Navigating AI Trends Amid NASDAQ Bearish Sentiment

Revenue Roundup: Insights from the RevOps Venture Think Tank

?? Status in the M&A Involving U.S.-Based, VC-Backed Startups

#mergers #acquisition

The M&A activity in 2024 has shown a steady increase in the number and value of transactions. After a slow start in January and February, there was a consistent rise in March, with significant peaks in May and July. July recorded the highest transaction count of 170 and the highest value at $16.6 billion, indicating robust market activity driven by substantial deals. The trend suggests growing confidence and investment in M&A throughout the year.

NOTE: Remember that the total value is likely higher as this chart is based on only disclosed amounts of the transactions).

Here is another data point that suggests the growing confidence in the Lazard (LAZ) company and its trading stocks, which have risen with the SMA for the last 50 sessions. The company specializes in M&A, and other banks are bullish on M&A activity towards the end of the year. Another catalyst might come from the lower NASDAQ share prices opening window toward the end of the year. Lower multiples will impact the privately held companies' evaluations, which must lower their expectations around the exit and harder path to the IPO.

?? Biggest Acquisitions by Disclosed Value

The top four are unchanged from the prior weeks. However, we see more transactions around $1.8B in value, matching the OpenGov acquisition by Cox Enterprises

1. Eyebiotech acquired by Merck | EyeBio specializes in developing innovative biotechnological solutions for eye diseases, offering cutting-edge treatments through advanced medical research. Transaction value: $3B USD.
2. AuditBoard acquired by Hg | AuditBoard provides comprehensive audit, risk, and compliance management solutions, leveraging advanced software to enhance organizational oversight and efficiency. Transaction value: $3B USD.
3. Neiman Marcus Group acquired by Saks Fifth Avenue | Neiman Marcus Group operates high-end retail stores offering luxury fashion, accessories, and home decor, renowned for its premium customer service and exclusive brands. Transaction value: $2.65B USD.
4. Tropical Smoothie Cafe acquired by Blackstone Group | Tropical Smoothie Cafe is a fast-casual restaurant chain known for its fresh, made-to-order smoothies, sandwiches, and salads, promoting a healthy lifestyle. Transaction value: $2B USD.
5. OpenGov acquired by Cox Enterprises | OpenGov Inc. offers cloud-based software solutions for government budgeting, performance management, and citizen engagement, streamlining public sector operations. Transaction value: $1.8B USD.
6. eStruxture acquired by Fengate Asset Management | eStruxture provides network and colocation data center solutions, offering high-density power, cooling, and connectivity services to businesses across various industries. Transaction value: $1.8B USD.
7. HI-Bio acquired by Biogen | HI-Bio focuses on developing innovative therapies for immune-mediated diseases to improve the lives of patients with chronic and severe conditions. Transaction value: $1.8B USD.
8. ProfoundBio acquired by Genmab | ProfoundBio specializes in creating targeted cancer therapies using antibody-drug conjugates (ADCs), aiming to provide more effective and less toxic treatment options for cancer patients. Transaction value: $1.8B USD.

?? Industry in Focus: Semis

#semiconductor #ai #aichips

The funding for semiconductor startups shows a fluctuating trend, with a notable peak in Q2 '23 at nearly $3 billion and over 150 deals. Investment dropped significantly in Q4 '23 but rebounded in Q1 '24. As of Q2 '24, funding and the number of deals have decreased again. This data suggests a volatile investment environment in the semiconductor sector over the observed period. However, don't get swayed by the VC investments, as these happen all over economies, starting from the VC, PE, and government funds.

Key players and recent investments

1. 长鑫存储技术有限公司 | Venture - Series Unknown | Description: ChangXin Memory Technologies, based in Hefei, Anhui, China, specializes in manufacturing dynamic random-access memory (DRAM) semiconductor products. Transaction value: $1,5B USD.
2. PsiQuantum | Venture - Series Unknown | Description: PsiQuantum, based in Palo Alto, California, United States, focuses on developing a scalable quantum computer using photonic qubits. Transaction value: $616.7M USD.
3. 紫光展锐 | Venture - Series Unknown | Description: UNISOC, based in Shanghai, China, is a semiconductor company committed to the independent research and development of core chipsets in mobile communications and IoT. Transaction value: $552.3M USD.
4. AaltoSemi Inc. | Private Equity | Description: AaltoSemi, based in Nanjing, Jiangsu, China, is a manufacturer of packaging substrate products. Transaction value: $351.8M USD.
5. SILICON BOX | Series B | Description: Silicon Box, based in Singapore, is a semiconductor integration startup that focuses on providing semiconductor integration services. Transaction value: $200M USD.

?? Stock Charts of the Week and why it matters 英伟达

Yes, Nvidia, AMD, ARM and many others are lower after the last earnings annoucements. Intel announced ayoffs. However, the industry has only a bright future ahead. Below the discounted price of the Nvidia stocks that is looking for another support line. It's a temporary situation and below you can find two charts that are telling about the future of the category.

The demand for high bandwidth memory (HBM) is not just growing—it’s expected to soar exponentially over the next few years. The chart illustrates a significant rise in HBM revenue growth, projected to reach nearly $80 billion by 2027. This surge aligns with the release of new chip models, indicating the start of a transformative journey in the semiconductor industry. The demand currently outstrips production capacity, and this gap is likely to widen, underscoring a critical need for increased production capabilities. Just recently, Samsung was cleared to purchase Nvidia's HBM model, with many others following suit. The increasing adoption of HBM technology by industry giants highlights the strategic importance of scaling production to meet this burgeoning demand. The race to develop and supply advanced memory chips is intensifying, making it a pivotal moment for the semiconductor industry to innovate and expand its capabilities.

The capacity of large language models (LLMs) is accelerating at an unprecedented rate, doubling approximately every 6 months. This rapid growth demands better, faster, and more efficient chips to match the capabilities of this new technological evolution. The energy consumption for training these models is also skyrocketing, with GPT-4 consuming over 51,773 MWh. Moore's Law is being stretched to its limits as we push the boundaries of compute power and energy efficiency. The semiconductor industry faces a critical challenge to innovate and keep pace with this explosive growth. The race to develop next-generation chips is not just about staying competitive—it's about enabling the future of AI and machine learning!

Finally, we see the investments split by political divisions. This distribution is unlikely to change soon, highlighting the importance of how much investment is being poured into future returns. If that’s the case, we must assume that new capabilities will need to replace the current ones rapidly. The race is on!

?? Contrarian Point of View This Week

Has this really changed over the last 10 years? Considering the first 8 months of 2024 and the current market dynamics, one might argue that today’s results could be different. Yet, I’ve been hearing the same conclusions for years. The McKinsey survey highlights that data, analytics, and AI platforms are top priorities across various industries, but is this truly a shift in strategic focus?

Despite the apparent emphasis on innovation and new business models, such as "everything as a service" and environmental sustainability, are we genuinely re-evaluating our priorities or merely following familiar patterns? The high expectations for AI, digital retail, and connected products suggest an industry caught in a cycle of predictable trends rather than groundbreaking change. Are we truly adapting to new market conditions, or are we just fooling ourselves into thinking we're moving forward?

The chart also shows a significant focus on physical products and environmental-sustainability-focused businesses, but is this enough to drive real transformation? The race to innovate might still be on, but perhaps it's time to question whether these investments and strategic shifts are as revolutionary as we believe.