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AMD Contemplates Chinese AI Chip to Take on Nvidia and Intel

China remains an important market that Advanced Micro Devices is willing to do everything to tap into its massive artificial intelligence market. Facing significant curbs on the way to operate in the market, the chip giant is contemplating developing a new chip line specifically dedicated and designed for the Chinese market.

US Chip Export Curbs

Such a chip would allow the company to comply with US export controls when Beijing and Washington are entangled in a fierce standoff over advanced technologies billed to be a matter of national security. Despite the protracted standoff between the two superpowers, China remains a lucrative market that US tech giants are willing to do anything to unlock value.

Faced with a similar challenge early in the year, Nvidia opted to tweak its advanced H100 chip specification amid US government restrictions to make them compliant with the export curbs. Intel also followed suit by modifying its Gaudi AI chips as one of the ways of pursuing opportunities in China without rattling the US government.

During the company’s earnings call, Chief Executive Officer Lisa Su made it clear they are willing to do everything possible to fully comply with US export controls while also pursuing opportunities in China. Part of the effort entails developing an artificial intelligence chip for the Chinese market that complies with US export controls.

Data Center Opportunity

Such a chip will not only circumvent the export curbs but will also strengthen AMDs competitive edge against Nvidia and Intel, which are also fixated on the Chinese opportunity. AMD is also in the process of accelerating the production of its M1300 chips, which should put it in a position to take Nvidia’s head on graphics processing units.

While Nvidia dominates the GPU market segment, there is a significant market opportunity that AMD can unlock. The M1300 AI chip is what AMD is banking on to take on Nvidia by targeting clients in the lucrative Data cater business.

Advanced Micro Devices is overly confident of strengthening its prospects in the data center business with the M1300 chip. Consequently, the company expects up to 50% growth in the second half of the year, thanks to the new powerful chip. The company is looking to accrue a significant market share in the data centers market, expected to be worth $150 billion by 2027.

Stellar Q2 Results

The company is fresh from delivering impressive second-quarter results, helped by the strong demand and sales of its artificial intelligence chips. The chip giant delivered 58 cents a share Q2 profit beating consensus estimates of 57 cents a share. Revenue came in at $5.36 billion, better than the $5.32 billion that analysts expected.

The better-than-expected Q2 results came on the company seeing lots of AI engagement increasing seven times as multiple customers initiated and expanded programs that require its AI chops. Likewise, the company expects its data center and client segment revenues to grow by a double-digit percentage, driven by strong demand for the Epyc and Ryzen processors. AMD stock is up by more than 80% for the year as it benefits from the AI rally boom.

Adobe Has 25% Upside Potential on AI Boom: Morgan Stanley

Adobe is the latest company to benefit from the hype around generative artificial intelligence. Like Nvidia, the creative software maker has seen its sentiments in the market improve significantly on integrating AI features into its software offerings. Likewise, the stock has rallied by about 57% year to date as investors jostle for positions seeing it as an ideal play for gaining exposure to the revolutionary technology.

AI Boom

Morgan Stanley analyst Keith Weiss is the latest to join the fray in touting the company’s long-term prospects as it continues integrating new AI tools into its creative software offerings. The analyst believes the stock could rally by a further 25% over the next year amid the AI boom. The $660 price target by the analyst would bring the stock close to its all-time high of $688 a share.  The analyst has also upgraded the stock to overweight from an equal weight.

Adobe joins the likes of Nvidia, Microsoft, and Alphabet, which have seen their valuations and sentiments significantly boost owing to their increased focus on artificial intelligence tools and innovation. Nvidia has been the biggest winner, its share price more than tripling, and the chip giant is becoming a trillion dollar company amid the AI revolution.

Microsoft has also benefited a great deal amid its $10 billion investment in OpenAI that allowed it to gain access to ChatGPT, a tool it is using to strengthen its edge on the search business through Bing.  Alphabet has also launched its own AI-powered chatbot Bard as it looks to fend off stiff competition from Microsoft.

Adobe AI Edge

According to the Morgan Stanley analyst, Adobe’s clarity in AI-enabled products and monetization roadmap should continue to strengthen investor sentiments on the stock. Likewise, it is expected to accelerate the company’s creative cloud organic growth.  Its cloud platform has made it easy for customers to tap into cutting-edge technology, therefore, create and customize their designs.

