The Long Term Investor

I should mention that the trades I am going to do in my siblings brokerage account....probably on Monday.....are additions to the existing positions....not....new positions. Their account contains the same investments that mine do.

 

THIS.....is a very good little article. I like it as a AMZN shareholder.

How Amazon is racing to catch Microsoft and Google in generative A.I. with custom AWS chips

https://www.cnbc.com/2023/08/12/ama...p-in-generative-ai-with-custom-aws-chips.html

(BOLD is my opinion OR what I consider important content)

I"n an unmarked office building in Austin, Texas, two small rooms contain a handful of Amazon employees designing two types of microchips for training and accelerating generative AI. These custom chips, Inferentia and Trainium, offer AWS customers an alternative to training their large language models on Nvidia GPUs, which have been getting difficult and expensive to procure.

“The entire world would like more chips for doing generative AI, whether that’s GPUs or whether that’s Amazon’s own chips that we’re designing,” Amazon Web Services CEO Adam Selipsky told CNBC in an interview in June. “I think that we’re in a better position than anybody else on Earth to supply the capacity that our customers collectively are going to want.”

Yet others have acted faster, and invested more, to capture business from the generative AI boom. When OpenAI launched ChatGPT in November, Microsoft gained widespread attention for hosting the viral chatbot, and investing a reported $13 billion in OpenAI. It was quick to add the generative AI models to its own products, incorporating them into Bing in February.

That same month, Google launched its own large language model, Bard, followed by a $300 million investment in OpenAI rival Anthropic.

It wasn’t until April that Amazon announced its own family of large language models, called Titan, along with a service called Bedrock to help developers enhance software using generative AI.

“Amazon is not used to chasing markets. Amazon is used to creating markets. And I think for the first time in a long time, they are finding themselves on the back foot and they are working to play catch up,” said Chirag Dekate, VP analyst at Gartner.

Meta also recently released its own LLM, Llama 2. The open-source ChatGPT rival is now available for people to test on Microsoft’s Azure public cloud.

Chips as ‘true differentiation’

In the long run, Dekate said, Amazon’s custom silicon could give it an edge in generative AI.

“I think the true differentiation is the technical capabilities that they’re bringing to bear,” he said. “Because guess what? Microsoft does not have Trainium or Inferentia,” he said.

AWS quietly started production of custom silicon back in 2013 with a piece of specialized hardware called Nitro. It’s now the highest-volume AWS chip. Amazon told CNBC there is at least one in every AWS server, with a total of more than 20 million in use.

In 2015, Amazon bought Israeli chip startup Annapurna Labs. Then in 2018, Amazon launched its Arm-based server chip, Graviton, a rival to x86 CPUs from giants like AMD and Intel.

“Probably high single-digit to maybe 10% of total server sales are Arm, and a good chunk of those are going to be Amazon. So on the CPU side, they’ve done quite well,” said Stacy Rasgon, senior analyst at Bernstein Research.

Also in 2018, Amazon launched its AI-focused chips. That came two years after Google announced its first Tensor Processor Unit, or TPU. Microsoft has yet to announce the Athena AI chip it’s been working on, reportedly in partnership with AMD.

CNBC got a behind-the-scenes tour of Amazon’s chip lab in Austin, Texas, where Trainium and Inferentia are developed and tested. VP of product Matt Wood explained what both chips are for.

“Machine learning breaks down into these two different stages. So you train the machine learning models and then you run inference against those trained models,” Wood said. “Trainium provides about 50% improvement in terms of price performance relative to any other way of training machine learning models on AWS.”

Trainium first came on the market in 2021, following the 2019 release of Inferentia, which is now on its second generation.

Inferentia allows customers “to deliver very, very low-cost, high-throughput, low-latency, machine learning inference, which is all the predictions of when you type in a prompt into your generative AI model, that’s where all that gets processed to give you the response, ” Wood said.

For now, however, Nvidia’s GPUs are still king when it comes to training models. In July, AWS launched new AI acceleration hardware powered by Nvidia H100s.

