data were hinting at a potential breakout.
Bitcoin and Ether remained relatively stable on Tuesday and Wednesday, while altcoins saw modest gains. Their lack of movement as Asian stocks rallied suggests a stronger correlation with US economic data.
Meanwhile, Bitcoin exchange-traded funds (ETFs) maintained momentum for the second week in a row, attracting inflows of US$136 million on Wednesday, the largest in almost a month.
Ether's price dipped after the US Securities and Exchange Commission decided to delay its decision on whether to approve options trading for spot Ethereum ETFs until November 11. This choice came after the government body approved a similar product for BlackRock’s iShares Bitcoin Trust ETF (NASDAQ:IBIT) last week.
The crypto market performed strongly on Thursday, propelled by positive jobs data. Bitcoin surged, with its upward momentum continuing into Friday, when it passed US$65,000 to trade above US$66,000 for the first time since July. Ethereum performed similarly, hitting a weekly high of US$2,721 midday on Friday.
As of Friday afternoon, Bitcoin was up 1.6 percent over the past 24 hours, trading at US$65,836, while Ether was up 2.4 percent over the same period, reaching a level of US$2,697.
3. Micron delivers uplifting Q4 results
Micron reported results for its fourth fiscal quarter and full 2024 year on Wednesday, prompting an 18 percent increase in its share price on Thursday morning. As of Friday’s close, shares of Micron stood at US$107.47, reflecting a 16 percent increase for the week and a 9.82 percent gain for the month.
The company's revenue for Q4 reached US$7.75 billion, exceeding the US$6.81 billion reported in the previous quarter. Micron’s revenue for the same period last year was US$4.01 billion.
Revenue for the full year came in at US$25.11 billion, up from US$9.57 billion during the previous year.
“Micron delivered 93 percent year-over-year revenue growth in fiscal Q4, as robust AI demand drove a strong ramp of our data center DRAM products and our industry-leading high bandwidth memory. Our NAND revenue record was led by data center SSD sales, which exceeded US$1 billion in quarterly revenue for the first time,” said Micron President and CEO Sanjay Mehrotra in a statement shared by the company.
“We are entering fiscal 2025 with the best competitive positioning in Micron's history. We forecast record revenue in fiscal Q1 and a substantial revenue record with significantly improved profitability in fiscal 2025.”
Micron Technology performance, September 23 to 27, 2024.
Chart via Google Finance.
Guidance for the company's first fiscal quarter of 2025 outlines revenue of approximately US$8.7 billion, plus or minus US$200 million, indicating continued confidence in demand for semiconductor chips.
Micron's positive results also impacted other chip stocks last week.
Shares of NVIDIA were up 2.72 percent at Thursday’s bell, while Taiwan Semiconductor Manufacturing Company (NYSE:TSMC,TPE:2330) rose by 3.37 percent. Advanced Micro Devices (NASDAQ:AMD) and Qualcomm (NASDAQ:QCOM) saw their share prices rise by 3.22 percent and 4 percent, respectively.
4. Meta unveils new AI innovations at Connect event
Shares of Meta sank 0.44 percent this week following the Meta Connect event, held on Wednesday and Thursday.
The company showcased a lineup of new products, including a US$299 budget-friendly version of its Meta Quest 3 reality headset, the Quest 3S, which will replace its Quest 2 and Quest Pro models by the end of the year. It also revealed limited-edition Wayfarer Ray-Ban Meta smart glasses with live AI-powered reminders and translations.
In addition, Meta CEO Mark Zuckerberg unveiled upcoming AI features for Meta, such as tools that will create lip-synced translations of Reels and voice chat capabilities. The event also showcased Meta’s full holographic augmented reality glasses, Orion. This provided the first glimpse of a product that has been in development for years, though Zuckerberg stated that it's not yet ready for consumers and offered no release timeline.
Finally, Meta released the newest version of its language model, Llama 3.2, which includes small- and medium-sized versions designed to fit onto edge and mobile devices. Both versions can understand and process text and images, handling larger amounts of text while maintaining context over extended conversations or documents. It comes with improved multilingual support for eight languages: English, German, French, Italian, Portuguese, Hindi, Spanish and Thai.
