IBM Is Partnering With MIT In AI Research, Plus Amazon Is Looking Beyond Seattle For Second Headquarters
“We’re excited to find a second home.” Jeff Bezos is looking beyond Seattle for another headquarters. The question is, will Amazon come to your city?
- U.S. indexes fell—investors sold off financials and consumer discretionaries.
- U.S. stock ETFs saw the greatest cash inflow since June.
- Gold hit a one-year high.
- Gas shortage in Florida intensified as civilians leave before Irma.
Let’s Do the Robot…Together
Even robots need friends. IBM is **[investing $240 million over 10 years](https://techcrunch.com/2017/09/06/ibm-and-mit-pen-10-year-240m-ai-research-partnership/) in an AI research partnership with MIT. **
The 100 researchers working at the MIT-IBM Watson AI Lab will focus on four segments of cutting-edge AI research: new algorithms, hardware, business applications, and socioeconomic implications.
And we know what you’re thinking—isn’t IBM’s Watson the poster child of artificial intelligence? It won Jeopardy for God’s sakes!
True, Watson has pulled off some moves that’s left even Ken Jennings speechless, but when it comes to the race for AI, IBM is actually losing ground. Just last year, revenue fell 2.5% to $4.6 billion in its Cognitive Solutions business.
It all starts with the usual suspects: Facebook, Google, Microsoft, and Amazon.
Compare IBM’s investment to Google’s $400 million acquisition of DeepMind in 2014. Then, consider that Amazon is spending upwards of $230 million annually just to secure the best talent in the field.
Across the board companies are racing to put AI in everything from massive cloud servers to football helmets.
But here’s the thing—IBM isn’t even among the top ten largest recruiters of AI talent. Maybe that’s why its starchild Watson isn’t living up to expectations, especially in the healthcare sector.
So how will IBM turn the tables?
MIT’s a prestigious place…just take one look at our giant stack of rejection letters. But it’s also an economic powerhouse. As of 2015, MIT alumni had founded 30,000 companies with annual combined revenues of $1.9 trillion. IBM hopes it can tap into MIT’s ecosystem to help it attract and grow the workforce it needs to compete.
You can bet IBM scientists will also be attending the Friday night coding parties at MIT’s Computer Science and Artificial Intelligence Laboratory. This is the all-star research lab that brought you companies like Dropbox and OKCupid.
But it’s going to take a whole lot more than data sharing and joint research projects for IBM to regain its place as the standard bearer in AI. It’ll need MIT’s talent.
On the Road Again
Mayors across North America canceled all of their Thursday ribbon cuttings. That’s because Amazon searching for another city beyond Seattle to be the home for a second headquarters.
So what’s the e-tail giant looking for in a partner? Besides being kind, smart, and funny, the metro will need to have more than a million people, loads of tech talent, and a business-friendly environment.
The $5 billion investment could be an absolute game changer for a city that’s down on its luck, like a Detroit. But Amazon’s not doing this for charity—it’ll expect generous tax incentives and other benefits in exchange for employing up to 50,000 people.
The Brew’s way-too-early predictions? Austin, Atlanta, Raleigh, Toronto (sleeper pick!), Denver, and NYC.
Nestle’s Got the (Fake) Meat
Months after Nestle suggested pawning off its $922 million U.S. confectionary business, it **[swallowed up](http://abcnews.go.com/International/wireStory/ap-newsbreak-nestle-buys-vegetarian-meals-maker-sweet-49673765) meat alternative food company Sweet Earth**.
It’s no surprise that in a world full of Fitbits, American tastes are shifting to healthier foods. And with Sweet Earth’s product names like “Benevolent Bacon” and “Harmless Ham,” it’s easy to see why “Butterfinger” is falling by the wayside.
Ask Nestle’s newest activist investor, Daniel Loeb, and he’ll tell you chocolate is far from the only problem. Nestle’s health and nutrition segment is growing 2% YoY, while the plant-based food industry is growing over 10% YoY and is set to hit $5 billion by 2020.
But Nestle’s not the only consumer goods company changing its MO. Unilever also announced its purchase of a healthier organic tea company, Pukka, which is growing 30% YoY.
So basically what we’re saying is…you can keep your measly 2% annual growth, Butterfinger, they don’t want it.
A Bitter Pill
American pharmaceutical company Eli Lilly took notes from Lego this week and is **[cutting 3,500 employees] (or 8.5% of its workforce).**
Don’t be alarmed, you’ll still be able to purchase all the penicillin, Prozac, and Cialis you need (so long as you don’t mix and match), but the drug company will start to move its focus elsewhere.
And here’s why: pharma technology is improving rapidly, and new drugs cost an arm and a leg to finance. Eli Lilly is doing fine at $2.7 billion in net income, but that’s peanuts compared to Novartis and Pfizer’s $6.5 billion and $8.3 billion, respectively. Not to mention its operating expenses (which are 55% of revenue) are above the industry average.
With the job cuts, Eli Lilly will save $500 million annually, half of which will go towards R&D.
What Else Is Happening…
- Disney CEO Bob Iger announced that the company will report a similar EPS to FY2016.
- Speaker Paul Ryan’s goal for the corporate tax rate is in the mid-to low-20% range.
- Hulu and Spotify will offer U.S. college students a combined $5/month subscription service.
- Earnings: No Events Today
- Economic Events: No Events Today
- Earnings: Dave & Buster’s (+), HPE (+)
- Economic Events: Factory Orders (-)
- Earnings: Yext (+)
- Economic Events: MBA Mortgage Applications (+), International Trade Deficit (+), ISM Non-Manufacturing Index (+/-)
- Earnings: Barnes & Noble (-), Cloudera (+)
- Economic Calendar: Jobless Claims (+), Petroleum Status (+)
- Earnings: Kroger, PetSmart
- Economic Calendar: Wholesale Trade, Baker-Hughes Rig Count, Consumer Credit
While Elon’s busy tunneling his way to D.C., Tencent has a different idea for travel: flying cars. The Chinese tech giant just plugged a German aviation company with $90 million in funding. True, it’s not the first to take interest in the futuristic spectacle. Larry Page, Uber, and Airbus have all placed their own bets on the technology. Better start watching out for falling hubcaps.
While a Chipotle burrito is pretty darn close to perfect, one major ingredient has been missing between the pinto beans and guac: queso. And mercifully, the burrito gods have spoken—Chipotle will be releasing its version of the cheesy topping in all U.S. stores on September 12th. You can add it to your dish for $1.25 or go queso-crazy with a side order for $5.25. We like queso…but that’s a bit steep.
It’s no secret that Facebook has a ton of users…2 billion monthly to be precise. One minor issue: some of those people…don’t exist. Brian Wieser at Pivotal Research Group crunched some numbers and found that even though Facebook reports to advertisers it can reach 41 million 18- to 24-year-olds in the U.S., there are actually only 31 million living, breathing people in that age group.
Question of the Day
The wage earned by Robin is 30% more than that earned by Erica. The wage earned by Charles is 60% more than that earned by Erica. How much % is the wage earned by Charles more than that earned by Robin?
Who Am I?
I am the CEO of Duke Energy—I serve on the executive committee of the Nuclear Energy Institute—I make $13.7 million a year.
Stat of the Day
The amount raised by Filecoin, a blockchain data storage network, during its now-completed Initial Coin Offering (ICO). It’s the single largest ICO in history.