“Nvidia chips have a massive software ecosystem that’s been built up around them over the last like 15 years that nobody else has,” Rasgon said. “The big winner from AI right now is Nvidia.”

Leveraging cloud dominance

AWS’ cloud dominance, however, is a big differentiator for Amazon.

“Amazon does not need to win headlines. Amazon already has a really strong cloud install base. All they need to do is to figure out how to enable their existing customers to expand into value creation motions using generative AI,” Dekate said.

When choosing between Amazon, Google, and Microsoft for generative AI, there are millions of AWS customers who may be drawn to Amazon because they’re already familiar with it, running other applications and storing their data there.

“It’s a question of velocity. How quickly can these companies move to develop these generative AI applications is driven by starting first on the data they have in AWS and using compute and machine learning tools that we provide,” explained Mai-Lan Tomsen Bukovec, VP of technology at AWS.

AWS is the world’s biggest cloud computing provider, with 40% of the market share in 2022, according to technology industry researcher Gartner. Although operating income has been down year-over-year for three quarters in a row, AWS still accounted for 70% of Amazon’s overall $7.7 billion operating profit in the second quarter. AWS’ operating margins have historically been far wider than those at Google Cloud.

AWS also has a growing portfolio of developer tools focused on generative AI.

“Let’s rewind the clock even before ChatGPT. It’s not like after that happened, suddenly we hurried and came up with a plan because you can’t engineer a chip in that quick a time, let alone you can’t build a Bedrock service in a matter of 2 to 3 months,” said Swami Sivasubramanian, AWS’ VP of database, analytics and machine learning.

Bedrock gives AWS customers access to large language models made by Anthropic, Stability AI, AI21 Labs and Amazon’s own Titan.

“We don’t believe that one model is going to rule the world, and we want our customers to have the state-of-the-art models from multiple providers because they are going to pick the right tool for the right job,” Sivasubramanian said.

One of Amazon’s newest AI offerings is AWS HealthScribe, a service unveiled in July to help doctors draft patient visit summaries using generative AI. Amazon also has SageMaker, a machine learning hub that offers algorithms, models and more.

Another big tool is coding companion CodeWhisperer, which Amazon said has enabled developers to complete tasks 57% faster on average. Last year, Microsoft also reported productivity boosts from its coding companion, GitHub Copilot.

In June, AWS announced a $100 million generative AI innovation “center.”

“We have so many customers who are saying, ‘I want to do generative AI,’ but they don’t necessarily know what that means for them in the context of their own businesses. And so we’re going to bring in solutions architects and engineers and strategists and data scientists to work with them one on one,” AWS CEO Selipsky said.

Although so far AWS has focused largely on tools instead of building a competitor to ChatGPT, a recently leaked internal email shows Amazon CEO Andy Jassy is directly overseeing a new central team building out expansive large language models, too.

In the second-quarter earnings call, Jassy said a “very significant amount” of AWS business is now driven by AI and more than 20 machine learning services it offers. Some examples of customers include Philips, 3M, Old Mutual and HSBC.

The explosive growth in AI has come with a flurry of security concerns from companies worried that employees are putting proprietary information into the training data used by public large language models.

“I can’t tell you how many Fortune 500 companies I’ve talked to who have banned ChatGPT. So with our approach to generative AI and our Bedrock service, anything you do, any model you use through Bedrock will be in your own isolated virtual private cloud environment. It’ll be encrypted, it’ll have the same AWS access controls,” Selipsky said.

For now, Amazon is only accelerating its push into generative AI, telling CNBC that “over 100,000” customers are using machine learning on AWS today. Although that’s a small percentage of AWS’s millions of customers, analysts say that could change.

“What we are not seeing is enterprises saying, ‘Oh, wait a minute, Microsoft is so ahead in generative AI, let’s just go out and let’s switch our infrastructure strategies, migrate everything to Microsoft.’ Dekate said. “If you’re already an Amazon customer, chances are you’re likely going to explore Amazon ecosystems quite extensively.”

MY COMMENT

I hope this is true and is not simply hype of old tech. Amazon is the leading and DOMINANT provider of cloud services.

They need to very significantly leverage that advantage to keep all this AI business in house.

