Tech Brew Ride Home - Thu. 10/31 – Spooky… I Mean, Earnings Season

Episode Date: October 31, 2024

We’ve got that day where all the tech earnings have come at once, but this time I’m gonna mention Uber too cause did you know they’re making bank these days? China says that two can play the sanctioning technology game. A niche little app from Nintendo. And a review of the Starlink Mini, which seems incredibly compelling for a specific type of user. Links: Meta AI has more than 500 million users (Engadget) Meta’s Next Llama AI Models Are Training on a GPU Cluster ‘Bigger Than Anything’ Else (Wired) Microsoft says AI is on pace to be a $10 billion-a-year business (Axios) Uber shares slide on slowing bookings growth (Financial Times) Chinese sanctions hit US drone maker supplying Ukraine (Financial Times) Nintendo made a music streaming app for Switch Online subscribers (The Verge) Starlink Mini review: space internet goes ultraportable (The Verge) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Halloween 2024. I'm Brian McCullough today. We've got the day where all the tech earnings come at once. But this time I'm going to mention Uber, too, because did you know they're making bank these days? China says that two can play the sanctioning technology game, a niche little app from Nintendo and a review of the Starlink Mini, which seems incredibly compelling for a specific type of user. Here's what you miss today in the world of tech. It is the meat of tech earnings season. So let's get through this meta Q3. revenue up 19% year-on-year, net income up, 35% year-on-year, and family daily active people, up 5% year-on-year to $3.29 billion on average for September 2024. Mark Zuckerberg says

Threads has almost 275 million monthly active users and is adding more than a million sign-ups per day, while Meta-I-I has passed 500 million monthly active users in less than a year. Quoting and Gadgett. Last month at MetaConnect, Mark Zuckerberg said that MetaI was on track to become the most used generative AI assistant in the world. The company has now passed a significant milestone toward that goal with MetaI passing the 500 million user mark. Zuckerberg revealed during the company's latest earnings call. The half billion user mark comes just barely a year after the social network first launched its AI assistant last fall. Zuckerberg said the company still expects to become the most used assistant by the end of 2024, though he's never specified how the company is measuring

that metric. Meta's assistant isn't the only AI tool that's boosting the company's business. Zuckerberg said that AI improvements in its feed and video recommendations have led to an 8% increase in time spent on Facebook and a 5% increase for Instagram this year. Advertisers are also taking advantage of the company's AI tools, he said, with more than 15 million ads created with generative AI in the last month alone. believe that there's a lot more upside here, Zuckerberg said, end quote. Zuckerberg says meta is executing quite well in building out AI infrastructure, as meta raises the low end of its 2024 CAPEX guidance from $37 billion to $38 billion.

Yeah, you know, we just need to nudge that a few tiny percentage points, which accounts for an extra billion dollars, no biggie. Zuckerberg also said meta is training Lama 4 models on a cluster of more. than 100,000 H-100 chips, quote, or bigger than anything that I've seen reported for what others are doing. Quoting Wired. Increasing the scale of AI training with more computing power and data is widely believed to be key to developing significantly more capable AI models. While meta appears to have the lead now, most of the big players in the field are likely working toward using compute clusters with more than 100,000 advanced chips. In March, meta and Nvidia shared details

about clusters of about 25,000 H-100s that were used to develop Lama 3. In July, Elon Musk touted his X-AI venture, having worked with X and Nvidia set up 100,000 H-100s. It's the most powerful AI training cluster in the world, Musk wrote on X at the time. On Wednesday, Zuckerberg declined to offer details on Lama 4's potential advanced capabilities, but vaguely referred to new modalities, stronger reasoning, and much faster. Meta's approach to AI is proving a wild card in the corporate race for dominance. Lama models can be downloaded in their entirety for free, in contrast to the models developed by OpenAI, Google, and most other major companies, which can be accessed only through an API. Lama has proven hugely popular with startups and researchers looking to have complete control over their models,

data, and compute costs. Although touted as open source by META, the Lama license does impose some restrictions on the model's commercial use, meta also does not disclose details of the model's training, which limits outsiders' ability to probe how it works. The company, released the first version of Lama in July of 2023 and made the latest version Lama 3.2 available this September. Managing such a gargantuan array of chips to develop Lama 4 is likely to present unique engineering challenges and require vast amounts of energy. Meta executives on Wednesday sidestepped an analyst question about energy access constraints in parts of the U.S. that have hampered companies' efforts to develop more powerful AI. According to one estimate,

a cluster of 100,000 H-H-100 chips would require 150 megawatts of power, the largest national lab supercomputer in the United States, L-CAPI-10, by contrast, requires 30 megawatts of power. Meta expects to spend as much as $40 billion in capital this year to furnish data centers and other infrastructure, an increase of more than 42% from 2023. The company expects even more torrid growth in that spending next year. Meta's total operating costs have grown about 9% this year, but overall sales, largely from ads, have surged more than 22%, leaving the company with fatter margins and larger profits. it's even as it pours billions of dollars into the Lama efforts, end quote.

