Pro Perspectives 11/20/23






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November 20, 2023

We’ll get Nvidia earnings tomorrow after the close.

As I said in my note last week, this Nvidia report will be the most important market event into the end of the year — even more important than the December Fed meeting.

As a reminder, they grew revenues by 19% from Q4 to Q1, by 88% from Q1 to Q2 and have guided for a $16 billion for this recent quarter, or 18% quarterly revenue growth.

Based on the commentary from corporate America on the third quarter, they are “investing heavily for the future.”  That means AI.  And at this phase, that means AI infrastructure (servers, data centers and network infrastructure).

So, while Founder/CEO Jensen Huang has set a high bar/high expectations, he should continue to deliver, for the foreseeable future.

Remember, it’s just the early stages of what Huang has called a trillion-dollar “retooling” of the world’s data centers — a move from “general purpose computing” (powered by CPUs) to “accelerated computing” (powered by GPUs).

For those that have been calling the boom in AI stocks unsustainable. They are underestimating, if not misunderstanding the significance of this technology revolution.  It’s productivity enhancing, and a formula for a boom-time era in economic growth.  Growing the economic pie will result in growing the size of the stock market. As I said back in June, in my first AI Innovation Portfolio note, “prepare for the era of (more) multi-trillion dollar companies.”

In short, the generative AI impact will mean bigger companies, in a bigger economy.

With the above in mind, let’s talk about the drama at openAI over the weekend.  This is the nonprofit developer of ChatGPT.  Within 48 hours, one of the most important organizations in the world has spiraled toward dissolution.  My view:  It looks like those involved (donors, investors, leadership) are vying for control of the organization’s valuable assets (they want claim on the bounty).