Meta's share price fluctuated during the two day event, briefly rising 0.97 percent to US$575.40 before returning to its pre-event level, offering limited insight into investor sentiment.
5. OpenAI rumored to be restructuring
Speculation about the future of OpenAI intensified this week following a Thursday report from Reuters on the company’s alleged plans to restructure into a for-profit corporation. Experts see the anticipated move as an attempt to make the company, which is not publicly traded, a more attractive option for investors.
The news came just a day after Chief Technology Officer Mira Murati announced she will be departing from OpenAI, along with two other executives. Sources told Reuters that the non-profit will persist, but hold a minority stake.
The restructuring would also grant CEO Sam Altman his first equity stake in the company, potentially valued at US$150 billion if the plans materialize. No specific timeline for the restructuring was provided by the source.
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Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Opyl, Phenix Health to Partner on AI Validation of Clinical Trials for Cannabis Products
Artificial intelligence (AI) company Opyl (ASX:OPL) has entered into a non-exclusive partnership with Phenix Health’s Compendium platform to validate clinic trials associated with cannabis products.
“Compendium is the first clinician-only medical cannabis knowledge base designed to streamline the prescribing process and enhance clinical decision-making,” Opyl said on Monday (September 23).
The platform has over 120 suppliers and more than 900 products listed.
Under the deal, clinicians using Compendium will be able to use Opyl’s AI-powered TrialKey solution to make data-driven decisions. At the same time, the companies believe TrialKey's advanced simulation and predictive analytics will help suppliers position their products to healthcare professionals.
"This partnership demonstrates the transformative potential of TrialKey in the cannabis industry,” said Saurabh Jain, executive chairman of Opyl. “By delivering Al-powered validation reports for clinical trials, we provide suppliers with the crucial research they need to demonstrate the efficacy of their products, facilitating market entry and growth."
Each validation report from TrialKey is priced at AU$5,000. The documents will provide insight into trial variables, competitor assessments, patient recruitment strategies and site selection recommendations.
Opyl said the agreement does not involve any direct financial exchange between both parties, but noted that it will potentially be able to generate revenue through Compendium’s suppliers.
Meanwhile, suppliers using TrialKey reports will be prioritised on Compendium. They will also gain access to global data and a holistic view of each product’s trial history.
"Our collaboration with Opyl enables us to offer suppliers the cutting-edge tools needed to navigate the complex regulatory environment in Australia,” said Gillian Alexis, CEO of Phenix Health.
She added that TrialKey's data-driven validation reports are “an essential resource for any supplier looking to build credibility and trust within the healthcare community."
Opyl and Compendium's partnership is valid for 12 months. Either may terminate the deal with 30 days written notice.
Don’t forget to follow us @INN_Australiafor real-time news updates!
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
Tech 5: Microsoft Taps Three Mile Island to Power AI, Intel Shares New Strategy
All eyes were on interest rates this week as the US Federal Reserve's two day meeting took place.
Meanwhile, Bitcoin and Ether rallied later in the week, but analysts are uncertain about the sustainability of their gains.
Elsewhere, Apple's (NASDAQ:AAPL) iOS 18 update has already encountered problems, while Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) announced major strategic moves.
Stay informed on the latest developments in the tech world with the Investing News Network's round-up.
1. Fed cuts rates by 50 basis points
With the Fed's meeting in focus, investors in the US adopted a cautious stance to start the week.
Tech stocks lost ground on Monday (September 16), weighing on the Nasdaq Composite (INDEXNASDAQ:.IXIC) and Nasdaq 100 (INDEXNASDAQ:NDX), but still finished slightly ahead.
Canada's latest consumer price index report, released on Tuesday (September 17), shows inflation cooled to the central bank's 2 percent target in August, its lowest level since February 2021.
Wall Street indexes opened higher as the Fed meeting commenced, boosted by strong retail sales data that showed a spending increase of 0.1 percent in August. Industrial production also exceeded expectations in August, climbing 0.8 percent. The Russell 2000 Index (INDEXRUSSELL:RUT) led gains midday, advancing by 1.29 percent.
