Internal | August 29th, 2024

GOOD MORNING

Here's everything you need to know today: Nvidia just dropped a second-quarter earnings report that would make any CEO’s head spin: $0.68 earnings per share on a mind-boggling $30 billion in revenue, pretty much curb-stomping Wall Street’s expectations. So naturally, the stock tanked 6%. Wait, what? Yep, because apparently, Nvidia isn’t curb-stomping as hard anymore, and the stock market—which has become dangerously reliant on NVDA’s over-performance—is now becoming anhedonic about Nvidia’s big numbers.

Even after more than doubling last year’s revenue of $13.5 billion, Nvidia’s reward was a collective yawn from investors. The company even threw out a juicy $32.5 billion guidance for next quarter, and what did they get? Crickets. It’s like being the valedictorian and getting grounded for not curing cancer.

Take the data center business: $26.3 billion in revenue, absolutely crushing Wall Street’s $25 billion target with a 154% year-over-year increase. Nvidia controls 80% to 95% of the AI chip market, and with its next-gen Blackwell chips on deck, they’re not letting go of that crown anytime soon. But on a call with analysts, CEO Jensen Huang seemed to feel the air leaving the room and answered specific questions about Nvidia’s P&L with mini-lectures about “The Race to the Next Plateau” and “recontextualizing” like some kind of armchair futurist trying to keep his dinner guests entertained.

Looking at the chart, it seems less like Nvidia disappointed investors and more like it has become a victim of its own success, held to standards so ridiculous by a market so charged up by AI’s promise and looming rate cuts that it now needs more from Nvidia than Nvidia can possibly give.

Let’s Dive Into More Details Below…

BREAKING NEWS
Oil, gas, and nuclear energy often struggle with negative public perceptions. Oil’s image is tarnished by its substantial CO2 emissions, a leading contributor to greenhouse gases. Although nuclear energy provides reliable, low-carbon power, concerns about water security, regulatory hurdles, and safety issues tend to overshadow its benefits.

In contrast, solar energy is surging globally, driving a safer, more secure transition to renewable energy. According to Statista, the global solar energy market is projected to generate about $65 billion from 1.30 trillion kilowatt hours (kWh) of electricity in 2024. With an expected annual growth rate of 7.31%, the market could expand to $92.63 billion by 2029. Solar photovoltaic capacity has exploded, growing from 5 gigawatts (GW) in 2005 to 1,180 GW (1.18 terawatts) in 2022, highlighting the sector’s rapid expansion. As climate change concerns escalate and new policies roll out globally, the key questions are: Which countries are leading the charge, and which companies are poised to capitalize on this momentum?

WHAT HAPPENED
To no one’s surprise, and much to the USA’s chagrin, China dominates the global solar power scene by a significant margin. According to Global Energy Monitor, China is currently developing 339 gigawatts (GW) of utility-scale solar and wind power—180 GW of solar and 159 GW of wind. To put that in perspective, China’s scale is nearly double the combined capacity of all other countries, with the U.S. trailing far behind, building just 40 GW. China also leads globally in solar power, with 609,921 MW of installed capacity—enough to power a small continent.

The U.S. is in second place, with 139,205 MW of installed solar power. While far behind China, the U.S. is making strides, achieving a compound annual growth rate (CAGR) of 26.5% from 2013 to 2023. Despite Biden’s recent tariffs on China, the administration is balancing national security with economic collaboration, allowing some Chinese participation in the U.S. renewable energy market. U.S.-China cooperation remains a net win, driving innovation and reducing global carbon emissions.

On May 16, 2024, the Biden Administration announced a $71 million investment, including $16 million from the Bipartisan Infrastructure Law, to grow domestic solar manufacturing. “The Biden-Harris Administration is committed to building an American-made solar supply chain that boosts innovation, drives down costs, and delivers jobs across the nation,” said U.S. Secretary of Energy Jennifer M. Granholm. “Thanks to historic funding, we’re deploying more solar power—the cheapest form of energy—to millions of Americans with panels stamped ‘Made in the USA.’”

