Three Trillion Dollar Thursday – Microsoft Joins Apple’s Club

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We have another $3Tn company! 

Although Apple (AAPL) put up an impressive 36.5% gain in the past year, Microsoft (MSFT) has caught up with them by gaining 64.8% in the same period. The key to MSFT’s success has been their embracement and implementation of AI, beginning with their very aggressive $10Bn deal with Open AI at the start of 2023 but this was no sudden decision on MSFT’s part – as Shelbot explains:

🤓 Microsoft has been a pioneer and leader in the field of artificial intelligence (AI) for decades, developing and deploying cutting-edge AI technologies across its products and services. Here is a brief timeline of some of the key events in Microsoft’s AI development, focusing on its investment in OpenAI and its integration of Bing AI into Copilot and Office:

Microsoft’s investment in OpenAI is part of its vision to responsibly advance and democratize AI as a new technology platform that can create transformative impact for the world. OpenAI is a research organization that aims to ensure that AGI, which is the next level of AI that can perform any intellectual task that humans can, is aligned with human values and can be deployed for the common good. By partnering with OpenAI, Microsoft hopes to leverage its Azure cloud infrastructure, AI expertise, and ethical principles to support OpenAI’s ambitious and impactful research agenda12.

Bing AI is Microsoft’s AI platform that powers Bing Search, Bing Ads, and other Microsoft products and services. Bing AI provides a range of capabilities such as natural language processing, computer vision, knowledge graph, and machine learning, that enable users to find, explore, and interact with information in natural and intuitive ways. Bing AI also integrates with Microsoft Graph, which is a unified API that connects data and intelligence from Microsoft 365 and other sources. By integrating Bing AI into Copilot and Office, Microsoft aims to enhance user productivity, creativity, and collaboration, by providing relevant and personalized information, insights, and assistance at the point of need95.

Shelbot sees robotics and space exploration in his future and that future is not too distant! In order to clarify, I asked the artist what he felt the images represented and ShelBot said: 

🤓 Some of the possible future directions of AI that the images suggest are:

This is both scary and great and we don’t know which but we also don’t know which with every new child that is born. It will be up to us to guide this new intelligence we’ve invited to share the planet with us…

For the moment, I’m optimistic as AI is trained on the sum of human knowledge and literature and that means all the great books and philosophies are in there long before it starts reading tweets and, like any of us, the AIs take them with a grain of salt. That doesn’t mean they can’t be corrupted. Hopefully “good” AI will triumph over “evil” AI in the long run – just like it sort of has so far in human history (or so we are told in fairy tales).  

Man of steel pray and kneel
With fever’s blazing torch
Thrust in the face of the night
Draws a blade of compassion
Kissed by countless Kings
Whose jewelled trumpet words blind his sight

Walls that no man thought would fall
The altars of the just
Crushed …. Dust …. in the wind ….

No man yields who flies in my ship
Danger!
Let the bridge computer speak
Stranger!
Load your program. I am yourself

No computer stands in my way
Only blood can cancel my pain
Guardians of a nuclear dawn
Let the maps of war be drawn

Rejoice! Glory is ours!
Our young men have not died in vain
Their graves need no flowers
The tapes have recorded their names

I am all there is
Negative! Primitive! Limited! I let you live!
But I gave you life
What else could you do?
To do what was right
I’m perfect! Are you?” – Emerson, Lake and Palmer 

 

I’ve had those lyrics in my head since I was 10 years-old (1973) so I’ve always been prepared for this moment in history. Here we are, 50 years later and there’s nothing fictional about this science anymore, is there?  

Speaking of AI Productivity, it’s 8:30 and the GDP just came out for Q4 and it was up 3.3%, blowing the doors off the 2% expected by our Leading Economorons (myself included this time) as we have drastically underestimated the upturn in Consumer Sentiment and their willingness to spend – whether they can afford it or not!

Retail inventories for Dec were up 0.8% and that added a lot to GDP and I always have an issue with this as there’s the assumption that inventories will be sold but inventories should not have built up in December – they should have drawn down – it remains to be seen if this comes back to bite us or not…

Durable goods were flat, down from 5.5% in November and that’s not good either but ex-Transportation (boo Boeing!), they were up 0.6%, well above the 0.2% expected.  

We have New Home Sales at 10 and if they are up too (620,000 expected) then it really is a bullish turn. Tomorrow we get Personal Income and Spending so we’ll see how much of this GDP rally was bought on credit and we also get PCE Prices – which the Fed cares about A LOT (0.2% expected).  

While these great numbers are likely to take Recession off the table (great for VALE!), they are also likely to take Fed cuts off the table so we’ll see what the market’s overall reaction will be.  We get Consumer Confidence on Tuesday and Thursday is Productivity, which was up a blistering 5.2% in Q3 and, if that keeps up – then the Fed can lower rates and we’re almost looking at a perfect soft landing for 2024 – Goldilocks, as they like to say!

 

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