EIEIO Best Of...Green With Envy
EIEIO Best Of...Green With Envy
A look back at our piece from last summer on 2023 and 2024's hottest company.
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Given NVIDIA’s stunning success – including adding $350 billion in Market Value in the past week – it’s increasingly difficult for the company to surprise anybody about anything.
That said, NVIDIA sent another thunderbolt to the industry today when it unexpectedly announced its next generation of artificial intelligence processors at the Computex conference in Taipei. “Rubin” is the successor to “Blackwell” which was only announced three months ago and hasn’t even been rolled out yet.
With the extraordinary dominance NVIDIA (current market cap: $2.7 trillion) has in the Market, we thought it would be good to dust off our EIEIO report on NVIDIA last summer.
The GSV team first published the following piece on August 27, 2023.
“Whether you think you can, or you think you can’t, you are right.” – Henry Ford
“Where there is no vision, the people perish.” – Proverbs 29:18
“Every great business I’ve been involved with has nearly died at least 3 times. The fact you are on the ropes I see as progress.” – Mike Homer to me in 2007
“I’m always amazed how these overnight successes take a hell of a long time.” – Steve Jobs
When you ask people to name a few companies when they think of Silicon Valley, Intel often pops up due to both its commercial success and the brilliant “Intel Inside” marketing campaign.
Intel was co-founded by Gordon Moore (the namesake for “Moore’s Law”) and Bob Noyce, and later led by the legendary Andy Groves. It is rightfully known as a powerhouse in Silicon Valley. Moreover, Intel’s chips were the brains for the PC, essentially providing the “arms” for the Computer Revolution.
With companies and with people, you get better or get worse, but you never stay the same. Alas, while Intel is an impressive company with $140 billion market value and 120K employees, a rival most regular people have never heard of has nearly a 10X greater market value. We’re talking about NVIDIA, which has exploded to a $1.1 trillion market cap and has become one of the five most valuable companies in the U.S.
NVIDIA is the primary supplier of Graphic Processing Unit (GPU) chips that power the Generative AI boom…essentially selling “picks and shovels” to the AI miners. Last week NVIDIA reported a monster second quarter, with revenues up 101% to $13.5 billion and EPS up 429% to $2.70. All financial metrics massively beat Wall Street estimates.
Like most all “overnight success” stories, NVIDIA took decades before it was recognized for what an incredible franchise it was building. While it was the #1 performing stock in 2001, 2016 and was one of the top 25 companies of the last decade as noted in last week’s EIEIO, it’s done this in relative anonymity.
Today, there are 4 million developers and 40,000 companies using NVIDIA to accelerate computing.
Started on a napkin at a Denny’s diner in San Jose in 1993, the founders’ (Jensen Huang, Curtis Priem and Chris Malahowsky) vision was to bring 3D graphics to gaming and multimedia. They chose the name NVIDIA as a nod to invidia, the Latin word for envy.
The NVIDIA startup journey took the usual twist and turns but stayed consistent and committed to its North Star that had been defined over scrambled eggs and bacon. As par for the superstar course, NVIDIA survived three near-death experiences over the course of its multi-decade rise. CEO Jensen Huang shared these nearly-fatal encounters in a recent commencement speech at National Taiwan University in May:
One of my favorite stories about the importance of discipline and utter commitment to a North Star was told by Jim Collins. It compares two explorers, Roald Amundsen and Robert Falcon Scott.
In October 1911, Amundsen and Scott led two parties on a journey, both with the goal of being the first to make it to the South Pole. Both left on the 1,400 mile round trip journey within days of each other. Obviously, no satellite phones, no GPS. Just a sled and some huskies.
Amundsen’s TEAM’s plan was to travel approximately 15 miles a day – come hell or high water. Scott’s TEAM’s strategy was to go as far as they could when the weather conditions were right, and to stay put if things were a little dicey.
Long story short, Amundsen’s TEAM beat Scott’s to the South Pole by 34 days. Not only did Amundsen succeed with the spoils that went along with that, but Scott’s TEAM of 5 all died on the trek back.