AI integration has helped shrug off any concerns that Adobe would be left behind as other firms launch AI tools. For instance, the company’s Photoshop Generative Fill feature allows people to edit and enhance designs by simply typing in the desired outcome and letting the software do the magic.

Improving Earnings

Adobe has reaped the rewards of betting on AI tools that continue strengthening its offerings and core business. Likewise, the company has increased its full-year revenue and profit outlook, expecting the tools to draw in more business.

The creative software maker expects full-year revenue of between $19.25 billion and $19.35 billion, up from the previous year of $17.6 billion.  The expectation is high that the company’s earnings growth can return to mid or high-teen growth over the next three years.

In the second quarter, the creative software maker delivered record revenues amid strong demand across all the key cloud products. Revenue was up 10% year over year to $4.8 billion as net income increased 10% to $1.3 billion.  Free cash flow increased 5.4% to $1.9 billion.

Even as Adobe continues to strengthen its competitive edge around artificial intelligence, it has encountered a stumbling block in its bid to acquire Figma. The $20 billion bid hangs in the balance amid European regulatory scrutiny by the European Union antitrust authorities.

AI Bubble Unlikely To Wan Soon, Says BofA Analysts  

Bank of America Corp. strategists, led by Michael Hartnett, suggest that while the excitement surrounding stocks related to artificial intelligence has reached unprecedented levels, it is unlikely that they will drop in the immediate future.

AI sector’s promising prospects driving momentum for tech stocks 

Hartnett wrote in a note that AI’s promising prospects have sparked enthusiasm, resulting in significant market momentum for companies such as Nvidia and Microsoft, which has contributed to the S&P 500’s positive performance in the first half of the year. The strategist however warned that despite the AI “baby bubble” being resilient due to low real rates (nominal interest rates adjusted for inflation), there are concerns that tighter financial conditions in August could pose challenges for risk assets.

According to Hartnett, in the 2020s, international markets, spanning from Treasuries to oil, Bitcoin, and stocks, have evolved into a realm of “excessive movements,” with fluctuations in asset values now considered the standard pattern. He further pointed out that AI represents the latest manifestation of this overshooting trend.

Following the remarkable surge in AI stocks, the current emphasis lies in exploring the technology’s influence on businesses’ financial performance, as evidenced by the recent earnings reports from various companies. For instance analysts have noted that Microsoft’s financial results did not meet the overly optimistic expectations of an instant AI-driven boost. On the other hand, Meta Platforms Inc. experienced significant growth as AI substantially enhanced their advertising efficiency. As for Nvidia, the leading choice of Wall Street in the AI sector, their upcoming earnings will be out later in August.

Investors should focus downside opportunities in tech and credit

Hartnett gave a justified bearish stance in 2022 but his current pessimistic outlook on US stocks in 2023 is yet to materialize. In the Friday note, the strategists suggested directing attention towards emerging segments and commodities as favorable investment options for the remaining summer period. They also highlighted tech and credit as potential assets to consider for downside opportunities in the upcoming autumn.

The BofA analysts also brought attention to significant financial movements during the week ending on July 26, based on data from EPFR Global. According to the EPFR Global data equity inflows were $13.5 billion with inflows resurgence to the US of around $9.9 billion while Europe experienced its 20th consecutive week of redemptions, with outflows totaling $1.3 billion.

In terms of sectors, the data indicated that materials had the most significant inflows over the last 25 weeks and in the last two weeks it attracted $1.9 billion. This trend reflects investors’ positioning for an improved outlook in China.

Despite the market activity, Hartnett observed that there hasn’t been a mass movement away from cash. In fact, there have been inflows into the cash asset class over the last two weeks, with a total of $104.1 billion invested in cash so far this month. 

Finally the data shows that bonds had a net influx of $11 billion, with investment grade bonds resuming inflows while high-yield experienced outflows.

Wex To Invest $100M In Electric Vehicle Startups

Wex is the latest high-profile company to set sights on the burgeoning electric vehicle space. The provider of vehicle fleet management services is planning to invest $100 million, focusing on early-stage startups focused on EV routing. The company has already established an investing group or arm to invest in startups focused on energy management and charging infrastructure.

Wex EV Investment

Wex Venture Capital is the new arm that has already invested strategically in Chargetrip, a startup focused on EV routing and range prediction. The venture capital arm has also invested in ev.energy, a charging software startup.

The $100 million investment targeting startups through 2025 comes when venture capital investments have slowed. Corporate-backed venture deals were down by 2% last year, with a 25% decline for venture capital overall. A decline in financing came despite the largest number of corporate units being created by corporate backers.