I hope as a shareholder....that AMAZON management is focused like a laser on this business area and the potential it will provide to earnings gong forward.

At least this little article gives me some hope that the new management at Amazon is competent and properly managing the company.

 

I am talking gross salary......rg. Before all taxes and deductions. They have a college degree but worked for government. Here in the USA many local and state government jobs dont pay very well. They did get a nice government pension with lifetime health coverage and they get raises in their retirement......at the same percentage every time the active workers get a raise.

Now on the other hand.....Federal Government jobs pay very highly plus have an outstanding pension.

 

Well I got all my trades done at the open. I ended up investing $62,000 in one of the accounts that I manage.....(not either of my own).

I put $10,000 each into......GOOGL, MSFT, HD, COST, and AAPL. The rest $62,000 went into NVDA. When it was all done I had about $87 left over so that will go into the SP500 Index Fund at the close today.

These were additions to existing positions. The account is invested the same way my accounts are. I did NOT add to the positions in HON, AMZN, and NKE.

 

This is a good article on AI and Microsoft. I will leave it to you to click on it and read it. I see this as CONFIRMATION that AI is going to be a HUGE business driver for all the big tech companies for many years to come. Amazing business and technology....that is in its infancy.

Microsoft Bets Big on AI: What Investors Should Know
What companies the tech titan is investing in, and whether the stock is worth adding to your portfolio.

https://www.morningstar.com/alterna...ts-big-ai-what-investors-should-know-part-one

A great article that goes way beyond what the headline says. AND....basically discusses many of the companies involved in AI.

 

The market started today on the down side.....but.....with the SP500 and NASDAQ simply wanting to go up we now have a mixed market. The close......who knows.

 

here is the day and the week.

Stocks open lower as retail-heavy week gets underway

https://finance.yahoo.com/news/stoc...derway-stock-market-news-today-133131871.html

(BOLD is my opinion OR what I consider important content)

"US stocks opened lower to start the week as Wall Street looked to shake off a rough August so far.

The Dow Jones Industrial Average (^DJI) was roughly flat, while the S&P 500 (^GSPC) fell 0.1%. The tech-heavy Nasdaq Composite (^IXIC) was down 0.3% as the index looks to rebound from two straight sharp weekly losses.

The moves come as markets brace for an update on the health of the US consumer in the form of retail sales numbers and earnings from many America's premier retailers, including Home Depot (HD), Target (TGT), and Walmart (WMT). Yahoo Finance will also feature a week-long special, Retail Evolution: The New Era, during our live streaming programming beginning Monday morning.

Meanwhile, eyes will also be on the release of the minutes from the Federal Reserve's last policy meeting, in which the central bank resumed its rate-hike campaign. Wall Street will be keen to decipher any clues in the minutes that point to the Fed's next move in September.

• Fed rate cuts could come as soon as May, per Goldman Sachs
• 
  The Federal Reserve will likely cut interest rates in the second quarter of next year regardless of whether the US economy enters a recession, Goldman Sachs (GS) economics team wrote in a new research note on Sunday.
  
  "The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target, not by a recession," Goldman Sachs Chief US economist David Mericle wrote.
  
  After one of the most aggressive rate hiking campaigns in history, the Fed's benchmark interest rate currently sits in the range of 5.25% to 5.5%, the highest level since 2001.
  
  With economists across Wall Street seeing less likelihood of a recession, and Goldman Sachs own team projecting 'unspectacular growth' but not a growth scare, inflation is the most likely catalyst for rate cuts. And inflation appears to be headed in the right direction.
  
  Last week data from the Bureau of Labor Statistics showed core the Consumer Price Index, which strips out the volatile food and energy categories, increased 0.2% in July, the same increase as June. That marked the first time since February 2021 that core CPI rose just 0.2% in consecutive months and has many economists betting the Fed will hold rates steady at its next meeting in September.
  
