Good morning from the Financial Times.
Today is Wednesday, November 26th, and this is your FT News Briefing.
NVIDIA may no longer be the bell of the AI ball, and US economic data is telling us that retailers aren't feeling the holiday spirit.
Plus, what is the opposite of to the moon?
Because whatever it is, that's what crypto is doing right now.
Companies and executives have been like if we're holding lots of crypto, our share price will go up.
But now the trend is really rapidly unraveling.
I'm Mark Filippino, and here's the news you need to start your day.
Google's parent company almost reached a $4 trillion market capitalization yesterday.
That would be a new record.
Alphabet has had a crazy run since early September after an antitrust judge ruled in its favor.
And the company's artificial intelligence offerings have become a shining star in the sector.
Google's AI is doing so well, investors got nervous it could overtake NVIDIA.
That sent the chipmaker's shares lower on Tuesday.
Here to unpack all this is the FT's John Foley.
He heads up our Lex column.
Hi, John.
Hi there.
All right, let's start with this big honking $4 trillion number.
What would that mean for Alphabet if its market capitalization reached that point?
Well, you know, the number itself is kind of meaningless.
These are big, round numbers, and we see everything is measured in trillions now in tech world.
But what it does tell us is that Alphabet, Google, has had a really remarkable reversal of fortunes.
About a year ago, it was tied up in an antitrust case.
ChatGPT was eating away at its market share in online search.
And it's really been quite amazing how Google has managed to turn things around.
And that $4 trillion market cap is a sign that really Google is back on top.
You mentioned that antitrust case that turned things around for Google.
Tell me a little bit more about what happened there.
Yeah, so we know that Google is a monopoly.
The courts decided that Google had an illegal monopoly in online search.
But then in September this year, a judge announced that He basically didn't think that in the age of AI, Google's monopoly was such a potent threat.
So the idea was that ChatGPT had kind of changed everything.
So there was no point in dismantling Google.
What that did was it basically allowed Google to just flex its monopolistic muscle in any way that it wants to.
And so now Google really has let rip with some new AI models that are proving really powerful.
You know, it's growing super quickly.
It's far from losing market share in search, which it was doing for a while.
It seems to be now regaining some of its market share from ChatGPT.
Users are searching more rather than less.
So let's go into Google's AI capabilities. a little more.
How far has the company come and how does it compare to other AI giants?
I mean, it has huge capabilities and it also has huge budgets because Alphabet is enormous.
It has all those years of monopoly profit.
Analysts are saying it's going to invest something like $120 billion next year on AI.
There just really aren't many companies that can compete with that.
Even OpenAI, which has a lot of money and is making a lot of big promises about spending over the coming years.
And the other thing that's really surprised people is that Google's AI is much better than people thought it was.
Its initial chatbot, BARD, was basically a flop.
It then launched Gemini and had a couple of glitches along the way.
And Gemini 3, which launched last week, has really kind of knocked the ball out of the park.
It's scoring very highly on a lot of the benchmark tests that are used to evaluate different AI models.
So Google's really rolled up its sleeves and got to work on producing AI models that people actually want to use and that can compete with the best things that are out there.
John, it was just last week that we were talking on the show about NVIDIA's banger of an earnings report.
Is what's going on at Google enough to take the top spot away from the chipmaker?
So the race is still on for AI supremacy.
OpenAI still wants to produce the absolute best AI AI that is smarter than a human meta platforms.
The owner of Facebook is doing the same thing.
It's pursuing super intelligence, you know, ever better, ever cleverer AI models.
So there is still much to play for.
What this tells us though, is that really, you should never bet against a company with the heft of Google.
It's also, this is a bit of a wake up for NVIDIA, which is the dominant maker of AI technology.
And NVIDIA sort of is to AI chips what Google is to search.
And one of the things that we've learned recently is that Google is managing to produce really impressive AI models that are trained on its own chips.
It's making its own chips, which are called TPUs.
And it may also, people are now saying, be thinking about selling those chips to third parties.
So Google's monopoly may be alive and well, but NVIDIA's monopoly suddenly looks a little bit more fragile now.
John Foley is the head of the FT's Lex column.
Thanks so much, John.
Thank you.
The end of the year often brings volatility to parts of the financial market.
We just told you about how some of that is playing out in the AI space.
It's also hitting the crypto world.
Shares are sinking in companies designed to stash cryptocurrencies.
They're also called digital asset treasuries.
