🤖 Nvidia’s AI gold rush

Friday, May 26, 2023 by Snacks
FYI: It’s pronounced “En-vidia” (Jakub Porzycki/Getty Images)

FYI: It’s pronounced “En-vidia” (Jakub Porzycki/Getty Images)

FYI: It’s pronounced “En-vidia” (Jakub Porzycki/Getty Images)

FYI: It’s pronounced “En-vidia” (Jakub Porzycki/Getty Images)

Yesterday’s Market Moves
Dow Jones
32,765 (-0.11%)
S&P 500
4,151 (+0.88%)
Nasdaq
12,698 (+1.71%)
Bitcoin
$26,476 (+0.54%)

Hey Snackers,

The power of Swifties continues to grow: Massachusetts lawmakers have introduced a “Taylor Swift bill” to protect ticket buyers from hefty surprise fees. No one wants a replay of last year’s Ticketmaster fiasco.

The Nasdaq led yesterday’s gains after a strong showing from chip titan Nvidia. Tech optimism paired with cautious debt-ceiling optimism as GOP leaders said they’d made progress toward a deal.

Chipper

1. Nvidia nears a $1T market cap as it positions its chips as fuel for the AI race

Hype machine (learning)… Nvidia is riding the artificial-intelligence wave near a trillion-dollar valuation. The chipmaker’s stock surged 25% yesterday after it reported earnings, catapulting it to the #5 spot of highest-valued US companies (behind #4 Amazon). Nvidia’s revenue was down 13% from last year as demand for its gaming chips sagged. But sales grew 19% quarter over quarter thanks to demand for its data-center chips for cloud and AI.

  • What investors really liked: Nvidia expects revenue to be 50% higher this quarter than last as the need for AI chips soars.

  • Rising tide: Techy boats lifted on Nvidia’s news as investors piled into other chip stocks like AMD, TSMC, and ASML.

Selling shovels to an AI gold rush… and Nvidia’s set up shop in a boomtown. Nvidia’s A100 chip was already the gold standard used in the large language models that underpin AI tools (thousands of A100s were used to train OpenAI's ChatGPT). But last month a hot new bombshell entered the server: the H100 chip, which is apparently faster and stronger than its predecessor. Orders are flooding in for the supercomputing chip from companies like Dell and Google.

  • Ahead of the pack: Unlike rivals Intel and AMD, Nvidia has specialized in GPUs (graphics chips), positioning it well for the latest rush.
THE TAKEAWAY

Change your shovels based on the gold… Nvidia is known for its graphics cards for gaming consoles like Nintendo's Switch. Gaming sales made up nearly a third of its revenue last quarter, even after dropping 38% from last year. As the pandemic-fueled gaming boom fades and controllers start to gather real dust (not just Cheeto dust), Nvidia is shifting its focus to the AI gold rush to drive growth.

Smize

2. E.l.f. reports stunning earnings as Gen Z goes all in on budget beauty trends

Eyes, lips, profits… E.l.f. shares jumped 20% yesterday after the budget makeup brand posted head-turning results. Its sales grew nearly 80% last quarter, marking 17 straight quarters of growth, and flying past Wall Street’s forecasts. E.l.f rose to drugstore fame with its variety of affordable makeup (picture: $7 glosses, $10 primer). Now it’s ranked the #4 largest mass cosmetics brands in the US, topping OG icons like Revlon and CoverGirl.

  • Mixed foundation: Last month rival Estée Lauder disappointed as makeup and skincare sales fell. L’Oreal saw growth thanks to a rebound in the US and Europe.

  • Glowy outlook: E.l.f’s CEO said its “winning formula” of value helped it issue what could be its strongest growth forecast ever.

Coffee gloss and glitter bombs… E.l.f. has long been a staple of the beauty industry’s dupe-economy, and gained even more fame thanks to buzzy collabs and social-media reviews (#GRWM). FYI: E.l.f has been tagged on TikTok nearly 7B+ times. Skincare took center stage during lockdowns, but after folks started going out again, “Euphoria”-style color cosmetics rebounded. Meanwhile, more “fresh face”-focused brands (cough, Glossier) are losing their shine. For the first time since 2020, teenagers are spending more on makeup than skincare.

THE TAKEAWAY

It’s the inside that counts… E.l.f.’s no-frills packaging is the opposite of flashier (but pricier) competitors. Instead, E.l.f. has leaned into quirky collabs with brands like Chipotle and Dunkin’ and word-of-mouth from TikTok beauty gurus. Its affordable prices allow teens to experiment with makeup trends without breaking the bank. Now E.l.f has become Gen Z’s #1 beauty brand, topping cult faves like Selena Gomez’s Rare Beauty and Rihanna’s Fenty Beauty.

DUNK

3. The Crypto Catch-Up…

🤹‍♀️ Quirky… Shaq got served. The NBA Hall of Famer was delivered a summons related to the FTX crypto exchange, for which he was a paid spokesman. He was reportedly served in the formerly named FTX Arena.

🤔 Sus… Reuters sources said that Binance commingled billions of dollars in customer funds with its own revenue. The world's largest crypto exchange denied the report. Former regulators said mixing customer and exchange cash puts clients' $$ at risk.

🤖 Techy… The maker of the Ledger crypto hardware wallet paused the rollout of a key recovery feature after customers pushed back over worries that "Ledger Recover" could put their secret seed phrases at risk.

What else we’re Snackin’

  • GeekSquad: Best Buy's CEO said shoppers were showing “recessionary behaviors,” after announcing that quarterly sales had fallen more than expected. Consumers are cutting back on electronics splurges like flat screens.

  • Eurout: Sam Altman said OpenAI might pull ChatGPT from the EU if lawmakers there pass regulation that could require genAI companies to reveal which copyrighted material they trained their systems on.

  • Virus: China is bracing for a Covid surge that could hit 65M cases/week in June. After years of strict lockdowns, China finally reopened this year, but its economy is recovering slower than expected.

  • Starboard: Cruise occupancy is averaging over 100% on many ships as sardine-packed passengers pile in for summer. Royal Caribbean's 102% Q1 occupancy blows last year’s 57% out of the water.

  • $1: Dollar Tree shares sank 14% yesterday after the chain missed profit expectations and cut its outlook, despite sales growth. The US’s 34K dollar stores are said to outnumber McDonalds, Starbucks, Walmart, and Target stores combined.

Snack Fact of the Day

Miami’s bitcoin conference attendance dropped more than half from last year

Friday

  • Earnings expected from Big Lots

Authors of this Snacks own bitcoin and shares of: Amazon, Google, Walmart, Nvidia, and Starbucks

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