Bad news from Meta, Oracle

00:00:00: There you go, markets are facing the biggest AI reality check in months after Meta unveiled plans to commercialize its vast AI infrastructure and Oracle warned that heavily leveraged customers like OpenAI may struggle.

00:00:20: The developments feel fierce.

00:00:22: obviously that Bit Technologies AI spending boom may be peaking, sanding chip makers sharply lower today and dragging the Korean Cosby Index down by more than five percent.

00:00:32: Meanwhile, software area inflation and easing oil prices reinforce hopes among investors at inflation.

00:00:39: pressures are fading for good maybe but doesn't answer the question of would that pay enough to avoid a broader market sell-off?

00:00:47: So welcome to Swisscodes!

00:00:50: Market Talk is Thursday, the second of July.

00:00:53: I'm Ipeko Skardish-Kreya.

00:00:54: we will talk about tech and macro but before we do as always please keep in mind that opinions are my own.

00:01:01: this not financial advice.

00:01:10: To

00:01:12: be honest, I was expecting to start this episode talking about US jobs data.

00:01:16: Year area inflation update and major central bankers latest thoughts about inflation on where the monetary policies are headed toward.

00:01:23: And i will get there.

00:01:24: don't worry but instead!

00:01:38: other third parties and continue with Oracle warning that AI investments may not turn into profit.

00:01:45: So let's start with Meta!

00:01:46: Metta is now willing to step in the cloud business, sell computing capacity chips and access to its AI models to companies joining Microsoft, Amazon & Google.

00:01:59: in this area.

00:02:00: Meta jumped nearly nine percent in yesterday's trading session on the news, as investors were quite happy to see and hear that massive AI infrastructure spending that looked nowhere life changing at Meta will finally end up profitable.

00:02:18: business, but the news sounded alarm bell in my ears yesterday more than anything else.

00:02:23: Meta has spent just too much!

00:02:25: Eating more then his stomach could take and now needs to spit a part of it out on the way.

00:02:31: he took that on its shoulders?

00:02:33: And it failed to release a go-to AI model and is moving into plan B for making investments worth.

00:02:40: Obviously Plan B will cost the company more.

00:02:47: Itself thought it would be and investors thought the company would be as a result.

00:02:51: I didn't get why The Company rally nine percent on yet another failed business attempt.

00:02:56: And then, more worryingly, Meta is certainly not alone in the camp of those who spend too much On AI infrastructure.

00:03:03: There could be other cockroaches if we take Jamie Diamonds words.

00:03:06: If that's the case We can see big technology slow down spending on AI and the letter.

00:03:11: what hurt the stellar future revenue expectations for the chip makers that have gun ballistic over the past year.

00:03:18: This is exactly why we see the Korean Cosby Index sink more than five percent today!

00:03:23: Second, Oracle disclosed part of his annual financial report that came as quite a shocker to me at least an important warning even though less then three percent sell-off was nowhere close to reflecting the magnitude of what they said.

00:03:38: but the company warned that construction data centers may eventually cost more and take longer than expected due to supply chain issues, government restrictions.

00:03:52: Okay, that's fair.

00:03:53: But more importantly the company said So.

00:04:19: in short, Oracle is just saying that open AI may have ordered too much food.

00:04:23: May not eat at all and worse!

00:04:25: May not pay the bill.

00:04:26: And well into context of AI's ecosystem where many best performing companies made big two sided deals with each other You invested my company and I buy chips from you.

00:04:38: Such a misstep could have terrible market consequences.

00:04:42: As such Nasdaq sold off one half percent yesterdays trading session With chip makers leading.

00:04:48: lost The time of fear that the big technology companies may have spent too much and may eventually slow their spending plans.

00:04:57: And oh, the news that Apple is negotiating today with blacklisted Chinese memory chip makers to use them in devices sold in China added sold to the ones China makes up around fifteen percent off apple sales.

00:05:09: another company's could also follow these steps as they also see there profits being squished by Unreasonable jump in membership prices.

00:05:18: Unreasonable, yes because we are talking about high triple digit percent rise in membership prices.

00:05:24: As such Micron lost ten per cent yesterday and other chip makers felt the heat as well quite nuttably with the Van Axe Micon Doctor ETF falling more than five per cent in a single session.

00:05:36: And then the Solov hit Neocloud providers such as Corvive and Nibius, as well.

00:05:40: Both printed double-digit losses – thirteen percent for Corviv, seventeen percent for Nibios in this session while their S&P five hundred closed yesterday's trading sessions with a smaller point twenty two percent pain omni.

00:05:54: As the majority of firms in their S & P five hundred actually gained despite bad smell from technology.

00:06:00: A further fall in oil prices.

00:06:02: On news that peace negotiations between the US and Iran are going well certainly helped, U.S.

00:06:07: growth fell nearly three percent yesterday to below six-to eight dollars per barrel level.

00:06:12: Central bankers at Meade in central these days sounded optimistic about inflation expectations.

00:06:18: both new chair Kevin Warsh and European Central Bank Chief Kristen Lagarde reckoned that The recent retreat we saw in oil price have had an easing impact on inflation.

00:06:31: Needless to say, this is development that could help them avoid further monetary policy tightening in the coming months.

00:06:40: The euro area CPI data came in softer than expected.

00:06:43: In June, preliminary release yesterday.

00:06:46: the headline inflation is from three point two to two-point eight percent versus a retreat of three per cent expected by analysts on a yearly basis.

00:06:54: while core inflation is form two points six to two point four per cent verses twenty half per cent penciled and buy analyst year dollar then ease one thirteen sixty one level that is setting it touch above key Fibonacci support this this morning, which is the major thirty-eight point two percent Fibonacci retracement on twenty five to twenty six rally near one thirteen fifty level.

00:07:19: that should distinguish Europe's year and a half long appreciation against US dollar from The US dollar, on the other hand strengthened across-the-board despite a soft looking ADP print.

00:07:55: The U.S.

00:08:09: economy may have added around one hundred and fourteen thousand new non-farm jobs in the month of June, worth a steady which is growth.

00:08:25: explicit emphasis on inflation and price stability, any heating up in wages growth could eventually revive the hawkish Fed expectations.

00:08:39: questions around the technology rarely are getting louder.

00:08:43: The good news is that, But wait, we recorded the third quarter outlook with Glank Oksani yesterday from NFT partners and he told me that AI gains will change hands eventually.

00:09:10: And it would be still interesting to accumulate NASDAQ at depths!

00:09:15: So I say that much only and let you discover a full conversation when published in few days.

00:09:21: for now... This episode of Market Talk has been helpful and it has been insightful to you.

00:09:35: So please do not hesitate, leave your comments!

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