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Reddit (RDDT) soared over 50% on its IPO debut on Thursday.
Is it the next meme stock? We have a full analysis of Reddit’s S-1 for you on our YouTube channel. We dissected everything you must know, from the growth strategy to the risks & challenges to watch out for.
It’s Jensen Huang’s world, and competitors don’t want to live there.
NVIDIA’s CEO took center stage at the company's annual GPU technology conference (GTC) earlier this week. Some analysts have called GTC the ‘AI Woodstock.’
Thousands packed the SAP Center in San Jose, buzzing with anticipation as Huang showcased NVIDIA's latest innovations. This grand stage reflects the company's meteoric rise, fueled by its AI hardware and infrastructure market dominance.
Today at a glance:
NVIDIA’s GTC.
Apple, AI, and the DOJ.
Microsoft hires the Inflection AI team.
Tencent and Nike's earnings visualized.
1. NVIDIA’s GTC.
If you missed it, here are the main announcements from GTC:
Blackwell: NVIDIA introduced the Blackwell platform, a major update to its AI architecture, boasting 30x the inference performance of its predecessor (Hopper) at lower energy costs. Blackwell’s B100 chip is notably larger than Hopper’s H100, a key factor along with a new liquid-cooled system. In short, it could make AI faster and more affordable.
Superchip power: The GB200 Grace Blackwell Superchip offers massive capabilities and will be incorporated into NVIDIA's DGX Cloud platform.
Cloud giants onboard: Amazon, Microsoft, and Google are set to leverage Blackwell's power in their AI infrastructure.
Apple partnership: NVIDIA's Omniverse platform is coming to Apple's new Vision Pro VR headset, opening up possibilities for 3D development.
The rise of AI robots: Huang announced Project GR00T, a foundation model for humanoid robots, signaling the next frontier in AI and robotics. The new Jetson Thor computer will power these advanced robots.
Next-gen data centers: The company showcased a 3D Omniverse-designed blueprint for AI-era data centers, emphasizing performance and efficiency.
Sovereign AI expansion: NVIDIA and Oracle deepen their partnership to deliver Sovereign AI solutions worldwide, addressing the increasing focus on AI data security and control. We touched on this in our review of Oracle’s earnings last week.
6G AI innovation: A new 6G research platform aims to accelerate AI advancements in wireless networks.
From hardware to services: The company unveiled NVIDIA Inference Microservices (NIM), a move seen as an attempt to create software-level lock-in amidst growing pressure for alternative hardware.
NVIDIA’s surging Data Center revenue (up 5X year-over-year to $18.4 billion in the latest quarter ending in January) despite being supply-constrained.
2. Apple, AI, and the DOJ.
Apple published details on MM1, a family of multimodal AI models. While smaller than top competitors, they show strong performance. Apple's open release of this information aligns with its history of contributing to core technologies.
📱 AI on iPhone
Device focus: Apple likely aims for AI solutions on their devices that don’t always rely on external providers.
Hardware advantage: They are well-positioned for running models locally thanks to their advanced mobile chips. Their focus on on-device AI aligns with their hardware strengths.
Cloud limitations: Apple may lack the capability for larger, cloud-based AI models.
🔎 Apple in talks with Google
Potential integration: According to Bloomberg, Apple and Google are in talks about integrating Gemini (Google's AI model) into the iPhone.
We’ve seen this before: Such a deal would echo the existing search partnership, with Google paying Apple an estimated $20 billion per year to remain the iPhone’s default search engine (some of it involves a revenue share from traffic acquisition costs).
Strategic benefits: A potential deal with Google underscores the strategic benefits for both companies despite Gemini's recent missteps. This would address Apple's model size and infrastructure gap.
⚖️ The Department of Justice (DOJ) Sues Apple
Key allegations: US officials sued Apple on Thursday, accusing the company of having an illegal monopoly over smartphones and harming consumers with inflated prices. The DOJ alleges that Apple’s closed ecosystem creates an unfair advantage in an 88-page document.
Apple's response: Apple denies the allegations and is preparing to defend itself in court.
