Let the chips fall

Let the chips fall

The Currency newsletter - issue 14

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06.01.2023

This week in emojis:

Its blockbuster szn, so weve got updates on Max, Netflix, and MoviePass.

Artificial intelligence is only as good as its GPU (and were about to enter a gold rush in the tech industry).

For good or bad, the gig economy is taking center stage.

Short-term rentals are facing a reckoning.

Gen Zers are packing their bags for some soul-searching.

Buckle up, its gonna be a busy summer.

The Editors

Call of Duty, calling the shots: Regulators are worried that Microsofts$75 billion acquisition* of Activision Blizzard might game the system. Activision owns Call of Duty (COD) one of the most successful video game franchises ever with $30 billion in lifetime revenue and a merger would make Microsoft the worlds third-largest gaming company by revenue. Microsoft wants to add Activisions blockbuster games to its subscription service called Xbox Game Pass, which could dominate the cloud gaming space if the brand doesnt license COD to rivals. The U.K.s Competition and Markets Authority rejected the deal, while the U.S. Federal Trade Commission is trying to block the buyout. In May, the European Unionapproved the deal.*

Its just Max: Entertainment giant HBO has rebranded itsstreaming platform as "Max"in an effort to give the flagship service a more family friendly feel. The newly merged Warner Bros. Discovery company (following a$43 billion mega deal* last year) said HBO Max had a male skewwith a focus on scripted shows, while Discovery+ had a female skewwith unscripted content. The new Max experience offers the best of both worlds and is designed to take on Netflix and Disney+. It certainly feels like one streaming chapter is closing, with HBOs award-winning series Succession fading to black over Memorial Day weekend tomixed feelings.*

Netflix, not so chill: After estimating that100 million people* worldwide were accessing their streaming service without paying for it, Netflixs password crackdown has commenced to cut back on account sharing outside of individual households.狼he streamer is serious about slashing moochers by checking IP addresses, device IDs, and account activity in order to bump up revenue (in fact, this writer had to verify her household last night, losing access to her parents account guess its time to grow up). Households can add an additional person outside the home for $7.99 otherwise, users will need to sign up for their own account.

Pass the popcorn: Summer blockbusters are back (Fast X,* anyone?) and in a surprise sequel, MoviePass has also returned following aservice shutdown* in 2019. The brand is back at 4,000+ theaters nationwide眨ith a service that allows users to cash in their credits for movie tickets. The $10畜asic plan症ives subscribers 34 credits, which roughly translates to up to three movies per month, according to MoviePass.狼ime will tell if the demand-based credit system will prove worth it.

Artificial intelligence is eating up the computer chip industry

A computer chip shortage may be on the horizon. The graphics processing units (GPUs) powering artificial intelligence applications like those at Google, Microsoft, and OpenAI are almost all made by Nvidia, whose stock recently surged to a$1 trillion market cap.*

Lots of GPUs mean sales are way up for Nvidia, which is forecasting$11 billion in revenue* during the current quarter, aided by the viral success of ChatGPT (its early version required about 10,000 GPUs, and the current version runs on five times as many, according to Elon Musk).

Demand is outpacing supply, as AI developers need GPUs to operate their疳ncreasingly complex models. GPUs arent cheap, either: one Nvidia H100 can sell for $40,000 onthe secondary market.* According to a recentWall Street Journal article,* the shortage of GPUs is like toilet paper during the pandemic.

To help with the shortage, Nvidia said its expanding its supplies and offering companies the chance to rent access to its supercomputer called DGX (it has eight GPUs) for $37,000 per month.*

Is the gig economy turning into a gotcha?

According to theNew York Times,* recent data shows that 10% to 15% of U.S. workers make up the gig economy, with some studies suggesting as many as a third of Americans occasionally dabble in gig work. Over the past decade, gig work has been popularized by the likes of Uber, Lyft, DoorDash, and Instacart, though workers for online platforms make up a small percentage of the gig workforce, and less than 1% of the overall labor force.

For some, the gig is up. Detractors say contract work often means unreliable hours and pay, or less access to benefits. The recent writers strike has brought these issues back into focus, as streaming giants try to turn writing into another gig lamini rooms* that hire talent as part of day-to-day arrangements instead of guaranteeing weeks of work at a time.

Advocates point to the freedoms of flexible work, putting people in control of the times and ways they can earn money. Recent Empower data showshalf of Americans(52%) are turning to a side hustle to generate more income, with 78% of Gen Z and Millennials picking up a second gig.

A reckoning for short-term rentals on the horizon

When mortgage rates were at anall-time low,* investors were buying up homes in attractive locations and riding the wave of vacationers and remote workers seeking out short-term rentals. The average number of short-term rentals on the market reached nearly1.3 million in 2022, up by roughly 19% from the previous year.

Now the pipeline of short-term renters has dried up in some markets with hosts facingempty booking calendars* andstiff competition,* sparking whispers of what Business Insider is callingan apocalyptic Airbnbust.*

The change in demand has ignited fears of a bubble and a broader economic slowdown, but last years numbers are telling a different story:according to AirDNA,* the number of nights booked at U.S. short-term rentals reached a record high in 2022. A bifurcated market a bust for some, a boon for others is a sign that the short-term rental market has reached a turning point.

Some cities havecapped the number of permits* for short-term rentals, crafting their own rules to keep hosts happy and their neighborhoods protected, which may explain the variation in markets.

The results are in: it's a summersoulstice

According to a recent Empower survey, Gen Zers plan to find themselves this summer by opting for a soul-searching trip (21%).1Nearly a quarter (24%) say they're packing their bags for a romantic getaway.1

And, in last weeks newsletter poll, our readers (47%) say they plan to spend between $1,000 - $3,000 on vacation.

For fun in the sun, check outthese affordable vacation options.

1Based on survey responses conducted by Morning Consult on behalf of Empower from May 19 to May 21, 2023, surveying 2,201 Americans ages 18+.純

*Empower Retirement, LLC and its affiliates are not affiliated with the author or responsible for the third-party content provided from links to external material.

As of May 31, 2023, EAG holds shares of NFLX, WBD, DIS, INTC, NVDA, MSFT, GOOGL and UBER in advisory client accounts and does not hold AMD, HMNY, ATVI, LYFT, DASH and ABNB.

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Disclaimer

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP簧, CERTIFIED FINANCIAL PLANNER, CFP簧 (with plaque design), and CFP簧 (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Advisory services are provided for a fee by Empower Advisory Group, LLC (EAG). EAG is a registered investment adviser with the Securities and Exchange Commission (SEC) and subsidiary of Empower Annuity Insurance Company of America. Registration does not imply a certain level of skill or training.