Stocks were slightly elevated on Wednesday (September 18) morning. The S&P 500 saw the most significant gains early on, while the Nasdaq Composite opened a modest 0.2 percent higher than Tuesday’s close.
The Fed’s decision to implement a 50 basis point cut sparked an immediate market rally. The Nasdaq Composite surged 0.98 percent, the S&P 500 jumped 0.78 percent and the Nasdaq 100 (INDEXNASDAQ:NDX) climbed 0.82 percent. The Russell 2000 and NYSE Composite (INDEXNYSEGIS:NYA), already trending higher, saw further gains.
However, the market pulled back in late afternoon trading as Fed Chair Jerome Powell cautioned that future cuts will hinge on positive economic data. Indexes ultimately closed lower on Wednesday.
While equities historically have not performed well in September, with the S&P 500 averaging a 1.2 percent loss for the month since 1928, Thursday’s (September 19) performance defied expectations. The index spent the day on the rise, closing at its 39th record of the year. The S&P/TSX Composite Index (INDEXTSI:OSPTX) also closed at a new high.
On Friday (September 20), indexes opened slightly lower in both Canada and the US. Market watchers pointed to the potential impact of “triple witching,” which could increase trading volume and volatility, as well as the fact that the Fed's rate cut was already priced in. By midday, equities were trading lower, prompting some analysts, like Allen Smal of iA Private Wealth, to characterize the day as a “breather” rather than a sign of significant concern.
2. Bitcoin prices rises above US$64,000
The price of Bitcoin ultimately trended up this week despite some volatility.
The cryptocurrency traded between US$59,770 and US$60,220 over the weekend, but started falling around noon on Sunday (September 15). As of 11:10 a.m. EDT on Monday, it was at US$57,673, down 4.2 percent in 24 hours.
Bitcoin and Ether saw modest gains of 3.5 percent and 2.96 percent, respectively, as the Fed meeting kicked off on Tuesday. Bitcoin was priced above US$61,000 briefly just before midday, while Ether saw gains of nearly 3 percent, allowing it to rise above US$2,300 for the first time since September 10.
After the Fed's rate cut, Bitcoin trended upward, eventually rising above US$62,000 for the first time since August 27. Ether also rallied, pulling above US$2,400 for the first time all week. Unlike previous spikes seen in recent weeks, both cryptocurrencies have managed to hang onto their gains and continue to climb.
However, the historical correlation between Bitcoin and the S&P 500 suggests a potential Bitcoin price drop following the Fed's rate cut. This correlation has been particularly strong during times of economic stress or uncertainty.
As Cointelegraph notes, "Considering that a Bitcoin correction might follow the cut in interest rates, the immediate target range is $54,000, where a Chicago Mercantile Exchange futures gap was formed at the beginning of September."
Bitcoin's recent price action further supports the possibility of a correction. It broke above US$61,000 ahead of the market open, accompanied by a surge in trading volume on Binance, which often signals a market top. Binance saw US$85 million in spot volume in one hour, the highest in over three months, although the peak wasn't sustained.
The crypto market showed strong signs on Thursday, with Bitcoin rising 5.1 percent to US$63,550, its first break above US$63,00 since August 26. Ether also saw substantial gains, climbing 6 percent to US$2,471.97 at 3:00 pm PST.
While some analysts have expressed caution about the sustainability of this rally, others see echoes of Bitcoin’s past breakouts fueling predictions of new record highs by year end.
Meanwhile, Ether’s technical indicators suggest a more robust price foundation, as it holds above its 200 day simple moving average, avoiding the dreaded “death cross” pattern that Bitcoin saw in August.
Bitcoin briefly touched US$64,000 for the first time this month overnight, potentially buoyed by the Bank of Japan’s decision to maintain interest rates at the current level.
A report from Steno Research predicts increased on-chain activity following the Fed's rate cut, similar to patterns observed in the last bull market. This development could particularly benefit Ethereum, potentially ending its recent streak of underperformance. The report also highlights the correlation between gold and Bitcoin's recent rallies, along with increased global liquidity due to central bank easing policies.
3. Microsoft shares a raft of AI news
Microsoft made strides this week, reporting a dividend increase, a major share buyback program and new partnerships focused on artificial intelligence (AI) infrastructure and responsible AI development.
