Reddit joins the stock market ??

Hey there,

This week, Reddit finally hits the stock market, Nvidia unveils a new AI chip, and Google talks partnership plans with Apple.?

But first, the macro wrap-up:

Investor excitement rose this week with the Fed holding US interest rates at 5.25% to 5.5%, whilst projecting three rate cuts later this year. Stocks ticked up, with the S&P 500 gaining 2.4%.

Reddit joins the New York Stock Exchange

Reddit did it: Yesterday, Reddit shares began trading on the NYSE at $34 a pop, valuing it at $6.4bn and making it one of the largest social media IPOs ever. It closed the day up 48%, taking its new valuation to $9bn, which is just $1bn short of its private valuation in 2021.

• Turn of events: Reddit set aside 1.76m shares for its highly active US-based users, but many passed, instead wanting to short the stock. Why? Because they’re worried Reddit will become more moderated and continue to lose money. Reddit remains an unprofitable company.?

• Money talks: But Reddit’s money troubles could be about to change. Google is believed to have paid $60m for the right to scan 20 years worth of Reddit threads to make its AI more human-like. Reddit also said it’s agreed similar deals worth more than $200m, which could make all the difference, given it closed 2023 with a $91m loss.

Nvidia unveils new chip

Meet the Blackwell: During its highly anticipated GTC event, Nvidia unveiled its latest AI chip, The Blackwell GPU, as it looks to continue dominating the AI industry, amid increased competition from AMD and Intel.?

• 2.5x the power: The Blackwell has 208bn transistors, compared with 80bn in last year’s H100 chip. It means AI is about to become a lot more powerful and CEO Jensen Huang predicts this will be “the most successful product launch in Nvidia’s history”.
• Humanoid robots: During the unveiling of the chip, Huang also invited humanoid robots on stage, detailing them as “the next generation of robotics”. Blackwell GPUs will power these types of robots, with CEO Jensen Huang predicting “everything that moves in the future will be robotic”.?

Alphabet & Apple’s AI alliance

Teaming up: Google is in talks with Apple about licensing its Gemini AI model for use in iPhones. Shares in Alphabet, Google’s parent company, rose 7% on the news.

• 2 billion users: Google pays Apple $18bn a year to be the default search engine on its devices, meaning a Gemini integration could automatically place it on 2+ billion iPhones around the world.
• Reputation recovery: Last month, Gemini was temporarily shutdown due to generating historically inaccurate images. It’s not the first blunder Gemini has made, and so an Apple partnership could finally help it get one over Microsoft-backed OpenAI.

What have we learnt this week?

• Reddit’s rocky road: On one hand, Reddit’s well positioned to turn a profit. On the other, its own users are betting against its decision to go public. The next few weeks could result in turbulent times for the stock.
• Humanoid robots are coming: So far, most of our AI experiences take place through a digital device. That’s likely to change as new GPUs will help power AI robots.??
• Apple’s striking a partnership: Apple has reportedly spoken with Microsoft-backed OpenAI about having ChatGPT integrated into the iPhone, but Google looks to be Apple’s first choice. Which will it partner with? Time will tell.

Stock announcements

Here are the key earnings dates to look out for next week:

• Tuesday 26th March: GameStop

Author: James Ashoo

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*Figures correct as of 21st March 2024.

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