Daily Brief - 🌩️ CTRL+Altman+Delete … Undo, Undo!

TLDR: The AI fever has taken the world by storm. This weekend, the AI world itself was taken by a storm. Friday afternoon OpenAI announced the board fired Sam Altman, its CEO and more or less the face of AI to most avid users of ChatGPT (and other AI tech). What’s happening?

In a very short span of time, Generative AI went from a curiosity exemplified by Dall-E to spawning an ecosystem of cutthroat apps built on top of a range of Large Language Model technologies. That put OpenAI at the very center of potentially incredibly lucrative commercial opportunities, reflected in its speculated $80 billion valuation. It also required that - more like a company and less like a non-profit - it moved fast and … well, break things.

The OpenAI board, governing a firm originally founded to build an open source, not-for-profit AI infrastructure, apparently became concerned and decided to get rid of its CEO. This may well be a fitting end of the first, experimental phase of AI. The period where everyone was first amazed, and then petrified by how the technology might impact their line of business (and/or replace them).

This transitional ambivalence is reflected in the stocks of the companies most closely associated with the AI boom. They have been stalling over the past few months, taking a breather as investors figure out what the commercial application will look like.

As the experimental phase winds down, firms are planning to deploy generative AI on a larger scale. A survey by KPMG found that four-fifths of firms said they planned to increase their investment in it by over 50% by the middle of 2024.

Among larger companies, data-centric firms, like those in healthcare and financial services, will be able to move fastest. That’s because they have at least some infrastructure in place to manage their data. Firms without solid data management may have to reorganise their systems before it is feasible to deploy generative AI.

Computation infrastructure will need to keep up. NVIDIA already benefited from massive demand - and shortage - of its chips. It keeps rolling out new ones but they are unable to make them fast enough. And this is while no real commercial application (except GPT) of the Generative AI technology has even been rolled out.

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

Amidst the pandemic, Zoom Video Communications emerged as the world's fastest-growing technology company, achieving three consecutive quarters of 3x growth or more at one juncture.

However, since the resurgence of the economy, Zoom has experienced an 88% decline in its market value. In response to this setback, the company has been actively exploring avenues beyond its core web meeting service to reignite growth, though sales have yet to reach the zenith of its glory days.

Anticipating tonight's earnings report, analysts project an EPS of $1.08 and revenue of $1.12 billion. Despite a historical trend of average returns leaning towards the negative following Zoom earnings, the stock defied expectations last quarter by experiencing a rise after the results were unveiled.

This prompts speculation about whether Zoom Video is approaching a potential inflection point in its trajectory.

Aggregated Leading Indicators!

Subscribe to Pro here to receive our pre-market Leading Indicator newsletter and access all Leading Indicators online!

Learn more about the Leading Indicators in the Learn Center!

Earnings Update: Agilent Technologies reports tonight

Agilent Technologies provides hardware and software for laboratories. Over the past 3 quarters, the company has beaten earnings expectations but fallen each time in the subsequent weeks. Could this time be different?

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: Is Disney's valuation too low?

Toggle analyzed 4 similar occasions in the past where valuation indicators for Disney were at a recent low and historically this led to a median increase in the stock's price over the following 6 months. Read full insight!

General Interest: What happened at OpenAI?

“Mr Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI”.

This is the statement from OpenAI’s board in regards to Sam Altman’s ousting from the company’s top seat.

The move caught both investors and partners by surprise. Even Satya Nadella seemed to be blindsided, only a few weeks earlier he had been special guest for OpenAI’s developer day.

So what really happened?

Apparently the firing is a result of Developers Day, which brought to light a rift between for-profit and non-profit views at the firm.

You can read more here on The Verge. If you get paywalled, check this passage from The Intelligencer.