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Latest AI Updates: OpenAI, Microsoft, ARM, Musk’s xAI & More

Plus500 | Thursday 09 May 2024

The field of artificial intelligence (AI) shines again as big names from OpenAI to Microsoft, and Tesla’s (TSLA) CEO Elon Musk’s xAI make the headlines. 

Here’s what you need to know about the latest AI updates and what these mean for the markets:

An illustration of AI

Arm: AI Stock Falling?

British semiconductor company Arm Holdings (ARM) went public in September of last year as the AI hype drove the company’s shares upward that month following its IPO.  However, it seems that while AI may still be boosting many enterprises, it is not enough for Arm which fell by 7% following its latest earnings report on Wednesday, May 8, 2024. 

This is because, in its earnings call, the company provided full-year revenue guidance which came in below expectations and showed uncertainty “around the pace of the build-out of artificial-intelligence computing and whether investors have lifted AI-related stocks more than is justified by their growth rates.” In addition, 

The report also led to losses among other popular AI stocks such as AMD (AMD) and NVIDIA (NVDA) both of which traded 0.5% lower on Wednesday. Interestingly, some note that while “Arm’s designs are found adjacent to chips that power AI applications, the company’s revenue and profit have not benefited from AI to the same degree as NVIDIA’s.” 

Nonetheless, despite these less-than-rosy results, it is important to note that there are still some market participants who believe that Arm could still benefit from the AI hype.

AI Competition Heats Up Between OpenAI and Google

OpenAI has undoubtedly been at the forefront of the AI revolution, especially with its famous AI chatbot ChatGPT. Likewise, while OpenAI is known for its AI efforts, Alphabet is known for its search engine Google. Moreover, more and more individuals may be referring to ChatGPT instead of Google for answers.

It was also recently revealed that OpenAI is working on integrating a search engine feature within ChatGPT, possibly rivaling Alphabet’s Google. This integration will reportedly allow ChatGPT users to receive answers with web citations and sources all while adding images and infographics where needed. This development comes against the backdrop of rising AI competition whereby OpenAI, itself, may be struggling to outpace its rivals. As such, if this comes to fruition, it could have important implications for AI stocks and tech companies.

It will be interesting to see how Alphabet, which currently has about 90% of the search engine market share, will respond to this and how its famous search engine which has been around since 1998 will fare. 

Elon Musk’s xAI: A New Player in the AI Field?

Tesla’s controversial CEO has been adamant about his perception of AI and his efforts to advance it in a “beneficial” way to humanity whilst understanding the inherent risks. He not only integrated AI into his enterprises such as Tesla and X (formerly Twitter), but he is also creating his own AI startup; xAI. 

According to some experts, this company is expected to close this funding round soon and is expected to be valued at nearly $18 billion. Furthermore, according to “a person familiar with the matter”, xAI “will be able to train on high-quality data from X.” 

Nonetheless, whether or not this new venture will actually prove to be fruitful is yet to be seen. It will also be worth keeping tabs on any news from Musk himself, especially given the fact that the aforementioned news is not confirmed yet.

Microsoft’s New Copilot AI: Can Anyone Become “a Prompt Engineer”?

Tech giant, Microsoft (MSFT) has been hard at work when it comes to AI. Here are the main highlights:

  • Creating a top-secret generative AI model for US spies that does not require an internet connection and can allow them to “analyze top-sector information.” This is considered “the first time a major large language model has operated fully separated from the internet.” This is also considered one of the most secure systems for US intelligence as it does not rely on cloud services. (Source: Bloomberg)

  • Creating a prompt for genAI that would potentially “turn everyone into a prompt engineer.” This is done through the Microsoft 365 Copilot which is a paid service “that adds an AI assistant to Office apps.” This would also allow Copilot for Microsoft 365 users to manage, publish, and create prompts that can be specified to business teams and would facilitate the sharing of prompts for colleagues.

What Else?

Besides the abovementioned news, it may be worth noting what some of the most important investors and businessmen in the world think of the burgeoning realm of AI.

In a recent Berkshire Hathaway annual meeting last week, Warren Buffet stated that he does not know a lot about AI and that he prefers to avoid technology outside of his scope of knowledge. He also stated that AI is like a “genie” in a bottle, that could have disastrous effects if it gets out. He even went on to say that it resembles nuclear weapons’ “unintended consequences” and could harm the labour market. 

Whether or not Buffet is correct is yet to be seen. For now, traders and investors alike may want to keep track of new developments and any news to come in order to see what will happen in this eerie yet fascinating world of technology.

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