Below are some of the most interesting articles, quotes and charts I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
This week Nvidia was all anyone, including a growing cohort of teen-aged stock traders, could talk about.
'Seventeen-year-old Suhas Badrinarayan attended a conference last week for high-school students interested in business. In between competitive events, everyone was talking about Nvidia.' https://t.co/dVob61tMsF
— Jesse Felder (@jessefelder) February 20, 2024
Certainly, the company has seen demand for its H100 chips boom, driven by Big Tech investment in generative AI.
'NVIDIA Data Center revenue amounted to 40% of Amazon/Alphabet/Meta/Microsoft total CAPEX in Q4.' https://t.co/684jNKgmtV pic.twitter.com/HmlPgN280l
— Jesse Felder (@jessefelder) February 23, 2024
However, to meet expectations, Nvidia will have to continue to lay claim to an ever greater share of Big Tech capex…
'To get to a $740 share price simply requires NVDA to maintain a monopolist-like operating profit margin of 55% for the next decade, while also growing sales 10x to more than $600bn. For context, the entire industry sold $527bn worth of chips last year.' https://t.co/VQK0kOkM8H
— Jesse Felder (@jessefelder) February 16, 2024
…even as those massive investments show few signs of paying off as yet.
'Most companies have barely begun testing generative AI in their businesses or worked out how to deal with the particular problems the technology presents, such as its tendency to "hallucinate." What if there's no return on these assets?' https://t.co/zCmRH9ntCA
— Jesse Felder (@jessefelder) February 23, 2024
And, as history frequently teaches, incredible innovations don’t always make for incredible investment opportunities.
"People said PCs were going to take over the world. They were right. But what they were wrong on was all the companies that didn't make it. The same is likely to be true for many of the companies swept up in the A.I. boom." –@AswathDamodaran https://t.co/zhcU5wFCQP
— Jesse Felder (@jessefelder) February 22, 2024
