NVDA, The Green-Eyed Monster

We had a snoozefest instead of volatility when NVDA announced its earnings. August 30, 2024 [WEBSITE]( | [UNSUBSCRIBE]( NVDA, The Green-Eyed Monster SEAN RING Dear Reader, Whenever I hang out with my friend Alex, I immediately regret my lack of classical education. Alex plays at least three musical instruments, speaks a few languages, including his wife’s native Polish, codes in at least four different computer languages, and studied the classics at Oxford. It’s lovely to have friends who are polymath renaissance men. But it’d be better if I were one myself. Sure, I love The Iliad and The Odyssey, but I don’t know my Aeschylus from my Euripides… yet. So I was only today years old when I found out NVDA, or Nvidia, was named after Invidia, the Roman goddess of envy and retribution, thanks to my friend and colleague [Chris Campbell’s excellent write-up]( in Altucher Confidential. From Chris: Derived from the Latin "invidia," meaning envy, the name is a nod to a lesser-known Roman goddess. [Note from SR: Her name is Nemesis in Greek mythology.] In Roman myth, Invidia was often portrayed as a green-tinged figure with a powerful gaze. Her "evil eye" of envy was believed capable of shaping destinies and toppling the mighty. Nvidia’s logo, a green eye, seems to reinforce the mythological link. Even their marketing slogans, like "Green with envy" for the GeForce 8 series (not to mention the occasional green goddess), lean into this symbolism. In Italian, ti invidio means “I envy you.” I must study harder! Old Billy Wigglestick wrote about envy in Othello. In Act III, Scene III, Iago tries to manipulate Othello by suggesting that his wife, Desdemona, is having an affair. Iago plants the seeds of jealousy in Othello’s mind by saying: O, beware, my lord, of jealousy! It is the green-eyed monster which doth mock The meat it feeds on. Are NVDA’s institutional investors too envious of other stock’s returns? How is that possible? NVDA Stock Let’s first look at the chart to understand where the stock is. This is the daily chart from the last two years. NVDA has only gone up since October 2022, which was also the low point of the major markets. From late January/early February 2023, this stock was a screaming buy (though the chart shows the split-adjusted price of the stock). From there (about $20), we’ve had a roughly 6x, or 500%, gain. Is the chart looking admittedly toppy? Maybe. After all, the stock fell 2% in after-hours trading Wednesday night into yesterday’s session and dropped a further 6.38% yesterday to $117.59. We’ll get to why that happened later. Would I be willing to short the stock here? No. And that’s the difference between guessing where a stock is going and putting your money where your mouth is. When it comes to stock investment decisions, patience and thorough analysis are key. I want to see definitive proof that the rally is over. Yes, the price is below the 50-day moving average, but that’s not enough. Investors are upset, yes. But I don’t think it’s a wholesale offload yet. What about those all-important numbers? You have [(1) item]( on hold at our warehouse: Item #: [51987]( Status: On hold Value: Approx. $300 Claim by date: 09/03 at 11:59 PM To see how to claim yours simply [click here]( our Head of Customer Experience will show you what you need to do. [Click Here To Learn More]( NVDA Numbers NVDA’s numbers were fine, anyway! They just weren’t the upper deck dinger the market has come to expect from Jensen Huang. Earnings per share: 68 cents adjusted vs. 64 cents expected Revenue: $30.04 billion vs. $28.7 billion expected If I were an NVDA investor, I’d have been OK with this. They beat the consensus estimates. But the institutions holding this stock have gotten dotcom greedy. In yesterday’s [Five Bullets]( my friend and colleague Dave Gonigam wrote: Sales and profits more than doubled during the second quarter. The company will buy back $50 billion of its shares — a substantial total, though less than half the record set by Apple earlier this summer. But gross profit margins narrowed from the previous quarter — in part because of a production glitch with Nvidia’s next-generation Blackwell chips, the ones CEO Jensen Huang touted on stage, Steve Jobs-style, back in March. [CNBC]( added: Nvidia said it expects about $32.5 billion in current-quarter revenue, versus $31.7 billion expected by analysts, according to StreetAccount. That would be an increase of 80% from a year earlier. Revenue continues to surge at the chipmaker, rising 122% on an annual basis during the quarter, following three straight periods of year-over-year growth in excess of 200%. Net income more than doubled to $16.6 billion, or 67 cents per share, in the quarter, from $6.18 billion, or 25 cents per share, in the year-ago period. It’s not like NVDA is losing any money. Quite the opposite, in fact! Wrap Up The