Look out below: AI's double-edged sword slashes Dell, MongoDB ...
THIS WEEK IN ENTERPRISE
Perhaps it shouldn’t come as a surprise that the artificial intelligence boom was never going to be unalloyed good for every enterprise technology provider looking to leverage AI. This week, investors got a taste of the downside and they didn’t like it, sending stocks of Dell Technologies, MongoDB, Salesforce, UiPath Nutanix, Workday, and more plummeting as it became apparent that spending on generative AI technologies such as ChatGPT is stealing budget from other tech spending, at least on the software side. And for Dell, all those AI servers it sold didn’t produce better profits because, as theCUBE Research Chief Analyst Dave Vellante says, all the profit in hardware is going to Nvidia.
The Impact on Tech Providers
It will be interesting to see how June quarter results for many of the biggest tech providers such as Microsoft and Google fare toward the end of July, but investors will be very wary. Meantime, the battle for AI dominance rages on, as Elon Musk’s xAI raised $6 billion and CoreWeave reportedly is planning a 2025 initial public offering of stock. And companies such as Google, which stepped in the AI mud again with bizarre answers with its new AI Overviews service, are striving to fix generative AI issues that may not have a ready solution.
Oh, and no word yet on whether Donald Trump supporters in technology such as Musk, David Sacks, and Chamath Palihapitiya will continue to support him now that he’s a convicted felon.
Upcoming Events and Earnings
Next week is another big one for events, with Computex, Snowflake’s Data Cloud Summit, and Cisco Live headlining the calendar. HPE, CrowdStrike, and a couple of other companies reporting earnings next week will provide another read on the tech-driven stock market.
This and other news, especially what’s happening in enterprise software and hardware, are discussed in depth on John Furrier’s and Vellante’s weekly podcast theCUBE Pod, out this afternoon on YouTube. Also, don’t miss Vellante’s weekly deep dive, Breaking Analysis, due out this weekend.
Key Tech Stories
- Elon Musk’s xAI raises $6B to build new AI services
- CoreWeave plans for 2025 IPO (from The Information)
- OpenAI tightens its grip on news media with Vox Media and Atlantic partnerships
- Transcend reels in $40M for its privacy management toolkit
- Maven AGI unveils AI platform after securing $20M for global expansion
Challenges Faced by Enterprise Software Firms
Enterprise software firms take a big hit on slowing demand, partly because AI is sucking all the air out of the budgets, as seen in the stock performances of UiPath, Salesforce, MongoDB, and Box. However, not all enterprise software companies are struggling, with Elastic, Asana, C3.ai, PagerDuty, and HashiCorp showing promising results.
Hardware Industry Struggles
Hardware companies like Dell and Nutanix are facing challenges as rising demand for AI servers impacts their gross margins, while Pure Storage experiences a bullish forecast. This showcases the double-edged sword nature of AI technologies in the tech industry.
