AI Nearly Breaks the Internet

🤖 OpenAI’s newest model nearly broke the internet this weekend February 20, 2024 | Peel #650 Silver Banana goes to... [CapLinked. ]() In this issue of the Peel: - 🆘 Inflation shows us its Mamba Mentality by refusing to give up - 💰 Coinbase rides the digital asset wave as BTC crosses $50k again - 🤖 OpenAI’s newest model nearly broke the internet this weekend Market Snapshot 📸 Banana Bits 🍌 - The Mag 7 now controls enough market cap to be the [2nd largest stock market in the world](=) - Capital One has discovered its next growth strategy in Discover, with a [$35.3bn merger on the way](=) - Further sanctions may be coming… this time [against Chinese firms](=) - U.S. housing starts fall by 14.8% in January, keeping [the market frozen](=) Brilliant: Daily learning that compounds Learning a little every day can lead to exponential growth—if you're learning on Brilliant. Brilliant is the app that helps lifelong learners level up fast, with bite-sized interactive lessons that are 6x more effective than watching lecture videos. Brilliant makes it easy to: - Master the concepts behind cutting-edge topics like AI, data science, and machine learning - Sharpen your mind and boost your problem-solving abilities - Build a daily learning habit you’ll actually keep [Join 10M+ people](=) getting smarter with a 30-day free trial. And when you’re ready to amp up the learning, get a special 20% discount for Daily Peel readers. Macro Monkey Says 🐒 Never Give Up Inflation in the U.S. has taken a page out of Kobe Bryant’s playbook, showing us its Mamba Mentality as this thing just refuses to give up. We know consumers are still pissed with the ~3% annual inflation over the last few months via the CPI report, but on Friday, we learned that wholesalers are pissed, too—and rightfully so. The Numbers On Friday, the Bureau of Labor Statistics (BLS) published the latest Producer Price Index (PPI) report, shedding some light on wholesale inflation. PPI saw its largest jump since August last month, gaining 0.3% in January. [Source]() Much like Hasbulla, 0.3% is still small but shocking to all who see it. It’s especially shocking considering producer prices actually declined 0.2% in December, just a month prior. Economists had been expecting a 0.1% rise, but the economy clearly must’ve told them to “hold my beer.” Core PPI also came in hotter than expected. Like with CPI, core PPI strips out costs related to food and energy along with trade services too, which is great because (from what I hear) manufacturing equipment doesn’t eat as much as the average American. Also expected to rise just 0.1%, core PPI jumped 0.5% in January. When we take out transportation costs as well, we get the super-core PPI, which jumped a fat 0.6% for the month. Extending our view to the past year, we can see that January’s jump might not be as scary as the monthly figures imply. Headline PPI rose 0.9% annually, while core PPI leaped 2.6% over the same period. Inflation’s Mamba Mentality We can thank our lucky stars that markets weren’t open on Monday (shoutout and happy 1-day belated birthday to the biggest dawg of all, President George Washington) as they almost certainly would’ve thrown up in response. Futures sold off mildly in response, but there’s so little data it’s mostly noise. Still, however, this report in the minds of Wall Street pros only helps to further delay the start date of any potential rate hiking cycle we’ve been waiting on more intensely than season two of House of the Dragon. [Source](=) Now, markets are pricing for rate hikes to begin as far out as June of this year when just weeks ago, all eyes were on March. Peep the tables included in the above image as they show the drastic change in probabilities associated with these potential cuts. This stickiness in inflation all but confirms inflation was, in fact, not transitory, as the Fed was saying while stuck on repeat back in 2022. Supply chain issues persist globally, but the U.S. has been affected less than other countries, at least so far. As we discussed recently, Fed Chair JPow considered himself a modern-day Paul Volcker as he has been steadfast in asserting that the FOMC isn’t cutting anything until inflation is clearly on its way out. Remember this chart? Definitely not something I want to “f*ck around and find out” about… The Takeaway? Inflation, like Kobe’s legacy, can never truly die (RIP btw). However, JPow and the FOMC remain determined to bring the U.S. economy back below that 2% level in a clear, long-term manner. One inflation report showing the right numbers likely won’t be enough to move the needle, which could be why markets have pushed back their due date from March to June already. Further delays in cutting could be on the horizon as well. Next Thursday, the real holiday isn’t the fact that it’s February 29th, but that it’s PCE day. Fingers crossed, the date is the only thing that Leaps then. What's Ripe 🤩 Coinbase (COIN) 📈8.8% - Get ready for your X feed to be absolute trash soon enough, as the BTC bulls are back with digital assets gaining more attention. Coinbase is loving it. - Shares in the digital asset exchange boomed on an earnings beat Friday, reporting hella strong EPS of $1.04/sh vs a $0.09/sh loss expected. - Revenue destroyed estimates, beating by 30% as a rebounding crypto market continues to hold. Who knew all BTC needed was a little help from BlackRock? Applied Materials (AMAT) 📈6.4% - Sure, Em Rata and Pete Davidson are hot, but nothing in 2024 is as hot as semiconductors. Applied Material’s latest quarterly numbers can confirm this. - The manufacturer of equipment that makes semiconductors reported $2.03/sh on $6.74bn in sales vs $1.93/sh on $6.69bn estimated, easily beating. - Investors were so hyped that no one cared about