color green represents envy, but it also represents inexperience. Sometimes, it’s associated with nature, growth, and harmony. Green is a calming color that reduces stress and anxiety and is associated with balance and stability. I’m going to choose harmony and tranquility. NVDA’s investors should do the same. Have a wonderful, long, restful weekend. You've been working hard and you deserve this time to relax and recharge. Thank you for subscribing. On Monday, the Rude will arrive, but it’ll be a rather unique one. I hope you enjoy it. All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… Reports of AI’s Death Are Greatly Exaggerated SEAN RING Every other week, some new tech guru—or, worse, a wannabe tech guru—claims that artificial intelligence is on its deathbed. They say the age of AI is over. Move on. Nothing to see here. These prophets of doom, armed with half-baked theories and clickbait headlines, want us to believe that the most significant technological revolution of the 21st century is fizzling out like cheap soda on a Sunday afternoon. I just read the most enlightening LinkedIn post from Linas Beliunas, who’s been writing about AI for ages. Here it is (emojis are his, not mine): This is huge! Swedish FinTech giant Klarna is using AI to halve its workforce 😳 "Our AI assistant now performs the work of 700 employees, reducing the average resolution time from 11 minutes to just 2, while maintaining the same customer satisfaction scores as human agents," - Klarna CEO Sebastian Siemiatkowski wrote in his letter to shareholders. But here comes the crazy part. The financial impact of these AI-driven efficiencies is substantial. In their latest H1 2024 financials, Klarna just reported that average revenue per employee has surged by 73% over the past 12 months alone, from SEK 4 million to SEK 7 million 😳 As an effect, this productivity gain has allowed Klarna to reduce its workforce from 5,000 to 3,800 over the past year alone through natural attrition, with plans to potentially shrink further to around 2,000 employees in the coming years. It's now clear that this Bloomberg interview Siemiatkowski did a few months ago wasn't just hype - Klarna is walking the walk. AI is eating FinTech. AI isn't just alive and kicking—it's running marathons, winning gold medals, and then inventing new sports just for fun. The Current State of AI: Alive and Thriving Let's start with the basics: AI isn't dead. In fact, it's doing quite the opposite. It's surviving and, yes, thriving. The technology has advanced rapidly over the last decade, becoming as ubiquitous as Wi-Fi. Every industry worth its salt—from healthcare to finance, retail to transportation—is dipping its toes in the AI pool. And those that aren't? Well, they're just waiting to be disrupted out of existence. Consider this: AI is now helping doctors detect diseases once thought to be the sole province of seasoned specialists. Financial institutions leverage AI to detect fraud faster than a hedge fund manager can say "insider trading." And in case you've missed it, autonomous vehicles are no longer just the stuff of science fiction; they're an actual thing now, zipping around streets, albeit in controlled environments. If that's what dying looks like, I can't wait to see AI's idea of a full-blown resurrection. [Could Elon Musk’s New Project be worth trillions of dollars?]( Elon Musk has predicted that his new venture “[X-9840” could be “a multi trillion dollar company…”]( As big as Microsoft… Apple…and Nvidia… Companies gave their early investors a chance to become millionaires over the long term, starting with just $1,000. [Click here to see the details]( because this has nothing to do with electric vehicles…Self-driving cars, rockets, brain chips, or satellites. [Click Here To Learn More]( Misconceptions and the Usual Litany of Criticisms But alas, the naysayers won't be deterred. They always find something to gripe about. "AI is overhyped!" they shout. "It’s stuck in a perpetual loop of failure!" they lament. "It’s a threat to humanity!" they cry as they furiously type away on their smartphones powered by—you guessed it—AI algorithms. But mainly, they can’t wait until NVDA stock falls out of bed. “Short this!” - Jensen Huang (under his breath) Let's take a closer look at these so-called criticisms, shall we? First up is the claim that AI is all hype and no substance. According to these folks, AI is just another overblown fad, like pet rocks or bell-bottom jeans. They love to point to high-profile AI failures, like chatbots that go rogue or self-driving cars that don't drive all that safely yet. Sure, there have been setbacks. But newsflash: that's how innovation works. If every technological breakthrough were flawless from the get-go, we'd all be commuting in flying cars by now. AI has its challenges, but it's far from a failure. Then, there's the argument that AI is