Finimize - ✋ Apple swapped iCars for AI

What’s going on here?

Apple scrapped plans to build the self-driving iCar after a decade of development, perhaps disappointed it didn't autonomously make a success of itself.

What does this mean?

Apple put “Project Titan” into motion in 2014, sketching plans for a self-driving electric vehicle with a swanky limo-style layout. A company needs to be pretty confident in its driverless car to put it on the roads, though – and even after a decade, Apple’s just not there. That’s why the iCar team has switched its focus to generative AI, the type of technology that fuels OpenAI’s ChatGPT. Apple’s already teasing more progress than it did with its eco-friendly limousine, dropping hints earlier this year that investors can expect a serious announcement in the not-too-distant future.

Why should I care?

Zooming out: Apple’s been reading the news.

Apple might not be missing out on much. Drivers aren’t buying electric cars like they once were, mainly because their higher prices are less justifiable in today’s economy. So realistically, the iCar wouldn’t have helped Apple catch up to competitors Google, Amazon, and Microsoft. But if Apple can craft an AI service that takes its signature iPhones and iPads to the next level, the company could win big-spending gadget aficionados over – not to mention eagle-eyed, tech-obsessed investors.

The bigger picture: Baidu, bai-dont.

The tech industry moves fast, and companies that can’t keep up risk being left behind. Just look at Baidu: the Chinese firm secured its spot as the country’s go-to search engine ten years ago, but rivals Alibaba and Tencent have since stolen a march on the company when it comes to AI. Baidu created the “Ernie” language model, sure, but the other two were quicker to throw a lot more money into their own budding systems. That go-getter attitude has already paid off, with Alibaba and Tencent’s stocks and AI-related revenue beating the old timer’s so far this year.

What’s going on here?

Klarna showed off slimmer losses ahead of its expected US stock market listing, potentially convincing investors that the stock could be worth a splurge.

What does this mean?

Klarna’s “buy now, pay later” interest-free loans became an online shopping staple during the pandemic, when pent-up fashionistas had nothing to do but finance their post-freedom wardrobes. That won it a $46 billion valuation in 2021, making it Europe’s most valuable startup at the time. And sure, that slipped to $7 billion the following year, when interest rates shot up and put investors off riskier, loss-making companies. But it’ll take more than monetary policy to keep the company down: the firm is rumored to be going public later this year, eyeing up a $20 billion valuation that’s roughly halfway between that peak and valley.

Why should I care?

Zooming in: Credit scores matter.

Klarna charges retailers a fee every time a shopper uses the service to fill their bags. And clearly, the high cost of living has made its loans even more popular. Klarna bagged 22% more revenue last year than the one before, enough to shrink its net loss by 76% in the same period. That’s come at just the right time: if Klarna wants investors to buy shares when it lists, the lender needs to show that it can fix its own finances as well as its customers’.

The bigger picture: Klarna eats its own dog food.

Klarna often takes out short-term loans to fund the ones it hands out. That might sound risky, but with central banks tipped to cut interest rates this year, the cost of borrowing could become a lot cheaper. That wouldn’t just help Klarna’s costs, it would encourage consumers to spend instead of save – a winning combination for the company’s books. It bodes well, too, that investors seem to be backing buy-now-pay-later firms again: publicly listed rival Affirm has seen its stock price-to-sales ratio triple since the start of 2023.