With the rising adoption of Generative AI, we’re witnessing a surge in innovation that is setting the stage for a new era in various sectors, most notably in Information Technology and Communication Services, which are heavily represented in our portfolio.

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

In the news this week:

  • The surge in AI startup valuations, with companies like xAI and Mistral AI hitting unprecedented valuations, is a testament to the burgeoning confidence in generative AI’s potential to revolutionize multiple industries. It showcases a vibrant ecosystem thriving on innovation and underscored by robust investment activity, signaling positive sentiment and a bullish outlook on AI technologies.
  • Apple’s recent announcement about significant AI upgrades for Siri, using Ajax LLM, shows how technology giants are increasingly leveraging Generative AI to enhance functionality. This move by Apple is emblematic of the broader industry trend where companies are employing generative AI technologies to elevate the efficiency and innovation in product and service delivery.
  • Microsoft’s development of its in-house AI model, MAI-1, to compete with tech behemoths like Google and OpenAI, underscores the escalating arms race in the AI domain.

ARTI Portfolio Highlights

Shopify Inc.

Shopify reported a 23% year-over-year growth in gross merchandise value (GMV) to $60.9 billion in Q1 2024, with revenue reaching $1.9 billion, indicating a robust business model and global merchant base expansion. The B2B segment saw over 130% growth, demonstrating successful market penetration. International GMV growth, particularly strong in Europe, outpaced North America, highlighting Shopify’s effective localization and product launches. The enterprise segment’s growth, with high-profile brand migrations like Overstock.com and BarkBox, underscores Shopify’s appeal to larger businesses. However, a slight decline in Q2 gross margin is expected due to the growth of lower margin payments business.

Over half of Shopify’s merchant support interactions in Q1 were assisted or fully resolved by AI, leading to improved efficiency and merchant satisfaction. The use of AI in support services not only streamlines operations but also enhances the overall user experience by providing timely and effective assistance.

HubSpot, Inc.

HubSpot reported a solid 23% year-over-year revenue growth for Q1 2024, alongside an improvement in operating margin, reaching 15%. Customer growth was notable, with a 22% increase to over 215,000 customers globally, driven by significant additions in the quarter. However, the company faced weaker demand conditions similar to 2023, with a new seats pricing model introduced in March negatively impacting business initially, though positive trends were observed in April. Despite these challenges, HubSpot remains optimistic, highlighting over 100 new product releases with more than 70 AI features and projecting an 18% revenue growth for the full year of 2024. The guidance for the upcoming quarters reflects caution due to ongoing macroeconomic challenges.

HubSpot highlighted significant product innovation, including over 100 new product releases with over 70 AI features in the Spring Spotlight, aiming to drive durable growth through AI and content marketing innovations.

RingCentral, Inc.

RingCentral provides cloud communications, video meetings, collaboration, and contact center software globally. Their products include RingCentral Message Video Phone, RingCentral Contact Center, and RingCX. They offer RingCentral Video for video meetings and team messaging. The company serves various industries and sells to enterprises and small businesses through resellers and partners.

RingCentral reported a 9% increase in total revenue to $584 million for Q1 2024, with the enterprise segment growing by 13%. The company achieved a record operating margin of approximately 21% and announced an increase in its share repurchase authorization by an additional $250 million. A significant milestone was the securing of its largest UCaaS deal ever with a Fortune 500 retailer for 40,000 seats. RingCentral introduced new products, RingEX and RingSense AI, and expanded partnerships, notably with Optus and Avaya. The company raised its full-year revenue outlook and EPS guidance, reflecting confidence in its growth trajectory.

The company achieved a record operating margin of approximately 21% in Q1 2024, surpassing their own outlook. This improvement in profitability, coupled with a strategic focus on reducing stock-based compensation (SBC) as a percentage of revenue, demonstrates effective cost management and operational efficiency.

RingCentral’s execution of its share repurchase program, expected to reduce the full-year fully diluted share count for the first time in history, reflects a commitment to returning value to shareholders. The board’s decision to increase the repurchase authorization by an additional $250 million, with approximately $375 million remaining, signals confidence in the company’s valuation and financial health.

Investing in Artificial Intelligence with ARTI ETF

Interested in using generative AI to identify the best artificial intelligence and artificial intelligence-related companies fundamentally changing our world today?

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.

For more information on ARTI or any of Evolve ETF’s lineup of exchange-traded funds, please visit our website or contact info@evolveetfs.com.


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Tags AI  Apple  artificial intelligence  hubspot  large language model  machine learning  Microsoft  ringcentral  shopify