Meta’s AI gambits; Amazon’s antitrust fight with FTC: Weekly tech roundup

(C) Reuters.

By Louis Juricic and Sarina Isaacs

Investing.com — Here is your weekly Pro Recap on the biggest headlines out of a big earnings week for tech: Meta AI wows analysts, Micron forecasts a big loss, Amazon is sued by the FTC, Apple dealing with scorching iPhone temps.

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Analysts cheered by Meta’s freshest AI innovations

Wall Street analysts are positive on Meta (NASDAQ:META) after the company unveiled new artificial intelligence (AI) features and showcased its latest range of head-worn devices at its annual “Connect” developers conference this past week.

The new products include AI-enabled Ray-Ban smart glasses that can livestream what a user is seeing directly to Facebook and Instagram, as well as a newly updated virtual-reality headset. The company also presented a new AI chatbot and a studio for developers to create brand-specific chatbots.

Analysts are particularly optimistic about the AI potential.

Oppenheimer wrote that the updates show that the company “understands investors want more focus on AI vs. the Metaverse,” reiterating its Outperform rating on the company, and Evercore analysts said of the smart glasses: “All in, this is a solid update, and we believe an important step towards mass adoption of AR/VR technology.”

UBS said it was “positively surprised by the level of innovation going on at Meta, the series of products likely to boost engagement, and a clear path to medium-term monetization potential of genAI products.”

And Bank of America said the event “offered early signs on how Meta will use AI to help drive user engagement (chat and image creation) and new business services,” adding, “We expect a number of AI based advertiser tools to help with ad creation and campaign management as well.”

Meta shares gained 1.6% for the week to $300.21.

Amazon accused of wielding ‘monopoly power’ by FTC in new antitrust lawsuit; invests in ChatGPT rival

Amazon (NASDAQ:AMZN) took a fall Tuesday after the U.S. Federal Trade Commission launched a landmark anti-trust lawsuit against the $1.3 trillion e-commerce giant, but some analysts have maintained their positive outlook on the company.

The FTC’s long-awaited complaint alleges that Amazon is a monopoly that maintains its power by employing anticompetitive and unfair practices. In particular, the FTC accused the company of harnessing its dominant market position to fight efforts by sellers on its online marketplace to charge cheaper prices on rival platforms.

FTC Chair Lina Khan, who has long advocated for a sweeping crackdown on Big Tech firms, declined to discuss a possible break-up of Amazon in a press briefing on Tuesday. Instead, she said, the focus is on “liability.”

Amazon General Counsel David Zapolsky, meanwhile, argued that the practices targeted by the FTC have actually produced “greater selection, lower prices, and faster delivery speeds” for customers and “greater opportunity” for businesses.

Considering the case, analysts at Telsey Advisory Group said that while they “understand” the FTC is concerned about the costs Amazon extracts from sellers, they believe it could be “hard to argue” with the tech group’s response that sellers have multiple options to transact. The analysts maintained their outperform rating of the stock, adding that they expect it to still be a “share gainer.”

Analysts at Bank of America and Citi also reiterated their respective buy ratings, arguing that Amazon’s core operations could help offset fears around the outcome of the lawsuit.

CFRA likewise maintained its Buy rating on Amazon and said it believes the lawsuit “will be a lengthy and uphill battle for the FTC.” Along with Wedbush, it believes major structural changes in the company are unlikely. Wedbush added, “Consistent with our view ahead of the lawsuit’s filing, we would be buyers of the pullback in shares.”

Amazon ultimately recovered some of its Tuesday losses and ended down 1.8% for the week to $127.12.

Separately, Amazon also announced in the past week that it is aiming to invest up to $4B in artificial intelligence group Anthropic, rival to ChatGPT-maker OpenAI, aiming to bolster its position in the corporate arms race over nascent AI technology.

Under the terms of the agreement, Amazon says an initial investment of $1.25B could expand to $4B depending on certain conditions. Anthropic will then have access to Amazon’s cloud computing platform to help optimize its AI systems, known as large language models.

Micron loses ground on shaky outlook

Micron (NASDAQ:MU) reported Wednesday better-than-feared fiscal fourth-quarter results, but a mixed picture on the outlook for the first quarter amid a challenging backdrop as the chip supply glut continued to keep a lid on demand.

Micron reported an adjusted loss of $1.07 a share, $0.08 better than anticipated, on above-par revenue of $4.01 billion.

For the fiscal first quarter, however, the company guided for a loss in a range of $1 to $1.14 a share versus consensus for $0.92 in the red, and revenue of $4.2B to $4.6B that comes in well below the $4.22B consensus.

JPMorgan raised the price target by $5 to $80 per share on MU, maintaining its Overweight rating, citing the beginning of an “upturn” in the memory industry and saying it believes Micron shares will rise through the rest of the year and into next “as the market continues to discount improving revenue/pricing/margin/earnings power.”

Goldman Sachs commented in a similar manner:

“Despite what now appears to be a slower than previously expected recovery in gross margins and EPS, our constructive thesis on the stock predicated on improving demand and supply discipline (i.e. reduction in Wafer Fab Equipment spending and wafer starts) remains unchanged and, as such, we would view any pullback in the stock as an opportunity to add to positions.”

Shares lost 4.4% on Thursday after the report, but clawed back those losses on Friday and ended down just fractionally for the week to $68.03.

Apple iPhones overheating: report

The new Apple (NASDAQ:AAPL) iPhone 15, particularly the high-end models, is facing overheating issues, according to a Wall Street Journal report.

The concerns, which echo similar ones for iPhone14 Pro, have been raised in consumer social media posts as well as reviews and tests conducted by the WSJ – the latter of which showed the iPhone 15 Pro Max reached temperatures as high as 106 degrees Fahrenheit (41C) while charging, and up to 112 degrees (44C), when charging coincides with processor-intensive activities such as gaming.

Apple may need to address these overheating issues through software updates, potentially impacting device performance.

Premium iPhones have traditionally been a significant source of revenue for Apple, especially as global smartphone demand has seen a decline. The company is pinning hopes on the iPhone 15, particularly its Pro variants, to rejuvenate its business and drive growth.

Sam Boughedda, Yasin Ebrahim, and Senad Karaahmetovic contributed to this report.