Author: mo-admin

Intel Turns to Glass Based Substrates to Leverage AI Boom

Intel has lagged as the likes of Nvidia shine amid the artificial intelligence boom. However, the chip pioneer might have found a way to play catch-up as the focus remains on developing chips to power the AI revolution. The company has a chance to show its research and development capabilities by betting on glass-based substrates.

Glass Based Substrates

Glass-based substrates are the materials that sit between chips and connect components in motherboards. They are seen as the answer to enhance connections between chips and other motherboard components as processors become larger and more complex. There have been concerns that as processors become larger in the race to handle AI workloads; they will be unable to communicate with the rest of the computer.

The tiny metal paths that carry data and power between billions of transistors in a chip pass through a fiberglass and epoxy substrate. While the material has been the industry standard for over 50 years, it’s starting to show its limitations, as chips that power the AI revolution come with tens of billions of transistors.

Increasing the number of holes to accommodate the billions of transistors is already causing warping, which leads to loss of contact in some areas. The epoxy and fiberglass mixture also have limitations on the pathways for power and data. The limitations present tremendous opportunities that Intel intends to unlock with its new glass base substrates.

The glass push is part of Intel’s investment in R&D as it tries to innovate for an artificial intelligence world and win customers. It comes from its research and production facilities as Intel continues to look for ways to raise its business profile as it seeks to attract customers for its manufacturing operations.

Intel Long Term Plan

The push for glass-based substrates comes as Intel continues diversifying its core business as it tries to remain competitive in the highly competitive industry. The company used its factories for the longest time to produce and develop its designs. In the most recent past, it’s bundling up its foundry operations to develop semiconductors and other technology for other customers.

In the most recent past, the company’s chief executive officer has talked about packaging capabilities seen as one of the areas for unlocking value. The company has been signing clients looking for ways to package their chips even if they were made elsewhere.

The packaging business offers an exciting and lucrative opportunity for Intel to lure customers who may end up using its broader swath of chip-making capabilities, having invested billions of dollars in its foundry business. The company has already started spending billions of dollars on developing new plants worldwide as it looks to enhance the chip production process.

Intel has also ramped up its research and development spending to over $18 billion as it looks to accrue significant market share in the $580 billion chip industry. The glass packaging initiative could allow the company to commercialize the technology before other companies jump into it. The company is especially banking on existing techniques for packaging from running out of steam in the second half of the decade, which should present a tremendous opportunity for its glass-based substrate technology.

5 Surprising Stocks to Own Now

There’s been a good deal of market uncertainty over the last year.

All thanks to inflation, interest rate hikes, fears of recession, Russia, and the collapse of Silicon Valley Bank, which triggered a sell-off in bank stocks, forcing regulators to backstop the industry. And while markets are still unpredictable even now, there are plenty of safe investment opportunities to jump into. In fact, we found five in some of the hottest, fastest-growing industries to buy now.

Piedmont Lithium (PLL)

Let’s start out with the red-hot lithium story.

With accelerating demand for electric vehicles, and all things green, there’s significant demand for lithium with little supply. Sure, Goldman Sachs and Bank of America want you to believe we’ll see a lithium surplus this year.  

“There could be a surplus of lithium in 2023 as higher supply volumes are set to supersede slowing demand for the metal,” said Bank of America Securities’ head of Asia Pacific basic materials, Matty Zhao. “We see a lot of supply coming out from lithium mines … We are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium.”

The prediction is honestly laughable.

According to Stellantis CEO Carlos Tavares, there may not even be enough lithium for EVs. 

“We know that we need lithium. We know that we are not producing as much as we need. We have right now 1.3 billion cars (that are) internal combustion engine powered on the planet. We need to replace that with clean mobility. That will need a lot of lithium. Not only the lithium may not be enough, but the concentration of the mining of lithium may create other geopolitical issues,” he told Detroit News.

Even major automakers—like Ford Motor and General Motors – are racing to secure supply with deals with Albemarle and Lithium Americas, for example. 

One of the companies benefiting from the lithium story is Piedmont Lithium, a $1.1 billion lithium company based out of North Carolina.

