Welcome to "Investment IN General Manager". Since the advent of ChatGPT, which has driven the craze of AI, we have seen OpenAI launch DALL·E 3 in 2023, which can generate images from text, and then launch Sora in 2024, which can generate videos with text. In this revolutionary trend Under the leadership of the U.S. technology giants, the stock price increases are even more astonishing. But as these companies expand their revenue and market value, why do they start to lay off employees significantly? Let’s first look at the biggest winner of this revolution, which is Nvidia. It provides The chips are probably like the arms dealers of the AI wave. Since Huang Renxun said at the conference in May 2023 that the AI market is experiencing the iPhone moment, Huida will benefit from it . Huida's stock price has risen frequently, and its market value has soared to US$950 billion. The same situation happened again in February 2024. Huida's financial report exceeded market expectations again. This time Huang Renxun said that generative AI has truly become a new application field , and Huida's market value once exceeded US$2 trillion during the session . In addition to Huida , driven by the AI trend, U.S. technology leaders have also risen one after another and are even known as the Magnificent 7 technology giants. The market value of these seven giants accounts for 30% of the S&P 500 index. In 2023, they will contribute 80% of the index's growth . Although this wave The sweeping wave is not over yet , but we can first summarize the four major trends currently formed for your reference. First of all, the business models of technology giants are probably related to platforms and subscriptions. How can I say this? Amazon AWS is the world’s largest cloud computing platform market. Microsoft's Azure accounts for 32% of the market . The second market accounts for 23%. Google ranks third . In addition , Google has 4.3 billion monthly active users, Facebook has 3 billion, and Apple's mobile phones have 2 billion. Let's look at Microsoft's operating system Windows and browsers. Bing has 1.4 billion and 3 billion users respectively . In other words, these technology companies have huge users, which can not only directly contribute to their revenue and profits, but also give them great bargaining power when purchasing, thereby lowering costs . 2 Trends : Asset-light enterprises that mainly focus on software advertising services. Their business models are highly replicable, allowing their performance to grow significantly. To put it bluntly, Microsoft's Windows system can serve 10 billion users , not to mention ChatGPT. Its strong replication power allows it to be used frequently by more than 100 million users every week . Even Apple, which is limited by the slow growth of hardware, has relied on mobile phones to bind the most willing users to pay, allowing its software services to continue. Companies that make more than half of their third- party hardware output are under pressure. We can see that the biggest impact is on Tesla's stock price, which has been affected by China's low-price competition. Apple has not performed much in this wave. Apple is also facing a similar situation. Due to the limitations of the Chinese market and the current unclear strategy of AI, the global market value throne was taken away by Microsoft. No. 4 must not forget the long-term trend of the current struggle between the United States and China . In this context, from economic warfare to technological war to financial war , as long as it is related to the confrontation between the United States and China. All businesses will be affected , so it is obvious that about 24% of Tesla's performance is contributed by China, and half of its output comes from China. However, the total output from 2013 to now is only 5.5 million vehicles, and the number of customers is still relatively small . Not to mention Apple, which has been banned from use by government personnel in China. Facing the loss of the Chinese market and the adjustment of the supply chain are difficult problems that need to be overcome. Against the background of these four trends, among the seven technology giants, there are no restrictions on geopolitics and Since the advent of ChatGPT in 2022, the stock prices of Tesla and Apple, which have limited hardware growth, have risen higher than the 26.14% rise of the S&P 500 index . Various industries have successively invested in the development of the AI field , but these are the The giants are actively laying off employees on the cusp of this wave. Why is this happening? Before further explanation, if you like our program, please join the Caixin channel membership or leave a message to sponsor us for the episode you like so that we can continue to serve everyone. Bringing more exciting content, let’s look at Facebook, Google and Microsoft respectively. These three companies have leading advantages in AI technology. They not only have strong stock price support , but also huge profitability and sufficient cash reserves. But Facebook is In 2022, 13% of employees will be laid off . In 2023, another 20,000 employees will go home to eat on their own. Google is not far behind, with a 6% layoff in 2023. About 12,000 employees include hardware engineers and advertising teams , even veteran employees who have served for more than 18 years. Microsoft, which has become the world's No. 1 market capitalization company, is not immune to layoffs of 5% and about 10,000 employees in 2023. In other words, in the face of the AI revolution, technology industry leaders are also re-adjusting their organizational structures. This situation of layoffs can be divided into 2 major categories : One is companies that have been impacted by AI technology and have been forced to downsize their organizations, such as Facebook and Amazon. The other is Microsoft and Google, which have mastered AI technology but actively lead changes. The first type has a good understanding of AI technology and has replaced them. Manpower reduces the size of the original organization. What about the second type? Microsoft and Google can be said to have mastered the most cutting-edge technology of AI. In fact, they understand the impact and development of AI on the future better than other companies. This is why Microsoft will After acquiring the game company Blizzard, 2,000 employees were laid off. After openAI released Sora, we can know that as long as we rely on "casting a spell" to produce beautiful animated videos , the animator's virtual studio and related equipment will eventually become high-cost. In other words , companies such as Microsoft and Google understand that AI will reshape the entire ecosystem, so they take the initiative to carry out self-defeating organizational transformation. Transformation is not just transformation , but a complete organizational transformation from the inside out. Global technology leaders have responded to AI one after another. As the tide changes and actively changes , how should we as investors seize the relevant opportunities? We can roughly put The business models brought about by AI are simply divided into three types. The first type is Huida , an arms dealer that provides infrastructure. Of course, it does not need to be a leader. The next one is TSMC, which provides advanced manufacturing processes , as well as AI server IC design parts, etc. This is why Huang Renxun The main reason why AI is the best opportunity for Taiwan is the second one, service providers such as Microsoft ChatGPT or Copilot, etc. However, service providers are still in fierce competition and it is not yet clear who the final winner will be. I can only say Microsoft has taken the lead , and the text, image and video generation services launched by OpenAI should take away the market of editing systems such as Adobe and Shutterstock in the future . As for the third business model , it is like Alphabet Meta Amazon Apple uses AI to increase advertising revenue and provide new The winner in the service and cost cutting segment is not yet clear, but the common point is that they want to get rid of Huida’s high-priced chips and design their own unique AI chips. As for other industries such as information security, which are subject to fierce competition, they have to wait for the AI industry at this stage. Only when the market is fully established can operations and profits keep up with the expansion. According to UBS's forecast, AI infrastructure can reach a scale of US$195 billion in 2027 with a compound annual growth rate of 50%. AI modeling and inference will reach 2027. Reaching US$225 billion, the annual compound growth rate reaches 152%. In summary, the AI trend has just begun. Even Huida, which has the most amazing growth, has only tripled its stock price since the end of 2022. According to Huida’s data center business, the annual growth rate is 400%. It seems that even if the stock price growth slows down in the future, it will not be a bubble. On the contrary, with the acceleration of AI construction policies, investment from all walks of life and the complete transformation of technology giants, the growth of various business models in the future is still worthy of investors' expectations. Financial news fans, do you think the aggressive layoffs of technology leaders are a hint that the AI craze will usher in a bubble? A. It’s not that technology leaders are actively transforming and leading changes. B. It’s that AI-related construction has not caught up with the current overheated market. C. I don’t know. More information is needed. Let us know in the comments. Today's "Investment IN General Manager" comes to an end here. Viewers who like this program, please remember to like and share for us. See you next time.