When comparing the journals of Amundsen and Scott, for the exact same days, Amundsen’s would say things like, “the weather outside today was challenging with cold and brutal wind, but we trudged on.” Whereas Scott’s entry would say “Today we decided to stay put and wait for the weather to improve before we moved forward.”
The same weather, but different attitudes about how to respond to it. Amundsen clicked ahead 15 miles whatever the outside circumstances were – that was the plan, and they stuck with it. Scott let the “uncontrollables” control him, and ultimately kill him.
Both as entrepreneurs and investors, being systematic and strategic towards the objectives is how we win the race. Additionally, it’s imperative to stay disciplined, humble, and accountable with our attitude.
Market Performance
Market Commentary
Stocks took a breather last week after climbing most of May. In the holiday-shortened four days of trading, the Dow fell 1%, the S&P 500 was off .5% and NASDAQ decreased 1.1%.
Most surprising was Salesforce’s softer than expected numbers and the first sub-10% revenue growth quarter since it became public. Thursday, CRM fell 20% but rebounded 7.5% on Friday.
Other disappointments in tech land included Dell which fell 18% on bad numbers and Marvell which dropped 12%, Trump Media and Technology dropped over 5% in connection with its namesakes 0 for 34 in the NYC courtroom…DJT shares are up 3X from its IPO and the former President took in over $50 million in the 24 hours after the verdict.
China is coming back into the tech news with Tencent’s “Dungeon and Fighter” taking in $140 million after its much-anticipated release in the PRC last week. Also, the Third Phase of the “Big Fund” from China to invest roughly $50 billion into its domestic semiconductor manufacturing capabilities.
Other interesting news included the rumor that Alphabet would purchase HubSpot with the laters shares advancing nearly 10%. GAP shares surged 29% after announcing much stronger results than anticipated.
The overall constructive action on public stocks is filtering its way into an IPO backlog and an uptick in private financing. We remain BULLISH.
Maggie Moe’s GSV Weekly Rap
GSV Model Portfolio
Need to Know
READ: Nvidia unveils next generation of AI chips in bid to entrench market lead | Financial Times
READ: The College Kids Are Not All Right | Minding the Gap
WATCH: Anduril CEO Palmer Luckey on “poaching people from big tech companies” | Austin Allred
READ: The Agentic AI (aka AI Agents) Report | Artificiality
WATCH: Dallas Fort Worth, Texas Google Earth Timelapse 1984-2022 | Google Earth
READ: ‘A dying empire led by bad people’: Poll finds young voters despairing over US politics | Semafor
READ: The New Space War | Vikram Mansharamani
READ: Nvidia’s revenue soars 262% on record AI chip demand | Financial Times
READ: Nvidia's Jensen Huang Lays Out Plans For Future AI Chips, Touts 'CEO Math' | Investor's Business Daily
GSV’s Four I’s of Investor Sentiment
GSV tracks four primary indicators of investor sentiment: inflows and outflows of mutual funds and ETFs, IPO activity, interest rates, and inflation. Here’s how these four signals performed last week:
#1: Inflows and Outflows for Mutual Funds & ETFs
#2: IPO Market
#3: Interest Rates
#4: Inflation
Charts of the Week
Chuckle of the Week
EIEIO…Fast Facts
Entrepreneurship: 111 - the number of colleges in the US that offer a major in Entrepreneurship (College Vine)
Innovation: 53% – the percentage of people in the USA who have heard of OpenAI/ChatGPT (Reuters)
Education: 142 million – number of registered learners on Coursera (Coursera)
Impact: 23rd – Rank of the United States among countries in terms of happiness in 2024, compared to 15th in 2023 (World Happiness Report)
Opportunity: 2/3 – the portion of Americans who say they are worried about their memory (Harper’s)
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Connecting the Dots & EIEIO…
Old MacDonald had a farm, EIEIO. New MacDonald has a Startup….EIEIO: Entrepreneurship, Innovation, Education, Impact and Opportunity. Accordingly, we focus on these key areas of the future.
One of the core goals of GSV is to connect the dots around EIEIO and provide perspective on where things are going and why. If you like this, please forward to your friends. Onward!
Make Your Dash Count!
-MM
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