Amazon revamps AI strategy

Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Tuesday, July 28th, and I'm your host, Kim Kahn. Our top story so far, Amazon is reorganizing its AI strategy, winding down many of its in-house AI models while increasing its focus on a new frontier model initiative. That's according to Business Insider. The company has begun winding down most of its flagship Nova models, including the high-end Premiere and Omni models, the real video generation model, and the Canvas image generation model. Amazon is increasingly directing resources towards developing the Frontier model, which is being led by researcher Peter Abiel. The new flagship model is expected to debut at Amazon's re-invent conference later this year. Amazon is not abandoning Nova completely, and the Frontier model could still launch under the Nova brand. The shift follows Amazon's recent job cuts in its artificial general intelligence group, with a spokesperson saying last week that the company was sharpening its focus on the initiatives that matter most for our customers. Among active stocks, Corning is tumbling after the glass and fiber optics company issued a mixed outlook that overshadowed stronger than expected Q2 results. While Q3 EPS guidance was in line, revenue guidance of $4.9 to $5 billion came slightly below the $5 billion consensus. Boeing is higher after beating Wall Street's Q2 revenue expectations on stronger commercial aircraft deliveries, But a fresh charge tied to the delayed Air Force One replacement program contributed to a wider-than-expected adjusted loss, underscoring the uneven pace of the aerospace giant's recovery. And PayPal beat on Q2 earnings and raised full-year guidance despite a soft Q3 outlook. The company did not provide an update on Stripe billion takeover bid involving private equity firm Advent International Still Seeking Alpha analyst Andres Vierink says the guidance boost is a great bargaining chip to push the $53 billion offer much higher. In other news of note, Apple topped $5 trillion in market capitalization, becoming only the second publicly traded company in history to reach that milestone and reclaiming the valuation crown from NVIDIA. Investors have continue to reward the iPhone maker's resilient hardware business, despite slower progress in artificial intelligence. Shares are up roughly 24% year-to-date, and nearly 60% over the past 12 months. CEO Tim Cook is set to hand leadership to incoming CEO John Ternus on September 1st. And in the Wall Street Research Corner, RBC Capital Markets analyst Tom Narian says a SpaceX-Tesla combination would likely create a vertical integration from orbit to ground AI ecosystem, combining Starlink's connectivity flywheel, Tesla's physical world AI deployment, and SpaceX's orbital compute infrastructure. At a hypothetical transaction price of $480 a share, a 50% premium, Tesla shareholders would own 54% of a combined company valued at about $3.3 trillion, while gaining exposure to SpaceX's long-term growth trajectory, Narayan said. So far, SpaceX has lost more than $1.2 trillion in market value, since peaking at $225.64 in June, the Lawson market cap nearly matching the total market cap of Tesla, which has recently slid towards one-year lows. That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com. And join the elite community of real investors to unearth great investing ideas. Just head to seekingalpha.com.