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Meta mojo is back: Earnings surprise sparks share surge, lifts Big Tech

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Meta mojo is back: Earnings surprise sparks share surge, lifts Big Tech

Meta Platforms Inc (META.O) shares rose nearly 20% in premarket trade after the Facebook owner floored Wall Street by slashing its spending forecast and boosting its stock buyback plan by $40 billion.

The company was set to add around $75 billion to its market value and would post its best day in a decade, if gains hold.

Meta stock surge also sparked a rally in shares of mega-caps Amazon.com (AMZN.O), Apple Inc (AAPL.O) and Alphabet Inc (GOOGL.O), all of which sport market values of more than $1 trillion and report earnings after market close.

Meta’s move on Wednesday to rein in costs was a dramatic shift for a company that has spent billions of dollars to turn its vision of the futuristic metaverse into a reality even while its core business reeled from stiff competition and a weak advertising market.

The results prompted at least 19 analysts to boost their price targets on the stock, with several saying that a combination of lower costs, upbeat revenue growth and share buybacks will drive up earnings per share.

“That is rare”, analysts at Evercorse ISI said, referring to the positive developments. “And stocks react to rare.”

The results also provided some relief to the market after an earnings meltdown at Snap Inc (SNAP.N) on Tuesday that had sent the tech sector’s shares lower.

“After Snap’s disaster, the fact that Meta wasn’t quite so bad has brought encouragement to tech mega-caps,” said Fiona Cincotta, analyst at City Index.
“There is also a less hawkish Fed which is also boosting demand for growth and tech stocks generally.”

‘YEAR OF EFFICIENCY’

Meta now expects its 2023 expenses between $89 billion and $95 billion, a sharp drop from its previous outlook of $94 billion to $100 billion, with CEO Mark Zuckerberg calling the period a “Year of Efficiency.”

The forecast reflects savings from the 11,000 job cuts it announced in November, plans for lower data-center construction expenses and moves to drop non-crucial projects.

“Promising that 2023 will be a year of efficiency was always likely to go down well with investors concerned about the largesse in spending directed towards the unproven potential of the metaverse,” said AJ Bell, investment director at Russ Mould.

There were also signs that Meta’s core social-media business was getting back on track, with monetization efficiency for short-form video Reels on Facebook doubling and the business being on track to break-even as soon as end of 2023.

The company, which forecast first-quarter revenue above market estimates, also said that Facebook’s daily active user base grew to 2 billion, from 1.98 billion in the prior quarter.

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Europe sets benchmark for rest of the world with landmark AI laws

Europe sets benchmark for rest of the world with landmark AI laws

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Europe sets benchmark for rest of the world with landmark AI laws

 Europe’s landmark rules on artificial intelligence will enter into force next month after EU countries endorsed on Tuesday a political deal reached in December, setting a potential global benchmark for a technology used in business and everyday life.

The European Union’s AI Act is more comprehensive than the United States’ light-touch voluntary compliance approach while China’s approach aims to maintain social stability and state control. 

The vote by EU countries came two months after EU lawmakers backed the AI legislation drafted by the European Commission in 2021 after making a number of key changes.

Concerns about AI contributing to misinformation, fake news and copyrighted material have intensified globally in recent months amid the growing popularity of generative AI systems such as Microsoft-backed OpenAI’s ChatGPT, and Google’s chatbot Gemini.

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“This landmark law, the first of its kind in the world, addresses a global technological challenge that also creates opportunities for our societies and economies,” Belgian digitisation minister Mathieu Michel said in a statement.

“With the AI Act, Europe emphasizes the importance of trust, transparency and accountability when dealing with new technologies while at the same time ensuring this fast-changing technology can flourish and boost European innovation,” he said.

The AI Act imposes strict transparency obligations on high-risk AI systems while such requirements for general-purpose AI models will be lighter.

It restricts governments’ use of real-time biometric surveillance in public spaces to cases of certain crimes, prevention of terrorist attacks and searches for people suspected of the most serious crimes.

The new legislation will have an impact beyond the 27-country bloc, said Patrick van Eecke at law firm Cooley.

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“The Act will have global reach. Companies outside the EU who use EU customer data in their AI platforms will need to comply. Other countries and regions are likely to use the AI Act as a blueprint, just as they did with the GDPR,” he said, referring to EU privacy rules.

While the new legislation will apply in 2026, bans on the use of artificial intelligence in social scoring, predictive policing and untargeted scraping of facial images from the internet or CCTV footage will kick in in six months once the new regulation enters into force.

Obligations for general purpose AI models will apply after 12 months and rules for AI systems embedded into regulated products in 36 months.

Fines for violations range from 7.5 million euros ($8.2 million) or 1.5% of turnover to 35 million euros or 7% of global turnover depending on the type of violations.

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Microsoft promotes new tools for making AI software