Japan holds third place globally, with 87,068 MW of solar capacity. Japan’s solar sector has grown steadily, achieving a CAGR of 20.4% from 2013 to 2023. The country is also exploring cutting-edge technologies like perovskite solar cells, which are lightweight and flexible, ideal for various installations, including building walls. Japan is also advancing space-based solar power (SBSP), with satellites transmitting energy back to Earth.

India ranks fifth globally with 73,109 MW of installed solar capacity. India has shown remarkable growth, with a CAGR of 46.5% from 2013 to 2023—one of the highest among major solar power producers. With a recent solar IPO and plans to reach 104 GW by March 2025 and 366 GW by 2032, India isn’t slowing down. This push is part of a broader strategy to achieve 500 GW from non-fossil sources by 2030, with solar playing a key role.

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BREAKING NEWS
Well, well, Wells Notice… Gary Gensler and the SEC are back at it, this time targeting NFT platform OpenSea, which has seen its sales volume nosedive since its peak.

Let’s talk about the timing here. Gensler isn’t exactly known for nabbing bad actors like Sam Bankman-Fried or Do Kwon while they’re in the act, so this move makes sense in his playbook. But NFTs? Really? Sure, there was a slight bump in sales in late August, with global NFT sales rising 14% to hit $100 million and over 1.8 million on-chain transactions. But that’s a drop in the ocean compared to the $4.22 billion OpenSea was raking in during January and February 2022.

Is Gary salty because he held onto his Bored Ape too long and sold at the bottom? Maybe he’s still smarting from being outbid on Trump’s latest NFT launch. Or is it just frustration from losing case after case as judges keep shutting down the SEC’s attempts to label Bitcoin and crypto as securities?

WHAT HAPPENED
If you were around for the NFT and OpenSea craze of 2021-2022, you know how wild it got. At their peak, Bored Ape Yacht Club (BAYC) NFTs were selling for nearly $500,000, with celebrities like Justin Bieber and Jimmy Fallon jumping on the bandwagon. Bieber dropped $1.3 million on a BAYC in January 2022, only to see its value nosedive to around $70,000 by November. While these investments weren’t illegal, they highlighted the speculative frenzy surrounding NFTs, a frenzy that many dismissed concerns about as “FUD”—until now.

Enter Gensler and the SEC. The agency recently slapped a Wells Notice on OpenSea, alleging that NFTs traded on the platform might be unregistered securities, using the Howey Test as its measuring stick. This isn’t sitting well with OpenSea’s CEO Devin Finzer, who argues that NFTs are “creative goods” and shouldn’t be regulated like traditional securities. To fight back, OpenSea has pledged $5 million to support legal fees for NFT creators facing similar scrutiny.

Finzer took to X (formerly Twitter) to voice his outrage: “OpenSea has received a Wells Notice from the SEC threatening to sue us because they believe NFTs on our platform are securities. We are shocked that the SEC would make such a sweeping move against creators and artists. Nevertheless, we are ready to stand up and fight.” He pointed out how NFTs have provided full-time careers for student artists and opened markets for Indie game developers, questioning who the SEC thinks they’re protecting.

As the SEC prepares for what could be a landmark case, the NFT world is watching closely. Whether OpenSea will have to adapt to new regulatory realities or successfully argue its case remains to be seen. But one thing is clear: the honeymoon phase of the NFT boom is over, and now it’s time to see who’s left standing when the dust settles.

CONTINUE READING ➔

BREAKING NEWS
Get your Sharpies out because the market is buzzing like it’s the second coming of Jesus, the release of Chat GPT-5, and the launch of the iPhone 16 all rolled into one—it’s finally here: Nvidia’s Q2 FY2025 earnings report.

Despite the immense pressure and significance placed on this single stock, Nvidia once again shattered expectations, delivering a performance that exceeded even Wall Street’s most ambitious predictions.

