AI accelerates
Powering up at Nvidia
Good morning, deep-learning detectives. This is your Stock Market Rundown for February 26th, 2024. Thanks for tuning in for another week of financial shenanigans. Let’s dig in:
TODAY’S TOP STORY: JENSEN HUANG’S SILICON SPRINT
The AI revolution is in full swing, and the hardware it runs on—graphics processing units (GPUs)—are a hotter item than tickets to a Beyonce concert.
The top chip designer for AI applications is Nvidia, which just made headlines by dropping a quarter that trounced street expectations. Thanks to the blockbuster results, Nvidia’s market capitalization rose by $277 billion—the biggest-ever one-day gain for any listed company.
Nvidia’s stock has been on a tear, rising from $1 trillion to $2 trillion in market value in just nine months as it repeatedly blows through estimates. What did these guys get so right?Â
CEO Jensen Huang foresaw the potential of AI computing and made a crucial decision to pivot Nvidia towards AI technology. His bet was that graphics-based processing was the best fit for AI workloads, which can do magical stuff like develop cures for diseases and predict the weather.
In the early days, Huang and two partners founded Nvidia at a meeting at a Denny’s in East San Jose in 1993. They soon got an infusion of cash from top venture capital firm Sequoia, which ended up becoming one of the most profitable venture investments of all time. Nice when that happens.
Huang believes the shift to upgrade data centers with high-powered AI-capable chips is still in its early innings, and will require trillions of dollars in outlay—much of which will become revenue for Nvidia, since it controls 80% of the high-end AI chip market.
Some investors are grumbling that Nvidia’s optimistic valuation could spell future pain if the breakneck growth doesn’t keep up. But Huang likely isn’t too worried about a market pullback, given he’s now worth $40 billion. Seems like his bold bets paid off.
SO WHAT ELSE IS GOING ON?
Much like an investment banker bro splurging for bottle service after his bonus hits his bank account, US companies are upping their spending on equipment purchases, signaling corporate optimism on the overall economy.
The American eater wins again: Restaurant Brands International, owners of Burger King, beat estimates thanks to dirt-cheap menu items. We salute their sacrifice of countless man-hours to reduce the price of Royal Crispy Wraps by ten cents.
Tractor maker Deere & Co isn’t harvesting profits lately—it just cut its 2024 forecasts. With US farm income declining, farmers are nervous about splurging on tractors that cost as much as an Audi A6 (minus the trunk space).
Tesla just dropped footage of their new Optimus humanoid robot taking a stroll around the factory. These robots are the ideal employees—they don’t take lunch breaks, get carpal tunnel syndrome, or try to kiss you under the mistletoe at the office Christmas party.
That’s it for today, my friends; catch you back here at the usual time tomorrow morning. Yours in capitalism, The Axe