With a market capitalization of more than $8 billion, Wex has what it takes to diversify its business footprint beyond manning vehicle fleets and providing fuel cards. Likewise, the company has, in the recent past, increased its focus on transitioning toward electric vehicles. The transition comes as the total number of vehicles that the company manages has grown to over 18 million.

As more customers move to electric vehicles as part of a drive to curb emissions, Wex has had no option but also to align its business with the ongoing changes. A decline in the costs of electric vehicles and a growth in models that customers can buy has seen an uptick in electric vehicles in most of the key markets where Wex operates.

Therefore, it makes sense for the company to invest in EV startups to supplement its fleet management business. However, it has emerged the company is planning to make small returns from its investments in EV startups. Its primary goal is to gain a strategic advantage in the sector to boost its fleet management business.

Growing EV Investments

Wex’s investment into EV startups comes at a time when automakers are racing against time to secure key supplies for making electric batteries. The likes of Tesla, General Motors, and Ford are increasingly investing in mining companies with solid exposure to lithium deposits around the world.

By investing in the mining companies, the automakers hope to secure key lithium supplies crucial to the development of electric batteries. Such supplies are essential to providing leeway for the automakers to develop highly affordable electric cars as the race for market share heats up.

In addition to investing in lithium miners, some automakers are also investing in smaller EV companies in the race to strengthen their competitive edge in the market. German Automaker Volkswagen is fresh from investing $700 million in XPeng as it seeks to strengthen its push for market share in the lucrative Chinese EV market.

The $700 million investments could provide the much-needed stopgap that should help address Volkswagen falling market share in China. On the other hand, XPeng gains a prestige backing from one of the largest automakers that should help calm nerves after delivering disappointing earnings results. The partnership could also help the Chinese company reach profitability sooner than expected.

Gold outlook should improve once there are signs of the US economy plunging into recession. Those sentiments echoed by JPMorgan strategists who believe the precious metal will push past the $2000 ounce level by year-end. The estimate comes when the yellow metal has found support above the $1900 an ounce level after gaining more than 15% over the past 12 months.

Gold Price Drivers

However, gold price move to the upside has been limited due to dollar strength. The dollar has remained resilient for the better part of the year as the FED reiterated its monetary policy tightening spree through interest rate hikes. Nevertheless, with prospects of the US economy tipping into recession, the gold outlook should improve.

There have been growing concerns that the current high-interest rate environment poses significant economic risks. Signs of slowing economic activity with gross domestic product failing to hit targets have fueled the concerns. With high-interest rates, access to cheap capital needed to fuel economic activity has been strained significantly.

Likewise, the prospect of the US economy plunging into recession could fuel demand for gold, often seen as a store of value. People and central banks often turn to precious metals during economic uncertainty. The strong demand often triggers a significant spike in prices.

Recession is not the only factor likely to fuel a significant uptick in gold prices.  A push by the US Federal Reserve to try and cut interest rates to support the economy would favor gold sentiments in the market. By cutting interest rates, demand for real yields would decline significantly, shifting the focus to non-yielding assets such as gold.

In addition, interest rate cuts are likely to fuel dollar weakness, something that should favor higher gold prices. Strong demand from central banks is another factor likely to support gold sentiments, pushing prices higher.

Gold above $2100

Considering all the factors, JPMorgan strategists believe gold prices could rally to record highs of $2175 an ounce as early as the first quarter of next year. The move higher would be accelerated by the US economy experiencing a mild recession later in the year.

Consequently, Grew Shearer, the executive director of global commodity research at JPMorgan, believes gold ownership and long allocation are good as they act as a cycle diversifier.  Likewise, he expects the precious metal to outperform over the next 12 to 18 months.

Similarly, long positions on gold futures have increased significantly in 2023, which explains why the precious metal has traded above the $1900 an ounce level for the better part of the year. Strong buying spree of physical gold by central banks and other traders has also acted as a key driver of higher prices. The buying spree has been fueled by the need to diversify investment portfolios away from currencies and equities.

China rarely discloses how much its central bank buys. In 2015 it shocked the market when it reported a 600-ton jump in its bullion reserves. While the country has not reported any change in its gold hoard since 2019, there is already speculation that it has been buying under the radar. Such buys under the radar are one factor that should push prices higher.

