Tech 5: Musk Faces SEC Clash, Broadcom Surges, Google Makes Quantum Chip Breakthrough

1. Bitcoin price volatile after US$100,000 milestone

Bitcoin fell below the US$100,000 mark at the start of the week after last's week's record-setting price move. Altcoins and meme tokens also took a hit, hinting at a potential shift in market dynamics.

Some analysts believe Bitcoin is consolidating, with a surge in buying needed to overcome the US$101,000 level. Even so, other experts predict Bitcoin could reach US$120,000 in the coming weeks.

Bitcoin's lowest point for the week came on Tuesday (December 10), when US$1.5 billion in long positions were liquidated. This downturn may have been fueled by concerns over Google's new quantum computing chip, which were later debunked by experts. The cryptocurrency recovered to rise above US$101,000 on Wednesday (December 11) afternoon, and briefly touched US$102,500 on Thursday (December 12). The increase came as traders bought the dip and as Wednesday’s US consumer price index report boosted investor confidence in crypto and tech stocks.

Wall Street also saw impressive gains on Wednesday, with the Nasdaq Composite (INDEXNASDAQ:.IXIC) closing above the 20,000 level for the first time. However, both cryptocurrencies and stocks retreated slightly after Thursday’s US producer price index reading showed producer costs had risen above estimates.

Bitcoin held around US$101,500 on Friday, while Ether was above US$3,900.

Bitcoin and Ether spot exchange-traded funds (ETFs) saw inflows this week, with over US$4 billion entering Bitcoin spot ETFs and over US$1.9 billion going into Ether spot ETFs in the past few days, as per SoSo Value data.

Despite the ongoing bullish sentiment, the Bitcoin-to-gold ratio is showing signs of an imminent correction. The resistance level has been between 34 and 37 since early to-mid November, a point that has been associated with local market tops. Additionally, the Bitcoin Relative Strength Index crossed above 70 in November, indicating overbought conditions — a pattern that has often preceded sharp price declines in the past.

2. Musk clashes with SEC, reaches net worth milestone

Musk expressed his discontent on X, formerly Twitter, on Thursday regarding a settlement demand issued by the SEC. The demand requires Musk to accept terms, including a fine, or face charges on multiple counts.

In a letter sent to the SEC and posted to X, Musk’s lawyer Alex Spiro accuses the SEC of engaging in “an improperly motivated campaign against Mr. Musk and the individuals and companies associated with him."

In February 2022, the SEC launched an investigation into Musk's business activities due to concerns about potential insider trading. It was based on suspicions that he might have shared confidential information with his brother.

Later, in April 2022, the Oklahoma Firefighters Pension and Retirement System sued Musk, accusing him of deliberately concealing his investments in Twitter and his intent to buy the company.

The fund’s attorneys argued that Musk influenced other shareholders’ decisions and put them at a disadvantage by failing to clearly disclose pertinent information regarding his stake in the company.

Both cases are ongoing at this time. The SEC's settlement demand letter is specifically related to concerns about Musk's disclosures regarding his initial purchase of Twitter shares in 2022.

Spiro's letter also references a reopened investigation into Musk’s biotech company Neuralink; it began in September 2023, when the nonprofit Physicians Committee for Responsible Medicine requested that the commission investigate the company for securities fraud after Musk falsely claimed that “no monkey has died as a result of a Neuralink implant.” The group claims that Musk lied to investors about the safety of the device.

Sources for CNBC said charges may not immediately follow if the SEC is unable to settle with Musk. Rather, SEC staff may issue a Wells notice before commissioners decide whether to file formal charges.

The news came as Musk's net worth passed US$400 billion, buoyed by Tesla and SpaceX valuations.

3. Broadcom surges on strong results and AI potential

Broadcom released results for its fourth fiscal quarter and full 2024 year on Thursday, revealing a 51 percent year-on-year revenue increase for Q4 and an 11 percent rise in its common stock dividend from the prior quarter.

The company also reported GAAP net income of US$4,324 million for the fourth quarter, non-GAAP net income of US$6,965 million and adjusted EBITDA of US$9.01 million for Q4.

