🤖 Nvidia envy

It’s pronounced en-vidia… and companies are en-vious. Nvidia will report earnings on Wednesday after surpassing Alphabet last week as the US’s third-most-valuable company behind Microsoft and Apple (it’s worth $1.8T — yeah, trillion). The chip titan, once known mostly for its sophisticated graphics cards for gaming consoles like Nintendo's Switch, is now synonymous with AI computing.

• Shovels for the gold rush: Nvidia’s AI chips have become the gold standard for large language models (including OpenAI’s ChatGPT), and as of August made up 70% of global AI-chip sales.

• Nvidia stock has more than 3X’d over the past year as tech giants raced to buy its supercomputing tech. Meta alone spent an estimated $9B+ on Nvidia chips.

• AI can see your halo: Because Nvidia doesn’t manufacture its own chips, the companies it relies on for production have seen a halo-effect boost. Shares of TSMC (which makes Nvidia semiconductors) and ASML (which supplies TSMC) have gained.

• The #s: In November, Nvidia reported that Q3 revenue had tripled to a record $18B, while profit was up over 1,200%. This week, Nvidia expects to report ~$20B in Q4 sales.

The easy days may be over… Nvidia was positioned to dominate the early days of the genAI boom thanks to its powerful graphics processors. Now competitors are catching up: shortly after Nvidia intro’d a new version of its genAI chip in November, rivals Intel and AMD announced their own AI chips. Meta, OpenAI, and Microsoft all said they’d use AMD’s chip, which CEO Lisa Su described as the industry’s “most advanced AI accelerator.” Meanwhile, Alphabet, Amazon, and Microsoft are cookin’ up their own AI chips. Google said it trained its Gemini AI model on its own processors, not Nvidia’s.

I wrote you 50+ letters… Gosling, step aside: Warren Buffett has been writing Berkshire Hathaway shareholders a letter every year since he took over the holding co in 1965. Investors scan them for investing + practical advice from the 93-year-old Oracle of Omaha. In this year’s missive (expected on Saturday) they may be looking for insight into why Berkshire trimmed its positions in tech cos like Apple and HP, and loaded up on Big Oil stock from Chevron and Occidental. It’ll be Buffett’s first letter since the death of his longtime biz partner, Charlie Munger.

Flat screens in aisle 5… Analysts expect a full cart when Walmart drops earnings today. America’s #1 retailer topped estimates in November as its go-to grocery biz helped lift sales. Walmart’s CEO said “deflation” has lowered prices of higher-ticket items like toys and electronics, which could hit margins but lure thrifty shoppers. Walmart's also reportedly in talks to buy TV maker Vizio for $2B+. Since smart TVs can display ads and collect viewing data, Walmart could use the purchase to supercharge its $2.7B/year ad biz.

PS5’s golden years… Sony’s sending its PlayStation 5 console into early retirement, saying it’ll soon “enter the latter stage of its life cycle.” Sales of the towering console (it’s giving Sauron) fell 4M short of expectations last year. Execs expect that was the PS5’s sales peak, despite supply-chain kinks that made it hard to buy the four-year-old console until recently. But it’s a rough time for gamers who just got their hands on one: no major titles from PS franchises like God of War and Spider-Man are planned for the next full year. 

Keep ’em at 10 and 2… Alphabet-owned Waymo issued its first recall (via software update) last week after two of its robotaxis hit the same towed truck a few minutes apart. Rival GM-owned Cruise has even bigger roadblocks: its entire driverless fleet was pulled last year after one of its cars dragged a pedestrian 20 feet, causing serious injuries. Cruise’s CA license got suspended, several execs were ousted, and regulators are investigating. These incidents haven’t fostered public support: some San Franciscans recently torched a Waymo vehicle.

• Trippy: OpenAI unleashed Sora, a text-to-video generator that can produce cinematic-quality clips (including a terrifyingly realistic woolly mammoth). The impressive tech hasn’t yet been publicly released, as OpenAI evaluates dangers like disinfo.

• Year3: This weekend marks the second anniversary of Russia’s invasion of Ukraine. Russia’s military budget grew by two-thirds from last year, while Ukraine needs $468B (almost 3X its 2023 output) to rebuild.

• Beyhair: Beyoncé hinted that she’ll launch a hair-care line called Cécred today. 53% of all celeb-led retail brands are in the beauty aisle, where Selena Gomez’s Rare Beauty and Rihanna’s Fenty are staples.

• Tuesday: Earnings expected from Walmart, Home Depot, Palo Alto, Teladoc, and Caesars Entertainment

• Wednesday: Earnings expected from Nvidia, Rivian, Etsy, Lucid, and Marathon Oil

• Thursday: MLB spring training. NASA spacecraft scheduled to make the US’s first lunar landing in 50+ years. Earnings expected from Moderna, Newmont Mining, Wayfair, Block, Keurig Dr Pepper, Carvana, Live Nation, and Bookings

• Friday: ETHDenver ethereum event. 30th SAG Awards tomorrow. Earnings expected from Warner Bros. Discovery and Bloomin’ Brands

Authors of this Snacks own shares of: Alphabet, Amazon, Apple, Block, Disney, GM, Microsoft, Moderna, Newmont Mining, Nvidia, and Walmart