Microsoft. Microsoft reported Q1 revenue up 16% year-on-year, Microsoft 365 commercial products and cloud services up 13%, LinkedIn, up 10%, and net income up 11% to $24.7 billion. Q1 Intelligent Cloud revenue was up 20% year-on-year to 24.09 billion versus 24.04 billion, estimated, including Azure and other cloud services, up 33,000. 3% year-on-year. Microsoft says its AI business is on track to surpass a $10 billion annual revenue run rate in Q2 its fastest product category to reach that milestone yet, quoting Axios.

Microsoft also said that 70% of Fortune 500 companies use Microsoft 365 co-pilot for at least some employees, end quote. Interestingly, in a filing, Microsoft was revealed to have made funding commitments of $13 billion to Open AI, and losses from its stake were partly why it had a $683 million expense on its Q1 investments. Quoting Geekwire. Microsoft disclosed the size of its OpenAI investment for the first time, acknowledging in its quarterly regulatory filing Wednesday afternoon that it has made total funding commitments of $13 billion to the chat GPT maker.

That footnote in the company's financial statements confirmed widespread reports about the magnitude of its investment. Because it came in a filing for the quarter ended September 30th, it doesn't include the additional $750 million that Microsoft reportedly invested in OpenAI's latest funding round at the beginning of October. But the juicier tidbit came in another footnote. Microsoft acknowledged that losses from its stake in OpenAI were part of the reason that it recorded a $683 million expense related to its equity investments in the quarter.

And on the company's earnings conference call with analysts, Amy Hood, Microsoft's chief financial officer, made it clear that this expense will be increasing significantly in the next quarter due largely to OpenAI. Other income and expense is expected to be roughly negative $1.5 billion, primarily driven by our share of the expected loss from OpenAI, which is accounted for under the equity method, hood explained, referencing a type of accounting used to record one company's share of another company's profits or losses. It's important to note that OpenAI doesn't represent the entirety of that line item in Microsoft's financial statements. However, it's clear that Open AI is a big part of it, and its losses are starting to weigh meaningful.

on Microsoft's bottom line to the point where it made sense for the company to start disclosing the numbers to investors. To put the numbers in context, Microsoft reported profits of about $25 billion in its latest quarter. At the same time, Hood sought to make clear that Microsoft's overall AI investment is paying off, noting that the company's AI business is on pace to exceed a $10 billion annual revenue run rate in the second quarter, end quote. One more, because I don't think people are fully aware of the fact that Uber is profitable, profitable to the tune of $1.1 billion a quarter, quoting the Financial Times. Uber's revenue rose 20% in the third quarter as ride bookings and food deliveries on the app

continued to grow amid robust consumer spending in the Americas and Northern Europe. Revenue of $11.2 billion for the three months to September was just ahead of analyst's expectations and up from $9.3 billion in the same three-month period a year earlier, the San Francisco-based company said on Thursday. Operating income jumped to $1.1 billion from $394 million far ahead of the average estimate as bookings increased 16% and its monthly users reached $161 million up from $142 million last year. In its outlook, Uber said it expected gross bookings, a measure of customers total spending across all its business units, would be between $42.75 billion and $44.25 billion in the fourth quarter compared with the $43.7 billion

analysts had forecast, according to visible alpha data, end quote. Turnabouts is something something. China is sanctioning Skidio, the U.S.'s largest drone maker and a supplier to Ukraine's military. Sources say Skydio is rushing to find new suppliers for critical parts. Quoting the F.T. Skydeo, the U.S.'s largest drone maker and a supplier to Ukraine's military, faces a supply chain crisis after Beijing imposed sanctions on the company, including banning Chinese groups from providing it with critical components. The drone maker has sought help from the Biden administration. Chief Executive Adam Brigh last week met U.S. Deputy Secretary of State Kurt Campbell and held discussions with senior officials at the White House. American officials are concerned about China disrupting U.S. supply chains and provision to Ukraine of drones used in intelligence gathering.

This is a clarifying moment for the drone industry, Brai wrote in a note to customers obtained by the Financial Times. If there was ever any doubt, this action makes clear that the Chinese government will use supply chains as a weapon to advance their interest over ours. This is an attempt to eliminate the leading American drone company and deepen the world's dependence on Chinese drone suppliers, he added, end quote. The sanctions announced on October 11th came in response to Washington's approval of drone sales to Taiwan. The timing was particularly impactful as it preceded Skidio's efforts to secure alternative suppliers shortly after the company had won a contract with Taiwan's fire. agency. Chinese authorities reportedly visited Skydeo's suppliers, including TDK subsidiary Dongguen Power Amp, which manufactures drone batteries, directing them to cut ties with the company. In response, Skydeo has begun rationing battery supplies to customers and doesn't anticipate

