January 24th, 2024 | 07:30 CET
Amazon, Globex Mining, AMD shares: Commodities on the upswing due to AI and E-commerce boom
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.
Amazon: 27.2% return, innovative AI tool versus EUR 32 million fine in France
Anyone holding Amazon shares (ISIN US0231351067) can count themselves lucky. The online retailer, which started out as an online bookseller in 1994 and went public three years later, has delighted its investors with an average return of 27.2% over the last ten years.
Amazon is currently testing a regenerative AI tool that allows shoppers to ask questions about a particular product. This feature could save potential shoppers a lot of time and prevent them from having to scroll through pages of reviews or read through a list to find information about an item. Amazon has already gained experience using AI to summarize reviews cnbc.com/2023/06/12/amazon-is-using-generative-ai-to-summarize-product-reviews.html and help sellers with tools such as AI-generated images for ads.
However, advancing technology and maximum efficiency are not enjoying the same popularity everywhere. According to a report by Bloomberg, the French regulatory authority CNIL has imposed a fine of EUR 32 million on Amazon France Logistique. The reason for this is a surveillance system for monitoring employee performance that was described as "excessively intrusive". The scanners used by employees record any inactivity in the application as well as the scanning speed of each individual worker. CNIL also deems retaining all data and statistical indicators for 31 days excessive.
Amazon's lawyers disagree with the fine and reserve the right to appeal. "Warehouse management systems are standard in industry and necessary to ensure the safety, quality and efficiency of operations," said an Amazon spokesperson. Amazon France Logistique manages Amazon's large warehouses in France. It remains to be seen whether the CNIL can enforce the fine.
Globex Mining: Diverse commodity portfolio and promising lithium drillings
For those who prefer to invest in ores instead of online commerce and appreciate the diversity of various commodities, is in good hands with Globex Mining (ISIN CA3799005093). The Company is engaged in acquiring, developing and exploring mineral properties in North America and has now built up 232 properties in its portfolio since it was founded in 1948.
New drillings for lithium extraction in an area within the Canadian Mirage Project are yielding promising results. The planned drill holes span over 2.8 km. Previous drillings have already shown high-grade Li2O (lithium oxide) assays over considerable widths. Details can be found here. Globex Mining currently has a 3% gross metal royalty on the Lac Escale claims in this area and a 1 km wide boundary zone around the lithium discovery claims in that location.
The Company's broad mineral portfolio includes early to mid-stage exploration, development and royalty properties with various commodities. These include base metals such as copper, zinc, lead and nickel, specialty metals and minerals such as manganese, titanium dioxide, iron, molybdenum, lithium, rare earths and antimony, as well as industrial minerals and compounds such as mica, silica, apatite, talc, magnesite, potassium feldspar and pyrophyllite.
The long-established company focuses on Eastern Canada, Germany and the US - all regions with little political risk. It relies on various strategic measures such as options, sales, joint ventures and royalties. With assets of over CAD 25 million in cash, shares and marketable securities, it has no debt.
AMD: Sustained growth despite doubts, AI over-ordering, and market expansion
Demand for graphics processing units (GPUs) has surged in recent months, resulting in significant profits for the companies that make these GPUs. AI applications like ChatGPT run on these processors. AMD is now also entering the stage for producing these GPUs since CES.
In 2023, AMD (ISIN US0079031078) rose by around 130% as investors bet that AMD's AI chips planned for this year could take market share from Nvidia and offer an alternative for large customers such as Microsoft and Meta. Now, AMD has caught up with its competitor.
However, the AI hype on the market and the share price are characterized by inflated expectations. Until recently, Nvidia was the sole manufacturer of AI chips, leading buyers to place orders well in advance, sometimes more than necessary. "We believe that the demand for AI in 2023 was exaggerated due to double orders," explain analysts. Additionally, the sales market in China is dampened by US government trade regulations, further impacting growth.
"Although chip prices are cyclically influenced by supply and demand, they remain stable in the long term," emphasize the researchers at the financial institutions. AMD is expected to continue to grow in the medium and long term. It is not yet clear which sectors the Company will scale into. However, one thing is clear: AMD will continue to grow, and the adoption of AI applications will increase even more.
Amazon investors have every reason to be happy, as the Company has delivered an impressive average return of 27.2% over the last ten years. The e-commerce giant is now testing an AI tool that could revolutionize the shopping experience. But while Amazon looks to the future, the Company is facing a EUR 32 million fine from the French CNIL for what it criticizes as an "overly intrusive" employee monitoring system. Too much surveillance micromanaging is causing warehouse workers, in particular, to take to the barricades. But the Group's triumphant advance is unstoppable. Modern technologies require valuable metals. Exploration companies such as Globex Mining are strengthening the investment portfolio. With its broad portfolio of 232 mineral properties and a focus on diverse commodities, the Company offers an attractive option for investors. New lithium drilling is also showing promising results in an area of the Mirage Project near Quebec, in which Globex Mining holds a 3% gross metal royalty on the Lac Escale claims. The increasing demand for the coveted raw materials makes Globex Mining a promising investment. And AI applications are also here to stay. AMD has now caught up in this segment, standing shoulder-to-shoulder with competitor Nvidia. However, trade regulations in China and exaggerated forecasts affect the expected profits. In the long term, however, AMD will continue to grow, even if the direction of the industry expansion is still unclear.
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