  Another inflation measure tracked by the Fed, the Personal Consumer Expenditures (PCE), has also recently shown inflation declines.
• 
  
• (By Q2 2024), we expect core PCE inflation to have fallen below 3% on a year-on-year basis and below 2.5% on a monthly annualized basis, and wage growth to have fallen below 4% year-on-year," Mericle wrote. "Those thresholds for cutting align roughly with the annual forecasts in the FOMC’s Summary of Economic Projections and the conditions at the outset of the last cutting cycle motivated by an intent to normalize from a restrictive policy stance as inflation came down in 1995."
• 
  MY COMMENT

Nothing happening this week except for some big retail earnings. SO....the focus will be where it should be.....individual business results that will matter for those that own the stocks. The FED minutes.....a JOKE. There will be NOTHING new.

My view on rate cuts next year......I dont think so. I think inflation will linger about where it is right now and there will not be any cuts next year. I also dont think there will be any more hikes either. SO.......fine with me. If cuts do happen....it will be a BONUS.

 

As I have been siting and scanning various sites with the business TV in the background......the markets that count.....the SP500 and the NASDAQ have continued to make progress to the positive side today.

So far I am glad that I rushed to make my stock buys this morning at the open.

Today is one of the most NEWS FREE days I have seen in a long time. Same for the entire week. There is basically NOTHING going on in the investing world. For once....there is no fear mongering that I can see of any significance.

SO.....as a result....we have a good chance of a week where nothing but the markets themselves control what happens. It will be interesting to see what the market do without any outside BALONEY impacting the markets.

 

I mentioned my sibling and their retirement income in a few posts. Here is how you end up with a retirement income of about $200,000 per year having worked a government job that never paid more than $45,000 per year.

Of course they were helped by being a super-saver, being a lifetime investor (with my management and the same stocks that I bought for myself), and inheriting half of our mom's estate and brokerage account (which I managed over the last 25-30 years)

Pension and Social Security $50,000

Deferred comp annuity $8000

Income annuities $68,000

Payments from family members for home mortgage loans $60,000

Misc dividends, etc, etc $35,000

This should be a wake up call for anyone that has been saving and investing for retirement. It is LIKELY that you will be in just as high if not a higher tax bracket when you retire.

 

I am doing very nicely today in the markets. ESPECIALLY NVDA......which was up by over $25.34 or about 6.20%....for the day.

I also hit that one at the perfect time this morning with my trade in my sibling's account....that one is up by about 5.5% for the day. the other trades are partly positive and partly negative for their first day of life.

It is nice to have a good size gain today even though four of my nine stocks are in the red.....COST, NKE, HON, and HD.

 

Way to go TomB16......that is the right attitude. Time to enjoy what you achieved. Let the portfolio take care of itself.

 

A BIG DAY for me today. The markets also. I see that they picked up stream as the afternoon went on.

I was definately in the green today....although I had my four stocks.....COST, HD, HON, and NKE.....down all day and down at the close. I BEAT the SP500 today by 1.20%.

The darling of the day.....NVDA....up by $28.98 or 7.09%. A great start to the week.

 

This was the market FUN today.

Nasdaq leads way up as Nvidia surges

https://finance.yahoo.com/news/nasd...surges-stock-market-news-today-200228831.html

(BOLD is my opinion OR what I consider important content)

"US stocks closed higher Monday, led by a sharp rise in tech stocks, as Wall Street attempts to shake off a rough August so far.

The Nasdaq Composite (^IXIC) led the day's gains, up more than 1%, as the index looked to rebound from two straight sharp weekly losses. Nvidia's (NVDA) 7% surge boosted the tech-heavy index.

Meanwhile, the benchmark S&P 500 (^GSPC) climbed about 0.6%, while the Dow Jones Industrial Average (^DJI) rose around 0.1%.

The moves come as markets brace for an update on the health of the US consumer in the form of retail sales numbers and earnings from many of America's premier retailers, including Home Depot (HD), Target (TGT), and Walmart (WMT). Yahoo Finance will also feature a week-long special, Retail Evolution: The New Era, during our livestreamed programming beginning Monday morning.

Meanwhile, eyes will also be on the release of the minutes from the Federal Reserve's last policy meeting, in which the central bank resumed its rate-hike campaign. Wall Street will be keen to decipher any clues in the minutes that point to the Fed's next move in September.

