Breaking Analysis with Dave Vellante

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 Transcripthttps://seekingalpha.com/article/4633537-uipath-inc-path-q2-2024-earnings-call-transcript?feed_item_type=news&utm_medium=referral&utm_source=msn.comGartner MQ for Robotic Process Automation https://www.gartner.com/doc/reprints?id=1-2EDXTGOY&ct=230705&st=sbBarron’s article frames the quarter and the AI debatehttps://www.barrons.com/articles/uipath-stock-earnings-artificial-intelligence-cfde9bcbAutomation Anywhere survey on GenAI adoption in automation use caseshttps://www.prnewswire.com/news-releases/generative-ai-emerges-as-essential-tool-for-successful-process-automation-automation-anywhere-survey-finds-301895896.htmlMotley Fool Bull/Bear case for UiPathhttps://www.fool.com/investing/2023/09/07/uipath-stock-bear-vs-bull/Power Laws have more power than you thinkhttps://every.to/p/power-laws-have-more-power-than-you-think

Google's strong leadership position in data and AI showcased at Cloud Next. Contrasting Google's solutions-focused strategy with AWS's disjointed services. Google's expanded ecosystem encourages global use of its kit. Google betting on AI as a catalyst to its cloud future. Discussion on Google's position in the AI cloud market and spending profile. Exploration of duet AI in low code development and BigQuery acceleration. Google emerging as the preferred platform for tech-centric companies. Transition from building cloud apps to building intelligent cloud data apps.

Discussion on the effects of cloud optimization on cloud companies, Snowflake's renewal with Microsoft, Google's focus on building its own data cloud stack, and a deceleration in spend momentum for Snowflake. The chapter also explores Snowflake's spending momentum and data consolidation challenges, the evolution of cloud apps and the data stack, Snowflake's opportunity on Google Cloud and the role of DevOps, Google's efforts to extend application services and control plane beyond Google Cloud, and differentiating Google Cloud by emphasizing solutions.

This podcast discusses the delays in the FTC's approval of Broadcom's acquisition of VMware and the potential impact on customers. It explores the challenges of multi-cloud computing and VMware's role in solving multi-cloud chaos. The discussion also includes VMware's range of products and partnerships, the potential separation of Carbon Black as a standalone security product, and VMware's decision on security and potential asset sell-off.

The data from enterprise customers is clear but conflicted. While 94% of customers say they’re spending more on AI this year, they’re doing so with budget constraints that will steal from other initiatives. As well, the choice of where customers plan to run generative AI is split almost exactly down the middle in terms of public cloud vs. on-premises/edge. Further complicating matters, developers report the experiences in the public cloud with respect to feature richness and velocity of innovation has been outstanding. At the same time, organizations express valid concerns about IP leakage, compliance, legal risks and cost that will limit their use of the public cloud. In this Breaking Analysis we’ll share the most recent data and thinking around the adoption of large language models and address the factors to consider when thinking about how the market will evolve. As always, we’ll share the latest ETR data to shed new light on key issues customers face balancing risk with time to value.Google memo - we have no moat and neither does OpenAIhttps://www.semianalysis.com/p/google-we-have-no-moat-and-neitherJanelle Teng - AI in the Cloud article on Substack:https://nextbigteng.substack.com/p/ai-model-layer-the-new-frontline-of-cloud-warsA16z on the economics of AI:https://a16z.com/2023/08/03/the-economic-case-for-generative-ai-and-foundation-models/Wall St Journal Article citing AWS, Google, MSFT, Dell & HPE POVhttps://www.wsj.com/articles/the-ai-boom-is-here-the-cloud-may-not-be-ready-1a51724d?reflink=mobilewebshare_permalinkTechnalysis GenAI study of 1,000 ITDMS:https://www.technalysisresearch.com/downloads/TECHnalysis%20Research%20Generative%20AI%20in%20Enterprise%20Survey%20Highlights.pdfAWS Outposts at the edge with Sagemaker - Circa 2021https://aws.amazon.com/blogs/machine-learning/machine-learning-at-the-edge-with-aws-outposts-and-amazon-sagemaker/