For one, Roth MKM analysts just raised their price target on PLL to $190 from $150 a share, with a buy rating. All thanks to its Definitive Feasibility Study for its Tennessee Lithium Project demonstrating strong economic viability. 

Two, North Carolina regulators just asked the company for additional information to approve the company’s mine permit application.  If all goes according to plan, Piedmont’s North Carolina mine could become one of “America’s largest sources of lithium for electric vehicle batteries for Tesla Inc. and other automakers,” as noted by Reuters.

Three, in early 2023, the company amended its supply contract with Tesla. Under the new contract, Piedmont Lithium will supply approximately 125,000 tonnes of spodumene concentrate to Tesla between the second half of 2023 and the end of 2025.

SoundHound AI (SOUN)

By now, you’re familiar with the artificial intelligence story. 

Grand View Research says the global AI boom could grow from about $137 billion in 2022 to more than $1.81 trillion by 2030. All as it transforms just about everything, about well, everything, including healthcare, governments, transportation, manufacturing, education, the media, even customer service. 

While we can always look at AI heavyweights like Alphabet, Microsoft, Nvidia, C3.AI, and Palantir, for example, the big payoff could come from the lesser known AI companies, which could eventually find themselves an M&A target.

Look at SoundHound (AI), a leader in conversational intelligence, offering voice AI solutions that let businesses offer incredible conversational experiences to their customers, for example.

Granted, that may not sound exciting.  But consider this.

The company is working to integrate voice assistants into vehicles and restaurants, both of which could bring in more than $500 million a year in revenue for the company. Even better, according to Automotive World, about 90% of new vehicles are expected to have embedded voice assistants by 2028. Another big plus for SOUN.

Also, not only is the company already seeing an “incredible surge in demand for conversational AI,” it just reported a 56% jump in revenue year over year. Gross margins jumped to 71% from 59%. And, according to CFO Nitesh Sharan, “Our top-line grew by 56% and every cost category improved sequentially, fueling steady progress towards profitability.”

Analysts over at Cantor Fitzgerald doubled his price target on SOUN to $6.20 from $2.80, with a buy rating.  SoundHound is one of the few companies that can take advantage of the AI frenzy currently occurring at every business across the globe,” he noted.

Viking Therapeutics (VKTX)

Obesity is a massive problem in the U.S.

In fact, you could say it’s bursting at the seams. According to the World Health Organization, global obesity has tripled since 1975.  In 2016, more than 1.9 billion adults were overweight. About 650 million were obese. About 39 million children under five were overweight or obese in 2020. Then more than 340 million children, ages five to 19 were considered overweight or obese in 2016. Unfortunately, when these numbers are updated they could be worse.

While regular diet and exercise could help prevent obesity, we may have the next best thing with medication.  That’s where Viking Therapeutics (VKTX) may benefit. At the moment, its VK2735 treatment is supposed to stimulate incretin hormones, which trigger a feeling of fullness, which can lead to possible weight loss.

Phase 1 trials with the treatment showed that patients lost 6% of their mean body weight, as compared to a placebo. Phase 2 trials are expected to start soon.

Even better, the company is in Phase 2 trials for a treatment of NASH, or non-alcoholic steatohepatitis, which is already showing positive results.  

In May, for example, the company “announced positive top-line results from its Phase 2b clinical trial of VK2809, the company’s novel liver-selective thyroid hormone receptor beta agonist, in patients with biopsy-confirmed non-alcoholic steatohepatitis (NASH).  The study successfully achieved its primary endpoint, with patients receiving VK2809 experiencing statistically significant reductions in liver fat content from baseline to Week 12 as compared with placebo,” as noted in a company press release.

Better, analysts at Roth MKM initiated a buy rating on the stock, with a $32 price target. They believe VKTX could have a blockbuster opportunity in a $26 billion NASH market. They’re also exciting about the company’s obesity drug, and see peak potential sales of $6.1 billion by 2035.

Roblox Corp. (RBLX)

Apparently, the demise of the metaverse has been greatly over exaggerated. That’s according to Lego and Epic Games, which partnered to launch new experiences in the digital world and the real world. Apple just launched its Vision Pro product, which gives it access to the metaverse. Even Nike is jumping into the metaverse with Fortnite to build a presence.  