Microsoft’s board declared a quarterly dividend of US$0.83 per share on Monday, a 10 percent increase over the last quarter. The dividend will be payable on December 12, 2024.
The board also approved a new share buyback program of up to US$60 billion, the third largest in 2024 after Apple’s US$100 billion buyback and Alphabet’s (NASDAQ:GOOGL) US$70 billion buyback.
On Tuesday, the company entered into a partnership with BlackRock (NYSE:BLK), Global Infrastructure Partners and MGX, an investment vehicle out of the United Arab Emirates. The initiative, called the Global AI Infrastructure Investment Partnership (GAIIP), will support data center construction to meet growing demand for computing power.
“These infrastructure investments will be chiefly in the United States fueling AI innovation and economic growth, and the remainder will be invested in U.S. partner countries,” the companies said in a joint statement.
NVIDIA (NASDAQ:NVDA) will support the initiative by providing expertise in AI data center development
GAIIP plans to attract additional investors, with an initial target of US$30 billion in private equity capital, potentially leveraging this into a total investment pool of up to US$100 billion.
Also on Tuesday, Microsoft extended its partnership with G42, a technology holding group based in the United Arab Emirates, by announcing plans to establish two new data centers in the country with the support of the Artificial Intelligence and Advanced Technology Council.
The data centers will focus on establishing “tesponsible AI,” with the first working on developing best practices and standards for ethical AI use in the Middle East and Global South. The second will be an expansion of Microsoft's AI for Good Research Lab, supporting AI projects targeting important social challenges.
The move follows Microsoft's US$1.5 billion investment in G42 in April to accelerate AI development in the United Arab Emirates. The company's collaboration with G42, which is part of Sheikh Tahnoon bin Zayed Al Nahyan's US$1.5 trillion empire, aims to establish G42 as a major AI player in the Middle East.
Microsoft ended the week with the announcement that it will buy power from the Three Mile Island nuclear power plant as part of a 20 year agreement that will fuel its data centers with carbon-free nuclear energy.
The Pennsylvania plant, located on an island in the Susquehanna River just outside Harrisburg, is owned by Constellation Energy (NASDAQ:CEG), a subsidiary of Exelon (NASDAQ:EXC), which shut down the plant in 2019 after it failed to become profitable and lawmakers refused to provide financial relief. In 1979, the plant was the site of one of the most dangerous nuclear power accidents in the US after a combination of equipment malfunctions and operator error led to a partial meltdown of the Unit 2 reactor, releasing radioactive gas and iodine into the environment.
“To prepare for the restart, significant investments will be made to restore the plant, including the turbine, generator, main power transformer and cooling and control systems,” Constellation Energy said in a press release.
The company will also need approval from the US Nuclear Regulatory Commission and various state and local agencies. Constellation plans to pursue a license renewal to extend operations until 2054.
The grid is expected to be operational by 2028.
4. Intel CEO outlines new strategy
Intel reported positive news on Monday, with CEO Pat Gelsinger issuing a statement just after the market closed to outline the “next phase of Intel’s transformation” following a board meeting last week.
The company said its chip-making division, Intel Foundry, will supply Amazon Web Services with two custom-made chips: AI fabric chips that use Intel’s advanced manufacturing technology, 18A, and a custom Xeon 6 chip using older technology, Intel 3. The companies will co-invest in custom chip designs in the future.
Intel also announced plans to establish Intel Foundry as an independent subsidiary, which will allow it to source external funding sources. The company has reportedly spent US$25 billion on Intel Foundry each year for the last two years. A source for CNBC shared that Intel is considering spinning the business off into a separate traded company.
In a separate press release, Intel confirmed it is eligible to receive up to US$3 billion in government funding under the CHIPS and Science Act for the Secure Enclave program to manufacture AI chips for the US military.
“Intel is proud of our ongoing collaboration with the U.S. Department of Defense to help strengthen America’s defense and national security systems,” said Chris George, president and general manager of Intel Federal.
Intel’s share price rose 2.37 percent to close at US$20.91 on Monday. It rose in after-hours trading and opened on Tuesday morning at US$21.73, 3.9 percent higher than Monday's close.
