What We Learned This Week

Apple Shuttering Electric Car Efforts: For nearly a decade, speculation has swirled around Apple's secretive electric car project. Seen as a bold move into a highly competitive industry, it was met with both anticipation and skepticism. Despite periodic rumors of key hires and talks with automakers, the project never quite aligned with Apple's ethos. Now, it seems the company is winding down these efforts to refocus on emerging Artificial Intelligence initiatives and core services/products. This move is commendable, as it allows Apple to concentrate on its strengths. Additionally, the decision reflects the growing importance of AI in today's tech landscape, an area where Apple has room to catch up. While the automotive venture may be fading, Apple's influence in the industry persists through features like CarPlay, further integrating users into its ecosystem in a low-risk manner.

Alphabet’s Latest AI Snafu: Alphabet's (parent of Google) AI endeavors seem to be stumbling (again), raising concerns about its progress compared to competitors like Meta and Microsoft. The recent launch of their Gemini image generator highlighted significant demographic bias and historical inaccuracies, revealing gaps in their technology (e.g., the model refused to generate images of white males, even when considering recreations of notable historical figures). Despite Alphabet's vast resources, such oversights are frustrating and raise questions about management's oversight. While we've admired Alphabet for its core business and diverse ventures, these missteps urge us to monitor their trajectory closely.

Amazon in the Dow: Amazon joined the Dow Jones Industrial Average this week, replacing Walgreens Boots Alliance. This move reflects Amazon's growing stature as a leading blue-chip company in the country. While the change itself isn't inherently positive or negative for Amazon, it underscores the index's need for an update, given its trailing performance compared to the S&P in recent years. Despite the Dow's somewhat outdated structure, it remains a key market benchmark for many investors. Amazon's inclusion obliges tracking indices to hold shares in the company, often contributing to reduced stock volatility.

Retail Excellence: TJX (parent of TJ Maxx, HomeGoods, and Marshalls), alongside Costco, has become a cornerstone of our retail portfolio. The company's management has consistently demonstrated impressive execution, strategic excellence, and a commitment to rewarding shareholders. This was particularly evident in their adept handling of the pandemic, swiftly adapting to shifting consumer demands and preferences. Their performance this quarter continued in the same vein, surpassing already high expectations through disciplined cost management and effective merchandising strategies. While their forward guidance may seem conservative, this management team has a track record of under-promising and over-delivering. Overall, we remain optimistic about their trajectory.