MY COMMENT

About time for the markets to take charge over the fear mongering BS.

 

A little bit on NVDA.

Nvidia stock jumps 7% after Morgan Stanley says chipmaker benefits from ‘massive shift’ in A.I.

https://www.cnbc.com/2023/08/14/nvidia-shares-up-7percent-on-morgan-stanley-upgrade.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Nvidia shares closed up 7.1% to $437.53.
• Morgan Stanley analysts said in a note that the stock is the firm’s “Top Pick” coming off its most recent earnings report.
• Nvidia’s stock price has tripled this year.

In this article

• NVDA+5.60 (+1.28%)

• MS+0.02 (+0.02%)

David Paul Morris | Bloomberg | Getty Images
As long as companies are interested in generative artificial intelligence, Nvidia stands to benefit.

Nvidia shares closed up more than 7% on Monday, underscoring how investors believe the company’s graphics processing units, or GPUs, will continue to be the most popular computer chips used to power massive large language models that can generate compelling text.

Morgan Stanley released an analyst note Monday reiterating that Nvidia continues to be a “Top Pick” coming off the company’s most recent earnings report, in which it offered a better-than-expected forecast.

“We think the recent selloff is a good entry point, as despite supply constraints, we still expect a meaningful beat and raise quarter — and, more importantly, strong visibility over the next 3-4 quarters,” the Morgan Stanley analysts wrote. “Nvidia remains our Top Pick, with a backdrop of the massive shift in spending towards AI, and a fairly exceptional supply demand imbalance that should persist for the next several quarters.”

Nvidia, now valued at over $1 trillion, bested all other companies during this year’s tech rebound following a market slump in 2022, with the chip giant’s shares up nearly 200% so far in 2023.

Although Nvidia shares dropped a little more than 10% this month, partly attributed to supply constraints and ongoing concerns over the broader economy and whether it will experience a significant rebound, the Morgan Stanley analysts predict that Nvidia will benefit in the long run.

“The bottom line is that this is a very positive situation, October numbers are entirely gated by supply, and the upper end of the buy side consensus has been reined in,” the analysts wrote. “We see numbers are going up at least enough that this stock will trade at P/Es more similar to the upper end of semis, with material upside still ahead.”

Nvidia’s stock has tripled this year. The company will announce second-quarter results Aug. 23."

MY COMMENT

This stuff STILL makes me wonder if the expectations are out of wack. BUT....when you are on a run-away train it is just crazy to jump off. I am along for the ride.

I continue to say.....this stock reminds me of the EPIC ten year run that Microsoft had from 1990 to 2000. During that time an investment in MSFT in 1990....grew MASSIVELY. For example if you invested $10,000 in MSFT on January 1, 1990.......as of January 1, 2000.....you had $963,438.

I think there is a significant "POSSIBILITY" that NVDA could rival or beat this over the next ten years. Notice I said....."POSSIBILITY".......not "PROBABILITY".

 

Sounds good to me......as an owner.

Home Depot earnings: CEO says 'uncertainties remain' amid Fed rate hikes
Home Depot stock was up 4.5% year to date as of Tuesday after market close.

https://finance.yahoo.com/news/home-depot-earnings-103318359.html

(BOLD is my opinion OR what I consider important content)

"Home Depot (HD) CEO fanned concerns on the economy after issuing a cautious outlook.

The home improvement retailer posted a slight earnings beat on Tuesday before the market open as consumers spent less on big-ticket discretionary items such as appliances. Overall, consumers seem less interested in home renovation than they once were with much higher interest rates.

"We were pleased in the second quarter, [but] uncertainties remain," Home Depot CEO Ted Decker said on the earnings call. "We don't know how quickly or further the share shift in PCE will occur and where spending in home improvement in particular will ultimately settle. And we don't know how the monetary policy actions which are specifically intended to dampen consumer demand, what that impact will ultimately have on consumer sentiment in the overall economy."

Two things are catching Wall Street's attention in the early going.

