Breaking Analysis with Dave Vellante

Power Law Explained Wikipedia

https://en.wikipedia.org/wiki/Power_law

Heavy tailed power laws:

Why are Power Law distributions called 'Heavy-tailed'?

Explainer video for power laws in statistics:

https://www.youtube.com/watch?v=JC71ZazlMR0

Power law in economics:

https://dash.harvard.edu/bitstream/handle/1/34651705/68262294.pdf

What is retrieval augmented generation (IBM Research)

https://research.ibm.com/blog/retrieval-augmented-generation-RAG

Llama2 technical paper from Meta:

https://scontent-dfw5-1.xx.fbcdn.net/v/t39.2365-6/10000000_662098952474184_2584067087619170692_n.pdf?_nc_cat=105&ccb=1-7&_nc_sid=3c67a6&_nc_ohc=o6bnSMYXMT8AX8QaArm&_nc_ht=scontent-dfw5-1.xx&oh=00_AfD4K2tm94KqZZ6vm0bmor-zmbJ5z5ENslOx60fJRmMO9A&oe=6548D47F

In 1987, Nobel Prize-winning economist Bob Solow famously observed, “You can see the computer age everywhere but in the productivity statistics.” This proclamation became known as the productivity paradox. Ironically, Solow’s statement preceded the greatest productivity boom since the dawn of the computer age which subsequently came to fruition in the 1990’s. It can be argued that a similar pattern is being seen today where AI is everywhere but generally not showing up in earnings numbers or productivity statistics…yet. 

In this Breaking Analysis we squint through the latest earnings reports from Microsoft, Alphabet and Amazon to understand what’s happening in cloud, evaluate the impact or lack thereof of AI on cloud earnings momentum and explain how we think about the future impact of generative AI and cloud. 

MIT professor and economist Erik Brynjolfsson said recently that he’d be disappointed if AI didn’t lift the  current anemic 1.2% productivity growth rate to 3% or even 4%. This would be a good thing for business and government as it could potentially help with the labor shortage, drive earnings growth and increase tax revenues, which would ostensibly help address current debt levels. This is one of the promised impacts of AI. While the hype surrounding Gen AI has narrowly propped up certain sectors of the market, like AI startups and the magnificent seven, the macro effects have not been felt thus far as adoption remains largely experimental. 

In this Breaking Analysis and ahead of Supercloud 4, ETR’s Erik Bradley and Daren Brabham join the program to share the latest trends on AI adoption, how Gen AI is being used, some of the deployment models and the AI leaderboard based on spending momentum and presence in the market. 

Historical trends in the music industry:

https://open.lib.umn.edu/mediaandculture/chapter/6-4-current-popular-trends-in-the-music-industry/#:~:text=The%20Big%20Four%20control%20over,current%20distribution%20of%20market%20share.&text=Four%20major%20music%20labels%20control,the%20U.S.%20recording%20music%20industry.

Current trends in the music industry:

https://musicandcopyright.wordpress.com/2023/04/25/recorded-music-market-share-gains-for-sme-and-the-indies-publishing-share-growth-for-umpg-and-wcm/

IDC sponsored content on AI w/ some market data:

https://content.dataiku.com/idc-infobrief-2023

In this week’s CUBE Insights, Powered by ETR. George Gilbert and I welcome Ryan Blue to this, our 201st episode. Ryan is the co-creator and PMC chair of Apache Iceberg and a co-founder & the CEO of Tabular, a universal open table store that connects to any compute layer built by the creators of Iceberg.

We’re getting used to the phrase, “higher for longer,” referring to  the realization that interest rates are expected to remain elevated for a period of time. This trend is having an inverse effect on enterprise tech spending growth rates. Prior to the Fed’s tightening binge for example, IT decision makers (ITDMs) in aggregate expected annual technology spending to increase by 7.5%. Eleven fed interest rate hikes later, ITDMs estimate that their 2023 budgets will be up only 2.9%, with an expectation, or perhaps it’s a wishful hope, that their budgets will increase 3.8% in 2024. 