While we can always buy Apple or Nike stock to take advantage, another hot metaverse stock to consider is Roblox (RBLX).  Starting out as a gaming platform for kids, it’s now one of the top destinations for immersive gaming for other age groups, too. 

Even better, the company just announced positive sales numbers. Bookings, for example, were up 23% year over year through April. Revenue jumped 22% year over year to $655 million. Daily average user growth was also up 22% year over year to 66 million. Plus, users spent about 14.5 billion hours interacting with RBLX content – up 23% year over year.

Analysts seem to like RBLX, too. Benchmark analysts just upgraded the RBLX stock to a buy rating. Roth MKM upgraded RBLX to a buy. Barclays raised its price target to $32 from $28, with BTIG raising its price target to $60 from $55. 

Canaccord also initiated coverage with a buy rating and a price target of $48 a share, and noted: “Bookings growth is anticipated to outpace expense growth moving through 2023 and into next year, which should contribute to margin expansion. The company is also targeting free cash flow at 25%+ of bookings over the long term,” per Seeking Alpha.

Enbridge (ENB)

Or, if you’re looking for safety with a high-yielding opportunity, there’s Enbridge (ENB). 

With a yield of 7.1% (which is higher than the broader market), the company offers safety in the energy infrastructure space, operating the second-longest natural gas pipeline in the U.S., North America’s longest crude oil pipeline, and a high-growth renewable power generation business. With regards to its renewable energy business, “projects in operation or under construction (and their 2,173 MW net generation capacity) are enough to meet the electricity needs of about 966,000 homes,” says the company.

The company also has about $12.9 billion worth of commercially secured capital projects that are under construction. Expected to come online through 2028, those projects include natural gas pipeline expansions, an LNG export terminal project, and offshore wind project in Europe.

Even better, Enbridge has a strong history of dividend payouts. The company has paid dividends for over 68 years.  Most recently, it declared a quarterly dividend of $0.8875 per common share, which was payable on June 1, 2023 to shareholders of record on May 15, 2023. 

Defiance ETFs Launches ETF that Taps Zero-Day-to-Expiration Craze

The insatiable demand for products that offer reliable income is forcing investment firms to come up with unique products to tap into the emerging market opportunity. Defiance ETF is the latest to jump into the growing demand for the so-called zero-day-to-expiration contract with the launch of ultra-short-dated options.

Defiance Option ETF

The investment fund plans to write contracts on the Nasdaq 100 that will protect investors from the index decline. According to the issuer, the Defiance NASDAQ 100 Enhanced Options Income ETF will be able to sell contracts more frequently. The ETF is to hold cash and short-term treasuries as collateral for the investments.

The new ETF product essentially amounts to a bullish bet on the Nasdaq 100, targeting investors who believe the Index will continue edging higher. Whenever the Index rises, the ETF will lock in a premium plus any extra amount linked to the time value of the contracts sold in the money.

On the other hand, whenever the Index drops below the strike price of a put placed, the buyer of the option could demand the price difference between the threshold and the index level. If the difference is more than the premium received, the ETF will incur a loss.

The ETF product will bet on the equity rally that is showing no signs of slowing down even as the Federal Reserve embarks on aggressive monetary policy tightening. Consequently, demand for derivative-selling exchange-traded funds has skyrocketed to record highs as the market continues to edge higher.

Nevertheless, given their ever-growing risk to market stability, the ever-growing demand for ODTEs continues to arouse concerns in some quarters. The option products bet on market calm and pose significant risks whenever volatility increases significantly.

Alternative Income Products Demand

Defiance joins a growing list of firms that are shrugging the concerns, opting to take advantage of the growing demand for ODTEs. ProShares has already filed to start offering ETFs leveraging option contracts. It is now a matter of time before other ETFs also incorporate them into a fund.

Many firms are increasingly racing against time to offer options products buoyed by the amount of success that JPMorgan has enjoyed with its JPMorgan Equity Premium Income ETF (JEPI). At the height of the bear market run in 2022, when the S&P 500 fell by about 19%, the fund outperformed by 15 percentage points. The fund has also amassed over $30 billion in assets over the past three years, with money flowing despite recent struggles in the recent past.