First, Home Depot's same-store sales fell 2% amid a pullback in shopper transactions. This is now the third straight quarter of declining same-store sales for the Georgia-based retailer.

And secondarily, the retailer only reiterated its full-year guidance despite a second quarter beat.

The company expects full-year sales to drop between 2% to 5% compared to fiscal 2022. And diluted earnings per share are expected to drop between 7% and 13% compared to last year.

"With continued pressure in certain big-ticket, discretionary categories, Home Depot took the conservative approach [with guidance]," Evercore ISI analyst Greg Melich wrote in a client note.

Home Depot shares rose nearly 2% in early trading.

The earnings rundown:

• Net sales: $42.92 billion vs. $42.12 billion expected
  
• Diluted EPS: $4.46 vs. $4.45 expected
  
• Same-store sales: -2.0% vs. -4.09% expected
  
  • US same-store sales: -2.0% vs. -3.64% expected
    
• Customer transaction growth: -1.8%vs. -3.62% expected
  
• Average ticket growth: up 0.1% vs. up 0.56% expected
  
• Selling, general, and administrative expenses: $6.92 billion s. $6.86 billion expected
  

What else we're watching: Home spending and $15B share buyback program

Home improvement has been struggling to regain the allure it once had during the COVID-19 era when everyone was homebound.

"While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories," Home Depot's Decker said in the earnings release.

Competitor Lowe's (LOW), which is expected to report earnings next Tuesday, remained relatively flat on Tuesday in premarket trading following Home Depot's lackluster results and outlook.

Home Depot's board of directors also approved a $15 billion share repurchase program, effective August 15, in a bid to boost the stock price.

Wall Street's First Take

"The comparable sales decline this quarter comes in better-than-feared relative to Street expectations, which appears to have driven fixed cost expense leverage in excess of consensus models. Vendor commentary throughout the quarter highlighted Pro outperformance vs. Do-It-Yourself, which partially explains the outperformance. With this result, not surprised to see annual guidance reaffirmed." -Jefferies analyst Jonathan Matuszewski

"Some might be disappointed by keeping the guidance unchanged despite the $0.20 beat on EPS and the better-than-expected comps. That said, with continued pressure in certain big-ticket, discretionary categories, HD took the conservative approach." -Evercore ISI's Greg Melich

"Home Depot put up a good quarter - same-store sales of -2% beat the Street's estimate of -4.1% and came in slightly above market expectations of -2.5%, margins beat across the P&L, and FY23 guidance was maintained. In our view, the 2Q beat is confidence inspiring that full year guidance is tracking to at least the mid-point of the range, especially given easing same-store sales comparisons in 3Q and 4Q. We await more details on the 9AM ET conference call regarding 2Q monthly same-store sales cadence, August demand trends, DIY vs. Pro performance in light of management commentary regarding strength in smaller projects, and updated ticket vs. transaction outlook for the second half. We reiterate our Buy rating." - Citi's Steven Zaccone"

MY COMMENT

A clear BEAT in every category but one. For some reason this article likes to take the negative side. At the end others state the positive.

This is a great company and now that they are starting to clear the EXTREME covid earnings comparison numbers.....they will be just fine.

A nice BEAT and conservative guidance. A great management company.......and......a DOMINANT company in their business area.

 

Here is a companion article to the above.

Retail sales increased 0.7% in July, better than expected as consumer spending is holding up

https://www.cnbc.com/2023/08/15/retail-sales-report-july-2023.html

"Key Points

• The advanced retail sales report showed a seasonally adjusted increase of 0.7% for the month, while spending increased 1% excluding autos. Both were better than the 0.4% estimates.
• July’s numbers were boosted by a 1.9% jump in spending at online retailers, while sporting goods and related stores increased 1.5% and food service and drinking places rose 1.4%.
• A separate report showed that import prices moved 0.4% higher in July, more than the 0.2% estimate. However, virtually the entire increase was driven by fuel prices.
• The Empire State Manufacturing Survey slumped 20 points in August to a reading of -19, though the index for future conditions posted a sharp gain."

MY COMMENT

Yes......there is no recession. The economy is just fine. AND.......the economy is the CONSUMER.