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🤑 Amazon, $4B More Into Anthropic

+ College students used Meta’s smart glasses to dox people in real time

November 22, 2024

Good afternoon! Who is Scott Bessent, the Treasury pick? He’s a hedge-fund heavyweight and founder of Key Square Capital Management, known for his strategic market calls and close alignment with Trump’s economic agenda. Previously the CIO at Soros Fund Management, Bessent has championed Trump’s policies, including his “3-3-3” plan: reducing the budget deficit to 3% of GDP, spurring 3% growth, and boosting oil production by 3 million barrels a day.

Bessent’s nomination, however, hasn’t been without pushback. His ties to George Soros and initial hesitation to back Trump’s tariffs have drawn criticism from some within Trump’s orbit. Still, he’s emerged as a key adviser, winning Trump over with his financial expertise and market insights. If confirmed, Bessent will face the challenge of steering Trump’s bold economic goals through Washington’s political labyrinth.

MARKETS

*Stock data as of market close*

  • The Dow climbed 0.97% on Friday, closing at an all-time high of 44,296.51 and marking its third straight winning session. The S&P 500 added 0.35% for its fifth consecutive gain, while the Nasdaq inched up 0.2%, held back by a rough day for big tech.

  • November’s economic activity showed strong momentum, with services posting the fastest growth since April 2022. Meanwhile, Bitcoin continued its climb toward $100,000, keeping investors on edge as stocks wrapped up the week on a high note.

STOCKS
Winners & Losers

What’s up 📈

  • Elastic surged 14.77% after the software company exceeded Wall Street’s expectations for its fiscal second-quarter earnings, driven by rising demand for AI applications. ($ESTC)

  • Texas Pacific Land climbed 14.15% after the announcement that it will be joining the S&P 500, replacing Marathon Oil. ($TPL)

  • Super Micro Computer continued its rebound, rising 11.62% as investors regained confidence in the server maker after a week of strong updates, including a new auditor. ($SMCI)

  • MicroStrategy rose 6.19%, reversing steep losses from the previous session as bitcoin neared $100,000. ($MSTR)

  • Carpenter Technology gained 5.68% after JPMorgan initiated coverage with an overweight rating, highlighting strong demand for its premium steel products. ($CRS)

  • Deckers Outdoor added 5.63%, reaching an all-time high after Needham initiated coverage with a buy rating, calling it a top-quality company. ($DECK)

What’s down 📉

  • Reddit dropped 7.18% after Tencent Holdings reduced its stake, and Advance Magazine Publishers made moves to establish a credit facility tied to its Reddit shares while retaining control. ($RDDT)

  • Intuit sank 5.68% despite beating earnings expectations last quarter, as the company forecasted weaker results in its consumer group for the next quarter. ($INTU)

  • Palo Alto Networks fell 3.61% despite exceeding earnings estimates, with investors unimpressed by its full-year guidance. ($PANW)

  • Nvidia slid 3.22%. ($NVDA)

AI
Amazon Throws Another $4 Billion into the AI Ring

Amazon is going all-in on artificial intelligence, tossing an additional $4 billion into Anthropic’s war chest.

This San Francisco-based AI upstart, known for its Claude chatbot, has already secured $8 billion in Amazon investments—making it clear the tech giant wants a piece of the AI action. And the partnership isn’t just about cash. Anthropic is doubling down on AWS as its primary cloud provider, fully embracing Amazon’s Trainium and Inferentia chips to supercharge its AI ambitions.

This investment positions Amazon as a heavyweight in the generative AI arms race, where Anthropic competes head-to-head with OpenAI’s ChatGPT and Google’s Gemini.

As Claude gains traction in industries like finance and healthcare, Amazon is banking on Anthropic to help boost its AI credentials while offering businesses tailored AI solutions through AWS.

Claude Gets a Cloud Boost

AWS isn’t just hosting Anthropic’s AI models; it’s adding exclusive perks to woo enterprise clients. For instance, AWS customers will soon get early access to a new Anthropic feature allowing them to fine-tune AI models using their own data. This unique offering sets AWS apart in a crowded cloud market and ensures Amazon gets a return on its massive investment.

Meanwhile, Anthropic has been busy leveling up Claude. Recent updates allow the AI assistant to perform human-like tasks on computers—think navigating websites and managing complex workflows. Add to that the launch of Claude Enterprise, and it’s clear Anthropic is aiming to dominate the AI-for-business space.

AI’s Billion-Dollar Boom

Amazon’s big bet underscores the sheer scale of AI’s financial demands. Anthropic’s CEO predicts the cost of developing next-gen models could hit $100 billion in the near future—a steep climb from this year’s $100 million. But with the generative AI market expected to rake in $1 trillion within a decade, it’s a gamble Amazon is willing to take.

Still, not everyone’s cheering. Regulators are increasingly wary of tech giants gobbling up the AI market, with U.S. officials scrutinizing deals like this for potential anti-competitive behavior.

But for Amazon, the playbook is clear: dominate AI, bolster AWS, and make sure it’s the cloud behind all the big brains of tomorrow.

