427% gain in one year from data centres
Welcome to AI Collision š„,
In todayās collision between AI and our world:
Meme stonk numbers in a multi-trillion package
All the Ballmer vibes
Hereās another $6 billion, Elon
If thatās enough to get the earnings smashing, read onā¦
AI Collision š„
Well, I was wrong.
I had thought that on the upside Nvidia had all the potential of smashing its earnings by 15% or more, and thatās what it would take for the market to get mega excited about its results.
But I was wrong.
Nvidia (only) beat expectations by 9.8%.
That said, revenue of $26 billion was up 262% year on year. But its data centre revenue of $22.6 billion was up 427% year on year.
Take a moment to absorb that number. This is a company that is now worth $2.61 trillion, and it lifted data centre revenues by 427%!
Are you kidding me?
Nvidia noted that it simply cannot keep supply up with demand.
This little gem from the call transcript gives a bit of insight as to what that looks like:
Large clusters like the ones built by Meta and Tesla are examples of the essential infrastructure for AI production, what we refer to as AI factories.
These next-generation data centers host advanced full-stack accelerated computing platforms where the data comes in and intelligence comes out. In Q1, we worked with over 100 customers building AI factories ranging in size from hundreds to tens of thousands of GPUs, with some reaching 100,000 GPUs.
If you havenāt looked and are at all interested, the whole call transcript can be found here.
The investment into AI infrastructure, or data centres, or datacentres-as-a-chip as I like to put it, is astonishing. And it will continue to drive Nvidia.
Thatās why the stock crossed $1,000 and traded up to $1,069 after market on Friday.
Itās also why Nvidia announced a 10-for-1 stock split to get that pesky massive stock price to a level thatās actually affordable for more investors to add to its bags.
This of course is no great surprise to me. As I noted in AI Collision in March,
I think 2024 is going to see a whole range of companies split their stock. It will be the year of the splits. And it will benefit holders of some of these stocks as they unlock that demand and excitement for their companies.
It may even fuel this market into a stronger bull run, thatās driven by AI and then dragging a whole bunch of other big tech higher.
Expect others to follow, like Broadcom, Microsoft and possibly Meta, Netflix, and Super Micro Computer.
But as for Nvidia, well, it really is meme-stonk-like numbers for a company thatās far from a meme stonk. Itās a company thatās massively growing revenues, has an incredible technology moat, and canāt keep supply up with demand. And its stock price is about to reduce in nominal price by a factor of ten.
I donāt expect itāll be too long before that $2.6 trillion valuation breaks $3 trillion..
AI gone wild š¤Ŗ
When Nvidia held its GTC developer conference in March, it was one for the ages. Nvidia announced some game-changing tech and sent not just the AI market into a tizz, but metals and materials markets too, like copper, which weāve discussed recently.
Nvidiaās conference this year was the first itād held in person in half a decade, with the previous GTCs all held online, virtually.
Thatās why Nvidia went guns ablaze for this one, holding it at the SAP Centre in San Jose with a seating capacity for around 20,000 people. Nvidia filled it of course, and then added about another 300,000 people through the usual virtual channels.
It was mega, it was an extravaganza.
But it was also just the start of big tech, and specifically those focused on AI, pulling out the big guns in 2024 for the full-beans production value for developer conferences.
Take for instance the Canva Create conference which was held recently. Canva is another of the tech āunicornsā with a reported valuation of around $26 billion.
Itās yet to be publicly traded. The company itself is an online platform for graphic design. Having used it personally, itās really good. $26 billion good? Yet to be seen. But Canva has clearly got the budget for some high-production conference action.
And while Canva spent up big, thereās one thing you canāt buy your way out ofā¦
Cringe-factor.
Canvaās conference was more like a cheesy West End production than a tech conference. You can see a snippet below from the whole thing which was also streamed online.
The rest of it is equally as bad. Equally as ācringeā.
Itās up there with Googleās I/O developer conference just a couple of weeks ago where it unleashed Marc Rebillet on the crowdā¦ and the world for those who didnāt know him already.
Again, cringe levels off the chart.
Now if youāve been around a minute or two, a bit of craziness (and cringeyness) at developer conferences isnāt something new.
You only need a throwback to the days when Steve Ballmer was in charge of Microsoft for that action (see below and be prepared if youāve never seen this before!).
You may need a stiff drink after those Ballmer clipsā¦
However, thereās something in the likes of Nvidia, Canva, Google and what I would expect to be other big tech, pulling out the big production values for their developer conferences.
Appleās WWDC24 is only a few weeks away tooā¦
Itās a decent sign that the lofty heights of a tech bull market are really kicking into overdrive.
Itās not free salads, soy lattes and electric scooters seven days a week, itās more, much more. Itās techās version of sending warships into the Taiwan strait as a show of strength.
Itās a flex.
And the bigger and better, the harder the flex.
When big tech is going all-out on conference spending and the cringe levels are off the chart, itās not a top sign, itās a sign that thereās a top coming down the trackā¦ which also means thereās a lot of vertical ascent still to come.
What you want to keep an eye out for is when big tech stops spending big on these things. Thatās when you know the belts are tightening and that every cent of growth counts.
Boomers & Busters š°
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom š
Nvidia (NASDAQ:NVDA) up 15%
Brainchip Holdings (ASX:BRN) up 10%
Teradyne (NASDAQ:TER) up 10%
Bust š
DUOS Technology Group (NASDAQ:DUOT) down 13%
C3.ai (NYSE:AI) down 9%
Vicarious Surgical (NASDAQ:RBOT) down 17%
From the hive mind š§
Elon makes me laugh. It was rumoured he was raising money for xAI, then he said he wasnāt. Then the rumours started again he was raising money for xAI, and now heās raised a lazy $6 billion for it.
The power that Google search wields is immense. It can quite literally make or break an organisation. With new tweaks, with the implementation of AI, will that change for the better, or worse? And we do have to ask, just how much power over the internet and information is too much?
And with that, we still have no reason to trust Google. After the historic debacle with black Nazis and the alteration of actual history, itās moved on a little, at least now Googleās AI is saying to eat rocks and use glue with your cheese on a pizza.
Artificial Polltelligence š³ļø The results
If you had to pick a favourite resource for the next year, what would it be?
That was the target of last weekās poll. With the uranium market going gangbusters in the last 18 months, and copper recently spiking higher on the expected demand to come from high tech AI and datacentres, itās a tricky one to pick the best of a bunch of resources screaming higher.
Even gold and silver have been on a run.
But interestingly there was a clear winner from our poll. Not the yellow cake, not the shiny gold rock from the groundā¦ but copper was a definitive winner in our poll.
Iām happy to see however that even gallium and aluminium got a vote or two in there as well. Check out aluminium prices and youāll also see thereās probably a bit of room to run there too ā particularly (as my mining sources tell me) if copper gets too high in price, keep an eye out for aluminium (and bauxite) to scream higher too.
Either way, perhaps weāre stepping into a resources mega cycleā¦ something I know a lot of the editors at Southbank Investment Research (including myself) have been talking about recently.
More on that another day!
Weāll have a new poll on Thursdayā¦
Weirdest AI image of the day
Birds of prey ā r/Weirddallee
ChatGPTās random quote of the day
“The Web does not just connect machines, it connects people.” ā Sir Tim Berners-Lee
Thanks for reading, and donāt forget to leave comments and questions below,
Sam Volkering
Editor-in-Chief
AI Collision