All eyes are on Microsoft and Alphabet as the two tech heavyweights report quarterly results at the height of the artificial intelligence boom. The two tech giants have been at the forefront of adopting and integrating the revolutionary technology as they seek to strengthen their competitive edge and unlock new growth opportunities. Consequently, Wall Street will want to see the impact the technology has had on the two companies and the opportunities it is likely to generate.

Microsoft-Alphabet AI Rallies

Microsoft has been one of the biggest beneficiaries of the AI boom, rallying by more than 40% year to date. The rally has come on the software giant investing about $10 billion in OpenAI as it sought to gain access to its AI-powered chatbot. It has already integrated the chatbot into its search engine tool Bing. Now investors will want to know whether the integration helped strengthen the software giant edge on search, therefore, bringing in more riches. A better-than-expected earnings report could be the catalyst to propel the software giant into a $3 trillion company joining Apple in the exclusive club.

On the other hand, Alphabet, through its tech unit Google has been active on the artificial intelligence front as it seeks to safeguard its lucrative search business. It has already unveiled the AI-powered chatbot Bard as it looks to counter the threat posed by ChatGPT on the search front. The stock is also up by about 38%, falling short of the 42% gain by the tech-heavy Nasdaq index.

Alphabet would be in the spotlight to see whether artificial intelligence has the potential to strengthen the company’s multi-billion search advertising business. The market will also want to see whether Bard is helping people make decisions on where to go for vacation, among other common tasks that the technology has been known for.

After the earnings report, the focus will be on whether artificial intelligence is the technology that will help drive growth in the two tech giants. The earnings reports will also shed lighter on whether the two companies deserve the hefty valuations they have received in recent months. For instance, Microsoft is trading at 31 times its estimated earnings, a significant premium over the Nasdaq 100 index average.

Key Business Units

Nevertheless, it does not mean that Microsoft’s future solely depends on artificial intelligence innovations. Microsoft is still a market leader in software products, a business in which it generates a food chunk of its revenues. It is a key player in cloud computing and gaming business units that will also be under the spotlight when the earnings call hits the wire.

Similarly, the focus will also be on Alphabet’s digital advertising business storm, which generates the biggest revenue share owing to its search monopoly. The company is also big on cloud computing.

Meta is another company whose earnings will also be in the spotlight once the market closes. The social networking giant has been on an impressive run rallying by more than 100% year to date. The rally has come at the back of an aggressive restructuring drive that has seen the company lay off staff and focus on high-growth areas. It has also benefited from an uptick in advertising spending on its social networking apps.

Brace for higher oil prices in the second half of the year. Those sentiments were echoed by analysts at Goldman Sachs, who believe prices will continue increasing as demand continues to outpace supply. The remarks come on oil prices dropping to lows of $63 a barrel last month only to bounce back and find support above $70 a barrel.

Declining Oil Production

Goldman Sachs analysts expect oil prices to rise from just above $80 a barrel and close the year at highs of $86 a barrel.  The uptick in oil prices, according to the analysts, will mostly be fueled by sizable deficits in the second half of the year. The analysts project deficits of up to 2 million barrels a day likely to push prices up in the third quarter.

The remarks about higher oil prices come on the backdrop of oil production increasing significantly over the past year to 12.7 million barrels a day in the US. The increased production comes with the opening of economies worldwide with the easing of COVID-19 restrictions.

However, analysts are convinced that the pace of production will slow starting in the third quarter.  Oil production is expected to decline to about 200 barrels a day, owing to a significant decline in rig counts.

Immediate data indicates that the oil rig count responsible for a good chunk of US oil production has dropped to the lowest level in 16 months, down from the 2022 peak.  Last month the rig count fell by 7 to 530 hitting the lowest level since March 2022.

Surging Oil Demand

Complicating the oil situation in the US is the failure of G20 energy ministers to reach an agreement that further throws oil demand into uncertainty. The ministers failed to agree on the modality of phasing down fossil fuels, all but complicating the push to clean energy. Lack of investments and commitment towards clean energy should continue to fuel demand for fossil fuels, with oil the biggest beneficiary.

The US has been pushing to instill curbs on fossil fuels. The government has already committed to providing up to $700 million to help monitor and reduce methane emissions from the oil and gas sectors. The funding is to be accompanied by technical assistance from companies to curb emissions of the planet’s warming greenhouse.  Nevertheless, its efforts might not be enough if other countries don’t do their part in curbing fossil fuels productions and emissions.

