ResearchThree Things (2/26)

Three Things (2/26)

Feb 26, 2024

Moguls cash in

Prominent executives at some of the world’s largest companies have been selling shares to start the year. Jeff Bezos sold 50 million shares of Amazon totaling ~$8.5 billion, Jamies Dimon, CEO of JP Morgan, sold $150 million in company stock, and Meta’s CEO Mark Zuckerberg sold ~$500 million at the start of the year.

Markets have come far, fast, and some of the savviest business leaders are taking profits. When companies are growing or still establishing themselves, the stock market tends to frown on substantial share sales from CEOs — it's seen as a sign of a lack of faith in the stock. Given that these companies are firmly established as some of the most valuable corporations on the planet, however, investors care less about such personal signals. With that said, the last time Bezos sold shares in size was right before the market pullback in 2022 so it’s a trend to monitor moving forward.

$2 trillion in market cap

Nvidia briefly surpassed $2 trillion in market cap during intraday trading Friday following the company’s rosy earnings report Wednesday. After rising earlier in the day, shares of Nvidia closed up less than 1% Friday, sitting at a $1.97 trillion valuation to end the week. The company has benefited from the tech sector’s insatiable demand for artificial intelligence capabilities over the past year.

Asking how much further can Nvidia rise is a fair question following its meteoric run. We’re monitoring this closely but what matters most are the cloud service providers (>50% of data center revenue) buying patterns and then the large internet players (I.e., META, etc). Capex guidance from the aforementioned hyper scalers, capacity growth metrics, and the ROI of the AI products developed by software companies are all top of mind for us as shareholders.

AI overview

Until an AI can provide a weekly wrap up on the industry, here’s a handy overview of recent stories from the fast moving sector: Google paused its AI chatbot Gemini’s ability to generate images of people after a segment of users complained about historical inaccuracies – it appears that Google implemented clumsy hardcoding under the hood to attempt to “correct” for biases in its model. Members of the artificial intelligence community signed an open letter to regulate deep fakes, Stability AI announced Stable Diffusion 3, the latest and most powerful version of the company’s image-generating AI model and Sora is taking the creative world by storm.

There’s been a lot of buzz when it comes to AI and the impacts will likely be far reaching. Much of the impact has been on a smaller scale, for now, and we’re looking forward to seeing where innovation can really drive change.


Disclosures:

As of writing, AMZN, GOOG, NVDA, and META are holdings in Titan's Flagship strategy.

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