Intel shares spiked by 11.71 percent in late afternoon trading on Friday after the Wall Street Journal reported insider knowledge of a recent takeover deal offered to Intel by Qualcomm (NASDAQ:QCOM). The surge was short-lived, and Intel ended the week near Thursday’s closing price, US$21.15.
Over the past five days, Intel's shares have shown a positive trend, increasing by 9.04 percent. However, the stock is down 54.31 percent year-to-date, highlighting a challenging period for the company.
5. Apple's iOS 18 launch encounters problems
Apple released iOS 18 on Monday ahead of the iPhone 16 launch. The update introduced enhanced customization options for the Home Screen and Control Center, alongside improvements to the Mail and Messages apps.
The Photos app got the biggest overhaul, with more Collections tabs for easier photo discovery, enhanced by on-device intelligence for library organization, a customizable layout and a new unified design for a scrollable view.
As early as Tuesday, complaints about the upgrade emerged, including battery drain and device overheating.
Additionally, users with M4-equipped iPad Pros reported that the upgrade “bricked” their devices, rendering them unresponsive to attempts to restart. M4 is a type of chip used by the company.
One Reddit (NYSE:RDDT) user posted that their device had been bricked after they attempted to update the operating system from iOS 17 to iOS 18. Multiple Reddit users replied, saying they had similar issues after updating to iOS 18.
In response, Apple provided a statement to MacRumors. "We have temporarily removed the iPadOS 18 update for M4 iPad Pro models as we work to resolve an issue that is impacting a small number of devices," the company said.
The market's reaction to these issues was minimal, and Apple’s share price is up 5.37 percent for the week.
Don't forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Is Now a Good Time to Invest in AI Stocks? (Updated 2024)
Artificial intelligence (AI) technologies have made their way to the mainstream, and major tech companies are competing to offer better solutions for their customers and investors.
AI itself is the simulation of intelligence in manmade software, and the field involves the study, development and application of machines able to learn and make decisions in a similar way as humans.
Since 2022, the progression of AI — and the exciting progress of generative AI — has sparked renewed interest in the field. Many startups have entered the field, with some backed by major tech companies that have been investing heavily in AI research and development.
While the buzz around AI has been promising, some analysts have articulated worries about a bubble forming around the biggest tech stocks, prompting some investors to wonder whether now is a good time to invest in AI.
There's a lot to understand about this fascinating subject, and the Investing News Network is here to help answer all your questions about the AI industry, including whether now is the right time to invest, how to get exposure to AI and whether AI stocks are a bubble. Read on to learn more about this developing market.
Table of contents
- What is the history of AI?
- What are the market trends for AI in 2024?
- What is the forecast for AI stocks?
- Is AI a bubble?
- How to invest in AI stocks and ETFs now
What is the history of AI?
The term "artificial intelligence" was coined by John McCarthy in 1956 at the Dartmouth Summer Research Project on AI. The project's goal was to brainstorm about AI's potential and how to achieve it. The event brought together brilliant mathematicians and scientists from around the world and is considered the catalyst for establishing AI as a field of study.
The emergence of AI in the 1960s was marked by the creation of the first AI-enabled robot and paved the way for major advancements like expert systems and the Internet. The 21st century saw AI integration into everyday life through devices like the iPhone and its voice assistant, Siri, which further fueled research into virtual assistants. This progress culminated in the development of sophisticated humanoid robots like Sophia, capable of human-like interaction and learning.
OpenAI, the explosive startup that helped spark interest in AI with their large language model ChatGPT, was founded in December 2015. On July 22, 2019, OpenAI signed a partnership agreement with Microsoft (NASDAQ:MSFT) worth US$1 billion, cementing the company’s status as a prominent figure in the tech industry, and Microsoft has made further investments since then, including one reportedly worth US$10 billion that was signed in 2023.
After releasing multiple iterations of its GPT language model internally or with limited access beginning in 2018, in November 2022, OpenAI publicly released ChatGPT, a chatbot application built on top of its GPT-3.5 model. The chatbot gained one million users in just five days, and ChatGPT became the fastest-growing consumer app in history.