lowering guidance in 2024. Like Em Rata and Pete know, when your sector is this hot, nothing else you do matters. What's Rotten 🤮 Roku (ROKU) 📉23.8% - Friday was Roku’s worst trading day ever, but as Homer Simpson would say, it’s only their worst trading day ever so far. Losses improved, but guidance was rough. - The streaming and smart TV provider narrowed losses dramatically to just $78.3mn from the $237mn it lost in Q4 of 2022. Sales jumped 14%, too. - But the firm’s gross profit guidance of $370mn in Q1 fell just below the $373mn expected. Competition from [Vizio]() and other smart TV makers is heating up. DoorDash (DASH) 📉8.1% - Turns out being too lazy to go out and get your own food is a Big W for everyone involved—except shareholders. DoorDash beat, but the Street’s pissed. - 23% sales growth was enough to drive a revenue beat at $2.3bn, but losing $0.39/sh was intolerable to analysts expecting a loss of $0.16/sh. - Still, EBITDA surprised to the upside, so the next time you DoorDash a $22 coffee and muffin, remember to tip your local shareholders. They need it. Thought Banana 🤔 That Didn’t Take Long… The United States might be the only country in history to drop an A-bomb on another country (for now), but OpenAI dropped its own A-bomb on the entire world… an AI-bomb. And, unlike the U.S.’s bomb, the OpenAI bomb has been continuously exploding for the entirety of the 447 days it has been released. This weekend, that explosion only heated up. Let’s see what’s going on. Sora-ing Through the Skies Last Thursday, OpenAI released its latest product—Sora. [Sora]() is a text-to-video generative AI model that can create videos up to a minute long from text-based prompts alone. If you’re not blown away yet, well, let me invite you to sit down now. The model isn’t widely available to the public yet, but OpenAI CEO Sam Altman took prompt requests on X over the weekend and seemed to nearly break the platform with all the attention they were getting: [Source](=) The videos so far range from animals doing random sh*t, as seen above, to drone-style footage of people doing equally random sh*t. Not only can users direct the model on what to include in the video, but motion, detail, camera angles & movement, and just about anything else can be determined by the user and created within the Sora model. Already, the examples are countless. Some of our personal favorites include the above, along with: [Source](=) [Source](=) [Source]( How adorable is that? And, if that’s not enough, here’s a [link]() to 50+ Sora-made videos compiled together. Who Cares? As usual, you should care—and so should everyone else. A few things about the release of Sora stand out from the rest of the AI crowd. The two most notable in our view include: - This makes OpenAI the first player to offer professional-use text, photo, and video generative AI content with ChatGPT, DALL-E, and now Sora - These videos are hyper-realistic, and it took less than a year and a half for OpenAI’s text to go from GPT 3.5 to this hyper-realistic video creation (it took Pixar [>3yrs to]() “perfect” Merida’s hair in the 2012 movie Brave) But it only gets crazier when we start to consider some of the use-case ideas thrown out there by technologists and others already. Some of the most ground-breaking ideas for using Sora already suggested include: - Personalized Media: Users could describe a video, TV show, or movie they wish to see and create it with Sora once the limit moves past the 1min mark - Extended Media: Love The Sopranos? As the [All-In Podcast]() discussed on their latest episode, you could instruct Sora to “add 10mins” or “make this episode twice as long” to milk your favorite media for even more unique content - Get Your Mind Out of the Gutter: Yes, in theory, it’s entirely possible to revolutionize pornography (RIP Taylor Swift, btw), but there definitely will (and absolutely should) be limitations on X-rated content generation Eventually, some speculate this could go even further into personalized video games, alternate realities, and much, much more. The AI can of worms is officially open, and it’s already bursting at the seams. We knew this stuff would be revolutionary, but damn, this has happened hella quick. When we overlay this kind of personalized content creation with simultaneous hardware developments like Apple’s Vision Pro headsets, a clear concern arises as we all would have the ability to customize our media consumption and more. This is concerning when we think about the loneliness epidemic already plaguing society along with the existing challenge of community unification and division. Further division and separation is the clearest downside we can see right now, but hey, maybe it’s worth it because those golden retrievers are already so damn cute. Be careful what you wish (and pay) for. 💭 The Big Question 💭: When will Sora become widely available, and what kind of impact will this have in the short term? What’s next for OpenAI and the AI community at large? Banana Brain Teaser 💡 Friday 🗓 A window is in the shape of a regular hexagon with each side of length 80 centimeters. If a diagonal through the center of the hexagon is w centimeters long, then w equals what? Answer: 160 centimeters Today 🕐 In a certain medical survey, 45 percent of the people surveyed had the type A antigen in their blood and 3 percent had both the type A antigen and the type B antigen. What percent of those with the type A antigen also had the type B antigen? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.” — Marc Andreesen How Would You Rate Today's Peel? 😁[All the bananas](=) 😐[Meh]() 😩[Rotten AF]() Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]() // [WSO ALPHA](=) // [ACADEMY]( // [COURSES]() // [LEGAL]() [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353