This Week In AI-Today's Stock Briefings

The AI Chip Wars Explode - Google Ditches Broadcom, Backstabs Nvidia, and Software Stocks Soar. The Trillion Dollar Battle No One Saw Coming.

Google's AI Power Play Roils Silicon Valley

Shockwaves rippled through Silicon Valley as insider reports emerged that Google may cut ties with longtime AI chip supplier Broadcom as early as 2027. Seeking to control its AI destiny, Google is said to be developing proprietary chips in-house, decimating Broadcom's 25% target for AI revenue by 2024.

Though Google claimed "no change" in its Broadcom partnership, the company's reported collaboration with rival Marvell since 2022 validates Google's aim for self-reliance. As the AI chip wars heat up, Broadcom scrambles to contain the fallout while Nvidia and design software partners Synopsys and Cadence emerge as winners.

Demand for custom AI chips is skyrocketing. As Google and others move design in-house, dependence on Synopsys and Cadence's electronic design software grows. With AI chips in unprecedented demand, these stocks are primed for gains.

The battle for AI supremacy has begun. Google wants total control of its AI future, spelling possible disaster for Broadcom. The shakeup signals a new era, with tech titans clashing over the world's most valuable prize: domination of artificial intelligence. Silicon Valley awaits the aftershocks, as bold moves by AI leaders shape the landscape for years to come. The trillion dollar war for AI supremacy is on.

Barron’s https://www.barrons.com/articles/broadcom-stock-google-ai-chip-52e2b758

Wall Street Sell-Off Deepens as 'Higher for Longer' Rates Loom

Wall Street crashed on Thursday as the Fed's hawkish stance dashed hopes for easing interest rates before 2025. The S&P 500 and Nasdaq plunged to their lowest levels since June, with megacaps like Amazon, Apple, and Alphabet dragging indexes down over 1.5%.

The sell-off came after the Fed reiterated its commitment to taming inflation through restrictive monetary policy. Unexpectedly low jobless claims reinforced the Fed’s view of a resilient labor market and economy. “Higher for longer” rate hikes now appear inevitable despite impending economic strains.

Rising Treasury yields, a strengthening dollar, and restarted student loan payments could further pressure consumers. Meanwhile, global central banks align on maintaining hawkish policies. With rate hikes starting to bite, the chances of a soft landing diminish.

By Reuter’s US stocks close at lowest since June, Treasury yields spike on hawkish Fed

Cisco Bets Big on AI With $28 Billion Splunk Gamble

Cisco rocked the tech world on Thursday with its jaw-dropping $28 billion acquisition of AI cloud firm Splunk. The deal, Cisco's largest ever, sent its stock tumbling 4% while Splunk shares skyrocketed 21%.

Wall Street is apprehensive about Cisco overpaying - the offer is a steep 32% premium on Splunk's last valuation. While Splunk posted losses last year, Cisco is hungry to tap AI-powered growth. But the deal's massive scale displays Cisco's desperation for expansion amidst slowing sales.

Splunk's data analytics capabilities will aid Cisco's cloud and security services. Yet analysts are split on the strategy's effectiveness. Some praise the deal as a bold move to boost Cisco's software portfolio. Others criticize the high premium and question if integrating Splunk will succeed.

Regardless, Cisco is betting huge on AI and the cloud. The acquisition caps a wave of mega-deals for AI-focused firms. With Cisco paying top dollar for scale, it seems AI is the hottest currency in tech. Competition in the space is cutthroat.

For Cisco, the deal is make-or-break. Splunk's technology could catalyze growth or become a wasted investment. AI promises immense rewards for those who harness it. In the innovation race, Cisco has put all its chips on AI with its costliest gamble ever. Forbes https://www.forbes.com/sites/dereksaul/2023/09/21/cisco-stock-dips-4-after-28-billion-splunk-acquisition/?sh=69874e6c234a