After a tough 2022, the first half of 2023 has shown impressive strength and many technology bets have paid off. For sure investors in the so-called Magnificent Seven, i.e. Apple, Alphabet, Amazon, Meta, Nvidia and Tesla have been rewarded. But sharp investors have sought alpha beyond these issues, riding the wave of secular trends in AI, cybersecurity, cloud infrastructure and software as well as other emerging spaces like cleantech and robotics. As we enter the second half of 2023, the runup in tech combined with macro uncertainty has many investors taking a cautious posture. But we believe the long term outlook for firms that can capitalize on the AI wave remains extremely attractive as an unstoppable force.   Hello and welcome to this week’s Wikibon CUBE Insights, Powered by ETR. In this Breaking Analysis we’re pleased to have back, founder and Chief Investment Officer of Spear Invest, Ivana Delevska to assess the current state of the market and explore how this investor is playing AI’s rising tide.  Spear Investment Deckhttps://19544476.fs1.hubspotusercontent-na1.net/hubfs/19544476/Spear%20Alpha%20Investment%20Case%20Approved.pdfSpear Advisors Fund Letter from its CIOhttps://seekingalpha.com/article/4599648-spear-advisors-q1-2023-fund-letterPlatformonomics Repatriation Indexhttps://www.platformonomics.com/2023/05/platformonomics-repatriation-index-q1-2023-surfs-up/Revised Wikibon Cloud Forecasthttps://wikibon.com/breaking-analysis-what-leaked-court-docs-tell-us-about-aws-azure-google-cloud-market-shares/

Recently leaked court documents during the Microsoft Activision hearing require us to revisit our cloud forecasts and market share data. The poorly redacted docs, which have since been removed from public viewing, suggest that Microsoft’s Azure revenue is at least 25% lower than our previous estimates. As a result, we’ve cut and revised our Azure revenue figures which in turn increases AWS’ big 4 hyperscale cloud market share. Our new estimates show that AWS maintains a greater than 50% share of revenue through 2023. While the change also helps Google Cloud, its market share is only modestly affected. In this Breaking Analysis we update our hyperscaler cloud revenue estimates and market share data. We’ll also explain how the ETR data on cloud should be interpreted in this context and look forward to potential catalysts for cloud growth, including acceleration in Q4 attributable to generative AI.Microsoft annual 10K:https://microsoft.gcs-web.com/static-files/e2931fdb-9823-4130-b2a8-f6b8db0b15a9Wikibon repatriation report:https://wikibon.com/breaking-analysis-desperately-seeking-cloud-repatriation/SiliconANGLE article on leaked court documents with Azure revenue data:https://siliconangle.com/2023/06/29/court-filing-shows-microsoft-azure-generated-lower-expected-34b-revenue-2022/Constellation report on cloud optimization:https://www.constellationr.com/blog-news/private-cloud-compelling-option-cios-insights-new-research

Cloud complexity, tools sprawl and the AI awakening further tip the balance in favor of cyber attackers. Combined with corporate inertia, AI-washing, LLM inconsistency and the pace of change, we believe for now anyway, adversaries have the advantage over defenders. Moreover, macro spending headwinds continue to force organizations to make budget tradeoffs, not the least of which is how to fund AI experiments and deployments. Notably, however, 45% of organizations are using LLMs in production for use cases that may very well improve the productivity of SecOps teams in the long run and accelerate the cat and mouse game back to a state of quasi-equilibrium. In this Breaking Analysis we share key takeaways from Supercloud 3 – AI meets cloud security – and put forth new spending data from the latest ETR survey that shows which security firms are best positioned in the AI race to capitalize on the wave. Cybersecurity in the AI age: The power, the promise, the perilhttps://siliconangle.com/2023/07/03/cybersecurity-ai-age-power-promise-peril/How organizations can combat AI-equipped attackershttps://siliconangle.com/2023/07/03/organizations-can-combat-ai-equipped-attackers/Supercloud 3 - AI meets Cloud Security Supercloud.world

The AI heard ’round the world has put the machine intelligence sector back in the spotlight. But when you squint beyond the press hype, the data shows that artificial intelligence is now the number one sector in terms of relative spending velocity in the ETR taxonomy. Normally market hype leads deployments, but the data suggests that spending activity and market penetration for AI are coinciding with the hype. While hyperscale cloud players are reaping the rewards, we think this is a rising tide that’s going to lift all AI ships, those both plainly in sight and others that may not be so visible.In this Breaking Analysis we dig deeper into the AI space with spending data from ETR and one of the best minds in tech generally, and AI specifically, Jeff Jonas, CEO, founder, and chief scientist at Senzing.