The positives, negatives, and challenges of Big Tech’s first quarter

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The positives, negatives, and challenges of Big Tech’s first quarter

The tech industry had a rocky first quarter. From Nvidia (NVDA) the stock price continues to climb higher and higher until that of Google (GOOG, GOOGLE) the botched launch of its Gemini image generator and Apple’s antitrust battle, the first three months of the year were full of highs, lows and, finally, even lower lows.

The quarter was also full of surprises. Meta (META) announced its first dividend payment and a larger share buyback program and Apple (AAPL), according to Bloomberg, decided to kill its long-gestating automotive programthus ending an effort that would have catapulted the company into the automotive industry.

Speaking of automobiles, electric vehicles have taken the chin as sales have plummeted. And the European Union’s Federal Trade Commission (FTC) and European Commission have begun digging into companies’ investments in AI and more.

Oh, and did I mention that Congress has revived efforts to ban TikTok in the United States? Yes, these three months have been busy. And we still have nine left to do. These are the good, the bad and the ugly stories from the first quarter of 2024.

Good

Let’s start with the good news for the tech industry in the first quarter. The first is Nvidia, which continues to dominate the AI ​​debate. In February, the company reported another monster quarter, beating Wall Street’s revenue and profit expectations and surpassing revenue forecasts for the current quarter.

Nvidia shares are up about 89% year to date and 226% over the past 12 months. And in March, the company showed off its new Blackwell AI processor architecture at its GTC conference, which felt more like a party than a developer event.

Also this quarter, Intel and the White House announced that the chipmaker was getting $8.5 billion in CHIPS Act funding to help expand its chip manufacturing and research and development facilities at factories across the United States.

The positives, negatives, and challenges of Big Tech’s first quarter

Nvidia founder and CEO Jensen Huang speaks during the annual Nvidia GTC artificial intelligence conference at the SAP Center in San Jose, California, March 18, 2024. (Josh Edelson/AFP via Getty Images) (JOSH EDELSON via Getty Images)

The money from the CHIPS Act is intended to revitalize the U.S. semiconductor industry, and as Intel begins building chips for third-party companies like Microsoft, it stands to benefit greatly from this funding.

Apple, meanwhile, made headlines by ending its electric car project. According to Bloomberg, the company will move a number of employees who worked on the car to its AI division, at a time when Wall Street is looking for signs that the iPhone maker is taking the generative AI trend seriously. . Ending the project also means Apple will avoid what could have been a costly rollout amid slowing U.S. electric vehicle sales.

Finally, Meta announced during its first quarter earnings report that it would begin pay a quarterly dividend of $0.50 per share and authorized an additional $50 billion for stock repurchases, sending the company’s shares up 38% year to date and 131% over the past 12 months.

The bad

Things haven’t been all good for tech in the first quarter. For example, the The FTC announced it was launching an investigation in Alphabet, Amazon (AMZN), and that of Microsoft (MSFT) investments in generative AI companies, including Anthropic and OpenAI. Alphabet and Amazon have both invested billions in Anthropic, while Microsoft has pumped billions into OpenAI.

The FTC says the move will “help the agency better understand investments and partnerships formed between generative AI developers and cloud service providers.”

The result ? The FTC is monitoring big tech’s efforts to capture as much of the AI ​​market as possible and questions whether these companies are hogging too much power.

FILE - OpenAI CEO Sam Altman, left, appears on stage with Microsoft CEO Satya Nadella during the first OpenAI developers conference, Nov. 6, 2023, in San Francisco.  Nadella will mark his tenth year as Microsoft CEO on Sunday, February 4, 2024, capping a decade of breathtaking growth as he steered the slow-moving software giant toward a laser focus on cloud computing and artificial intelligence.  (AP Photo/Barbara Ortutay, file)FILE - OpenAI CEO Sam Altman, left, appears on stage with Microsoft CEO Satya Nadella during the first OpenAI developers conference, Nov. 6, 2023, in San Francisco.  Nadella will mark his tenth year as Microsoft CEO on Sunday, February 4, 2024, capping a decade of breathtaking growth as he steered the slow-moving software giant toward a laser focus on cloud computing and artificial intelligence.  (AP Photo/Barbara Ortutay, file)

OpenAI CEO Sam Altman, left, appears on stage with Microsoft CEO Satya Nadella during the first OpenAI Developer Conference on November 6, 2023 in San Francisco. (Barbara Ortutay/AP Photo, file) (ASSOCIATED PRESS)

The FTC isn’t the only one monitoring tech companies. The European Union’s competition watchdog, the European Commission (EC), is investigating whether Apple, Google and Meta are comply with the bloc’s digital markets law (DMA).

The DMA aims to force big tech companies to open up their services to prevent them from dominating specific markets. The EC, however, is unsure about playing ball and is looking into whether or not they comply.

The hits continued to come for Google during the quarter, after botching the launch of its flagship AI-powered generative Gemini image generator. Users discovered that the app produced images of multicultural Nazis, among other things, forcing the company to remove the app.

Congress also jumped into action, seeking, once again, to take down TikTok, with the House passing legislation that would force parent company ByteDance to sell the social network or block Apple and Google from offering it in their application stores. The Senate has yet to take action on the measure, but First Amendment concerns could prevent any ban from continuing.

The ugly one

But nothing is as bad as these stories: above, the Justice Department antitrust lawsuit against Apple. The DOJ says Apple eliminates competition and harms developers, and ultimately consumers, by maintaining tight control over its App Store and hardware.

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According to the suit, Apple is preventing competitors from accessing features that would allow them to take on the Apple Wallet and Apple Watch. Apple denies these claims, but the lawsuit could take years and could prove to be a distraction to its future.

You’re here (TSLA) CEO Elon Musk has filed his own lawsuit against OpenAI, the company he co-founded, claiming the AI ​​company abandoned its original mission to create AI technologies that benefit humanity. Musk says OpenAI is more profit-oriented and is a subsidiary of Microsoft. OpenAI hit back, refuting Musk’s claims and saying it was more or less upset that it had missed the mark in the face of the company’s explosive growth.

Finally, there is the electric vehicle market. Electric vehicle sales slow in the United States as subsidies for some models dry up and sky-high interest rates make it harder for consumers to purchase models. Then there’s lingering range anxiety about a car running out of power mid-trip. The general idea is that electric vehicles will eventually become the dominant type of vehicle on the roads over the next decade, but for now the sales surge seen over the past few years is flattening.

It’s still early in the year – hell, baseball season has just started, even though my Mets are already in the basement. That is, good stories could turn around and become bad or ugly and vice versa. Let’s move on to the second trimester.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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