Google and Nvidia made duelling announcements in April that have implications for advancements in both AI and the metaverse.
Google published details about its latest artificial intelligence supercomputer in April, claiming its computer was faster, more efficient, and required nearly 2x less energy than rival Nvidia’s systems. While Nvidia’s graphics processing units (GPUs) control more than 90% of the market for AI model training and deployment, the new Google supercomputer uses 4000 of Google’s own tensor processing units (TPUs), which have been in development for AI training since 2016.1
For its part, Nvidia unveiled new software called NeMo Guardrails, built to help AI designers prevent their models from stating incorrect or invented facts as accurate, prevent the chatbots from discussing harmful subjects, and prevent them from opening security vulnerabilities. The tendency of large language models like ChatGPT to invent information—so-called “hallucination”—is an ongoing challenge with the latest generation of AI models.2
As with Meta’s AI Research SuperCluster (RSC) supercomputer announced last year, next-generation supercomputers will be necessary for the massive computing needs of the metaverse. The improved AI models that such computers will make possible—ones that overcome the hallucination problem—will be the backbone of content-moderation algorithms, multimodal signal sorting, and augmented-reality features (amongst others) that will make the metaverse a safe, functional, and enjoyable space for users.3
Meanwhile, hints continue to trickle out on what we can expect from Apple’s long-rumoured mixed reality headset, reportedly set to debut at Apple’s Worldwide Developers’ Conference in June. Reporting in April suggests the mixed reality headset can switch between virtual reality (VR) and augmented reality (AR) and that the device will focus heavily on gaming, sports, and collaborative tools, as well as run Apple Fitness+ workouts in VR. Customers will be able to use “millions” of other existing apps on the headset’s 3D interface “with slight modifications” from developers.4
The device will also allow Apple to leverage its streaming rights for Major League Soccer and Major League Baseball by enabling “immersive sports viewing,” as well as “immersive video,” which will let users watch videos in virtual environments like a desert or the sky.5
The move into mixed reality has been signaled by Apple for years, and more recent generations of iPhones already contain metaverse-ready hardware and software.6 But the ultimate goal for an Apple mixed reality headset is to move such devices out of the hands of enthusiasts and early adopters and make them a widespread consumer product. If successful, some industry watchers suggest an Apple AR/VR headset could be the company’s biggest hit since the iPhone.7
Updates on Specific Companies
Meta Platforms Inc
Meta reported its first sales increase in four quarters in April and issued optimistic guidance for the rest of the year. Meta’s Q1 sales were up 3% year over year to $28.6 billion, and for Q2 Meta now expects revenue of between $29.5 billion and $32 billion against analyst expectations of $29.5 billion.8
On the April earnings call, CEO Mark Zuckerberg emphasized generative AI’s role in Meta’s future. Promising that generative AI will soon “touch every single one of our products,” Zuckerberg highlighted plans to introduce “AI agents” like chatbots or digital assistants like Siri and Alexa to billions of users—businesses and regular people alike—for tasks including business messaging, customer support, the creation of metaverse avatars, and the writing of code. Zuckerberg also said that any suggestion Meta is moving away from the metaverse is “not accurate,” and highlighted the upcoming release of the next Quest VR headset later this year.9
Microsoft reported revenue of $52.86 billion, beating expectations of $51.02 billion. Net income was $18.3 billion (up 9%), while revenue grew 7% year-over-year. Microsoft’s cloud-based offerings continued attracting new customers with sales up 22% to $28.5 billion. Microsoft also plans to increase spending on its cloud data centers to meet growing customer demand for new AI tools.10
It wasn’t all good news for Microsoft in April, however. UK antitrust regulators blocked Microsoft’s $69 billion purchase of Activision Blizzard, one of the world’s largest video game developers, over concerns the deal would threaten competition in cloud gaming given that Microsoft already holds a 60%-70% global market share in cloud gaming.11
While Microsoft and Activision Blizzard plan to appeal the ruling, the deal isn’t out of the woods even if they are successful. Both the US Federal Trade Commission and the European Union are evaluating the proposed takeover based on similar competition concerns.12
With Microsoft initially talking up the importance of the Activision Blizzard acquisition as strengthening its future offerings in the metaverse, if the deal ultimately falls through it remains to be seen what that means for Microsoft’s plans to compete with metaverse competitors like Sony, Amazon, and Google.13
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MESH ETF Portfolio Strategy and Activity
For the month, Meta Platforms Inc made the largest contribution to the Fund, followed by Ubisoft Entertainment and Microsoft Corp. The largest detractors to performance for the month were Snap Inc, followed by Roblox Corp and Coinbase Global Inc.
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- Leswing, K., “Google reveals its newest A.I. supercomputer, says it beats Nvidia,” CNBC, April 4, 2023; https://www.cnbc.com/2023/04/05/google-reveals-its-newest-ai-supercomputer-claims-it-beats-nvidia-.html
- Leswing, K., “Nvidia has a new way to prevent A.I. chatbots from ‘hallucinating’ wrong facts,” CNBC, April 25, 2023; https://www.cnbc.com/2023/04/25/nvidia-nemo-guardrails-software-stops-ai-chatbots-from-hallucinating.html
- Dominguez, D., “Meta Unveils AI Supercomputer for the Metaverse,” InfoQ, February 1, 2022; https://www.infoq.com/news/2022/02/meta-metaverse-ai-supercomputer/
- Shanklin, W., “Latest Apple headset rumors say it’ll include VR workouts and sports,” Engadget, April 18, 2023; https://www.engadget.com/latest-apple-headset-rumors-say-itll-include-vr-workouts-and-sports-192316389.html
- Gurman, M., “Apple’s AR/VR Headset to Feature Sports, Gaming, iPad Apps and Workouts,” Bloomberg, April 18, 2023; https://www.bloomberg.com/news/articles/2023-04-18/apple-vr-ar-headset-apps-sports-tv-fitness-gaming-wellness-ipad-features
- “Apple Metaverse; How Apple Enters the New Digital Frontier,” Metamandrill, n.d., https://metamandrill.com/apple-metaverse/
- Mims, C., “Apple’s iPhone Successor Comes Into Focus,” The Wall Street Journal, December 4, 2021; https://www.wsj.com/articles/apples-iphone-successor-comes-into-focus-11638594004
- Vanian, J., “Meta shares pop 12% after company reports first sales increase in four quarters, issues optimistic guidance,” CNBC, April 26, 2023; https://www.cnbc.com/2023/04/26/facebook-meta-q1-earnings-report.html
- Heath, A., “Mark Zuckerberg says Meta wants to ‘introduce AI agents to billions of people’,” The Verge, April 26, 2023; https://www.theverge.com/2023/4/26/23699633/mark-zuckerberg-meta-generative-ai-chatbots-instagram-facebook-whatsapp
- Bass, D., “Microsoft Profit, Sales Top Estimates on Strong Cloud Demand,” Bloomberg, April 25, 2023; https://www.bloomberg.com/news/articles/2023-04-25/microsoft-profit-sales-top-estimates-as-cloud-growth-endures
- Ziady, H., “UK blocks Microsoft takeover of Activision Blizzard,” CNN Business, April 26, 2023; https://www.cnn.com/2023/04/26/tech/microsoft-activision-blizzard/index.html
- Weise, K., Ross Sorkin, A., Browning, K. & de la Merced, M.J., “Microsoft will buy Activision Blizzard, betting $70 billion on the future of games,” The New York Times, January 18, 2022; https://www.nytimes.com/2022/01/18/business/microsoft-activision-blizzard.html