đź’¬ The Nvidia effect

Thursday, September 14, 2023 by Snacks
It’s pronounced en-vidia (Kim Kulish/Getty Images)

It’s pronounced en-vidia (Kim Kulish/Getty Images)

It’s pronounced en-vidia (Kim Kulish/Getty Images)

It’s pronounced en-vidia (Kim Kulish/Getty Images)

Yesterday’s Market Moves
Dow Jones
34,576 (-0.20%)
S&P 500
4,467 (+0.12%)
13,814 (+0.29%)
$26,240 (+1.50%)

Hey Snackers,

They’ve got the beats, and now they’ve got news beats: Gannett, America’s largest newspaper chain, is hiring reporters to exclusively cover Taylor Swift and Beyoncé news. 

Stocks barely budged yesterday after the August Consumer Price Index showed that core inflation (which excludes food and energy) picked up for the first time in six months. The Fed’s expected to skip a rate hike at its meeting next week, but future bumps aren’t off the table.


1. Chip startups are in an investment slump as Nvidia takes the AI spotlight — for now

Nvidia envy… Nvidia's AI dominance is casting a shadow over smaller chipmakers. Nvidia’s A100 and H100 AI chips have become the gold standard for lots of large language models (including Open AI’s GPT) and make up 70% of global AI-chip sales. Newer entrants are having a hard time keeping up: so far this year, chip startups have raised just $881M, compared to nearly $2B in the first half of last year. This quarter, the # of US investment deals for chip startups is down by 80% from last year.

  • AI-dvantage: Nvidia, which has long specialized in graphics chips, reported that its sales doubled last quarter, and said it expects revenue to nearly 3X this quarter.

Feeling the crunch… As Nvidia’s AI power grows, fledgling companies are having trouble meeting investors’ insatiable hunger for market-ready chips. It can cost as much as $500M to advance a single chip design. Some analysts say the surge in AI spend is sapping investment in other types of data-center chips. Intel, which specializes in PC chips, said data-center revenue was down 15% last quarter. But global spending on AI chips is forecast to more than double over the next four years to $106B. Meanwhile:

  • SoftBank-owned chip designer Arm halted orders for its IPO after hot demand. But the smartphone-focused company isn’t expected to get a near-term revenue boost from AI.


Being first isn’t always comfy… While Nvidia’s #thriving, it has the burden of supplying most of the industry, and it’s struggling with shortages and production strains. Without lots of AI chip options, and less $$ to help create them, some companies are being forced to delay AI product launches because they can’t get their hands on enough GPUs. But a shift may be coming: chip-making biggie AMD plans to roll out an AI chip to compete with Nvidia’s this year.


2. Americans’ wealth hits an all-time high, but don’t look at their bank accounts

My money don’t jiggle jiggle… it’s invested in a 3-bedroom. Fresh federal data shows that last quarter US household wealth hit a non-inflation-adjusted record, ballooning to $154T+. Net worth climbed as Americans’ stock holdings soared by $2.6T and the value of their real estate popped $2.5T. Behind the surge: booming tech stocks and a housing market that seems to be quickly recovering from the Fed’s rate-hike crusade. But it’s not all rainbows and dollar bills…

Bounced checks… and trips to the dollar store. While household wealth has climbed, this week the Census Bureau said that inflation-adjusted median income in the US slipped last year (for the third year straight) to just over $74K. For many it means purchasing power (aka how far your $$ goes) actually declined, despite rising wages. It’s a potentially stubborn trend, as yesterday’s CPI data showed that inflation ticked up last month. 

  • Maxed out: Americans’ credit-card debt passed a record $1T last quarter, pushing overall household debt to over $17T. 

  • Piggy-bank cracks: The savings rate fell to 3.5% in July, down from 4.3% in June — a month when more than 60% of US adults lived check to check. 

  • Struggling: The US poverty rate had the largest annual jump on record last year, while the child-poverty rate more than doubled to 12.4%.


Wealth’s more than net worth… This year’s market gains and resilient real-estate prices have provided padding against inflation’s toll. While wealth and wages are up, many still feel they’re falling short: according to a recent survey, Americans say they need $233K/year to feel financially secure, and last month consumer sentiment ticked down.

What else we’re Snackin’

  • SlowZone: The United Auto Workers union said it was prepared to strike if it didn’t reach a deal with GM, Ford, and Stellantis by tonight. Stellantis made a third offer, and the UAW said it’s prepared to negotiate 24/7. 

  • OTC: The FDA said a nasal decongestant found in meds like NyQuil and Mucinex doesn’t work. The regulator could ban the ingredient as it ramps up OTC oversight (it also issued a warning about eye drops). 

  • Birks: Birkenstock filed for an IPO, proving you’re never too old to go public (it’s almost 250). The comfy-shoe maker, which got a boost after a pink cameo in “Barbie,” could be valued at $8B+. 

  • Match: Lyft’s new Women+ Connect program matches up women and non-binary drivers and riders. Lyft and Uber have added safety features in recent years, like letting riders share their trip progress with friends.

  • Descent: American Airlines and Spirit cut quarterly profit expectations after fuel costs spiked, joining Alaska and Southwest. American also called out a recent hike to its pilots’ pay as more airline workers seek raises.

Snack Fact of the Day

US car-insurance prices have soared nearly 20% in the past year


  • Initial jobless claims

  • United Auto Workers contract set to expire

  • Earnings expected from Adobe and Lennar 

Authors of this Snacks own shares of: GM, Nvidia, and Uber

Subscribe to Snacks