Impressed by the growing demand for options-selling products, Defiance has confirmed plans to diversify in the industry with the launch of Defiance S&P 500 Enhanced Options Income ETF (JEPY) and the Defiance R2000 Enhanced Options Income ETF (IWMY). The two option products will be focused on the S&P 500 and the Russell 2000 indexes.

According to Defiance co-founder and Chief investment officer Sylvia Jablonski, retail and institutional investors continue showing strong interest in alternative income products. This is the drive behind the launch of more option-linked ETF products to enhance the income outcomes.

Essential AI Raises $40M as AI Investment Frenzy Persists

Essential AI is the latest startup to attract strong interest amid the artificial intelligence boom. The startup raised $40 million in new funding in a deal that underscores the frenzy around AI invention and innovation. The new funding round comes just months after the startup raised $8 million in a funding round led by Thrive Capital.

Essential AI LLM Push

A brainchild of Ashish Vaswani and Niki Parmar, the startup works on large language model (LLM) software. LLM is the technology that powers the popular chatbots led by ChatGPT that generate new content by ingesting immense amounts of information. The fact that the startup is raising close to $40 million while still in stealth mode without raising any products underscores strong confidence about its technology and prospects.

The $40 million raised came after Vaswani and Parmar left Adept AI, a company they helped co-found with former Google director David Luan. Adept is one of the companies focused on training neural networks to perform general tasks for enterprise clients. The startup has already risen close to $415 million. The two join a number of high-profile researchers who have left Google to start startups and attracted millions in investments.

AI Investment Frenzy

While the venture capital market has slowed in recent months, AI startups have contended to draw lots of investments as investors eye the opportunity in a segment in the initial stages of growth. In June, three startups raised more than $1.5 billion, underscoring the strong interest in AI startups. AI startup Inflection AI spearheaded the funding round, raising $1.3 billion.

The $1.3 billion investment in Inflection AI was led by Microsoft, Reid Hoffman, Bill Gates, and Nvidia in a deal that valued the startup at $4 billion. The startup has already raised more than $1.5 billion. The startup is building what it says will be the biggest AI cluster in the world. Like Essential AI, it also works on large language models that will allow people to interact with AI-powered assistants.

New York-based Runaway is another AI startup that has raised $141 million, and an extension to $50 million Series C funding from Google, Nvidia, and Salesforce rose late last year. The startup is the brain behind AI image generator Stable Diffusion, having also unveiled its video-to-video generative AI app.

Cohere, an AI startup that competes with open AI, has also raised $270 million this year from investors led by Nvidia, Oracle, and Salesforce. The startup is focusing on developing AI models for enterprise customers. The company seeks to be a neutral provider for enterprises that use models not tied to cloud providers. It is also led by former top AI startups that left Google to plot their way in the industry.

Microsoft Impact

Microsoft investing close to $10 billion in OpenAI, the parent company behind ChatGPT, triggered the investment frenzy around artificial intelligence startups. With ChatGPT sending shockwaves and showing signs of revolutionizing various sectors, it underscored the pivotal role AI is poised to play, therefore attracting massive investments.

The investment drive underscores how startups with exposure to artificial intelligence have become a bright spot in an otherwise subdued market of venture capital funding. Most of the startups continue to receive funding from big tech companies that seek exposure to game-changing innovations.

Amazon Joins Microsoft, Investing in Technology For Decarbonization

Amazon has affirmed its commitment to helping reduce carbon in the atmosphere in the race to combat global warming. The e-commerce giant is funding the world’s largest direct air capture (DAC) technology deployment used in sucking CO₂ from the atmosphere. The company will purchase a quarter of a million metric tons of carbon removal over the next decade from the first plant developed by carbon removal Technology Company 1PointFive.

Amazon Decarbonization Push

The carbon that is to be removed by the direct air capture technology is to be stored underground in saline aquifers, which are large rock formations. A quarter of a million metric tons of the saline aquifers with CO₂ will be equivalent to the emissions in one year from 55,633 fossil fuel cars. The investment in DAC technology is part of Amazon’s bid to reduce CO₂ in the atmosphere.

