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TheBRRR’s Thoughts

Another hot inflation report this morning - this time on the production cost side of the equation.

While producer prices have stabilized much faster than consumer prices in the US - evident by today’s 0.9% y/y PPI print, the data was worse than the market wanted to see.

The market’s expectations were for 0.6% y/y, so risk assets have ticked lower on the report.

Despite the two “hot” inflation reports this week, the Nasdaq is down 1% while the odds of interest rate cuts by the May FOMC meeting collapsed to 28% from 61% just one week ago.

Today we’re covering Coinbase’s blowout earnings report and a deepdive on Apple’s AI strategy.

We first recommended Coinbase at $66 and the stock has remained in the newsletter’s portfolio as the stock has run up to $190.

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Coinbase Smashes Wall St’s Expectations With Q4 Earnings, Stock Opens 15% Higher

WHAT HAPPENED:

• Coinbase Global (COIN) reported its first quarterly profit in two years, with shares jumping over 13% in premarket trading.

• The company recorded a $273 million profit in the fourth quarter, exceeding analyst expectations and marking a significant turnaround from previous losses.

• Consumer trading volume reached $29 billion, up 164% quarter over quarter, while institutional trading volume hit $125 billion, a 92% increase from the prior quarter.

• Total transaction revenue saw a 64% increase to $529 million.

• A market rally, fueled by anticipation of SEC approval for spot bitcoin ETFs, attracted more users and transactions to Coinbase.

WHY IT MATTERS:

• The approval of bitcoin ETFs represents a significant step toward mainstream adoption of cryptocurrencies, broadening the investor base.

• Coinbase's role as custodian for several ETFs positions it as a key player in the expanding digital asset ecosystem.

• The company's ongoing legal battle with the SEC underscores the broader industry's need for regulatory clarity, which could influence the future of cryptocurrency markets.

• Coinbase's ambition to be at the forefront of making cryptocurrencies more accessible suggests a long-term vision for the industry's growth, likening it to needing its "iPhone moment."

Investors.com

Is Apple Falling Behind on AI?

WHAT HAPPENED:

• Apple has been quietly advancing its capabilities in generative AI, focusing on on-device inference and optimization rather than cloud-based large language models (LLMs).

• Recent research papers and model releases from Apple indicate significant progress in running LLMs efficiently on devices that naturally have memory constraints.

• Apple introduced a technique called "LLM in a flash", which optimizes memory usage and reduces inference latency on devices equipped with Apple silicon.

• The company has also released open-source generative models, including Ferret, a multi-modal LLM designed for detailed image interaction, and MLLM-Guided Image Editing (MGIE), capable of modifying images based on natural language commands.

• Apple's move towards open-source with models like Ferret and the development tool MLX (optimized for Apple processors and supporting commercial use) signals a broader strategy to engage developers and enhance its product ecosystem with AI capabilities.

WHY IT MATTERS:

• Apple's strategy emphasizes strong vertical integration, leveraging its control over hardware and software to enhance the performance of generative AI applications directly on users' devices.

• The focus on on-device generative AI could lead to a new wave of applications that are more privacy-conscious, faster, and do not rely on constant cloud connectivity.

• By optimizing LLMs for on-device use, Apple is not only addressing the technical challenges of AI but also potentially setting a new standard for user experience and privacy in AI-powered applications.

• The open-source release of models and development tools is a significant step for Apple, historically known for its closed ecosystem, indicating a shift towards fostering a broader development community around its AI technologies.

• This approach positions Apple to potentially reshape the generative AI landscape, prioritizing efficiency, privacy, and integration over the scale of models, and possibly paving the way for innovative AI applications on consumer devices.

VentureBeat

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll