Developments and Earnings

Meta Platforms (META) reported a significant operating loss of $5 billion for Reality Labs in Q4, primarily due to increased infrastructure costs and employee compensation, underscoring the financial challenges in the development of virtual and augmented reality technologies. Additionally, Meta is making strides in AI innovation, with plans to develop an AI engineering agent with mid-level engineer capabilities by 2025, which is seen as a major milestone and a potential market opportunity. Furthermore, Meta’s management expressed strong belief in smart glasses as the future primary computing platform, emphasizing their potential to enhance AI assistance through unique contextual understanding, despite uncertainties about their long-term adoption.

Key Earnings Developments in Bullet Points

• Booz Allen Hamilton (BAH) reported double-digit growth in both revenue and adjusted EBITDA for Q3 FY2025, reflecting strong financial performance.
  • The company announced a $0.04 increase to its quarterly dividend and a $500 million increase to its share repurchase authorization, indicating a commitment to returning value to shareholders.
  • Booz Allen’s backlog reached a record high of $39 billion, up 15% year over year, providing a solid foundation for future growth.
• Intel (INTC)’s Q4 revenue, gross margin, and EPS were above guidance, driven by Intel Products and operational efficiencies in Intel Foundry.
  • Intel’s Core Ultra CPUs have established the company as the market leader in AIPC CPUs, with plans to ship over 100 million systems by the end of 2025.
• Apple (AAPL) reported a record revenue of $124.3 billion for the December quarter, marking a 4% increase from the previous year, and an all-time high EPS of $2.40.
  • Apple’s services revenue hit an all-time high of $26.3 billion, growing 14% from the previous year.
• Dynatrace (DT) raised its full-year guidance, with 16% to 16.5% growth in ARR and 20% growth in subscription revenue, signaling confidence in continued strong performance.
• ServiceNow (NOW) reported a strong Q4 with subscription revenue growth of 21% and an operating margin of 29.5%, each 50 basis points above guidance.
• IBM (IBM) achieved its highest reported free cash flow margin in history, with $12.7 billion generated in 2024, representing a 14% growth.

Major News Developments for ARTI ETF Holdings

• Nvidia (NVDA) experienced significant market volatility due to the launch of DeepSeek’s AI model, which led to a historic loss in market capitalization, dropping nearly $600 billion.  However, Nvidia shares rebounded by 8.9% the following day as investors sought bargains.
• Meta Platforms (META) settled a lawsuit with President Donald Trump for $25 million after his social media accounts were suspended in 2021. Additionally, Meta announced plans to cut approximately 5% of its workforce, targeting low-performing employees.
• Apple (AAPL) faced regulatory challenges, including a UK class action lawsuit over its App Store commission and an antitrust investigation in India regarding its payment rules.  Apple also announced a $1 billion investment in Indonesia to lift the iPhone 16 sales ban.
• Microsoft (MSFT) reported strong Q2 2025 earnings, surpassing revenue and EPS expectations, with significant growth in its cloud and AI segments. The company also announced a $3 billion investment in India to expand its cloud and AI infrastructure.
• Intel (INTC) announced the retirement of CEO Pat Gelsinger, leading to the appointment of interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus. The company also canceled its Falcon Shores AI chip to focus on developing a rack-scale solution with Jaguar Shores.
• Alphabet (GOOGL) faced multiple regulatory challenges, including a significant antitrust fine in Indonesia and ongoing investigations in the UK and EU.  Google also invested an additional $1 billion in AI developer Anthropic.
• Amazon (AMZN) announced the closure of all its Quebec warehouses, affecting approximately 1,700 full-time and 250 temporary jobs. The company also signed a lease for office space in Miami, marking a significant expansion in the area.
• Advanced Micro Devices (Advanced Micro Devices (AMD)) faced downgrades from HSBC and Wolfe Research due to increased competition from Nvidia and slower-than-expected growth in data center GPU revenue.

DeepSeek News Summary

DeepSeek, a Chinese AI startup, has recently gained significant attention for its cost-effective AI models, which have disrupted the tech industry. The company’s AI model, DeepSeek-R1, is open-source and reportedly matches the capabilities of leading models like OpenAI’s GPT o1, but at a fraction of the cost. This has raised concerns about the dominance of U.S. tech companies in AI development, as DeepSeek’s model was developed using less advanced chips and required significantly less investment.  The release of DeepSeek’s AI model has led to a substantial impact on the stock market, with tech stocks, particularly Nvidia (NVDA), experiencing a sharp decline. Nvidia’s market value dropped by nearly $600 billion, marking the largest one-day loss in U.S. history. This reaction was driven by fears that DeepSeek’s low-cost model could challenge the need for high-performance chips, which have been a cornerstone of AI development in the U.S..

DeepSeek’s rise has also sparked geopolitical debates, as it challenges the U.S.’s strategy of restricting advanced chip exports to China. The company’s success suggests that AI advancements can be achieved with limited resources, potentially undermining U.S. export controls. This development has been described as a “Sputnik moment” for AI, highlighting the competitive nature of the global AI race.  Despite the excitement, some experts caution that DeepSeek’s achievements are not miraculous but rather a result of efficient engineering practices. The open-source nature of DeepSeek’s model allows for broader access and potential cost savings, which could democratize AI technology and foster innovation across the industry.

North American Tariffs on Tech Stocks

Summary:

The recent imposition of tariffs by President Donald Trump on imports from Canada, Mexico, and China is expected to have significant implications for the tech sector. These tariffs, which include a 25% levy on Canadian and Mexican goods and a 10% levy on Chinese imports, are likely to increase costs for tech companies that rely on global supply chains. The tariffs could lead to higher prices for consumer electronics and other tech products, as companies may pass on the increased costs to consumers. Additionally, the uncertainty surrounding the duration and scope of these tariffs is causing volatility in the stock market, with tech stocks being particularly vulnerable. Analysts predict that the tariffs could lead to a contraction in global trade, further impacting tech companies with international operations. The potential for retaliatory measures from affected countries adds another layer of complexity, as it could disrupt supply chains and increase operational costs for tech firms.

 

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