TCEHY - Wall Street Breakfast Podcast: C3.Ai Drops 2024 Profit Goal

2023-09-07 06:47:40 ET

Summary

• Apple's stock drops over 3.5% after reports that the Chinese government told government agencies to remove iPhones and other foreign electronic devices at work.
• AMC Entertainment's shares fall nearly 37% as the movie theater chain registers to sell up to 40 million shares.
• Investment firm CLSA identifies Alibaba, Baidu, and Tencent as the top leaders in AI innovation in China.

Listen below or on the go on Apple Podcasts and Spotify C3.ai ( AI ) says will not be profitable in Q4 of fiscal year 2024. (00:29) Alibaba (BABA), Baidu (BIDU), Tencent ( TCEHY ) top picks at CLSA as firm sees trio leading AI innovation. (01:33) AMC sees largest drop since 2021 on plan to sell up to 40M shares. (03:00)

This is an abridged transcript of the podcast.

C3.ai (NYSE: AI ) says it will not be profitable on a non-GAAP basis by the end of fiscal year 2024 as it had previously planned.

Class A shares of C3.ai ( AI ) are down 10% premarket following that announcement. But it is worth noting that the stock has more than doubled YTD (+184.2%) amid a huge rally in technology stocks and in artificial intelligence-related stocks in particular.

C3.ai ( AI ) provides software that uses enterprise artificial intelligence (AI), or solutions that apply AI and machine learning to digitally solve problems faced by organizations.

The company said in a statement that it will "invest in lead generation, branding, market awareness, and customer success related to our Generative AI solutions.”

And as a result of this decision, C3.ai ( AI ) said it does not expect to be non-GAAP profitable in Q4 FY 2024, though it still anticipates being cash positive in that period and in FY 2025.

Investment firm CLSA said Alibaba (NYSE:BABA), Baidu (NASDAQ: BIDU ) and Tencent (OTCPK: TCEHY ) are its top picks as the investment firm sees the trio leading the innovation in artificial intelligence in China .

The analysts noted that China is expected to become the second-largest AI market in the world (behind the U.S.), with more than 6% of the $1T in AI spending by 2026.

Earlier this month, Baidu ( BIDU ) said its generative AI chatbot, known as Ernie, is now fully open to the general public. The company also said it will soon launch a suite of new "AI-native" apps to help with the four core abilities of generative AI: understanding, generation, reasoning, and memory.

The analysts noted that even though GPT-4 is still seen as the most powerful large language model globally, Chinese large language models have caught up, including Baidu's Ernie 3.5. They said they saw noticeable improvement and is considered "the best in China." An updated version of Ernie, known as Ernie 4.0, is slated to be released before the end of the year.

Alibaba ( BABA ) has its Tongyi Qianwen chatbot while Tencent (OTCPK: TCEHY ) teased on Wednesday the launch of its own AI chatbot.

CLSA also noted that the trio, along with ByteDance (BDNCE), account for 12% of global AI chip purchases, with the expectation that the country's AI computing power will jump eight-fold by 2026.

AMC Entertainment Holdings (NYSE: AMC ) shares fell nearly 37% on Wednesday, its largest drop since February 2021. This happened as the movie theater chain registered to sell up to 40M Class A shares .

In a filing , the company said it has entered into an equity distribution agreement with Citigroup, Barclays, B. Riley and Goldman Sachs with the investment banks acting as sales agents on behalf of AMC.

Net proceeds from the offering will be used to boost the company's liquidity, repay, refinance or redeem debt and for "general corporate purposes."

The Chinese government has reportedly told government agencies to stop using Apple (NASDAQ: AAPL ) iPhones and other foreign electronic devices at work.

The Wall Street Journal reported , citing people familiar with the matter, that it is not clear how wide the orders were distributed, but similar messages were mentioned at certain government regulators.

Apple ( AAPL ) closed down more than 3.5% on Wednesday.

According to its most recent quarterly results, Apple ( AAPL ) generated $15.75B in revenue from Greater China. Of the nine months ended July 1, Greater China accounted for $57.48B in revenue for Apple.

And finally Wendy’s ( WEN ) is jumping on the pumpkin spice bandwagon. If you want some ice cream as the temperatures start to cool off, the pumpkin spice frosty could be an option. It’ll be available next week.

Other headlines to look out for on Seeking Alpha:

U.S. Senate confirms Lisa Cook for full 14-year term as Federal Reserve Governor

SAP will acquire LeanIX, an architecture management software

WestRock in talks to merge with Smurfit Kappa - WSJ

On our catalyst watch for the day,

• Guardant Health (GH), First Solar (FSLR), Freshworks (FRSH), Synaptics (SYNA), and Trex Company ( TREX ) will all hold investor events that may include guidance and strategy updates. The Freshworks event could be of particular interest due to the company recently unveiling new AI-powered services.

Wall Street's major averages ended in the red on Wednesday.

The Nasdaq ( COMP.IND ) retreated 1.06%, with Apple ( AAPL ) the second biggest percentage loser on the tech-heavy index.

The S&P 500 (SP500) settled 0.7% lower, while the Dow ( DJI ) slipped 0.57%.

Nine of the 11 S&P sectors ended in negative territory, led by Tech. Utilities and Energy were the two gainers.

The economic calendar was busy. ISM's reading of U.S. services activity in August came in at 54.5 versus the consensus figure of 52.5 and 52.7 prior. Meanwhile, the S&P Global U.S. PMI composite slipped slightly more than expected in August.

Earlier, mortgage applications declined to their lowest level since 1996. Also, the U.S. trade in goods and services deficit widened less than expected in July.

Additionally, the Fed's Beige Book report on regional economic activity arrived , which indicated that economic growth was modest during July and August.

Turning to the fixed-income markets. The 10-year yield (US10Y) was up 2 basis points to 4.29%, while the 2-year yield (US2Y) was up 5 basis points to 5.02%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is up 0.1%, the S&P 500 is down 0.2% and the Nasdaq is down 0.5%. Crude oil is down 0.7% at nearly $87 a barrel. Bitcoin is up 0.05%.

In the world markets, the FTSE 100 is up 0.3% and the DAX is up 0.2%.

The biggest stock movers for the day premarket: GameStop (NYSE:GME)is up nearly 6% following upbeat Q2 results. And BlackBerry (NYSE: BB ) is down more than 11% after the company's preliminary Q2 revenue of $132M fell short of analysts expectations of $155.5M.

On today’s economic calendar, at 8:30 a.m. productivity and costs. And we’ll hear from the Fed’s Raphael Bostic twice today, once at 3:45 on the economic outlook and then again at 7pm on economic mobility.

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