The rising tide of Generative AI is reshaping industries, heralding a significant technological evolution. This has far-reaching implications, especially for sectors that are integral to our investment strategy. Notably, developments in Generative AI from companies such as OpenAI, Apple, Meta, and Google provide insights into how this technology is evolving and what it means for businesses and investors alike.

Stay up-to-date on the latest AI trends – here’s what’s new this week.

In the news this week:

  • Apple’s development of an on-device large language model (LLM) for iOS 18 underscores the tech giant’s commitment to privacy and speed, two critical aspects that often concern AI technologies. By focusing on on-device processing, Apple aims to differentiate its AI approach from competitors and potentially set a new standard for integrating AI into consumer technology. This development not only highlights the rapid advancements in AI technologies but also the growing importance of balancing power with privacy considerations.
  • Amazon Web Services’ expansion of the Amazon Bedrock platform introduces new capabilities that simplify the development and deployment of generative AI applications. This move shows Amazon’s vision of making AI more accessible and customizable for businesses, addressing the rising demand for generative AI solutions across various sectors.
  • Meta’s introduction of Llama 3, an enhanced AI model showcasing superior capabilities in code generation and general text generation. This AI model is now embedded into Facebook, Instagram, and WhatsApp. This development marks a significant leap in the AI landscape, enabling more efficient and sophisticated operations across a range of applications.

ARTI Portfolio Highlights

Meta Platforms, Inc.

Meta Platforms reported a strong Q1 with a total revenue of $36.5 billion, up 27% year-over-year, and a net income of $12.4 billion, indicating robust growth and profitability. The company is experiencing healthy growth in WhatsApp’s daily active users in the U.S. and has launched Meta AI, receiving positive feedback. Significant investments are planned in AI, aiming to lead in AI services quality and usage, despite a multi-year investment cycle before monetization. However, Reality Labs reported an operating loss of $3.8 billion, and the company faces regulatory challenges that could impact its business. Meta expects Q2 2024 total revenue to be in the range of $36.5 to $39 billion, reflecting cautious optimism amidst a complex global economic environment.

Meta Platforms launched Meta AI, powered by the new LLaMA 3 model, with tens of millions of users trying it and providing positive feedback. This AI assistant is being rolled out in English-speaking countries first, with plans for more languages and countries, highlighting Meta’s ambition to lead in AI services quality and usage.

Meta Platforms plans to significantly increase investment in AI over the coming years, aiming to build more advanced models and the largest-scale AI services in the world. This includes scaling CapEx and energy expenses for AI, indicating a strategic shift towards AI despite the expectation of a multi-year investment cycle before monetization.

About 30% of Facebook’s feed and over 50% of Instagram content is now delivered by AI recommendation systems, doubling over the last couple of years. This has been a key factor in improving app engagement and ad relevance, demonstrating the positive impact of AI on user experience and advertising efficiency.

Alphabet Inc.

Alphabet, Google’s parent company reported a strong first quarter in 2024, with a 15% increase in consolidated revenues to $80.5 billion, driven by the search and cloud segments. YouTube and Cloud are projected to reach a combined annual run rate of over $100 billion by the end of 2024, highlighting significant growth. The company emphasized its AI leadership, consolidating AI model development under Google DeepMind and launching Gemini 1.5 Pro. The Google Cloud segment saw a 28% revenue increase to $9.6 billion, with a notable operating margin of 9%. Alphabet’s advertising business also showed strong performance, with search advertising revenues growing by 14% and YouTube advertising revenues by 21% year-on-year.

Alphabet’s reported CapEx for the first quarter was $12 billion, primarily driven by investments in technical infrastructure to support AI initiatives. The significant year-on-year growth in CapEx reflects Alphabet’s confidence in the opportunities offered by AI across its business. This strategic investment is aimed at maintaining Alphabet’s technological leadership and supporting long-term growth, highlighting the company’s commitment to innovation and future readiness.

Alphabet emphasized its leadership in AI, highlighting the consolidation of AI model development under Google DeepMind and the launch of Gemini 1.5 Pro. These moves are aimed at streamlining AI development and leveraging AI to enhance Alphabet’s product offerings, including search and cloud services. The focus on AI innovation is a strategic effort to stay ahead in the technology curve and meet the evolving needs of users and customers, potentially driving future growth and maintaining Alphabet’s competitive edge.

Microsoft Corporation

Microsoft’s earnings call highlighted significant growth and strategic investments, particularly in cloud and AI technologies. Microsoft Cloud revenue surpassed $35 billion, a 23% increase, driven by strong demand for cloud services. Azure’s market share and AI customer base continue to expand, with over 80% year-over-year increase in $100 million-plus Azure deals. GitHub Copilot and Copilot for Microsoft 365 saw rapid adoption, indicating Microsoft’s leadership in AI innovation. Despite the mixed financial impact of the Activision acquisition, Microsoft expects full-year FY24 operating margins to increase, reflecting efficient cost management and strategic investment in growth areas.

Microsoft’s strategic partnership with OpenAI has led to more than 65% of the Fortune 500 using Azure OpenAI service. The introduction of models as a service offering and partnerships for AI applications, such as with G42, underscore Microsoft’s leadership in AI innovation and its ability to attract significant enterprise customers.

The number of Azure AI customers and their average spend continues to increase, demonstrating the growing adoption and value of Microsoft’s AI offerings in the market. This trend is supported by the acceleration of revenue from migrations to Azure and the expansion of Azure Arc’s customer base.

LinkedIn’s AI-assisted messages and collaborative articles have significantly increased engagement on the platform, with AI features also accelerating LinkedIn premium growth. This demonstrates the successful integration of AI to enhance user experience and business performance.

Investing in Artificial Intelligence with ARTI ETF

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Evolve Artificial Intelligence Fund (ARTI) is Canada’s first Artificial Intelligence Fund that uses generative AI in portfolio construction. ARTI is designed to provide investors with exposure to global securities from AI companies deemed to benefit from the increased global adoption of AI.

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Tags AI  artificial intelligence  Google  large language models  llm  machine learning  Meta  Microsoft