Three Things (4/17)

Adobe releases AI assistant

Adobe made its artificial intelligence assistant available through a monthly subscription plan starting at $4.99/month. The new tool will allow users to be more efficient in PDF, as it answers questions about the content of documents through a conversational interface. The AI assistant can synthesize information into top takeaways for presentations or emails and quickly locate key details inside of lengthy contracts. When answering questions, the tool generates citations for its responses so the user understands where the information is coming from.

In the artificial intelligence race, companies are scrambling to come to market with valuable AI tools and integrations. The Adobe AI assistant is a smart way to make users feel like they are directly benefiting from AI with a simple add-on to products they already have. Although companies are building AI into the engines of their products, users want to touch and feel the technology, just as they did with the explosion of ChatGPT. Companies who can be nimble and create consumer products that are monetizable at scale will rise ahead of their peers.

Credit card delinquencies

U.S. credit card delinquency rates were the highest on record in the fourth quarter of 2023, according to the Federal Reserve Bank of Philadelphia. 3.5% of card balances were at least 30 days late as of the end of December. The number of people making minimum payments also rose, pointing to distress among cardholders. While 25% of active accounts have a balance of over $2,000 for the first time, one third of users pay their balance in full every month, exhibiting contrasting behaviors from likely different brackets of earners.

Issuers have responded to the rise in delinquencies by lowering the credit limit on new accounts. The problem is a direct result of the higher cost of living for Americans, as the last few inflation prints illustrated stickier than expected inflation. The Fed is unwavering in its goal to lower inflation, and their hope is that higher rates will eventually slow spending and reduce inflationary pressures. A higher for longer environment will help regulate the economy and the credit card delinquencies are an unfortunate symptom of the Fed’s remedy for inflation.

Microsoft raises Dynamics 365 prices

Microsoft announced price increases for its Dynamics 365 business applications, a side effect of the company releasing hundreds of new features and tools each year. A few examples include AI-powered customer insights, supply chain visibility, automated financial processes, and data insights for optimizing. The price increases range from 9% to 16% across various products, and the new prices will be in effect on October 1, 2024.

When Salesforce increased prices in 2023 for the first time in seven years, investors reacted positively sending the stock price up 4%. Microsoft’s planned price hikes exceed those of Salesforce last year, and investors see it as a driver for higher margins. Although higher costs are one reason for price increases, executives also know that demand from their large customer base grants them an immense amount of pricing power.

Disclosures:

As of writing, ADBE and MSFT are holdings in Titan’s Flagship strategy.

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