new supply sources until spring. The company is now exploring partnerships with Asian manufacturers, particularly in Taiwan. U.S. officials have reached out to Asian allies seeking assistance, while Skydio has directly engaged with Taiwan's vice-president. and it shall be him to address the supply chain disruption, end quote. Nintendo has launched Nintendo music in iOS and Android app that lets switch online subscribers stream or download gaming tunes from Nintendo titles. And this is, I agree, a niche little thing, but it's interesting because there's this whole industry of Spotify playlist and YouTube channels devoted to either official releases

or covers of this music that people listen to for hours on end. Quoting The Verge. It's a mobile app called Nintendo Music, which lets users listen to classic gaming tunes from Nintendo games spanning the last few decades, including Splatoon, Animal Crossing, and the Legend of Zelda. It's only available to switch online subscribers, and it's launching today on both iOS and Android. The app features curated playlists themed around games, moments, moods, or characters, though you can also build your own. It also supports streaming as well as downloading tracks for offline listening. Curiously, it includes a spoiler feature that lets you filter out tracks that somehow might spoil a game you haven't played or finished yet.

And if you just want some high-roll white noise, the app also lets you loop songs or extend select tracks to 15, 30, or 60 minutes for uninterrupted listening. The announcement of Nintendo music comes not long after a handful of other surprise non-Switch 2 reveals from Nintendo, including the launch of an alarm clock and a mysterious MMO that's currently in testing, end quote. Yeah, while we wait for the Switch 2, Nintendo seems to begin to weird to keep people engaged. Finally today, a review of the Starlink Mini.

The Verge says it's super compact and light. You can use it in a backpack. It can be powered by a small power bank. Installs quickly at new locations, but Wi-Fi range is sometimes a concern. Apparently, the compact rectangular dish weighs just 2.56 pounds or 1.16 kilograms and is roughly the size of a stack of printer paper. One of its most impressive features is its energy efficiency, consuming less than half the power of the larger standard actuated disk and gen 2 router combination. Thomas Ricker says the dish's performance proved surprisingly forgiving in terms of positioning.

While the Starlink app provides a real-time alignment guide, testing revealed that precise orientation isn't critical. In fact, download speed sometimes tested faster when the dish wasn't perfectly aligned, as long as it maintained a relatively flat position. Power consumption seems to vary by location and usage. In urban environments like Central Amsterdam, the mini typically draws around 30 watts, ranging from 22 to 38 watts, while rural locations see even lower consumption at 15 to 20 watts. Even during peak demands like startup or 4K streaming, power draw rarely exceeds 50 watts. The device requires a battery supporting 100 watts USBC power delivery, a specification found mainly in newer high-end power banks,

when tested with a flight-compliant 27,600-m-a-amp-hour battery, the mini operated for about three hours on a rooftop or two hours during mobile use. While the mini-ships with an AC adapter and a 49.2-foot weather-resistant cable, maximizing its portability requires additional accessories. SpaceX's proprietary USBC cable offers two key benefits, maintaining IP67 water and dust protection, and including an LED indicator for insufficient power supply. One notable limitation is the relatively slow upload speeds, which might necessitate finding alternative connections for large file transfers, and quoting from the concluding paragraphs.

You also have to pay for the service, which, importantly, can be paused for the months you're not using it. In the U.S., the Starlink Mini is available with either the Rome 50-Gibabytes, $50 a month plan, or Rome Unlimited, $165 a month. Both allow for use anywhere within the country of purchase internationally for up to two months per trip, and on a vehicle moving at speeds of up to 100 miles per hour, on land, or up to 12 nautical miles off the coast. I pay 72 euros a month, about $79 a month for my Rome Unlimited Plan. For me, the cost of the Starlink Mini Kit and subscription are a bargain for the lifestyle it enables. I had considered paying several hundred dollars for a star mount just to have my old

standard actuated disk converted into a 12-volt system that could easily be powered by a large power station without any of that inefficient ACDC conversion mess. Now, SpaceX has done all the hard work for me, and I get to keep my warranty. As someone who likes to occasionally live and work as far off the grid as possible, the Starlink Mini is the dish I've been waiting for. It's the most energy-efficient Starlink terminal SpaceX offers, and it's most portable by a mile with only a modest drop in performance. That makes it an absolute game-changer for anyone who wants to stay fully connected

in areas too remote for broadband providers to care about. I humbly submit that those are the best places to be, end quote. Hi of mind, I'm thinking of getting my kids' Apple watches. Any advice out there, any hurdles you've run into that I should be aware of? Is it, as they promise, easy to just set up with your iPhone and have it do all of the carrier setup for you, pairing it with your existing wireless plan? Or do I need to go through our carrier as opposed to the Apple?

Apple Store. Any and all advice appreciated at Brian MCC on Twitter and Threads. Talk to you tomorrow.