Three Things (6/24)

Apple’s AI partnerships

Facebook’s parent company has reportedly held discussions with Apple about integrating Meta’s generative AI model into Apple Intelligence, the recently announced AI system for iPhones and other devices. Meta and other companies developing generative AI are hoping to take advantage of Apple’s massive distribution through its iPhones. It’s yet another move from Apple that clearly signals their intentions to win by partnerships instead of building out the foundational models themselves.

Data and scale will be key for folks looking to build out their AI capabilities and we’re not sure there’s a better distribution play than the iPhone. It’s an interesting update from their recent partnership with OpenAI and we wonder if users down the road will be given a choice to choose their preferred model. It would be a compelling approach for Apple to again build the ecosystem and marketplace for other tech players to compete for best product, price, and service.

Nvidia retreats

Nvidia’s run as the world’s most valuable company didn’t last long. Shares of the semiconductor giant have fallen ~6.7% in the last two days, erasing over $220 billion in market cap and removing the company from its place as the world’s top stock. Nvidia’s market cap was about $3.1 trillion as of market close on Friday, lower than Apple at $3.2 trillion and Microsoft at $3.3 trillion.

It was a swift reversal but the decline underscores the pace at which the stock had climbed, nearly +200% to start the year, and how that ascent now makes it vulnerable to sudden retreats like this one. Some whipsawing in the short-term is to be expected especially and is a feature, not a bug, when the steep climb makes the stock vulnerable to profit taking.

Housing roars

Home prices rose in May to a new high, with low inventory continuing to spur bidding wars among home buyers in some markets. Although prices aren’t adjusted for inflation, the national median existing-home price in May was $419,300, a record in data going back to 1999. Even though demand is low, home prices are still rising because high mortgage rates are likely deterring potential sellers from listing their homes.

The housing market is somewhat of a strange phenomenon, where we have low home-sales activity yet prices are hitting record highs. Seven percent interest rates is likely the psychological level for mortgage rates that may bring some more buyers to the table. With rates higher for longer, though, and seven percent being seemingly far away, we wonder how long can the current dynamics last before something breaks?

Disclosures

As of writing, AAPL, META, MSFT, and NVDA are holdings in Titan's Flagship strategy.

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