Tech market insights: theCUBE Podcast dives into 2024 trends

AI

It’s not even the end of January, but big pieces of news have been rolling out in the technology world. On the latest episode of theCUBE Podcast, theCUBE Research industry analysts John Furrier and Dave Vellante dove deep into recent news, including the latest earnings.

“The market’s great. Everyone’s like, ‘Oh, look at the stock market. S&P 500 at an all-time high,’” said Furrier (pictured, left). “It’s not even the end of January yet, and you’ve got the FTC probing in. The capital markets are looking good on paper.”

“When we exited the pandemic, people were thinking, ‘Oh, we’re going to grow our budget 7.5%.’ Then Ukraine hits, recession or inflation kicks in, Fed starts the tightening,” Vellante said. “What happens is all through 2022 and 2023, we just saw those expectations for budget increases dropping up until July of 2023 when the Fed stopped tightening.”

That’s when those expectations stopped dropping. Things instead stayed pretty flat, according to Vellante.

“We ended the year OK, maybe 3.4% budget growth or spending growth in 2023 versus 2022, with an expectation that’ll grow like 4.5% in 2024,” Vellante said. “But it’s all backloaded.”

In that, Vellante quoted Amazon Web Services Inc. Chief Executive Officer Adam Selipsky, who said at AWS re:Invent in late November that we’ve seen better times, we’ve seen worse times, but we’ve never seen such uncertain times. It’s a quote that Vellante has often referred back to in recent months, and it continues to resonate for him.

“I think companies right now are like, ‘Well, we don’t really know. We’re going to watch earnings. We’re going to watch the Fed,’” he added.

AI isn’t lifting boats (yet)

When it comes to earnings, it’s also important to consider where artificial intelligence is at right now. Almost half of companies report that they’re stealing budgets from other areas to fund AI, according to Vellante.

“There’s no incremental budget. What does that say?” he asked. “That says that unless you start to see real AI ROI, we’re going to be in this tied to the Fed, tied to the economy, tied to the earnings situation. If and when AI starts throwing off ROI, like people expect, then that will self-fund and you’ll have gain sharing, but we’re not there yet.”

On last week’s episode of theCUBE podcast, Furrier and Vellante also discussed the promise of AI ROI in 2024. Furrier reiterated this week that it’s all about productivity, but the market is in a bit of a strange place.

“All the signs on Wall Street, if you look at CNBC, you’re hearing people say, ‘Oh, the rising tide,’” Furrier said. “I’m telling you, I’m feeling people and I think it’s a lot worse than it really is on paper. Budgets are being cut; people we talked to are not spending as much. There’s a cautious optimism. And if anything, people are pulling back. I think Q1 and Q2 are going to be very difficult if you look at the spend on tech companies.”

Intel facing big challenges

This week, Intel Corp. shares fell more than 10% in the after-hours session after the company provided a lower sales forecast. AI may be everywhere, except for when it comes to Intel, according to Vellante.

“Everything’s growing except their growth business,” Vellante said. “It reminds of me of IBM in the Ginni Rometty days, where they had all these strategic growth businesses that weren’t growing. I think the big concern with Intel from an investor’s standpoint is their outlook is 15% below where people were expecting to hear.”

While Mobileye Global Inc. and Altera Corp. were big, multibillion-dollar acquisitions, they aren’t paying out, according to Vellante. But Intel needs cash.

“I’ve said before, Intel could go bankrupt,” Vellante said. The problem is they’re fighting a multi-front war. They’re fighting AMD in their backyard, data center. They’re fighting Nvidia to try to get to the GPU game. They’re fighting TSMC in foundry. I’ve never loved the foundry strategy. It’s just so expensive. It’s such a cash drain.”

Watch the full podcast below to find out why these industry pros were mentioned:

Sam Altman, co-founder and CEO of OpenAI
Rob Hof, editor-in-chief at SiliconANGLE Media
Ed Sim, founder and managing partner at boldstart ventures
Bret Taylor, chairman of the board at OpenAI
Adam Selipsky, CEO of AWS
Erik Bradley, chief strategist and research director at ETR
Charles Fitzgerald, consultative strategist and investor
David Floyer, analyst emeritus at theCUBE Research
John Chambers, CEO of JC2 Ventures
Chuck Robbins, chair and CEO of Cisco Systems
Tony Baer, principal at dbInsight
Sanjeev Mohan, principal at SanjMo
Merv Adrian, independent analyst
Arvind Krishna, chairman and CEO of IBM
Larry Ellison, chairman of the board and CTO of Oracle
Patrick Moorhead, founder, chief analyst and CEO of Moor Insights & Strategy
Pat Gelsinger, CEO of Intel
Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology
Lisa Su, chair and CEO of AMD
Lina Khan, chair of the FTC
Jamie Dimon, chairman and CEO of JPMorgan Chase & Co.
Jordan Novet, technology reporter at CNBC
Chamath Palihapitiya, CEO of Social Capital
Bill Gurley, general partner at Benchmark
Pete Sonsini, venture advisor at New Enterprise Associates
Bob Muglia, entrepreneur and builder
Brad Gerstner, founder and CEO of Altimeter Capital
Jason Calacanis, internet entrepreneur, co-host at All-In
Jim Harbaugh, NFL coach of the Baltimore Ravens
John Harbaugh, NFL coach of the LA Chargers
Lamar Jackson, NFL quarterback for the Baltimore Ravens
Christian McCaffrey, NFL running back for the San Francisco 49ers
Patrick Mahomes, NFL quarterback for the Kansas City Chiefs
Tom Brady, former NFL quarterback
Rob Gronkowski, former NFL tight end
Travis Kelce, NFL tight end for the Kansas City Chiefs

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Photo: SiliconANGLE