AI development accelerated rapidly from that point. Taiwan Semiconductor Manufacturing Corporation (TSMC) (NYSE:TSM), the largest manufacturer of computer chips, released its Q4 2022 results on January 12, 2023, which revealed an astonishing 78 percent growth in net profit compared to the previous quarter thanks to an increase in chip orders as TSMC’s clients — including Apple (NASDAQ:AAPL), Sony (NYSE:SONY) and Intel (NASDAQ:INTC) — raced to capitalize on the AI boom.
In early 2023, one company emerged as a leader in AI hardware: Nvidia (NASDAQ:NVDA). Nvidia designs high-performance graphics processing units (GPUs) and other specialized chips powering the majority of AI workloads today. The company’s products were in high demand as AI took off, and on May 24, 2023, the company reported a 19 percent increase in quarterly revenue driven by orders of its GPUs. Nvidia’s share value grew by over 230 percent in 2023. Its chips are still highly sought after, and the company is now TSMC's largest and most valuable customer.
The excitement and interest from users — and investors — have prompted tech companies eager to capitalize on the groundbreaking technology to pour billions of dollars into AI research and development (R&D).
OpenAI’s GPT-4o was released on May 13, 2024, and featured improved personalized responsiveness and contextual awareness. “This is incredibly important because we are looking at the future of interaction between ourselves and the machines," said Chief Technology Officer Mira Murati during the product release at the company’s Spring Update.
Its newest model, OpenAI o1, is designed to spend more time “reasoning” before it responds, allowing it to solve harder, more complex problems in math, coding and science. A preview of the first version was released on September 12.
What are the market trends for AI in 2024?
AI and generative AI — technology with the "brainpower" to produce content — have already taken the world by storm, and the industry appears set to continue growing. The global AI market was valued at US$136.6 billion in 2022 and is expected to grow at a compound annual growth rate of 17.3 percent between 2023 and 2030, according to a report by Grand View Research.
AI software has revolutionized data-driven industries, particularly the finance, healthcare, transportation, manufacturing and education sectors. In the medical field, AI has been particularly transformative, accelerating drug discovery, refining diagnostic accuracy and advancing research by enabling the analysis of large datasets with speed and precision. The market for AI in healthcare is expected to grow at a compound annual growth rate of 47.6 percent between 2023 and 2028, according to research conducted by Markets and Markets.
AI software has also boosted major tech companies to new levels of success and turned lesser-known enterprises into household names. Microsoft’s collaboration with OpenAI exemplifies this trend, as integrating OpenAI’s technology into AI products like Microsoft 365 Copilot and the Azure cloud platform has likely contributed to increased revenue for cloud services.
Microsoft's product releases had become somewhat stagnant in the years leading up to their involvement with ChatGPT. While the company continued to iterate on existing products and services like Windows and Office, there was a lack of truly groundbreaking or innovative releases that captured widespread attention and excitement the way its AI product offerings have.
To understand the AI landscape, it's helpful to break down the key players into three distinct segments: the software designers crafting the AI models and providing essential infrastructure, the chip designers creating the specialized hardware and the chip manufacturers bringing these designs to life.
Google’s (NASDAQ:GOOGL) LLM Gemini made its debut on December 6, 2023, and led to the company’s stock price increasing by 5.34 percent. Google has since expanded access and rolled out new versions and updates to Gemini. The company’s valuation has grown by 21.41 percent since Gemini’s initial release.
Amazon (NASDAQ:AMZN) Web Services (AWS) has become an integral part of Amazon’s AI landscape as well, providing tools and infrastructure for businesses like pharma giant Johnson & Johnson (NYSE:JNJ) to build and scale their own AI solutions.
Johnson & Johnson also collaborates with IBM (NYSE:IBM) to leverage its expertise in AI. IBM’s AI platform, Watson, provides domain-specific expertise for various industries including healthcare and customer service. Its architecture combines machine learning and natural language processing, giving it reasoning capabilities beyond pattern recognition.
Nvidia is an industry leader in terms of chip design and has seen its share value increase by nearly 145 percent year-to-date in 2024. While it is certainly the most well-known chip designer, there are a number of other prominent figures in the industry including AMD (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), ARM (NASDAQ:ARM) and Samsung (KRX:5930).
