In January, 2021, retail investors - Robinhood army - came together on Reddit's Wall Street Bets group and other social media outlets to take down prominent hedge funds by causing a short squeeze and pushing up GameStop's stock price by 400% in just one week¹. This amount of volatility is not normal, the retail investors were urged on by the Reddit group to punish hedge funds that had taken an outsized short bet against GameStop. Tracking market sentiment can be a powerful tool for investors because understanding the mood of where the market is going can allow one to capitalize from the changing direction. Combining market sentiment with market fundamental will result in more sound investments. I was fascinated by the showdown between Wall Street and Reddit and inspired to understand how machine learning (ML) can be used to track market sentiment.
Streaming entertainment giant Netflix this afternoon reported Q2 revenue that topped expectations, but missed on the bottom line, and offered an outlook for revenue in line with Wall Street's consensus. In the all important metrics department, Netflix added 1.54 million paying subscribers, on a net basis, topping expectations for 1.15 million. However, the company expects to add just 3.5 million paying subscribers this quarter, which is well below consensus for 5.63 million. The report sent Netflix shares down about 3% in late trading. Netflix said it will add video games to its service, confirming recent rumors.
Netflix Inc.'s foray into gaming is raising more eyebrows than excitement among analysts. Though there's long been speculation that Netflix might move into video games, Wednesday's news that it had hired an executive to lead the effort -- and would start adding titles to its streaming platform in the next year -- came as a surprise to many. The Los Gatos, California-based company doesn't have the infrastructure or the expertise to create or support top-tier games, analysts said. And that capability won't be easy to build. "They don't have a game catalog -- they haven't cultivated a base of gamers in their audience," said Lewis Ward, research director for gaming at IDC. "And they don't have an internal studio or infrastructure to handle a service."
Wall Street, venture capitalists, technology executives, data scientists -- all have important reasons to understand the growth and opportunity in the artificial intelligence market to access business growth and opportunities. This gives them insights on funds invested in AI and analytics as well potential revenue growth and turnover. Indeed, the growth of AI, continuing research, development of easier open source libraries and applications in small to large scale industries are sure to revolutionize the industry the next two decades and the impact is getting felt in almost all the countries worldwide. To dive deep into the growth of AI and future trends, an insight into the type and size of the market is essential along with (a) AI-related industry market research forecasts and (b) data from reputable research sources for insight into AI valuation and forecasting. IBM's CEO claims a potential $2 trillion dollar market for "cognitive computing").
Tokyo stocks turned up Monday, getting a boost from a continued rally on Wall Street last week. The 225-issue Nikkei average of the Tokyo Stock Exchange rose 213.07 points, or 0.74%, to close at 29,161.80, The Topix index of all first section issues ended 5.73 points, or 0.29%, higher at 1,959.75, snapping its three-day losing streak. The Tokyo market got off to a strong start, after all three U.S. market gauges including the Dow Jones Industrial Average extended their gains Friday thanks to data showing improvement in consumer confidence in the United States in June. Although selling to lock in gains from the initial market spurt gathered steam in the morning, stocks gradually extended gains in the afternoon in pace with Dow futures in off-hours trading. Trading was generally lackluster with many players taking to the sidelines ahead of the U.S. Federal Reserve's two-day Federal Open Market Committee meeting from Tuesday, brokers said.
Most stock pickers have one goal: to beat the market. Since January 2015, the S&P 500 has returned an average 13% per year, or 110% total. That's not bad, but it pales in comparison to NVIDIA's (NASDAQ:NVDA) 3,410% return over the same period. Given the chipmaker's $438 billion market cap, investors may think it's too late to buy this stock. But NVIDIA recently delivered strong first-quarter results, reminding Wall Street that it's still a growth company.
UiPath, the robotic process automation startup that came public April 21st, this afternoon reported fiscal Q1 revenue that easily topped Wall Street's expectations, and a surprise profit where the Street had been expecting a net loss, and an outlook for this quarter's revenue that was higher as well. Despite the upbeat report, UiPath shares fell 9% in late trading. CEO and co-founder Daniel Dines called the quarter "an exceptionally strong start to fiscal year 2022." Dines noted first-quarter annualized recurring revenue, or ARR, rose over 64 percent, year-over-year, to $653 million, calling it, "a testament to our leadership position in enterprise software automation." We believe automation is the next layer in the software stack.
C3.ai, the cloud-based, industrialized machine learning company that went public in December, this afternoon reported fiscal Q4 revenue and profit that topped Wall Street's expectations, and an outlook for this quarter's revenue roughly in line with consensus, but higher for the full year. The report sent C3.ai shares down 6% in late trading. CEO and founder Tom Siebel remarked, "We achieved strong business and financial results in the fourth quarter and full fiscal year, as we advance our leadership position as the enterprise AI application software pure play." "The enterprise AI software market is rapidly growing, and we see accelerating interest in enterprise AI solutions across industries, geographies, and market segments. We are aggressively investing to extend our product and technology leadership and to expand our market-partner ecosystem and associated distribution capacity. As we continue to execute on delivering high-value outcomes for customers, we are increasingly well-positioned to establish a global market leadership position in enterprise AI application software. Bottom line, performance was strong across the board and we are planning for accelerating growth in the coming year."
Algorithmic trading now dominates the derivative, equity, and foreign exchange trading markets. These trading strategies can be complex, but the essentials are straightforward: program a set of rules that takes market data as input and apply basic models (10 -day moving average) to generate an automated trade workflow. Over the years, these strategies have moved beyond simple time-series momentum and mean revision models to more exotic name strategies like snipes, slicers, and boxers. Evolved over decades, algorithm trading has replaced much of the manual trade order flow with faster static rules-based strategies. What was once cutting edge is now an inherent disadvantage.
Semiconductor maker Nvidia (NASDAQ: NVDA) slipped in pre-market trade Thursday, following a better-than-expected earnings report for fiscal 2022's first quarter. Shares fell $2.70, or 0.43%, to $625.30 The company, which specializes in graphics chips, earned $3.66 per share on revenue of $5.66 billion. Wall Street had pegged net income at $3.28 a share on revenue of $5.41 billion. Those results marked year-over-year gains of 103% and 84%, respectively.