The Rundown - Amazon's $4 Billion AI Investment, Home Depot's $18 Billion Acquisition

Episode Date: March 28, 2024

Stock market update for March 28, 2024. Get started with Public: ⁠⁠⁠⁠Click here⁠⁠⁠⁠ The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Thursday, March 28th. In today's episode, we talk about a new AI alliance forming between Amazon and Anthropic, and if it'll be enough to take on Microsoft and Open AI. Also, Home Depot just spent $18 billion to acquire a company that I've never heard of. We'll recap this deal and why Home Depot did it. And finally, we wrapped the show highlighting some stocks making moves today, and a fun fact about AI investments that is both surprising and underwhelming at the same time.

Stick around and find out what I mean. All right, let's get into it. Well, we finally saw some green this week in the stock market. The Dow, S&P, and NASDAQ all finished higher, snapping a three-day losing streak. In fact, the Dow had its best day of the year up 478 points, or 1.2% to close at its second highest level in history. And the S&P 500 actually closed at all-time highs. the 21st record close of 2024. Now, some notable movements yesterday was Trump media.

It jumped another 14% on Wednesday, keeping the meme stock rally going. Reddit, on the other hand, dipped 11% on Wednesday. Now, the reason I bring those two stocks up is because we posted a Spotify poll on yesterday's episode and asked which amongst these two stocks do you think will be a better investment for the rest of the year. And more than 70% of you guys that voted think that Reddit will be a better investment for this year. I mean, with the way things are going this week, this might be a lot of the way.

lot closer than I originally thought. But remember, investing is a long-term thing. You don't want to overreact to the day-to-day volatility of individual stocks. Now, today is the last trading day of Q1. Remember, markets are closed for Good Friday. And as of right now, the S&P 500 is on track to finish the quarter up 10%, which would be the best opening quarter since 2019. All right, let's run through some headlines. Amazon just made their biggest investment ever. Amazon is investing $2.75 billion in the AI-com. company Anthropic. They've actually invested in Anthropic before. So this investment brings their total investment in the AI company to $4 billion. And this deal puts Anthropics valuation

at $18.4 billion, according to CNBC. Not bad for a company that was founded just three years ago. Now, this collaboration between Amazon and Anthropic is not just a cast infusion into Anthropic. Anthropic has committed to spending $4 billion on Amazon's AWS services over the next five years and use Amazon's AI chips to build its AI software. That's according to the Wall Street Journal. I see it's a pretty sweet deal for Amazon. Amazon invest $4 billion into Anthropic, and Anthropics just going to give it right back to Amazon

by spending it on AWS services. Kind of a win-win for Amazon if you ask me. On the other hand, Amazon will make Anthropics AI model, including Claude 3, accessible to its cloud customers. I've actually used Cloud 3 because I'm addicted to buying AI subscription services, and yeah, it's pretty good. Sometimes I actually prefer it to OpenAI's chat GPT. And speaking of OpenAI,

This whole partnership between Amazon and Anthropic looks like Amazon's response to Microsoft and OpenAI's alliance. We all know the stories of Microsoft investing billions of dollars into OpenAI to get access to the AI tech that Open AI is developing. Amazon didn't want to fall behind, so it looks like they're hitching their wagon to Anthropic. So the competition for generative AI dominance is definitely heating up. We got Microsoft and Open AI. Now we have Amazon and Anthropic.

And there's been rumors of Apple teaming up with Google. Teams are being formed right now that'll dictate how AI is going to play out over the next decade or so. But I'll be honest, I'm not smart enough to understand, like, which duo is better. What do you guys think? We'll make that the Spotify poll question of the day. Who do you think is a stronger AI duel? Microsoft and Open AI or Amazon and Anthropic. If you listen to this episode on Spotify, tap this episode and vote in today's poll and let us know what you think. Shifting gears into an old school industry, Home Depot is spending $18.25 billion to acquire SRS, which is a company that supplies goods for roofers, landscapers, and pool contracts.

This will be Home Depot's largest acquisition ever, and the deal is expected to close this fiscal year. Home Depot was really trying to grow their sales with professional contractors and not just be a Saturday morning hangout spots for suburban dads. And yes, I'm talking about myself here. The CEO of Home Depot said that this deal should help increase Home Depot's total addressable market by $50 billion. And just zooming out a bit, it looks like M&A activity is really bouncing back. 2023 had the lowest deal volumes in almost two decades. But in 2024, M&A volume in the U.S. is up 50, Here's a quick recap of the three largest deals in Q1. Capital One acquiring Discover for more than

$35 billion. Synopsis taking over ANCIS for $35 billion. And then Diamond Energy merging with Endeavor Energy for $26 billion. So that's a lot of cash. On that note, let's talk about some stocks making moves today. Big winner this morning is Restoration Hardware. Stock is up more than 9% after the luxury furniture retailer announced that they expect a boost in demand for 2024 after its new furniture product collection launches this spring. They are really hyping up the spring collection. Remember, the stock did miss on both earnings and revenue estimates for Q4. Now, I've never been to restoration hardware, but I've heard they have some really good brunch because who doesn't get hungry after spending 10 grand on a couch? On the flip side, Walgreens stock, not doing so good

today, down more than 1% this morning after it lowered its profit outlook for 2024. Wallgreens management attributed the downgrade to challenging retail environment in an early wind-down of its sales leaseback program. The company also, also sold shares in Sensora, a drug wholesale company, which it says had an earnings impact for the quarter. Walgreens having a tough year. They got kicked out of the Dow Jones. Stock continues to slide. Tough, tough year for them so far. Let's wrap the show with a fun fact. Today's fun fact is about AI. Might have heard of it. In 2023, $29.1 billion were invested across 691 generative AI deals. That is according to Pitch Book. And this is for investments in private AI companies,

not companies that are publicly traded on the stock market. And just to give you some perspective here, in 2022, $7.9 billion were invested in AI. So in 2023, the investments in AI more than tripled. If I'm being perfectly honest here, I thought that number would be a lot higher. Just given how a hyped AI has been over the last year or so. But still, the investments in AI are pouring in. And this all really kind of got started after the release of ChatGPT, which happened in November of 2022. And I feel like the AI hype hasn't really died down, if anything, it's only gotten bigger. so I wouldn't be surprised if AI investments in 2024 come in like two to three times more than investments in 2023.

So it's a good time to be an AI company right now. If you got an AI company, you could probably get funding for it. On that note, let's wrap up the show for the week. Now, this is a part of the show where I chill for five-star ratings. I want to thank everyone that's already given us a five-star rating on Apple and Spotify. In fact, we crossed 500 five-star ratings on Spotify this week. And we're actually almost at 600. A fun bet that I made with my wife was that this show was going to hit 1,000-5-star ratings

before Nvidia stocks hits $1,000. Right now, Nvidia's stock is at $900. So I know it's a long shot, but I believe in us. So yeah, help me win this bet and tap the five stars on Spotify. Also, if you're listening on Spotify, hit the follow button and tap that notification bell. Spotify will then just notify you when this show goes up. And also, consider voting in the polls. That engagement really does help the show grow.

All right, that's enough shilling for today. Thank you guys again for listening this week. Remember, the stock market is closed tomorrow because of Good Friday, so we won't have a show either. But we'll be back here on Monday to recap all the stocks, crypto, and corporate drama. Have a good weekend, everybody. We'll see you guys back here on Monday. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in this show reflect the opinions of the guests.

You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Rundown guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals. Learn more at public.com disclosures. partnership with Zayid Mani. Brokage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.