The largest chip manufacturer is TSMC, which is based in Taiwan. TSMC American depositary shares trade on the New York Stock Exchange and have seen growth of 103.89 percent since January 2023. Other major chip makers include Qualcomm (NASDAQ:QCOM) and Intel.
The relationship between Nvidia and TSMC is one of critical interdependence and mutual benefit, similar to the partnership between Microsoft and OpenAI, as both are key players in the semiconductor industry.
What is the forecast for AI stocks?
The transformative potential of AI is undeniable; it’s no longer a question of “if” but “how” AI will shape our future. This sentiment is mirrored in the market, with clear examples of AI’s impact on stock valuations.
For instance, Apple announcing that it would integrate ChatGPT into new versions of iOS on June 10 coincided with a 7.26 percent increase in its stock's valuation.
However, the September 9 product release was underwhelming and Apple’s stock lost value due to a delayed rollout and limited access to AI features. This serves as a reminder that the AI landscape also presents challenges, including fierce competition and the risk of rapid obsolescence. It's also important to acknowledge the possibility of a disconnect between current investor sentiment and the realistic timeline for AI to deliver substantial returns.
Nevertheless, there are indications that "the fourth industrial revolution" has the potential for long-term economic growth. After all, the handful of internet companies that managed to survive the dot-com crisis went on to become majorly successful. For now, the AI hype seems set to continue — Nvidia’s Q2 report, released on August 28, projected a strong outlook for Q3 based on the growth of its AI architecture. Likewise, TSMC projected its gross profit margins for Q3 would be between 53.5 and 55.5 percent.
Is AI a bubble?
The excitement around AI's potential has sent investors to AI stocks in droves, but does that mean that now is a good time to invest? If the dot-com bubble burst of 2000 taught us anything, it's that overvaluing revolutionary sectors can have dire consequences. While there’s no doubt the industry carries a lot of potential, experts have raised concerns about overvalued tech stocks and market concentration.
A report released by Goldman Sachs on June 25 offered diverse viewpoints on the issue. For example, while Head of Global Equity Research Jim Covello points out that AI’s abilities have not justified the sizable investments made to develop it, senior global economist Joseph Briggs argues that the cost of deploying AI will decline over time, and in the long-term, these technologies should increase automation, productivity and the GDP.
Peter Mangin, an AI expert out of New Zealand, responded to the points made in Goldman Sachs’ report in his article Investing in AI: Why the Scepticism Misses the Bigger Picture.
“AI has the potential to create new industries, tasks, and business opportunities, driving long-term economic growth and productivity improvements beyond current projections,” Mangin wrote. “Just as the internet gave rise to entirely new sectors like e-commerce and social media, AI can lead to the development of new fields and professions. This will not only create jobs but also spur innovation and economic diversification.”
Purpose Investments Nicholas Mersch posted on July 18 that a portfolio with a high concentration of tech stocks can be profitable if the stocks are chosen carefully. He points to semiconductor companies, infrastructure builders and mega-cap cloud providers — in that order — as the “beneficiaries” of AI, as decided by the market.
Indeed, amidst the stock market panic on August 5, share values of chip manufacturers like TSMC, Micron Technology (NASDAQ:MU), Broadcom and ASML (NASDAQ:ASML) took a significantly smaller hit compared to mega-cap cloud providers like Apple, Nvidia and Google.
There is also the issue of energy consumption. Speaking with Bloomberg’s Merryn Somerset Webb during a July 5 episode of the Merryn Talks Money podcast, founding partner of MacroStrategy Partnership James Ferguson emphasized that the energy demands of AI applications may erode the profits.
“Therefore you end up with something that is very expensive and has yet to prove anywhere really, outside of some narrow applications, that it’s paying for this,” he said.
In January, the International Energy Agency found that energy consumption from data centers, cryptocurrency and AI accounted for roughly 2 percent of global energy usage in 2022 and it forecasted that figure could double by 2026.