Potential remedies: The Justice Department seeks significant changes to Apple's business practices and could even consider a breakup of the company. To be continued...
3. Microsoft hires the Inflection AI team.
Microsoft hired most of Inflection AI's employees, including co-founder Mustafa Suleyman, who also co-founded Google’s DeepMind. He became the CEO of Microsoft AI, focusing on Consumer AI (Copilot, Bing, and Edge). Microsoft Azure will host Inflection 2.5, a new model that competes with GPT-4 and Gemini.
Inflection raised over $1 billion in 2023 from a group of investors (notably from Microsoft, Inflection’s cloud computing partner) for a consumer chatbot called Pi. The startup bought thousands of NVIDIA’s top-tier GPUs (H100).
Don’t call it an acquisition:
Forbes reported that Microsoft is not investing in Inflection AI. Still, an arrangement as part of the license of Inflection’s Application Programming Interface (API) could make investors in the startup whole.
Inflection will now focus on providing an API for businesses, shifting away from its original consumer chatbot focus. Microsoft gets the talent and benefits from Inflection’s API and its many H100 GPUs (now facing a demand surge).
Key Takeaways
This announcement follows Microsoft’s $16 million investment in French AI startup Mistral.
This could be a hedge against Microsoft's reliance on OpenAI in case the partnership sours and a way to access more top-tier GPUs in the AI race.
4. Tencent and Nike's earnings visualized.
🎮 Tencent doubles down on shareholder returns
Revenue growth disappoints: Tencent, the largest Chinese company by market cap, grew its revenue by 7% to RMB155 billion ($22 billion), missing analyst expectations by 1%.
📱 Gaming weakness: International games grew only by 1% year-over-year, offset by a decline for domestic games by 2% due to a tough comparison following a lift in government restrictions in the previous year.
💳 Bright spots: Online advertising rebounded with a 21% increase, an acceleration from 20% in Q3. Fintech & business services grew by 15%, consistent with the past two quarters.
Margin improvements: Gross and operating margins jumped by 7 percentage points year-over-year, primarily from the business mix. A significant decline in net profit was due to the sale of Meituan last year (one-off profit in Q4 FY23).
Shareholder returns get a boost: Tencent plans to more than double share repurchases in 2024 to nearly $13 billion following the decline in share price. Management also increased the dividend by 42% year-over-year.
AI focus: Management highlighted AI initiatives, particularly its Hunyuan language model (1-trillion-parameter scale in Chinese), with integration into advertising and productivity tools like Tencent Meeting and Docs. The company is looking at AI-generated videos next, emulating OpenAI’s Sora.
Check out our previous deep dive on Tencent here.
👟 Nike works through its turnaround
Mixed earnings: The footwear giant exceeded Wall Street's third-quarter revenue estimates by $130 million, indicating a positive holiday season despite rising competition. Expectations were relatively low, with a flat revenue year-over-year at $12.4 billion.
Nike Brand regional success: Nike Brand saw its fastest growth in Greater China (+5% year-over-year) but was still short of expectations. It was partially offset by weakness in EMEA (-3% year-over-year).
Converse not getting it done: The iconic sneakers saw a 20% decline in constant currency, with notable weakness in North America and Europe.
Discounts work: Promotions on Jordan shoes and new sneaker launches, like the Ultrafly trail running shoe, helped attract customers.
Wholesale rebound: Nike's wholesale business bounced back with a 3% rise after a tough few quarters.
Cost-savings impact: Strategic price hikes, lower freight costs, and initial restructuring efforts boosted gross margin to 45%, contributing to earnings exceeding expectations.
Competitive landscape: Nike faces rising competition from innovative brands like On, New Balance, and Hoka.
Turnaround in progress: Analysts highlighted uncertainty about Nike's innovation direction and long-term plan clarity. While these results are positive, they reflect just one quarter during a major restructuring phase.
Check out our previous deep dive on Nike here.
That’s it for today!
Stay healthy and invest on!
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Disclosure: I am long AAPL, AMZN, GOOG, NVDA, and TCEHY in the App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
Really good article it touches and gives you an overview of what’s happening in the tech world 🌎
Thanks for sharing !!
Good one