The International Energy Agency already expects global demand to rise by 2.4 million barrels per day in 2023, which should outpace last year’s 2.3 million-a-day increase. Demand from China and India is expected to continue fueling the oil market, with the two countries expected to make up for 2 million barrels starting in the second half of 2023. Speculation over a new stimulus in China expected to accelerate economic activity should also have a significant impact on driving prices higher

A surge in oil prices will also be fueled by tightening supply from some of the biggest producers. Saudi Arabia is one of the major producers turning to production curbs to trigger price uptick. The cuts come when summer demand is more vital than ever.

A JPMorgan Asset Management-run fund worth $1.4 billion, is holding a positive outlook for Asia’s semiconductor supply-chain stocks, anticipating their potential to match the rapidly rising US rivals.

Valuation of Asian semiconductor manufacturers to rise in 2H 2023

One of the JPM Asia Pacific Equity Fund co-managers, Oliver Cox, foresees an upcoming surge in artificial intelligence (AI)-related investments for Asian enterprises. This development is expected to result in augmented valuations during the latter part of 2023. Cox believes that AI has considerable potential to significantly influence regional earnings, and this trend of increased AI-driven orders is likely to persist well into 2024.

Cox stated in an interview that this is the anticipated course of event based on insights from previous cycles. The JPM Asia Pacific Equity Fund has performed exceptionally this year out doing rivals by 86%. 

The optimistic sales projection made by Nvidia Corp. in May ignited a worldwide enthusiasm for artificial intelligence (AI) related products, and this positive trend continues to thrive. The Santa Clara based chipmaker predicted that it expects sales of around $11 billion for the quarter ending July despite analysts holding that the figure could be around $7.2 billion. 

Interestingly, brokerage firms that have been skeptical have started touting the potential of chip stocks connected to AI, as evidenced by Morgan Stanley’s recent upgrades of semiconductor companies in South Korea, Greater China, and Japan. The Chinese sector received an upgrade from a US broker, which is now considered attractive rather than in-line. Additionally, Morgan Stanley raised the price targets for Korea’s SK Hynix Inc. and Samsung Electronics Co. On the other hand, the Japanese chip sector received a lift from in-line to attractive with Disco Corp seeing a change to overweight.

Asian chipmakers on the rise as AI-related ventures grow  

Nonetheless, the change has predominantly favored US companies until now, given that numerous Asian enterprises have experienced a decline in profits due to a slump in electronics demand. Only recently are they witnessing an encouraging surge in AI-related ventures, as highlighted by Cox. Recently, Taiwan Semiconductor Manufacturing Co. faced a setback, with its shares plunging by up to 3.8% on Friday, attributed to a reduction in its annual revenue forecast.

In the current year, the Bloomberg Asia Pacific Semiconductors Index has demonstrated a modest growth of approximately 23%, which is about half of the advancement observed in its US counterpart. Furthermore, the 12-month forward price-to-earnings ratio for the Index is trailing behind the Philadelphia Semiconductor Index by nearly five points, representing the most significant margin since 2017.

In addition to possessing appealing valuations, Korean suppliers stand to gain from price upswings due to anticipated “DRAM shortages in 2024” fueled by the rising demand for high bandwidth memory driven by AI technologies, as highlighted by Cox.  Furthermore, the Hong Kong-based manager is actively considering investments in cutting-edge semiconductor packaging and testing companies in Taiwan and Japan, for another technology-focused fund he runs.

Forecasts of future earnings for the Asian semiconductor benchmark have climbed by 15% since their lowest point in 2023, which is almost twice the increase seen in the US benchmark.

Aston Martin Is a Buy: Goldman Sachs

Focus in the auto industry has always been on Tesla, owing to its credentials as an electric vehicle pioneer. In comes Aston Martin Lagonda, whose sentiments and outlook have improved significantly. Over the past month, the stock has rallied by more than 40%, turning out to be a bright spot for the auto industry.

Aston Martin Improving Outlook

The latest catalyst fueling a buying spree on the British Automaker is analysts at Goldman Sachs insisting that this stock is a buy for the first time in nearly four years. According to analysts led by George Galliers, unveiling new core car models every quarter has set the company up for tremendous growth.

Special models like DBR22 and Valour are expected to deliver higher average selling prices that should see the automaker generate higher profit margins. In March, the automaker announced that it expected significant growth in profitability compared to 2022, driven by an increase in volumes of car sales to about 7,000 units. It also expects higher gross margins in its core and special vehicles. The company is on course to start deliveries of its next-generation sports cars before year-end.