NEWS
Market Movements

EARNINGS
Gap Jumps After Lifting Outlook Ahead of Key Shopping Season

Gap Inc. is on a roll. Shares of the retail giant jumped 12% today after it raised its full-year outlook, marking a strong start to the all-important holiday shopping season.

The company’s fiscal Q3 results outperformed Wall Street’s expectations, with earnings per share hitting $0.72 compared to the forecasted $0.58 and revenue climbing 2% to $3.83 billion. CEO Richard Dickson, who took the reins in 2023, credited the company’s turnaround to stronger brand identities, better pricing strategies, and nostalgic marketing campaigns.

Despite challenges like unseasonably warm weather and hurricanes that temporarily closed 180 stores, Gap’s holiday season is already looking promising. Dickson emphasized the company’s improved execution and momentum compared to a year ago, stating, “Our brands are in a much more pronounced place than they were last year.”

Breaking Down the Brand Performance

Gap’s eponymous brand saw a 3% increase in comparable sales, boosted by improved marketing and product offerings. Meanwhile, Old Navy, its largest revenue generator, posted flat comparable sales, slightly missing analysts’ expectations.

Warmer weather impacted kids’ outerwear sales, but Dickson noted a rebound as conditions normalized. Banana Republic, the trendy workwear line, reported a 2% rise in sales but struggled with a 1% drop in comparable sales, reflecting ongoing efforts to refine its fundamentals.

Athleta, Gap’s athleisure brand, stood out with a 4% sales increase and a 5% boost in comparable sales, signaling a recovery under new leadership. The turnaround is particularly notable given last year’s 19% drop in comparable sales for the brand.

Gearing Up for the Holidays

With four consecutive quarters of sales growth, Gap is banking on a strong holiday season to sustain its momentum. The company has raised its full-year guidance, now projecting sales growth of 1.5% to 2%—far above analysts’ expectations of 0.4%. Operating income forecasts were also bumped up, signaling confidence in profitability.

Looking ahead, Dickson’s strategy of leveraging nostalgia and celebrity partnerships seems to be paying off. While the company still faces challenges, particularly in product assortment and full-price selling, Gap’s recent performance shows it’s heading in the right direction.

Investors and holiday shoppers alike will be watching closely to see if the comeback story continues.

Calendar
On The Horizon

Next Week

Next week is a quick one, thanks to Thanksgiving shutting down markets on Thursday and trimming Friday’s trading to a half day. With only a few reports to track, the action is packed into just two trading days.

Tuesday brings real estate updates like the S&P Case-Shiller home price index and new home sales, alongside a snapshot of consumer confidence. On Wednesday, brace for a flood of data: initial jobless claims, durable goods orders, a GDP revision, and the main event—PCE inflation.

Earnings are similarly crammed into two days:

  • Monday: Bath & Body Works ($BBWI), Zoom ($ZM), and Agilent Technologies ($A).

  • Tuesday: Best Buy ($BBY), HP ($HPQ), Dell Technologies ($DELL), CrowdStrike ($CRWD), Analog Devices ($ADI), Abercrombie & Fitch ($ANF), Macy’s ($M), Burlington Stores ($BURL), Dick’s Sporting Goods ($DKS), Kohl’s ($KSS), and Manchester United ($MANU).

After that, it’s all turkey, touchdowns, and terriers in the Thanksgiving home stretch.

NEWS
The Daily Rundown

  • 🎥 Hollywood Bets Big on "Wicked" and "Gladiator II": Wicked and Gladiator II hit theaters today, with Hollywood watching closely to see if these blockbusters can replicate the success of Barbie and Oppenheimer. Wicked is expected to open between $100–$110 million, while Gladiator II may bring in $65–$80 million. Despite positive reviews, both films carry massive production costs, with Wicked’s first installment at $150 million and Gladiator II at over $350 million.

  • 🔗 ICC Targets Netanyahu with Arrest Warrant: The International Criminal Court issued a warrant for Israeli PM Benjamin Netanyahu over alleged crimes against humanity, though enforcement remains uncertain as Israel and the U.S. are not ICC members.

  • 🚀 Russia Escalates with Experimental Missile Launch: Russia launched a medium-range experimental missile in response to U.S. and British long-range weapons in Ukraine. This marks the latest escalation in a war lasting over 1,000 days.

  • 🕹️ Niantic Turns Pokémon Go Data into AI Gold: Niantic announced it’s using geolocated data from Pokémon Go players to train a new AI model for real-world navigation. The model could power augmented reality tools and robotics, raising privacy concerns from past critics.

  • 🚆 China's High-Speed Rail Faces Overcapacity Issues: China is set to surpass 30,000 miles of high-speed rail, a feat costing over $500 billion in five years. While urban routes thrive, many rural stations remain underutilized, contributing to the railway operator’s nearly $1 trillion debt.

  • 📉 SEC Chair Gary Gensler to Step Down: Gary Gensler, appointed by President Joe Biden and known for his tough stance on crypto, has announced he will step down as SEC Chair in January.

RESOURCES
The Federal Reserve Resource

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