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Greetings! Nvidia investors are, let’s face it, a bit like spoiled children. Here’s a company that posts a 94% increase in revenue from a year ago, which is quite a bit better than it had projected, and the stock falls! Sure, Nvidia’s growth rate has come down from the blazing-fast 260% or so of a few quarters ago, but did anyone imagine the company could maintain that pace? The chip designer, which has a stranglehold on the much-in-demand specialized chips used in artificial intelligence development, on Wednesday reported third-quarter numbers that were about as good as could be hoped. Selling chips for data centers, the key part of Nvidia’s AI business, generated about $30 billion in the quarter, the vast bulk of the company’s revenue of $35 billion. Net profit doubled to $20 billion. If you consider that the data center sales business produced just $4 billion a mere seven quarters ago, you get a sense of how much Nvidia’s business has mushroomed in size in less than two years (more details here). Investors, though, don’t care about the big picture. They want to know the future. Nvidia has just started to ship its latest-generation Blackwell chips, which offer many times faster performance than the Hopper AI chips that have supercharged its revenue. Demand for the new chips “is staggering and we are racing to scale supply,” Chief Financial Officer Colette Kress told analysts tonight. But Nvidia’s ability to meet demand is limited by constraints on component supply. And what seemed to worry investors was that the company’s projection for the final quarter of the year implied a meaningful slowdown in sales growth. As Blackwell sales grow, companies will scale back on the number of Hopper chips they’re buying. Kress was vague about whether Nvidia is expecting sales of its Hopper chips to grow from the third quarter into the fourth quarter, saying, “We will have to see.” Meanwhile, the Blackwell ramp-up will dilute Nvidia’s gross margin by a couple of percentage points. Zoom out, and the Nvidia picture looks incredibly healthy. But investors sweat the small stuff. And right now, their focus is on the transition to Nvidia’s next generation of chips and how smoothly it occurs. That’s understandable, but investors shouldn’t forget the big picture entirely. In the grand tradition of companies dumping declining assets, Comcast Corp. announced Wednesday it will spin off most of its cable channels—including USA, CNBC, MSNBC and SyFy—into a new publicly traded company. The move will rid Comcast of a declining business, which should help its growth rate. Think of this as a little like Viacom’s spin-off of its video rental business, Blockbuster, in the early 2000s as that business declined thanks to Netflix’s DVD rentals business and video-on-demand services on both cable and digital outlets. That didn't work out too well for shareholders in the spun-out Blockbuster, which went bankrupt in 2010. Of course, Comcast is spinning this move as a positive for everyone concerned, including the new company, dubbed SpinCo for the moment. “With significant financial resources from day one, SpinCo will be ideally positioned for success and highly attractive to investors, content creators, distributors and potential partners,” said Comcast CEO Brian Roberts in a statement. Highly attractive to investors? Let’s see: While Comcast didn’t disclose the historical performance of the businesses it will be spinning off, we know cable channels are in decline across the board, thanks to customers’ cord cutting. Comcast’s overall TV network revenue fell 7% between 2021 and 2023, rising so far this year mostly thanks to its Olympics coverage. And that revenue number includes broadcast network NBC, streaming service Peacock, international TV networks and Bravo, a cable channel whose “Real Housewives” franchise is very popular. Comcast isn’t spinning off any of those businesses into this new company, presumably because they’re too valuable to let go. Investors should beware Roberts’ spin: If the cable channels were that attractive, Comcast wouldn’t be getting rid of them! • Digital Currency Group, the parent company of crypto asset manager Grayscale, is launching a decentralized AI subsidiary called Yuma, led by DCG founder and CEO Barry Silbert, who will also serve as its CEO. • Snowflake reported 28% higher revenue of $942.1 million for the three months ended October. Snowflake stock jumped 20% as the company raised its full-year forecast. • Publicly traded ad tech giant The Trade Desk plans to build a TV operating system for streaming. It’s a notable move, given that most of the dominant smart TV operating systems on the market have come from TV businesses, such as Roku, Samsung or LG, or big tech firms, like Amazon or Google (more here). AI Agenda by Stephanie Palazzolo separates hype from reality and explains how AI is transforming industries. The 4x/week newsletter details the innovation and disruption happening in AI, from the AI startup funding frenzy to the major technological breakthroughs that will set the agenda for decades to come. Sign up today. Some describe AI as significant for the future of our species or as a new industrial revolution, while others say it’s just an app and not a new way to work. However, its impact cannot be overstated, considering that a majority agree AI will not be an equalizer for all employees, and companies need to prepare their workforces for the technology. The Information surveyed our readers in collaboration with Comcast NBCUniversal LIFT Labs to understand their perspective on how AI will impact the workplace. Read up on the insights they provided here.
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