The tech giant has been investing millions of dollars as it looks to play a key role in combating greenhouse emissions. Its Climate Pledge Fund has invested in climate tech firm CarbonCapture Inc. That is helping accelerate the commercial deployment of new DAC materials that absorb carbon from the atmosphere.

With the two investments, the company is now positioned to target emissions that cannot be eliminated from the source. The investments also position the company to help develop technologies that should help avert the worst effects of global climate change.

In addition to helping reduce CO₂ in the atmosphere, the tech giant is also decarbonizing its operations to ensure it limits CO₂ emissions from its operations. It’s been investing in and adopting renewable energy sources, from solar to wind, to power its operations. The company has also started relying on electric cars for its delivery fleet in the race to reduce CO₂ emissions from its operations.

Microsoft Carbon Credits

It Joins Microsoft, which has also invested millions of dollars in the race to combat carbon emissions. The software giant has already reached an agreement to purchase carbon credits from California-based Heirloom Carbon. The company uses limestone to remove carbon from the atmosphere instead of using DAC technology.

Microsoft is on course to remove up to 315,200 metric tons of carbon dioxide over the next decade by purchasing carbon credits. The removal is poised to offset the carbon emitted by at least 70,000 gas-powered cars. Heirloom’s has already attracted an investment of up to $600 million from the Department of Energy to help in the decarbonization spree.

Even as Amazon and Microsoft make huge leaps in the removal of CO₂ from the atmosphere, scientists insist there is still some work to be done to bring the situation under control and slow down climate change. Removing about 1 trillion tons of carbon dioxide from the atmosphere is needed to keep global warming below 1.5 degrees.

Therefore, new and better technologies are needed to help reduce the CO₂ in the atmosphere that has been fuelling global warming. To solve the problem, new innovation and invention of technologies that don’t exist is highly needed.

By Noel Randewich and Hannah Lang

(Reuters) – Retail traders getting their first bite at Arm Holdings’ highly anticipated public offering when the British chip designer begins trading this week should beware: individual investors often get burned when they jump on hot listings.

Arm’s goal of raising around $5 billion in New York in what might be the biggest IPO of 2023 follows other major listings in recent years whose returns have mostly disappointed.

Since Arm, owned by Japan’s SoftBank Group’s, is not well-known among consumers, it is focusing its IPO marketing efforts on institutional investors, people familiar with the deal said.

That leaves Main Street investors to buy Arm shares at potentially higher prices once they begin trading. With retail investors holding individual stocks for less than a year on average, recent history suggests they could lose money, a Reuters analysis shows.

The 10 biggest U.S. initial public offerings (IPOs) of the past four years are down an average of 47% from the closing price on their first day of trading, according to the analysis of LSEG data as of Friday. Investors who bought at the top of an intra-day price surge that often occurs in high-profile listings would have fared even worse, with an average loss of 53%.

Only two of the stocks in those top 10 are up from their IPO prices: software seller Snowflake and Airbnb, which leads with a 111% return.

While dabbling in individual stocks is a notoriously risky business for amateur investors, the analysis underscores just how perilous it can be to buy into blockbuster IPOs on Day One.

Even institutional investors invited to buy into those 10 IPOs before trading would be down an average of 18%.

The S&P 500 has gained an average of 13% since each of those IPOs, nine of which happened in 2020 and 2021.

“If you’re buying in the market, on average, you’re buying at a premium to the offer price,” said Jay Ritter, a professor at the University of Florida who studies IPOs. “For almost all retail investors, buying and holding a low-cost index fund is the best strategy.”

Arm’s debut and an upcoming listing from grocery delivery service Instacart are expected to rejuvenate a lackluster IPO market which has slowed over the past two years due to volatility and economic uncertainty.

Instacart will be offering some retail investors a chance to buy into its IPO via underwriter fintech company SoFi, its prospectus said.

While Arm is a business-to-business company with little consumer brand recognition, its IPO publicity is likely to attract retail interest, said analysts. Nvidia, the chipmaker at the center of an artificial intelligence boom, has been a retail favorite this year.

Retail participation in U.S. stocks surged in 2021, fueled by low interest rates, zero-cost trading apps, and social media hype around GameStop and other so-called meme stocks.

But Main Street investors have become more cautious after last year’s stock market sell-off, said Marco Iachini, a senior vice president at Vanda Research, which tracks retail trades.