So far, $1 trillion has been wiped off the crypto market.
Nico Asghari covers crypto for the FT.
She joins me now to make sense of all this.
Hi, Nico.
Hi.
All right.
So help us understand what exactly these crypto treasuries do and why their shares are suddenly sinking.
So this year...
Companies ranging from biotechs, from companies that sell electric vehicles vapes, you name it.
There is a company that has decided this year I'm going to raise lots of money through the debt and the equity markets and I'm going to buy crypto.
It might be Bitcoin, it might be ETH, it might be more niche tokens like Litecoin or TON.
But the strategy is to raise as much money as possible, to buy as much crypto as possible, in the hope that this will send your share price up.
Because, as we've talked about this year under US President Donald Trump, crypto markets have been hitting record highs.
Everyone's very excited.
So companies and executives have been like if we're holding lots of crypto, our share price will go up.
Our investors will be really happy.
And that is a trend that has swept financial markets.
But now the trend is really rapidly unraveling.
Yeah, we've talked about these crypto treasuries before, but can you give us a few examples of the kind of companies that we're talking about right now?
Yeah, so the most famous one is a company called Strategy, listed in the US, and it's led by a man called Michael Saylor.
He is really the leader of this movement, if you like.
He started doing this in August 2020 with what was really a software company, but the software bit is irrelevant.
The main business really just buys and holds Bitcoin.
And Michael Saylor has become sort of evangelist, going and doing podcasts and conferences saying this is what you need to be doing.
If you run a public company, you need to be buying Bitcoin.
So his is the biggest and the most famous one.
But there are lots of others.
Metaplanet is Japan's biggest Bitcoin holder.
In the UK, you've got the Smarter Web Company, which does sort of website design and marketing.
But again, value that investors had seen so far in it is because it's buying and holding Bitcoin.
All right.
We've talked about Bitcoin.
We've talked about ETH.
How do other more niche tokens fit into the sell-off?
Yeah, so some companies have been buying and holding more niche tokens.
But as the crypto market really over the past month has tanked and, like you said, dropped about a trillion in market cap, all of these tokens have also dropped in price.
And, as a result, the shares of these companies have dropped in price, some of them as much as 80 90 from their peaks in the summer.
And so now some of these companies are looking a little bit desperate and they're saying hey, we need to increase our share price.
This isn't looking good.
This whole plan was to buy and hold as much crypto as possible.
And now it's going into reverse and they're having to sell some, mostly to fund share buybacks, in the hope that that will help boost their share price.
It's all sort of going wrong at the moment.
Yeah.
Which kind of brings me to my last question, Niku, as we head into the final days of the year.
How are investors thinking about this sell-off and what are you going to be watching for?
I think it's not going to get any better, to be honest.
As I said, the share price of a lot of these companies has crashed and a lot of them are now trading are now valued less than the amount of Bitcoin they hold.
So if you wanted to buy a big pot of Bitcoin at a discount, it's kind of a good time to be doing deals.
And a lot of people are sort of waiting and seeing when there might be a wave of MA and a wave of one company that might be doing a bit better buying another company, just really to hold the crypto at a discount.
And I think that's the next stage of what we'll see here.
It's the FT's Niku Esgari.
Thanks so much, Niku.
Thank you.
Data about the US economy keeps trickling in, and things apparently weren't so hot for retailers back in September.
Remember, we're working off old data.
The shutdown stopped government agencies from collecting information about the economy.
Anyway, back to retailers.
Their sales growth only ticked up two-tenths of a percent.
That's lower than what economists were expecting and not great, considering sales growth hit six-tenths of a percent in August.
This is a key figure to watch as we head into the holidays.
So is the read we got on consumer confidence yesterday.
This month, it fell to its lowest point since the spring.
Households are worrying about their bottom lines.
So now we want to know how you're handling the holiday season.
Is the economy or sticky inflation informing what you spend on gifts?
Or maybe you're cutting back on travel or big family meals.
Send me a voice message with your name and where you're from, and we might play it on the show.
My email address is in the show notes.
Before we go, just a reminder that today UK Chancellor Rachel Reeves will be delivering her autumn budget.
There's a great piece my colleagues wrote about the four audiences Reeves needs to satisfy and I highly recommend you give it a read.
Link for that is also in the show notes.
We'll have coverage throughout the day on FT.com.
This has been your daily FT News Briefing.
Check back tomorrow for the latest business news.