In this our 200th Breaking Analysis, we preview the current spending climate and where AI fits in relation to other sectors. We’ll also share with you a snapshot of the leaders in terms of spending velocity for their platforms; and how their performance compares to peers relative to earlier survey periods.

theCUBE host Dave Vellante is joined by George Gilbert and Bob Muglia for this weeks Breaking Analysis

George Kurtz is pumped up…and why not? CrowdStrike’s business appears to be on a fast track and entering a new phase of growth, despite the difficult macro and elongated sales cycles. The company’s products are considered best in class, its business is growing steadily and an improved profitability and cash flow outlook had investors excited, at least up until this week. A still challenging environment and a rich 13X revenue multiple perhaps led to some profit taking, but Gen AI could be the next catalyst for the company. In the race to close the SecOps staffing gap, CrowdStrike has what appears to be a strong play with a natural language-based intelligent assistant known as Charlotte AI. 

In this Breaking Analysis we update our scenario on security leader CrowdStrike. We’ll review the company’s recent progress, share survey data that shows where it is strong and where there may be icebergs ahead. And we’ll preview Fal.Con 2023 which takes place next week in Las Vegas. 

UiPath’s recent earnings beat and raise provides some evidence that thus far, Gen AI has not been diluitive for the company. As an early leader that is transforming beyond RPA toward end-to-end enterprise automation, UiPath, like all automation providers, has always faced adoption headwinds beyond isolated deployments. In this sense, Gen AI should bolster adoption and be a positive force. The flip side is that widely available tools like chatbots and generalized foundation models could eat away at the low end of the automation TAM, highlighting the urgency for companies like UiPath to move up market and accelerate innovation that brings differentiation from commoditized tools; and, importantly, create distance from embedded AI within mainstream enterprise SaaS platforms like Slack GPT and Salesforce Einstein. 

In this Breaking Analysis we briefly review the recent earnings print from UiPath. We’ll look at ETR survey data that shows Microsoft Power Automate’s impact on the automation market and how it is forcing UiPath to target larger accounts with a more functional product set. As well we’ll look at the impact that AI is having in these larger accounts and test UiPath management assertions that Gen AI will be a tailwind for the company. 

Q2 ‘24 $PATH Earnings Transcript

https://seekingalpha.com/article/4633537-uipath-inc-path-q2-2024-earnings-call-transcript?feed_item_type=news&utm_medium=referral&utm_source=msn.com

Gartner MQ for Robotic Process Automation 

https://www.gartner.com/doc/reprints?id=1-2EDXTGOY&ct=230705&st=sb

Barron’s article frames the quarter and the AI debate

https://www.barrons.com/articles/uipath-stock-earnings-artificial-intelligence-cfde9bcb

Automation Anywhere survey on GenAI adoption in automation use cases

https://www.prnewswire.com/news-releases/generative-ai-emerges-as-essential-tool-for-successful-process-automation-automation-anywhere-survey-finds-301895896.html

Motley Fool Bull/Bear case for UiPath

https://www.fool.com/investing/2023/09/07/uipath-stock-bear-vs-bull/

Power Laws have more power than you think

https://every.to/p/power-laws-have-more-power-than-you-think

At Cloud Next, Google showcased its strong leadership position in data and AI. In our view, Google’s messaging, demos and tech-centric narrative have broad appeal for developers and next generation startups. As well, the company’s focus on solutions, contrasts its strategy to the typically disjointed services we’ve seen from AWS over the past decade. Google also showed off an expanded ecosystem of GSIs and smaller CSPs, encouraging the broad use of Google’s kit globally. While Google remains a distant third in the Iaas/PaaS race, with revenue one-fifth the size of AWS, it is playing the long game and betting the house on AI as a catalyst to its cloud future.

In this Breaking Analysis we unpack the key takeaways from Google Cloud Next with Rob Strechay and George Gilbert. We’ll share ETR data that positions Google’s AI relative to other leaders and we’ll contrast Google’s data-centric strategy with traditional architectural models. 

Google Cloud Next Keynotes:

https://cloud.withgoogle.com/next

AI shapes the narrative for Google Cloud Next

https://siliconangle.com/2023/08/29/old-new-ai-shapes-narrative-google-cloud-next/

AnalystANGLE on theCUBE:

https://www.youtube.com/watch?v=eHSOKi9yI50

Day 2 Keynote Analysis:

https://www.youtube.com/watch?v=mMw2Gv4UeAE

Analyst Angle:

https://www.youtube.com/watch?v=VCvTYHrWEKY