Meta Claims AR Breakthroughs

Meta unveiled prototype augmented reality (AR) glasses that it described as "truly representative of something that could ship to consumers." The Orion glasses support holographic displays, which enable the wearer to place 2D and 3D digital content within their field of view.

Although the prototype glasses look comically large (see picture) and could attract ridicule, Meta enthused: "Nailing the form factor, delivering holographic displays, developing compelling AR experiences, creating new human-computer interaction paradigms – and doing it all in one cohesive product – is one of the most difficult challenges our industry has ever faced. It was so challenging that we thought we had less than a 10% chance of pulling it off successfully. Until now." 

While many people will be too self-conscious to wear the Orion glasses out and about, the form factor could be light enough and sleek enough to be used for enterprise applications or in the privacy of the home.

Orion will only be available to Meta employees and some external actors, but the company said it is building towards a consumer AR glasses product line, which it plans to begin shipping in the near future.

Meta said it is focused on "tuning the AR display quality to make the visuals even sharper,  optimising wherever we can to make the form factor even smaller and building at scale to make them more affordable."

Meta also unveiled Meta Quest 3S, a headset that promises the same mixed reality capabilities and performance as the Meta Quest 3, but at a lower price point - starting at 299.99 US dollars for the 128 GB model. The 128 GB Meta Quest 3 had cost about 500 dollars, but its display resolution and field of view is better than that of the Meta Quest 3S.

The company also announced new capabilities for its Ray-Ban Meta glasses, such as being able to translate speech in real time. "When you’re talking to someone speaking Spanish, French or Italian, you’ll hear what they say in English through the glasses’ open-ear speakers," Meta said, noting the glasses will support more languages in future.

Source: Meta newsroom

T-Mobile Forecasts Strong Service Growth

T-Mobile US forecast a compound annual growth rate of approximately 5% in service revenue in the next three years, as the mobile operator expects to generate 75-76 billion US dollars in revenue in 2027. "This is driven by continued wireless and broadband customer growth, continued growth in average revenue per account from deepening customer relationships and growth in new businesses," it said. It plans to invest 9-10 billion dollars in annual capital expenditures between now and 2027.

Providing examples of opporunities, T-Mobile US said it has grown "solutions that it built to improve advertising in its own business to other advertisers into an over 1 billion dollar in annual revenue business." The operator also pointed to its T-Priority service, "which gives first responder agencies of all sizes priority on the T-Mobile network to help ensure best-in-class connectivity during times of congestion, especially massive emergencies, and offers support for a wide range of data-intensive applications." Source: T-Mobile US

Big Tech Steps Up Investment

The AI arms race is driving up capital spending by the tech giants. In the first half of 2024, the aggregate capital spending of the Magnificent Seven was more than 107 billion US dollars, compared with 77 billion dollars in the same period of 2023. In 2024, Alphabet and Microsoft have both already invested about 25 billion dollars each in capex, compared with 8.6 billion dollars (including spectrum) for Deutsche Telekom - one of the biggest investors in the telecoms sector.

On its second quarter earnings call, Alphabet said its increase in capital spending was "driven overwhelmingly by investment in our technical infrastructure, with the largest component for servers, followed by data centres." It expects total capital spending to be about 48 billion dollars in 2024.

On that call, Sundar Pichai, CEO Alphabet and Google, added: "Aggressively investing upfront in a defining category (AI), particularly in an area, which in a leveraged way, cuts across all our core areas, our products, including search, YouTube and other services as well as fuels growth in cloud and supports the innovative long-term bets and Other Bets. It is definitely something that for us makes sense to lean in."

"The risk of underinvesting is dramatically greater than the risk of over-investing for us here. Even in scenarios where if it turns out we are over-investing, these are infrastructure which are widely useful for us, they have long useful lives, and we can apply it across and we can work through that."

Despite Alphabet's ramp up, Amazon still has by far the biggest capex budget in the Magnificent Seven, reflecting the fact that it runs a massive logistics business, in addition to its cloud services and apps. After cutting investment sharply in 2023 (through lower spending on fulfilment and transportation), Amazon has said it will increase capex in 2024 to support growth in its cloud computing business (AWS), which is investing in generative AI and large language models.

Source: The Magnificent Seven - Follow the Money 

Nvidia Sees Major Surge in Cash Flow

Now more than 30 years old, Nvidia reported revenue for the second quarter ended July 28 of 30 billion US dollars, up an extraordinary 122% from a year ago. The vast majority of that performance was down to the data centre business, which saw a 154% year-on-year rise to 26.3 billion dollars. 

Perhaps, even more impressively, Nvidia's net cash from operating activities in the six months to July 28 tripled year-on-year to 29.8 billion dollars. 