Microsoft promotes new tools for making AI software

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Microsoft talked up new tools on Tuesday aimed at encouraging programmers to build AI-focused technology into Windows software as it races against Alphabet, Amazon and Apple to dominate the emerging field. At a developer conference in Seattle, Chief Executive Satya Nadella promoted new application programming interfaces, or APIs, that make it easier for developers to tap in to AI technology offered by Microsoft. The company said 1.8 million developers are now using Github Copilot, Microsoft's generative AI tool that helps computer programmers be more productive. "What stands out to me as I look back at this past year, is how you all as developers have taken all of these capabilities and are applying them, quite frankly, to change the world around us," Nadella said during his keynote address at the Build conference. Microsoft detailed new features for its Copilot AI software that helps business productivity applications such as email and its Teams video and text chat product. At its developer conference last week, Alphabet's Google unveiled a similar batch of AI tools to help people with office applications. Microsoft announced details of its new developer tools last week. Shares of Microsoft were up 1.2% at $430.67 on Tuesday afternoon after hitting a record high of $432.97 earlier in the session. Microsoft's stock has now gained 14% in 2024. Also aimed at developers, Microsoft said last Thursday it would offer its cloud computing customers a platform of AMD AI chips that will compete with Nvidia whose graphics processing units have become the gold standard for AI computing. The platform of AMD chips created by Microsoft uses networking technology made by Nvidia called Infiniband to string the processors together. OpenAI's new GPT4-o model, which runs on Microsoft's infrastructure, is 12 times cheaper for developers to use in their software than earlier versions of the technology, Microsoft's chief technology officer Kevin Scott said. Microsoft is the largest investor in OpenAI and uses some of the AI heavyweight's technology in its own products. On Monday, Microsoft debuted a line of Copilot+ personal computers with AI features such as software that lets users search through their past actions in nearly any software. The new computers feature Arm-based, processors made by Qualcomm.

 Microsoft talked up new tools on Tuesday aimed at encouraging programmers to build AI-focused technology into Windows software as it races against Alphabet, Amazon and Apple to dominate the emerging field.

At a developer conference in Seattle, Chief Executive Satya Nadella promoted new application programming interfaces, or APIs, that make it easier for developers to tap in to AI technology offered by Microsoft. 

The company said 1.8 million developers are now using Github Copilot, Microsoft’s generative AI tool that helps computer programmers be more productive.

“What stands out to me as I look back at this past year, is how you all as developers have taken all of these capabilities and are applying them, quite frankly, to change the world around us,” Nadella said during his keynote address at the Build conference.

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Microsoft detailed new features for its Copilot AI software that helps business productivity applications such as email and its Teams video and text chat product.

At its developer conference last week, Alphabet’s Google unveiled a similar batch of AI tools to help people with office applications. Microsoft announced details of its new developer tools last week.

Shares of Microsoft were up 1.2% at $430.67 on Tuesday afternoon after hitting a record high of $432.97 earlier in the session. Microsoft’s stock has now gained 14% in 2024.

Also aimed at developers, Microsoft said last Thursday it would offer its cloud computing customers a platform of AMD AI chips that will compete with Nvidia whose graphics processing units have become the gold standard for AI computing.

The platform of AMD chips created by Microsoft uses networking technology made by Nvidia called Infiniband to string the processors together.

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OpenAI’s new GPT4-o model, which runs on Microsoft’s infrastructure, is 12 times cheaper for developers to use in their software than earlier versions of the technology, Microsoft’s chief technology officer Kevin Scott said.

Microsoft is the largest investor in OpenAI and uses some of the AI heavyweight’s technology in its own products.

On Monday, Microsoft debuted a line of Copilot+ personal computers with AI features such as software that lets users search through their past actions in nearly any software. The new computers feature Arm-based, processors made by Qualcomm.

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Explainer: What are AI PCs? How do they differ from traditional PC?

Explainer: What are AI PCs? How do they differ from traditional PC?

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Explainer: What are AI PCs? How do they differ from traditional PC?

The PC just got an AI makeover, raising hopes that the buzzy technology would help revive an industry that has been on a steady decline over the last few years.

Here’s everything we know about AI PCs:

WHAT DOES “AI PC” MEAN?

Manufacturers say these devices process data more swiftly than traditional PCs and can handle a greater volume of AI tasks directly on the device, including chatbots.

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That means they do not have to rely on cloud data centers that currently power most AI applications, including OpenAI’s ChatGPT.

Some models can even support the training of AI models, a task that requires significant computing power and is typically performed on servers.

PC makers are hoping such features will help draw in buyers as more people lean on generative AI for everything from sending emails to planning vacations.

Research firm Canalys estimates AI PC shipments will surpass 100 million in 2025, constituting 40% of all PCs shipped. 

WHAT TECHNOLOGY IS USED IN AI PCS?

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AI PCs come with specialized processors called neural processing units (NPUs) that handle the majority of on-device AI workloads.

These NPUs work in tandem with central processing units and graphics processors to manage complex tasks, deliver enhanced processing speeds and power applications such as AI assistants.

WHAT ARE SOME OF THE AI PCS AVAILABLE ON THE MARKET?

Brands including Dell, HP, Samsung Electronics, Lenovo, Asus and Acer have unveiled new computers under Microsoft’s Copilot+ branding, which was announced on Monday.

Among these, Microsoft’s refreshed Surface Laptop and Surface Pro tablet are some of the most affordable Copilot+ devices, starting at $999.

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Lenovo ThinkPad T14s Gen 6, expected to start at $1,699, stands as the priciest option based on the pricing disclosed by some manufacturers.

ARE THERE ANY CONCERNS?

A new flagship feature from Microsoft called “recall” has raised some privacy concerns. The Windows maker’s Copilot+ PCs “recall” capability within the AI assistant allows it to search and retrieve information on any past activity on the computer.

The recall feature tracks every action performed on the laptop from voice chats to web browsing, and creates a detailed history stored on the device. The user can then search this repository and go through past actions.

Some social media users have expressed fears that the feature could enable spying, while billionaire technologist Elon Musk compared it to “Black Mirror,” the Netflix series that explores the harmful effects of advanced technology.

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The main concern with the feature is whether the data is stored on the device or centrally, International Data Corp analyst Ryan O’Leary said, adding that there would be “significant privacy risk” if Microsoft stored the data.

On the other hand, some experts say that managing more AI-related tasks directly on the device offers greater privacy.

Research from Forrester showed AI PCs could help avoid the use of personal data to train AI systems, as well as copyright and patent violations, making them preferable for enterprise use.

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