That might be why some analysts are looking at utilities stocks and data center companies as an indirect way to benefit from the growth potential AI offers. “Data-center expansion is a generational growth opportunity right now for utilities,” Travis Miller, an energy and utilities strategist for Morningstar, told Fortune on August 4.
For their part, companies have released smaller language models with specific use functions, like OpenAI’s GPT-4o Mini or Gemini Nano, which use less energy and are more affordable.
The contrasting views among analysts and experts create a complex landscape for investors. While AI's potential is undeniable, navigating its investment complexities requires careful consideration.
How to invest in AI stocks and ETFs now
Seasoned investors with decent knowledge of AI and its applications might want to invest in individual AI stocks. Many of the largest tech stocks offer investors various levels of exposure to AI, particularly ones in the Magnificent 7: Nvidia, Microsoft, Meta (NASDAQ:META), Apple, Tesla (NASDAQ:TSLA), Amazon and Alphabet, the parent company of Google.
To date, Microsoft has committed US$13 billion to OpenAI, and both Alphabet and Amazon are reputable, publicly traded companies that have subsidiary services with generative AI capabilities.
There are also investment opportunities in generative AI, arguably the field's most exciting sector, as evidenced by the reception to OpenAI’s ChatGPT platform. While you can’t yet directly invest in OpenAI, you can invest in companies that are pouring money into generative AI research.
Chipmakers such as TSMC, Broadcom and Qualcomm are options for investors looking to invest in the hardware components needed for AI.
For a list of the biggest US, Canadian and Australian AI stocks by market cap, click here.
If, however, you’re new to investing or AI, an AI ETF might be the simplest way to invest in AI. Some of the most successful AI ETFs are the Global X Robotics and Artificial Intelligence Thematic ETF (NASDAQ:BOTZ), the ARK Autonomous Technology + Robotics ETF (BATS:ARKQ) and the iShares Robotics and Artificial Intelligence ETF (ARCA:IRBO).
For a detailed description of each ETF and more AI ETF ideas, click here.
This is an updated version of an article first published by the Investing News Network in 2023.
Don't forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Global AI Safety Network to Address Opportunities and Challenges at Inaugural Meeting
The US Department of Commerce and US Department of State have announced the inaugural meeting of the International Network of AI Safety Institutes, scheduled for November 20 to 21, 2024, in San Francisco.
This global network aims to foster international cooperation on artificial intelligence (AI) safety.
First introduced by US Secretary of Commerce Gina Raimondo at the AI Seoul Summit in May of this year, the network is designed to unite representatives from each member country's AI safety institute, or the equivalent scientific office.
The meeting's objectives include establishing collaborative priorities and advancing global knowledge on AI safety.
“AI is the defining technology of our generation. With AI evolving at a rapid pace, we at the Department of Commerce, and across the Biden-Harris Administration, are pulling every lever. That includes close, thoughtful coordination with our allies and like-minded partners,” said Raimondo in a Wednesday (September 18) release. “We want the rules of the road on AI to be underpinned by safety, security, and trust, which is why this convening is so important."
The International Network of AI Safety Institutes includes 10 founding members: Australia, Canada, the EU, France, Japan, Kenya, the Republic of Korea, Singapore, the United Kingdom and the US.
The San Francisco meeting will feature technical experts and representatives from member countries, with discussions on priority areas for the network and the start of detailed work on joint AI safety projects.
The meeting is intended to lay the groundwork for collaboration leading up to the AI Action Summit, which is scheduled to take place in Paris in February 2025.
US Secretary of State Antony Blinken emphasized the importance of this initiative as AI usage increases rapidly at a global scale. The push for safety comes amid ongoing challenges in US legislative efforts to regulate AI technology.
In response to the rapid advancement and potential risks associated with AI, the US Department of Commerce has proposed new reporting requirements for advanced AI developers and cloud computing providers. These requirements are aimed at ensuring these new technologies are safe and resilient against cyber threats.
The initiative also aligns with broader US policy goals set by President Joe Biden.
In October 2023, he signed an executive order requiring AI developers to report safety test results for systems posing risks to national security, public health or safety before their public release.
As AI continues to evolve and integrate into society, the establishment of the International Network of AI Safety Institutes represents a proactive step toward addressing the complexities associated with this transformative technology.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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