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📣 Tech stocks's worst decline since August 5th.

📣 Tech stocks's worst decline since August 5th.

$100B AI data centers are becoming a reality.

Techonomy Barista
September 05, 2024

Welcome to another day at the Techonomy Barista, where Tech meets Econ, and common sense takes a holiday! ⛷️

Take a deep breath and sip your fav beverage while we unveil the top happenings for today.

A retro-futuristic view of the city of LA.

Today’s crunchy news, air-fried for you:

Obscure data centers powering top AI tech companies.
Tech stocks lead in Wall St.’s worst decline since 5th August.
GPTNext by OpenAI.
China’s woes continue with its services sector slowing.
Decline in traditional TV ads vs streaming ads.
The great immigration surge of the 2020s. 🚀
Go full Stewie: Global markets go south.

Markets

Snapshot of markets: top 5 economies in the world.

Economic Calendar

Calendar covers high-impact events for the five largest economies. All times in EST.

1. Secretive AI data centers powering tech giants.

Source: The Information, Meta disclosures

Tech giants are playing hide-and-seek with their AI supercomputers, but there’s scoop on 17 data centers across 7 states that'll make your wallet cry. We're talking a cool $50 billion price tag, with $35 billion just for Nvidia's fancy chips. 🤖
🔌🏠These AI beasts are power-hungry monsters, gobbling up enough juice to light up 100,000 homes. Looks like your neighbor's Christmas light display has some serious competition!
It's a race to the "next plateau" of AI, and everyone's flexing their GPU muscles. Elon Musk claims he's got 100,000 chips in Memphis, making other AI devs sweat like they're in a sauna. But hey, maybe he's just counting his Dogecoin stash?
Cooling these brain-melting machines is trickier than keeping ice cream solid in the Sahara. Microsoft's so desperate, instead of cooling with air, they're dunking their chips in water, literally. 💦

Source: X

😰 Sam Altman's having FOMO over Musk's alleged supercomputer flex, so much so that he's whispering to Microsoft execs about xAI's potential chip supremacy. Now he's scrambling to cook up his own silicon recipes with Broadcom.
North Dakota is being considered by two large AI companies for developing data centers at a cost of $125 billion a piece. 🫰

2. Wall Street's rollercoaster: Economy fears spark market nosedive. 📉😱

Credit: WSJ.

Stocks took a nosedive on Tuesday, with major indexes having their worst day since August 5th. 📊🎢
S&P 500 dropped 2.1%, Nasdaq fell 3.3%, and Dow Jones lost about 626 points (1.5%). 🔴📉
Renewed worries about a slowing economy gripped investors, sparked by gloomy manufacturing data. 🏭😟
Tech stocks led the decline, with Nvidia dropping 9.5% and losing $279 billion in market value in one day. 💻
Despite the tumble, S&P 500 is still up 16% for the year, showing the market's resilience. 📈

3. What is GPTNext by OpenAI?

Tadao Nagasaki, the CEO of OpenAI Japan, mentioned recently that Project Orion could be named GPTNext and is set to evolve 100 times more than its ancestor, GPT-4o.

CEO of OpenAI Japan says GPT-Next will be released this year, and its effective computational load is 100x greater than GPT-4
More on Orion and Strawberry:
"GPT-4 NEXT, which will be released this year, is expected to be trained using a miniature version of Strawberry with… x.com/i/web/status/1…
— AI Notkilleveryoneism Memes ⏸️ (@AISafetyMemes)
11:43 AM • Sep 3, 2024

As a reminder, Project Strawberry is OpenAI's secret sauce, rumored to have reasoning skills that would make Sherlock Holmes jealous.
This AI brainiac scored over 90% on the MATH benchmark, proving it can solve equations faster than you can say "Pi to the 100th digit".
Strawberry's not just smart; it's a data chef, whipping up high-quality synthetic training data like it's making digital soufflés.
Orion, on the other hand, is positioned as OpenAI’s next flagship language model, potentially succeeding GPT-4.
It aims to be a jack-of-all-trades, juggling text, images, and videos like a digital circus performer, putting it in the ring with Google's Gemini.

4. China’s slowing services sector adds to economic woes.

China's services PMI stumbled to 51.6 in August, falling short of the expected 51.8. It's still above 50, so there's growth, but it's moving slower than a giant panda on a lazy Sunday.
💼 Companies are tightening their belts faster than a weightlifter before a competition, adopting a cautious approach to hiring. The job market's feeling the squeeze as businesses prioritize cost-saving.
🏙️ Official data shows service industries like restaurants and tourism are teetering on the edge of contraction. This adds to the economic headache caused by the ongoing real estate crisis, leaving the government scrambling for solutions.
Financial markets reacted to the news: the yuan pared gains, bond yields dropped to near 20-year lows, and the CSI 300 Index fell 0.5%. These movements reflect growing concerns about China's economic health.
With manufacturing contracting for four straight months and services now showing weakness, China's 5% growth target is looking about as achievable as finding a quiet corner in Shanghai during rush hour. 🏭

5. Decline of traditional TV ads VS streaming ads.

Source: The Information

Disney's streaming ad revenue is set to hit $4.5 billion this year, with Hulu carrying the team like LeBron James in his prime 🏀
YouTube's been in the ad game longer than most millennials have been alive, raking in a whopping $31.5 billion in annual ad revenue.
Traditional TV ad revenue is expected to plummet from $51.8 billion in 2022 to $44.8 billion this year.
Streaming ads are projected to overtake traditional TV ads by 2029, like a tortoise finally beating the hare in a marathon of epic proportions. 🐢
Warner Bros. Discovery is struggling to catch up in the streaming ad race, generating only about $1 billion compared to NBCUniversal and Paramount Global's $2 billion each.

6. America's new melting pot: The great immigration surge of the 2020s. 🚀

Credit: WSJ

The U.S. is experiencing its biggest immigration wave since sliced bread was invented, with over 9 million new arrivals since 2020. Talk about a population boom! 💥
Without these newcomers, America's population growth would be slower than a snail on vacation. Thanks to immigration, it's now at a peppy 1.2% annually.
Most of these folks aren't exactly following the traditional immigration playbook. Less than 30% are "lawful permanent residents." The rest? Let's just say they're taking the scenic route to citizenship.
The newcomers are young, eager to work, and ready to shake up the job market. It's like America just got a shot of espresso right in its labor force.

Source: WSJ

Spanish is so hot right now! About 80% of recent immigrants speak it. Duolingo stocks must be through the roof. 🗣️📈
These immigrants are spreading out across the country like butter on toast. Top destinations? Florida, Texas, California, New York, and New Jersey. Sorry, Alaska – maybe next time? 🍞🧈
While they're starting in jobs like construction and housekeeping, don't be surprised if your next software developer has an accent. These folks are climbing the career ladder faster than you can say "American Dream."

7. Global markets' wild ride: When chips are down, stocks go south. 🎢

Credits: Techonomy Barista Analysis.

Wall Street sneezed, and now Asia's caught a cold. It's like a financial domino effect, but with more zeros. 🤧
Nvidia's 9.5% tumble sent shockwaves through the tech world. Seems like AI isn't the magic money tree everyone thought it was, while the U.S. manufacturing sector is still in a funk, contracting like it's trying to fit into last year's jeans.👖
Japan's Nikkei took a nosedive, dropping 3.8%. South Korea and Taiwan joined the pity party, with Samsung and TSMC feeling the heat. It's a bad day to be a chip.
Even Australia's economy growing couldn't save its market from the global gloom. G'day? More like G'bye gains.
Oil prices are slipping faster than a penguin on ice, thanks to Libya and China's economic woes.