“Whatever comes out of the Arm IPO, you’ll see niches of the retail community trying to get in on it, but it’s not going to be at the levels we saw in some of the IPOs in 2021,” he said.

Spokespeople for Arm and SoFi declined to comment. Spokespeople for Instacart and the 10 companies whose IPOs were analyzed did not provide comment, or did not respond to comment requests.

CRUSHED VALUATIONS

Arm is seeking up to $51 per share, potentially valuing it at more than $50 billion – the most valuable company to list in New York since electric carmaker Rivian Automotive debuted in 2021.

Burning through cash to ramp up production, Rivian’s market value has collapsed by over $60 billion since it listed. Also among the biggest IPOs in recent years, food delivery company DoorDash’s stock remains down by more than half from its intraday high on its December 2020 debut.

To be sure, it has been a tough few years for IPOs. Wall Street’s steep sell-off in 2022, along with rising interest rates and fears of a potential U.S. recession, have crushed valuations of companies that went public before they were profitable. But studies by Ritter and others have shown IPOs offer poor returns.

In the past four years, over 260 IPOs have debuted with stock market values above $1 billion, mostly in the technology, healthcare and consumer discretionary sectors, according to LSEG. They are down on average 29% from their offering prices and down 49% from their initial trading highs.

One standout among recent big IPOs is chipmaker GlobalFoundries, which has gained 23% since its 2021 listing, compared to the S&P 500’s 3% dip over that time.

(Additional reporting by Lance Tupper, Anirban Sen and Echo Wang; editing by Michelle Price and Richard Chang)

Bernard Arnault Invests $230 Million in LVMH Despite Stock Decline 

Billionaire Bernard Arnault made significant investments totaling €215 million ($230 million) in LVMH shares following the luxury conglomerate’s disappointing financial results in late July, which had led to a decline in the stock’s value.

French billionaire buys LVMH’s dip 

According to records filed with French regulatory authorities, Arnault’s companies, Financiere Agache and Christian Dior SE, initiated the acquisition of LVMH Moet Hennessy Louis Vuitton SE shares just three days after the release of the earnings report on July 25. Subsequently, the stock has experienced a 14% decrease in value, primarily influenced by economic slowdowns in China and the United States, persistent inflationary pressures, and the rising trend in interest rates.

The French entrepreneur, alongside his family, holds approximately 48% of LVMH’s equities, along with a significant 64% of the voting authority. Arnault, ranked as the planet’s second-richest person, frequently acquires LVMH shares, pausing during the blackout intervals associated with financial reports, as indicated in official disclosures. A spokesperson on behalf of Arnault chose not to comment on the issue.

LVMH’s financial performance for the second quarter indicated challenges for the luxury conglomerate, which owns well-known brands like Louis Vuitton and Tiffany & Co. Notably, the company encountered difficulties in the US market, where its organic revenue experienced a 1% decline. This disappointing outcome had a negative impact on investor sentiment, resulting in a 5.2% decline in the company’s stock price during the subsequent trading session. 

In the previous month, LVMH experienced a notable 7.8% decrease in its share value, marking the most substantial monthly decline since the end of the previous year, December. This recent downturn in the stock market led to the displacement of LVMH from its position as the leading European corporation in terms of market capitalization. Danish pharmaceutical company Novo Nordisk A/S surpassed the luxury conglomerate in this regard, thanks to the impressive sales performance of its Ozempic obesity treatment.

This shift in market dynamics has had a notable impact on Bernard Arnault’s wealth, which had reached a historic high of $212.4 billion in the middle of July. However, as of the latest available data on Thursday, his fortune has dwindled to $170.4 billion. This places him in the second position on the Bloomberg Billionaires Index, trailing behind Elon Musk, whose worth currently stands at $230.7 billion.

It’s worth noting that despite the recent decline, LVMH shares have still managed to maintain an overall positive trajectory for the year, with an increase of approximately 8.8%.

Luxury stocks on decline due to inflationary pressures 

Early in the week the stock declined alongside other luxury stocks with its value dropping below $400 billion following Richemont Chairperson Johann Rupert’s comments that inflation had started to dent dead in the region. Rupert told shareholders that they had seen the squeeze. 

