The Next Big Theme: February 2024

Big tech re-double their AI pursuits, drug makers capitalise on weight loss demand, and the end of the PC slump. Join us in this month’s “Next Big Theme” as we explore recent news and developments in AI, healthcare, semiconductors and more.

Artificial Intelligence

Big Tech Intensifies Its AI Efforts

Google renamed its generative AI chatbot Bard to Gemini as part of the company’s integration of its latest AI models and to reflect the chatbot’s enhanced capabilities.1 Google also launched a paid version called Gemini Advanced that specialises in complex coding, logical reasoning, and creative collaboration.2 Google will also introduce a dedicated Gemini app for Android that integrates key services like Gmail, Maps, and YouTube.3 Meta announced that it is spending billions on Nvidia AI chips to support AI initiatives, which include open-sourcing Meta’s yet-to-be developed artificial general intelligence (AGI).4 This project requires a massive compute infrastructure, including over 350,000 Nvidia H100 graphics cards by the end of 2024. Assuming Nvidia’s H100’s sell for $25,000 to $30,000, Meta’s total expenditure is likely to exceed $9 billion.5 Meta plans to deploy its own in-house custom chip “Artemis” to complement the chips purchased from Nvidia.6

Explore artificial intelligence with FANG and SEMI.

Healthcare Innovation

Weight Loss Drug Makers Increase Efforts to Boost Manufacturing Capacity

The investment arm of Novo Nordisk’s parent foundation will buy drug manufacturer Catalent for $16.5 billion in a deal aimed to bolster the supply of the highly popular weight loss injection Wegovy and diabetes shot Ozempic.7 In turn, Novo Nordisk will buy three of Catalent’s fill-finish sites from the investment group for $11 billion.8 Catalent, one of the premier contract development and manufacturing organisations (CDMOs), already works with Novo Nordisk to manufacture its wildly successful GLP-1 treatments. The deal, which is expected to close at the end of 2024, is Novo Nordisk’s latest effort to boost manufacturing capacity for its drugs and mitigate future shortages, especially amidst fierce competition from Eli Lilly.9 Demand is robust for Eli Lilly’s new weight loss drug, Zepbound, which generated $175.8 million in fourth-quarter sales despite only receiving regulatory approval in November 2023.10

Explore biotech with CURE.

Big Tech and Advertising

Digital Ad Market Rebounds Sharply After Bleak Year

Quarterly results from tech giants Alphabet, Meta, and Amazon showed a notable rebound in the digital advertising market following a down period.11 Meta’s ad sales surged 24% year-over-year (YoY) to $38.7 billion, bouncing back from a 4% decline in Q4 2022.12 Amazon’s ad business grew 27% to $14.7 billion and Alphabet’s Google ad business increased 11% to $65.5 billion, with YouTube contributing a 16% growth.13 Additionally, Meta and Alphabet’s investments in AI to enhance their ad platforms show positive results. Several factors contributed to the bounce back in sales, including major advertising events like the Superbowl, the upcoming summer Olympics in Paris, and the upcoming U.S. presidential election, alongside a more favourable macroeconomic environment.14 Global ad spending is forecast to increase 10% in 2024, signalling a positive outlook for the industry worldwide.15 Digital advertising spending is expected to account for roughly 70% of total ad spend this year and nearly 75% by 2027.16

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PC and Semiconductors

The PC Slump Appears to Be Nearing an End

The PC industry seems to be turning a corner after a challenging 2023, with AI enhancements playing a pivotal role. For Q4 2023, Intel’s client computing division, which houses its consumer chips, grew a notable 33% YoY, alongside reports of normalised consumer inventory levels and unprecedented notebook shipments.17 AMD’s chips sales increased by a substantial 62% YoY, driven by robust demand for its Ryzen 7000 series CPUs tailored for desktop and laptop applications.18 AMD’s bet on AI PCs as the AI race heats up can help accelerate the PC market rebound. Generative AI integrations like these are poised to invigorate PC sales, aligning with consumer preferences for AI-enabled devices. Forecasts suggest that by 2027, 60% of PC shipments will have AI capabilities.19

Explore semiconductors with SEMI.

Related Funds

FANG: The Global X FANG+ ETF (ASX: FANG) invests in 10 companies at the leading edge of next-generation technology that includes household names and newcomers.

SEMI: The Global X Semiconductor ETF (ASX: SEMI) invests in leading companies along the semiconductor value chain including designers, technology developers and manufacturers.

CURE: The Global X S&P Biotech ETF (ASX: CURE) invests in companies at the fore of healthcare innovation and genomic science, including those involved in gene editing, genomic sequencing, genetic medicine and therapy, computational genomics, and biotechnology.