stuck in a perpetual cycle of failure. This one is a real hoot. Failure isn’t a bug; it’s a feature of progress. Remember when the Wright brothers crashed their planes? Or when Edison burned through ten thousand materials before figuring out the lightbulb? Failure is just success training in the gym. Counterarguments: AI is Just Getting Started Now, let's turn the tables and bring in some facts—real ones, not the kind cooked up in some basement think tank. AI is not just alive; it’s experiencing a growth spurt that would make teenagers blush. Recent breakthroughs in AI technology are nothing short of extraordinary. Take, for instance, generative AI—those clever little algorithms that can create new content from scratch. Whether writing poetry, composing music, or generating images that make you question reality, generative AI proves that machines can be just as creative (and sometimes as nonsensical) as humans. AI's rapid growth and potential should make us all feel optimistic and excited about the future. But it doesn't stop there. AI has become a cornerstone in natural language processing, with algorithms now capable of understanding and responding to human speech in ways that were unimaginable just a few years ago. Remember when you had to shout at Siri or Alexa just to get a weather update? Those days are behind us. Today’s AI can decipher accents, understand context, and even crack a joke—though, admittedly, its sense of humor still needs a bit of work. And let's remember machine learning, the bread and butter of AI. Algorithms are getting smarter by the minute, processing vast datasets and uncovering insights that humans would take centuries to figure out. Machine learning transforms industries and redefines what's possible, from predicting market trends to diagnosing diseases. So, Why Does the "Death of AI" Narrative Persist? With all this progress, you might wonder why some people are so eager to declare AI dead. Well, it's simple. Fear and sensationalism sell. No one wants to read a headline that says, "AI Continues to Grow Steadily and Will Eventually Solve Many of Humanity's Problems, But It’s Going to Take Time, and There Will Be Some Bumps Along the Way." No, people want drama. They want the fall of Rome, the bursting of the dot-com bubble, or the next big villain to blame for the world's ills. And AI, with its rapid advancements and occasional missteps, makes for a perfect scapegoat. There’s also a fundamental misunderstanding of what AI is and isn't. Some folks still think AI is a monolithic, singular entity—like Skynet plotting to overthrow humanity. AI is a collection of technologies with strengths and weaknesses, working together (and sometimes against each other) to solve specific problems. It’s not one size fits all; it's more like a Swiss Army knife with different tools for different tasks—horses for courses, as they say. And then there's the fear factor. Let’s face it: AI is spooky. It’s the ultimate boogeyman for a tech-obsessed world. It can do almost magical things, and humans have a long history of fearing what we don't understand. But just because AI is powerful and mysterious doesn't mean it's on the brink of collapse or rebellion. Remember, we’re the ones programming these systems. If anything, AI's so-called "death" would reflect our shortcomings, not some apocalyptic failure of technology. The Future of AI: A More Nuanced Perspective Instead of declaring AI dead or overhyped, how about we take a more nuanced perspective? Yes, AI has its challenges. There are ethical considerations to navigate, biases to address, and plenty of bugs to fix. But that's true of any transformative technology. The printing press had its critics, especially when it came to printing The Bible in the local vernacular. So does the internet, especially from governments who don’t like their secrets posted on the wall for all to see. And now, so does AI. The future of AI is neither a utopia nor a dystopia—it's a work in progress. It’s a road with twists, turns, bumps, and occasional potholes. But it's a road worth traveling. AI has the potential to revolutionize how we live, work, and interact with the world around us. It can improve our lives, jobs, and futures (especially when it comes to diseases humans couldn’t hope to manage without it). But it will require careful stewardship and oversight. Wrap Up So, the next time you hear someone proclaiming the death of AI, do yourself a favor: roll your eyes, shake your head, and maybe even chuckle a little. AI isn't dead; it's far from it. It’s evolving, growing, and, yes, occasionally stumbling. But isn't that true of all of us? In the grand scheme of things, AI is just getting started. And if you ask me, the future looks pretty darn exciting. AI’s death is one funeral that won’t happen soon. All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting Rude Awakening.](