On Wednesday, HSBC Holdings Plc released a report in which they revised their projections and price objectives for the luxury sector. Analyst Erwan Rambourg cited the adjustments as a response to the influence of a strengthening euro and an increased near-term growth cost within the industry.

SpaceX Yet To Secure Regulatory Approval for Starship Launch 

SpaceX has no green light to conduct another test flight of its Starship Super Heavy launch vehicle. That’s the stance held by the US Federal Aviation Administration, coming on the heels of CEO Elon Musk insisting they are ready to launch. Reports indicate the aerospace and Defense Company is yet to meet requirements to be able to fly again after an explosion early in the year.

SpaceX Grounding

In April, SpaceX was dealt a significant blow after its first Starship launch imploded in a catastrophic way after launching for more than three minutes. The starship lost multiple engines after launching and fell to the ground, affecting the ground infrastructure. The fact that the implosion triggered a crater in the ground, flung concrete chunks, and also impacted the sensitive habitat of endangered habitats triggered an investigation from the FAA.

The FAA is responsible for protecting the public during commercial space transportation launches. Therefore, it is mandated to conduct an in-depth investigation of the matter to ensure all loopholes are sealed before SpaceX is allowed to carry out another launch. Consequently, the agency has confirmed that the mishap investigation is still open, which means SpaceX cannot proceed with any launch until it is closed.

Until the aerospace giant implements corrective actions and demonstrates compliance with all regulatory requirements, its starship will remain grounded. The grounding comes amid a deteriorating relationship between Musk and federal regulators.

Musk vs. Regulators

The SpaceX CEO has found himself in hot soup with the regulators on flouting several FAA requirements in the past. For instance, in 2020, the executive pushed the company to go against the regulators orders and conduct a rocket test flight on a date it was explicitly prohibited. In the end, the SN8 rocket exploded midair.

In the most recent past, SpaceX conducted a test on a water deluge system designed to keep the company’s launch pad cool during launches. The fact that the tests were conducted without authorization or environmental permits has plunged the company into trouble with regulators.

Nevertheless, it is highly unlikely that the company will be grounded for long, given the role it plays. NASA, the country’s space agency, relies on Elon Musk’s company to transport people and equipment from the US to orbit.

Therefore, any grounding derails the agency’s programs and plans. In addition, SpaceX is also planning to move heavy equipment to orbit as it also plans to make space tourism work with plans to move people to the moon and eventually Mars.

SpaceX is one of the most important pieces of the Musk Empire. Over the years, the billionaire investor has turned to the aerospace company to back up his other ventures. For instance, he borrowed $20 million from the company to help the then-struggling Tesla, which was on the brink of collapse in 2008. Likewise, he used the company to offer support to Solar City in 2015 and 2016 when it was experiencing a period of financial difficulties.

While Musk is the majority shareholder at SpaceX, some investors have questioned his actions of diverting resources from the company to another enterprise. His actions have paid off as Tesla has found its foot and accounts for the biggest chunk of his net worth.

US Tech Giants under Siege as EU Digital Market Act Looms

Microsoft and Apple stock plunged amid reports they face fresh investigations from the European Union regulators. The new probe pertains to a new digital markets clampdown that target’s close to 22 services offered by some of the biggest tech giants. Google, Amazon, and Meta are the other tech giants targeted as part of the new Digital Markets Act poised to come into effect early next year.

EU Digital Markets Act

Under the new act, it will be illegal for tech giants to favor their own services over those of rivals. Additionally, the companies will be prohibited from combining personal data across different services or using data they collect from third-party merchants to compete against their rivals. In addition, the companies will have to allow users to download apps from rival platforms, which takes a significant swipe on Apple’s iOS platform.

Under the new obligations, Apple will have to open up its ecosystem to allow iPhone and iPad users to download apps from rival app stores. Apple has already downplayed the push, insisting that such actions will pose significant privacy issues and data risks.

Tech Giants Targeted

Meta is another tech giant targeted by the new EU Digital Markets Act, as it will be prohibited from combining user data between Facebook and Instagram or its other apps without seeking permission. Amazon is another company targeted by the new act, as it will be barred from using data it collects from sellers on its platform to create products that compete against them.