According to the company’s executive chairman Lawrence Stroll, the order book is stronger now more than ever, backed by solid underlying fundamentals. In addition, the company is experiencing strong demand in the market as it focuses on delivering 10,000 wholesale units over the coming years. Last year, it sold about 6,400 cars.   The company also seeks to attain more than $2.55 billion in annual revenues by 2025.

Electric Vehicle Push

The luxury car maker has also set sights on the burgeoning electric car segment. It has already reached a $232 million deal to enter the segment with the help of Lucid Group. Under the terms of the agreement, Lucid is to get a 3.7% stake in Aston Martin worth $232 million.

In return, Lucid is to provide the much-needed electronic vehicle powertrain and battery systems that the British Automaker needs to develop its fleet of electric cars. The British Automaker, which gets its engine and EV technology from Mercedes Benz, intends to strengthen its line of luxury vehicles with the first hybrid car early next year. It also plans to unveil an electric car in 2025 as part of its expansion strategy.

Nevertheless, it faces an uphill task as it plays catchup to industry hitters. Tesla remains the market leader in electric vehicles, having already sold thousands of cars as it innovates around autonomous driving features. In addition, like other established automakers, Tesla has secure key supplies for materials needed to develop batteries in-house, strengthening its competitive edge in the industry.

Nevertheless, the market for electric vehicles is big, with no one automaker expected to meet the demand. As the race to reduce carbon emission heats up, demand for such cars grows, presenting a massive market.

Since going public in 2018, Aston Martin has been under immense pressure. Its pretax loss more than doubled last year.   However, its fortunes appear to be changing in the aftermath of Canadian tycoon Stroll spearheading an investment into the company.

Futureverse Raises $54M After Diversifying Into Crypto, AI, Gaming, and Metaverse

Renewed interest and an improving regulatory outlook are some of the catalysts likely to fuel investments into the embattled cryptocurrency sector. In the race to attract investments, companies and startups are becoming increasingly creative in the push for much-needed financing. Futureverse is the latest to raise $54 million in fresh funding after merging with 11 different startups.

Futureverse Funding Round

Futureverse, which began as a tie-up of eight companies late last year, continues to attract investor interest owing to its exposure to blockchain, artificial intelligence, metaverse, and gaming segments. Some of the big investors that participated in the $54 million funding round included Ripple Labs, which has seen its sentiments improve after a US district judge refuted claims it sold ripple cryptocurrency as securities. Crypto investment firm 10T is also believed to have participated in the funding round.

The massive investment comes on Futureverse embarking on an aggressive restructuring drive to reinvigorate its sentiments. The company has already laid off nearly 20% of its staff as it sought to strengthen its competitive edge amid a challenging macro environment. The massive cash injection gives the company much more stability and resilience to weather any storm as the crypto industry tries to bounce back.

Diversification Drive

Blockchain is also an important part of Futureverse’s prospects. However, it is not the only thing that the company does. The underlying technology behind various digital assets accounts for only 10% of the company’s tech stack.

Instead of focusing on cryptocurrencies, Futureverse has sought to diversify its footprint as one way of weathering down industry headwinds. For instance, it offers a tech infrastructure that allows users to enjoy a unique experience in the metaverse world. In addition, it has stakes in the non-fungible token segment with FLUF world, which is a collection of NFTs

The company is also flexing its muscle in the embattled metaverse world that has lost its buzz and hype after Facebook changed its name to Meta and turned its attention to artificial intelligence technology. According to the company’s CEO, Aaron McDonalds combining metaverse with artificial intelligence promises to unlock more value.

Drying VC Investments

Diversifying interests and operations across various emerging technologies is the only way to attract investments. Venture capital firms have continued to sour the crypto sector, with investments in crypto and blockchain firms shrinking to $2.3 billion in the second quarter compared to $8 billion raised in the two sectors last year during the same period.

At the height of the pandemic, crypto-focused companies attracted a record $13 billion amid the explosive move in cryptocurrencies. Fast forward to a challenging business environment compounded by regulatory pressures and high-interest rates has seen deal flow shrink significantly. Rising interest rates have made it difficult for many investors to find the much-needed investment capital to bet on long-tail risk assets.

The amount of cash invested in crypto companies has also declined significantly as venture capital firms and investors maintain a cautious approach. On the other hand, only startups focused on crypto trading exchanges and lending are attracting investments amid the cuts.