Markets Waded In A Sea Of Red 📈 | Salesforce Dips 16% After ER Report 👀 | Googles AI Is Continuing To Have Issues? 🤔 | Netflix Bull Calls Lead To A 2% Surge 🚀
Markets shook off the long weekend hangover and went straight for the red in todays trading session. Treasury yields spiking made investors uneasy with data that could shift the needle in either direction looms. Lets drive straight into our indexes to see how they performed:
The S&P500 shed 0.7%
The Dow Jones Industrial Average Fell 1% through the session
The Nasdaq Composite lost 0.6% after a historic day
Economic concerns seem to be eclipsing the hopes of AI that investors have been banking on to give the market a solid push. On our corporate front reported earnings in after hours with stock sliding 16% after a weak revenue forecast for the current quarter made the street turn sour. Here are the results:
EPS = $2.34 vs expected $2.40
Current Revenue = $9.2B vs expected $9.35B
Prior Q Revenue = $9.13B vs expected $9.15B
is showing that is not the “market maker” that analysts believed it would be after the stellar earnings report last week. The overall market however is not rallying, with the S&P500 down just 0.5% since the earnings report hit the tape.
Google’s Trust in Question: AI Failures and the Race to Compete 👀
Google’s Memorial Day weekend was filled with challenges as its AI Overview feature in Search made several inaccurate and bizarre statements, including suggesting that nontoxic glue can keep cheese on pizza and that Barack Obama was the first Muslim president. These errors follow a series of AI-related missteps, such as the inaccurate images generated by the Gemini image generator and the Bard chatbot’s error in a promotional video. These incidents have the potential to erode users’ trust in Google as the premier source of information. Google has responded by taking down the incorrect responses and using the errors to improve its systems. However, the frequency of these issues raises concerns about the company’s ability to deliver reliable AI-generated content.
Google’s AI Overview problems stem from users asking uncommon questions, with the system linking to inaccurate sources. The company’s Gemini image generator faced criticism for generating photos of diverse groups in inaccurate settings, including as German soldiers in 1943. Google has attempted to address this by increasing the diversity of ethnicities in generated images, but the software overcorrected, leading to the rejection of some requests for images of people of specific backgrounds.
Google’s rush to release AI-powered products to compete with Microsoft and OpenAI may be contributing to these issues. The company is moving quickly to beat competitors, shrinking the gap between research and product development. However, this speed may result in surface-level issues that harm user trust. Google must balance the need to compete with the responsibility to deliver accurate and reliable information. The company’s reputation as a trustworthy source of information is at stake, and addressing these AI-related challenges is crucial to maintaining user trust.
Netflix Stock Surges Amid Industry Disruption and Growth Opportunities 🐂
Netflix’s stock surged 2% on Wednesday, driven by a string of bullish calls from Wall Street analysts. Morgan Stanley analyst Benjamin Swinburne sees 30% upside potential based on current trading levels, citing Netflix’s position as “both a driver and beneficiary of industry disruption.” Swinburne projects over 30 million subscriber net additions this year, with revenue expected to continue its double-digit growth path next year. This growth is attributed to initiatives such as Netflix’s advertising tier and its password-sharing crackdown.
Netflix’s advertising tier has already gained significant traction, reaching 40 million global monthly active users. The company has also turned to live events and sports to fuel growth, including a three-season deal to air NFL games on Christmas Day and a 10-year deal with WWE to bring its flagship program Raw to the streaming service. With shares up 35% since the start of the year, analysts are optimistic about Netflix’s future growth trajectory. As Evercore ISI analyst Mark Mahaney noted, “Netflix is in the strongest position financially, fundamentally and competitively that we have ever seen.”