WHAT HAPPENED
Nvidia reported a staggering $30 billion in revenue, up 122% year-over-year, driven mainly by its Data Center segment’s $26.3 billion haul—a 154% surge. Demand for Nvidia’s AI chips, especially the A100 and H100 models, continues to fuel this explosive growth.

Other segments also shined: Professional Visualization revenue hit $454 million, up 20%, and automotive revenue reached $346 million, a 37% increase. Both exceeded analyst expectations, reinforcing Nvidia’s market dominance.

Financially, Nvidia is rock solid, with an adjusted gross margin of 75.7%, beating estimates, and operating income soaring to $19.94 billion, up from $7.78 billion. GAAP EPS jumped 168% to $0.67, while non-GAAP EPS rose 152% to $0.68.

Nvidia’s R&D spending hit $3.09 billion, up 51%, in line with expectations, showing its commitment to AI leadership. Adjusted operating expenses rose 52% to $2.79 billion, just under the anticipated $2.81 billion.

Looking forward, Nvidia expects gross margins to stay in the mid-70% range, with operating expenses growing in the mid- to upper-40% range.

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1. Lowe’s, Ford, and Harley-Davidson Cut Back on DEI Initiatives

Major companies like Lowe’s, Ford, and Harley-Davidson are scaling back their diversity, equity, and inclusion (DEI) programs amid growing conservative backlash. These corporations are reducing or ending partnerships with advocacy groups and rethinking their DEI strategies, reflecting a broader corporate shift in response to political pressures.

2. Super Micro Stock Plummets After Annual Report Delay

Super Micro Computer's shares plunged over 20% following the company’s announcement that it would delay its annual report filing. The delay follows allegations from short-seller Hindenburg Research, which accused the company of accounting manipulation and sanctions evasion.

3. Nvidia Misses Lofty Expectations Despite Record Sales

Nvidia reported $30 billion in Q2 revenue, exceeding expectations, yet its stock fell 6% as the earnings report failed to meet the high expectations set by investors. The chipmaker's guidance for future quarters raised concerns about whether its explosive growth can be sustained.

4. Warren Buffett's Berkshire Hathaway Reaches $1 Trillion Market Value

Berkshire Hathaway became the first U.S. company outside the tech sector to reach a $1 trillion market value. This milestone comes as Warren Buffett’s conglomerate continues to adjust its investment portfolio, notably selling nearly $1 billion in Bank of America shares.

5. Foot Locker to Move Headquarters Amid Strategic Overhaul

Foot Locker announced it will move its global headquarters from New York to St. Petersburg, Florida. The move is part of a broader strategy to streamline operations and enhance collaboration as the company continues its turnaround efforts.

6. AeroVironment Secures $1 Billion Army Contract

AeroVironment shares jumped 16.5% after securing a $1 billion contract with the U.S. Army. The deal marks the company’s largest military contract to date and is expected to significantly boost its revenue and market position in the defense sector.

7. Google Uses AI to Moderate Employee Questions at Town Halls

Google has implemented an AI tool to moderate and summarize employee questions during town hall meetings. Some employees express concerns that this tool is being used to avoid addressing tougher or more controversial questions.

8. Two Sigma's Co-Founders Step Down Amid Leadership Change

John Overdeck and David Siegel, co-founders of the $60 billion hedge fund Two Sigma, are stepping down as co-CEOs. The leadership change follows internal disagreements over the firm’s direction and signals a significant shift in the company's management structure.

9. HSBC's Incoming CEO Considers Cutting Middle Management

HSBC's incoming CEO, Georges Elhedery, is reportedly planning to reduce layers of middle management to streamline operations. The move is part of broader cost-cutting efforts aimed at improving efficiency and competitiveness in the banking sector.

10. Abercrombie & Fitch Shares Drop Despite Strong Sales Growth

Abercrombie & Fitch reported a 21% increase in sales for Q2 2024, yet its stock fell 17% as the company warned of an increasingly uncertain retail environment. Despite the strong sales figures, investor concerns about future growth weighed on the stock.

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