Looking forward, Broadcom estimates that it could derive US$90 billion in revenue from custom artificial intelligence (A) chips by 2027, driven by key customers like Google and Meta (NASDAQ:META). There is potential for significant expansion if contracts with Microsoft (NASDAQ:MSFT) or Amazon (NASDAQ:AMZN) are secured.

Broadcom's strong outlook has spurred optimism among analysts at Jefferies Financial Group (NYSE:JEF), Morgan Stanley (NYSE:MS) and Evercore (NYSE:EVR), sparking a rally that sent its share price soaring over 24 percent to a new all-time high of US$224 on Friday, culminating in a market cap of US$1.05 trillion.

This positive sentiment extended to other chip stocks, with Marvell Technology (NASDAQ:MRVL), Micron Technology (NASDAQ:MU) and Taiwan Semiconductor Manufacturing (NYSE:TSM) also experiencing gains. The PHLX Semiconductor Sector (INDEXNASDAQ:SOX) closed up 3.36 percent for the day and 1.57 percent for the week.

Ahead of Broadcom’s results, Bloomberg reported on Thursday that Apple (NASDAQ:AAPL) — one of the chipmaker’s biggest customers — is working to replace Broadcom's combined Wi-Fi and Bluetooth chip with its own in-house technology, codenamed Proxima. Taiwan Semiconductor will manufacture the chip, which is reportedly anticipated to be used in products as early as 2025.

4. Google makes quantum computing breakthrough

Google took a significant quantum computing step with the unveiling of its Willow quantum processor on Monday (December 9). Willow features 105 qubits — fundamental units of information in quantum computing, similar to bits in classical computers — and demonstrates a significant reduction in error rates as the number of qubits increases.

This addresses a major challenge in quantum computing, where qubits are highly susceptible to environmental interference. Willow also excels in random circuit sampling, a benchmark test that involves running a quantum computer with a series of random operations and then measuring the output. According to Google, Willow can complete a calculation in under 5 minutes that would have taken the fastest supercomputer 10 septillion years.

Some commentators, including Andy Parackal, an AI and machine learning advocate and the founder of Parackal Coaching, came forward to express concerns that Willow’s quantum computing abilities could be enough to crack Bitcoin’s cryptographic hash function, Secure Hash Algorithm 256-bit. However, industry experts like Cinemad Producer have said these concerns are unfounded because Willow is not yet powerful enough. Willow has reached 105 qubits with improved error rates, but 2022 research from Universal Quantum and the University of Sussex shows that a quantum computer with a capacity of 1.9 billion qubits would be required to break Bitcoin's encryption.

Willow's advancements represent a significant step forward in quantum computing, offering the potential to revolutionize various fields, including drug discovery, materials science and AI.

Google also released Gemini 2.0, its most advanced multimodal AI model to date, to developers and testers on Wednesday. According to the company, Gemini 2.0 will be capable of generating images and audio, with a focus on enhancing "agentic experiences" across applications.

Google DeepMind CEO Demis Hassabis and CTO Koray Kavukcuoglu said in a joint statement that AI agents powered by Gemini 2.0 will be able to understand complex instructions, plan, reason and even assist with video game strategy.

A full release is slated for next year, but in the meantime, Gemini Advanced users will be able to try out the chat-optimized version of Gemini 2.0 within the Gemini app.

5. NVIDIA faces antitrust investigation in China

NVIDIA's share price dropped 2.5 percent on Monday following the news that China's market regulator will be investigating potential violations of the country's antimonopoly law.

The investigation is reportedly focused on the terms of NVIDIA's 2020 acquisition of Mellanox Technologies, an Israeli-American company that specialized in high-performance interconnect solutions prior to the purchase.

NVIDIA is currently facing legal challenges on multiple fronts. In the US, a class-action lawsuit alleging that the company misled investors about the connection between its sales and cryptocurrency mining has been allowed to proceed by the Supreme Court. The Associated Press released the news on Wednesday.

Shares of NVIDIA are down 3.27 percent for the week, dwarfed by the gains of competitor Broadcom.