(Michael M. Santiago/Getty Images) |
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When charting the usage of ChatGPT, we noticed an interesting pattern: traffic plummeted by 70% during the week of June 4-11, remaining low through the summer months. In late August, ChatGPT usage picked up again. If you’ve correctly guessed what’s driving the uptick, then you can understand the timing of OpenAI’s announcement of a parental control system that will allow parents to monitor and control how ChatGPT responds to minors’ queries.
The global sell-off in long-term government bonds weighed on risk assets on Tuesday, accentuating the pullback in the AI trade seen in the final trading day of August. However, stocks did manage to close at session highs after facing steep losses during the morning.
The S&P 500 ended down 0.7%, the Nasdaq 100 gave back 0.8%, and the Russell 2000 fell 0.6%. |
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In after-hours trading yesterday, Google was soaring after a court ruling avoided some of the worst-case antitrust scenarios the company faced in relation to its dominant position in search. A year ago, a federal judge ruled that Google broke antitrust laws to maintain its monopoly in search. On Tuesday that same judge told Google how it must fix that illegal monopoly.
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- US District Court Judge Amit Mehta ruled that Google could no longer engage in exclusive search deals like its one with Apple, but the search giant isn’t being broken up or forced to divest Chrome.
- Google has $26 billion in deals with companies like Samsung and Apple — the latter alone worth $20 billion a year — to be the default search engine on their products.
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However, Apple shares also moved higher in postmarket trading, as the judge said nonexclusive payments to preload Google products, which help drive its lucrative Services segment revenues, can continue.
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“Google will not be required to divest Chrome; nor will the court include a contingent divestiture of the Android operating system in the final judgment,” the decision read. “Plaintiffs overreached in seeking forced divesture of these key assets, which Google did not use to effect any illegal restraints.” |
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The decision “strengthens the company’s position in gen-AI agent deployments, given the importance of integrating large language models natively within the browser,” Bloomberg Intelligence analysts Mandeep Singh and Robert Biggar wrote.
Google Search is the default search engine in Chrome, the world’s most popular browser, ensuring plenty of traffic to Google’s advertising ecosystem. Recently, both OpenAI and Perplexity expressed interest in buying Chrome. The DOJ also floated making Google share its valuable search and user data with competitors. Google still faces remedies for a separate monopoly case involving ad tech, with that phase of the case set to begin next month.
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Introducing the Global X Bitcoin Covered Call ETF. |
Bitcoin’s trajectory has turned heads all over the investment landscape. And for investors that don’t actively trade crypto, there are ways to get Bitcoin exposure without buying the coin.
One of those is the new Bitcoin Covered Call ETF (BCCC) from Global X. The actively-managed fund offers exposure to the world’s largest cryptocurrency via synthetic exposure to Bitcoin Exchange-Traded Products , instead of holding Bitcoin directly, while employing a partial covered call strategy.
Why use a partial covered call strategy? It allows investors to capture a portion of bitcoin’s capital appreciation while also seeking to manage its volatility, since the fund writes weekly call options on Bitcoin ETPs. This covered call strategy also seeks to generate income for investors to potentially buffer against downside movements of Bitcoin itself.
Check out BCCC at Global X for income potential (weekly distributions) and hedged exposure to Bitcoin’s growth — all in an efficient ETF wrapper.2 |
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Stocks hitched to the data center boom were key contributors to the market slump Tuesday, with Nvidia and the so-called hyperscalers — Amazon, Microsoft, Meta, and Alphabet — among the biggest contributors to the downturn in the S&P 500 (at least before the closing bell sent Google and Apple up because of that unrelated legal decision).
But that aftermarket action doesn’t change the appearance that the weakness in the AI trade goes beyond those companies writing the sizable checks needed for AI data centers, instead stretching up and down the data center value chain. |
- Shares of semiconductor equipment manufacturers like ASML were down, as were chip foundries like TSMC and chip stocks like AMD, Lam Research, and Qualcomm, not to mention AI energy plays like Talen Energy, NRG, and GE Vernova.
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The Trump administration’s decision to strip TSMC of its ability to ship gear to its manufacturing base on the Chinese mainland has injected some uncertainty into the global tech sector. But TSMC is holding up better than most of those aforementioned stocks.
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The breadth of the sell-off seems more along the lines of a momentary (and understandable) crack in confidence that sometimes emerges in even the most unanimous bets on Wall Street. That would include the staunch belief among investors, traders, and companies that AI is going to fundamentally reshape the US economy, creating untold riches for companies in the industry.
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Moments of doubt make some sense. After all, while AI has shown a lot of promise, for the moment it remains more of a market phenomenon than an economic one. That is, despite its outsized role in the stock market, we haven’t seen the explosion of profits and productivity that would be needed to justify all this investment. |
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Hedge fund manager and market-making maven Ken Griffin seems to agree, telling Barron’s recently, “There is one salient issue in the equity market now: how much of the hype of AI will translate into the reality of a more productive, more prosperous future?” Nobody, not even Ken Griffin, knows. But in the meantime, the bet continues to build. The latest data on US construction spending, released on Tuesday, shows it’s still very much alive.
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The current market is a Rorschach test: do you see a golden age of corporate profitability ushered in by AI, or irrational exuberance gone mad? |
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Yesterday’s Big Daily Movers |
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