Net cash flow from operating activities in 2023 versus 2020
Source: The Magnificent Seven - Follow the Money

In this decade, Nvidia has seen a massive increase in its cash flow, thanks to its leadership in the development of the GPUs (graphics processing units) underpinning the recent advances in AI. In particular, Nvidia has benefitted from a step change in spending on AI-related computing capacity by other members of the so-called Magnificent Seven, notably Amazon, Meta, Microsoft and Alphabet.

Like Apple, Nvidia makes an extraordinary return on capital employed (ROCE). Nvidia made a ROCE of more than 80% in 2023, compared with an aggregate ROCE of the Magnificent Seven of 29%.  In the telecoms industry, ROCE tends to be below 10%.  

Source: The Magnificent Seven - Follow the Money 

Apollo Go Now Fully Driverless in Wuhan

Chinese Internet giant Baidu reported that its Apollo Go ride-hailing service has successfully transitioned to offering 100% fully driverless services in "practically the entire Wuhan municipality." It said that all its vehicles in the city are now operating without the need for human safety officers on board, reducing the cost per vehicle in the second quarter of 2024 by more than half compared to the same period in 2023. In the first quarter of 2024, 55% of trips in Wuhan were fully driverless.

In Wuhan, Apollo Go's 400 vehicles are now available to seven million people around the clock, Robin Li, CEO of Baidu, told analysts, but its share of the city's ride hailing market is just 1%. The number of Apollo Go's pickup points at the end of June had increased by over three-fold from the previous quarter, he added. Nationwide, Apollo Go provided about 899,000 rides to the public in the second quarter, marking a 26% year-over-year increase. That equates to about 69,000 rides a week. Waymo, Alphabet's self-driving ride hailing service, recently reported that it is now making 100,000 paid trips a week in the US.

Apollo Go has also begin large-scale open-road testing of its sixth-generation autonomous vehicle, the RT6. Equipped with a battery-swapping solution, RT6 is priced at below 30,000 US dollars for mass production, Baidu said. "After thorough testing, we plan to officially roll out RT6 into our fleet, establishing a strong foundation for further substantial cost reductions in Apollo Go operations," Li added. Source: Motley Fool transcript

Waymo Claims to Have Doubled Paid Trips

In a short LinkedIn post, Waymo reported that its self-driving vehicles are now taking 100,000 paid trips a week - that's double the figure it reported on August 6th. The company didn't provide an explanation for the sudden leap, but the August 6th blog post did reference "well over 50,000" paid rides a week.

Waymo has also published some details of its sixth generation hardware - a modified Zeekr electric vehicle. It said the vehicle's new sensor suite - 13 cameras, 4 lidar, 6 radar and array of external audio receivers - is optimised for greater performance at a significantly reduced cost, without compromising safety. "It provides the Waymo Driver with overlapping fields of view, all around the vehicle, up to 500 meters away, day and night, and in a range of weather conditions," Waymo claimed.  Source: Waymo blog post

Streaming Sales Drive Disney Forward

 

The Walt Disney Company reported a 4% year-on-year rise in revenues for the quarter ending June 29th to 23.16 billion US dollars. The uptick was driven by a 4% rise in revenues in its entertainment division, where its direct to consumer streaming business lifted revenues by 15% to 5.8 billion dollars. Source: Disney collateral

SK Telecom Talks Up AI Prospects

SK Telecom reported that its data centre revenue grew 20.5% year-on-year to 59.2 billion Korean won (43 million US dollars) in the second quarter of 2024 "thanks to AI-driven demand growth for data centre and higher utilisation rates of the data centres." 

In the past two years, SK Telecom has invested more than 300 million dollars in AI, including a 10-million-dollar investment in Perplexity, which is developing an AI-based search engine, and a 200-million-dollar investment in Smart Global Holdings (SGH), a provider of AI data centre solutions. 

SKT says SGH developed "ultra-large AI clusters" with 16,000 GPUs for Meta in 2023 and was selected in 2024 as an AI cluster operator of the Voltage Park with 24,000 GPUs. "We plan to combine SGH’s capabilities to build and operate AI clusters with SK Telecom’s solutions, such as data centre management system and liquid immersion cooling, to target the global AI data centre market aggressively," SKT added. "SGH owns edge solutions specialised for industrial applications. The two companies will cooperate to develop telecom edge AI solutions by combining AI with telecom infrastructure."  

Also targeting the PAA (personal AI assistant) market, SKT has started to offer a call recording and summary service and real-time call interpretation service for Android handsets via its A. (A dot) app. As of the end of June, the cumulative downloads of A. (A dot) had exceeded 4.55 million. "In the second half of the year, we will upgrade (the) UX to make it more user-friendly and introduce a generative AI search feature of Perplexity," the telco added. SKT also plans to develop localised PAAs in collaboration with telcos in various countries and expand the service worldwide.  Source: SK Telecom collateral

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