Arm lifts SoftBank—with AI’s helping hand

Despite Arm’s IPO last August, SoftBank still owns 90% of the chip-design legend. So when Arm’s share price climbed by around 40% in the fourth quarter, that firmed up SoftBank’s ability to finance new investments. And Arm just took another mighty leap, today rising by over 37% after yesterday shocking Wall Street with a killer forecast for its first quarter of this year. SoftBank’s stock soared by 11% in Tokyo.

Why’s Arm doing so well? All together now: A! I!

AI applications have demanding hardware needs, in terms of both power and energy efficiency, and this is leading many chipmakers to adopt the relatively shiny-new Armv9 instruction set architecture in their products, all the way from data-center monsters like Nvidia’s Grace server CPU (which looks like a serious contender in high-performance computing as well as AI) down to the processors in Apple’s iPhone 15 and Samsung’s Galaxy S24, as well as in cars and wearables.

Happily for Arm, the company is able to set its Armv9 royalty rates at least twice as high as those for its last-gen Armv8 architecture (which, interestingly, is still what’s underpinning Qualcomm’s big incoming desktop-AI hope, the Snapdragon X Elite chipset). Result: Ka-ching. “More customers moving to higher-value Armv9 technology combined with market share gains in cloud server and automotive resulted in strong royalty growth,” crowed Arm CEO Rene Haas in yesterday’s letter to shareholders. “The AI wave drove licensing growth as these new devices require Arm’s performant and power-efficient compute platform.”

Speaking of Nvidia, it looks like the AI-chip leader, which is currently worth around $1.715 trillion, will soon become a more valuable company than Amazon for the first time in two decades. According to London Stock Exchange Group data, it’s even closing in on Alphabet. That old line about selling shovels in a gold rush may be hoary as heck, but it remains true.

As for SoftBank, whose profitability spent the last year in the toilet due to bad Vision Fund I bets on the likes of WeWork, Vision Fund II remains a dire proposition—down $19 billion since it began life in 2019 (Vision Fund I is now up $16.7 billion since it commenced investments two years previously). But let’s let Son enjoy his successes. More news below.

David Meyer

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NEWSWORTHY

Say hello to Gemini. Google hopes you’ve enjoyed your time conversing with its Bard chatbot. Now say goodbye, because Bard now bears the name of its underlying AI model, Gemini. And what’s more, the company is rolling out a $20-per-month Google One AI Premium plan (same price as ChatGPT Plus), which bundles access to the next-level Gemini Advanced service with 2TB of cloud storage, plus access to Gemini in Gmail and other Google productivity apps, Wired reports.

Apple wins Cook pay case. A Manhattan court yesterday threw out a lawsuit that accused Apple of massively overpaying CEO Tim Cook, Reuters reports. The case was brought by a pension fund affiliated with the International Brotherhood of Teamsters and, according to U.S. District Judge Jennifer Rochon, the plaintiff sued before Apple’s board could consider its objections to Cook’s compensation in 2021 and 2022 (around $99 million each year; it declined to $63.2 million last year). Rochon said there was no evidence of Apple’s board acting improperly. Are you listening, Tesla?

Intel loses chip case. HP and Dell may have to stop selling computers featuring certain Intel processors in Germany after a court there awarded another U.S. company an injunction against Intel. As the Financial Times reports, the lawsuit concerns voltage-regulating technology and covers Intel’s 10th-, 11th-, and 12th-generation processors and its Ice Lake Server processors. Intel (which is now selling 14th-gen processors) strongly insinuates that the claimant, Palo Alto-based R2 Semiconductor, is a patent troll that “files serial lawsuits to extract large sums from innovators like Intel.” R2, which lost a similar case against Intel in the U.S., counters that it has never sued any company but Intel for patent infringement.

SIGNIFICANT FIGURES

$1.1 billion

—Uber’s annual operating profit for 2023. As the Wall Street Journal reports, this is Uber’s first annual profit since its IPO five years ago, and only its second in its 15-year history. The last time was in 2018 and, unlike last year, that profitability came from investments rather than operations.

IN CASE YOU MISSED IT

Elon Musk reportedly quizzed Tesla managers on which staff could be fired—the last time he did that it didn’t end well for Twitter employees, by Christiaan Hetzner

Bob Iger’s pitch for a virtual Disney World sounds a lot like Mark Zuckerberg’s metaverse—but is better poised for success, analyst says, by Rachyl Jones

Alibaba wakes up to competition from PDD and ByteDance, promising to ‘reignite’ growth as disappointing results send shares down 6%, by Lionel Lim

Drake’s nude photos expose big moderation problems on X, but Elon Musk is cheering the downloads, by Kylie Robison

Zero interest-rate babies are facing their day of reckoning. It’s time this generation of startups learns how to fly, by Raphaelle D’Ornano (Commentary)

Microsoft CEO Satya Nadella says ‘AI is really in the air now’ and is planning to train 2 million Gen Z in India with tech skills, by Sunny Nagpaul

BEFORE YOU GO

Apple’s latest model. VentureBeat reports that Apple and the University of California, Santa Barbara, have open-sourced an AI model that lets people edit photos with simple text prompts about what they’d like to see changed—“add more contrast to simulate more light,” “remove the woman in the background,” “have them be in the desert,” and so on. This tool, MGIE, is a fun research breakthrough for now, but with Google's Pixel phones boasting all kinds of AI trickery these days, it will be interesting to see if, when and with what safeguards it becomes an iPhone feature.