Alphabet’s Google also finds itself at a crossroads with the EU regulators as it will be barred from favoring its own search verticals like shopping in its search results. Microsoft has sought to defend itself from the new act, insisting that its search engine, Bing, is too small compared to Google and thus should be exempted.

Antitrust Pressure

The new rules should pile antitrust pressure on US tech giants that have had to pay billions of dollars in the past in fines and tax orders from the watchdog. The EU antitrust body insists that the new act is necessary to clamp down on the monopolistic plays by the big tech giants. The EU internal market commissioner, Thierry Breton, expects the new act to reign on the tech giants’ economic power and create more choice for consumers while creating new opportunities.

Companies that violate the new DMA act stand to incur fines of as much as 10% of their worldwide annual sales. It could also rise to 20% in the event of continued infringement. The EU commissions could also demand the companies to be broken up in case of systemic violations.

The affected companies have six months to fall in line and ensure their products and services abide by the new rules. Companies that feel aggrieved have a right to challenge the new regulations in court. The EU antitrust body expects the tech giants to go to court, as has been the case in the past.

Big technology companies have dominated the digital economy over the years owing to their ability to challenge any form of government oversight. Despite facing the risk of billions of dollars in fines, the companies have continued to propagate their monopolistic behavior, something that allows them to generate billions of dollars in revenues and earnings.

Crypto Staking Hits Record Highs despite Digital Assets Sell Off

It’s not all doom and gloom in the cryptocurrency sector. While digital assets led by Bitcoin and Ethereum have been under immense pressure amid a prolonged market selloff, another segment of the broader sector has flourished. Liquid staking is the segment that is flying high, having turned out to be a hotbed of investments in recent months.

Liquid Staking Demand

Staking is one of the options offered by various platforms that allow token holders to lock their tokens to help secure the blockchain network and enhance liquidity. It turned out to be an attractive investment play, given the rewards up for grabs on locking tokens in liquidity pools for a specified amount of time.

The value of assets locked in liquid staking services has jumped by more than 290% to over $20 billion over the past 12 months. Lido platform has benefited with the value of assets locked in the platform soaring to $14 billion, helping support the 60% rally of the network’s native token. The increase signals investors are increasingly locking their digital assets in staking services instead of trying to buy and sell to benefit from price differences.

Consequently, liquid staking has emerged as one of the flourishing segments in decentralized finance. The segment allows people to trade, lend, and borrow without intermediaries but through blockchain-powered pools. Its popularity has grown on being embraced by Ethereum, one of the most important blockchains, following an upgrading of the network last year.

Likewise, the Ethereum network offers Ether token holders an opportunity to earn an equivalent of 4% annually on locking their tokens to help secure and enhance liquidity. The number of Ether token holders that pledge tokens to help approve Ethereum transactions has risen by more than 40%, affirming strong interest in staking.   Rival blockchains like Solana and Cardano also offer staking opportunities.

Crypto Market Sell Off

Liquid staking pools like Lido and Rocket Pool have since bounced back after last year’s sell-off following the TerraUSD stablecoin implosion. The collapse of the stablecoin, followed by the FTX scandal, triggered a massive sell-off in the broader industry, triggering a $2 trillion crypto market rout.

A rebound in liquid staking comes against global regulators’ pressure on cryptos and staking products from various centralized exchanges. Kraken and Bitstamp are some of the popular staking platforms that have been targeted and pushed to discontinue their products. Hong Kong is one of the jurisdictions that have taken a stringent stance against staking, with Singapore banning all forms of staking.

The broader cryptocurrency sector has struggled to bounce back from last year’s slow down amid reduced demand for risk in the markets. Bitcoin, the flagship cryptocurrency, has so far struggled to power and find support above the $30,000 handle signaling waning demand for digital assets. Ethereum has also struggled to rise past the $2,000 level.

Likewise, the prices of major digital assets remain far below the record highs of 2021 and 2022 as investors turn their attention to other assets. Equities have emerged as a preferred investment vehicle in addition to staking for digital assets. Investors have been ramping up positions in equities depicted by the Nasdaq 100, rallying by more than 30% year to date, with the S&P 500 also up by more than 15%.