Back to square one: Alibaba's share price is back to where it was at its IPO

3/15/22 7:00PM

China changes course

‍China has pledged to keep its stock markets more stable and take measures to boost economic growth this morning, sending shares of tech companies Alibaba and JD.com up more than 25% at the time of writing. For e-commerce giant Alibaba that news couldn't have come any sooner, as the company's share price has been in a slump for much of the last 18 months, which has had little to do with the company's fundamentals.

Thanks to its ties with founder Jack Ma, Alibaba has been in the cross hairs of China's big tech crackdown. That has meant that, despite growing its revenue more than 13x from 2014 to 2021, Alibaba's share price found itself below its IPO price as recently as yesterday.

‍Not the time for tough love

‍China may have lost its appetite for beating up on big tech given all that's happened in the last few weeks. Russia's closeness with China (the "no limits" friendship), a fresh outbreak of Covid-19 (which has meant lockdowns) and a tougher regulatory outlook for US-listed Chinese companies have all put Chinese assets deeply out of favor with global investors. The result is a supportive Chinese state for its biggest tech companies... for now.

Rani Molla20m

WSJ: Amazon considering $50 billion investment in OpenAI

What a difference half a day makes. Earlier today, The Information reported that Amazon was considering investing roughly $10-$20 billion in OpenAI as part of a $60 billion funding round alongside Nvidia and Microsoft. Now the Wall Street Journal is reporting the ecommerce giant could invest up to $50 billion in the ChatGPT maker as part of a larger, $100 billion funding round. The Financial Times also earlier reported today a $100 billion funding round but with smaller amounts from Nvidia, Microsoft and Amazon.

Exclusive | Amazon in Talks to Invest Up to $50 Billion in OpenAI

Rani Molla2h

Elon Musk’s SpaceX reportedly in talks to merge with xAI

Tesla CEO Elon Musk is reportedly exploring a merger between SpaceX and his artificial intelligence startup xAI, a move that would bundle rockets, satellites, the social media site X, and AI under one company ahead of SpaceX’s long-anticipated IPO.

According to Reuters reporting, the deal would swap xAI shares for SpaceX stock, potentially valuing the combined operation north of $1 trillion.

Reuters reports:

Two entities have been set up in Nevada to facilitate the transaction, the person said.

Reuters could not determine the value of the deal, its ‌primary rationale, or its potential timing.

Corporate filings in Nevada show that those entities were set up on January 21. One of them, a limited liability company, lists SpaceX and Bret Johnsen, the company's chief financial officer, as managing members, while the other lists Johnsen as the company's only officer, the filings show.

The combined companies could also set the narrative groundwork for putting data centers in space — an idea that Musk and a number of other tech billionaires have been floating lately but that may not get off the ground.

In its earnings filings yesterday, Tesla disclosed that it recently made a $2 billion investment in xAI. Last year Musk’s xAI bought Musk’s X in an all-stock deal.

Exclusive: Musk's SpaceX in merger talks with xAI ahead of planned IPO, source says

Reuters reports:

Two entities have been set up in Nevada to facilitate the transaction, the person said.

Reuters could not determine the value of the deal, its ‌primary rationale, or its potential timing.

Corporate filings in Nevada show that those entities were set up on January 21. One of them, a limited liability company, lists SpaceX and Bret Johnsen, the company's chief financial officer, as managing members, while the other lists Johnsen as the company's only officer, the filings show.

In its earnings filings yesterday, Tesla disclosed that it recently made a $2 billion investment in xAI. Last year Musk’s xAI bought Musk’s X in an all-stock deal.

Translating Microsoft’s CEO Satya Nadella

Translating Nadella’s jargon to understand his strategy for meeting intense demand for AI computing.

Jon Keegan3h

Rani Molla4h

Driverless Waymo struck a child near school in California

A Google Waymo struck a child near a Santa Monica elementary school during morning drop-off last week, as self-driving cars by Waymo, Tesla, and others continue their expansion across the country. In a blog post, Waymo said the fully driverless car detected the child as they emerged from behind a parked SUV, braked sharply, and reduced speed from approximately 17 mph to under 6 mph before striking the child. The child suffered minor injuries and walked away.

The company reported the incident to the National Highway Traffic Safety Administration, which is currently investigating, adding fresh scrutiny to how robotaxis perform in the wild.

Jon Keegan5h

Digging into Microsoft’s cloud backlog

Microsoft’s Azure cloud computing unit is seeing huge demand. In yesterday’s second-quarter earnings call, Microsoft CFO Amy Hood said the company’s commercial bookings increased 230% thanks to large commitments from OpenAI and Anthropic and healthy demand for its Azure cloud computing platform.

Hood said that the company’s “remaining performance obligations” (RPO) ballooned to a staggering $625 billion, up 110% from the same period last year. How long will it take for Microsoft to fulfill these booked services? Hood said the weighted average duration was “approximately two and a half years,” but a quarter of that will be recognized in revenue in the next 12 months.

Shares of Microsoft tanked today, down over 11%, despite the strong beat on revenue and earnings. The drop puts the stock on track to have its worst single-day drop since March of 2020.

Investors may be concerned that while huge, that extra demand was coming only from OpenAI, an issue that Oracle recently experienced.

But Hood said the non-OpenAI RPO still grew 28% year on year, which reflects “ongoing broad customer demand across the portfolio.”