Nvidia faces the music
- This post originally appeared in the Insider Today newsletter.
Hi there! In today's edition of Terrible Ideas Come to Life: People are trying to recreate the "Temple Run" video game in a Cambodian temple.
For today's big story, Wall Street is watching Nvidia's earnings report as the chip giant faces some big questions.
What's on deck:
- Markets: The tech projects Wall Street execs are most excited about.
- Tech: Breaking down Mark Zuckerberg's letter to Congress that admitted Meta screwed up.
- Business: For a certain group of workers, big cities no longer come with big paychecks.
But first, happy Nvidia earnings day to all those who celebrate.
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The big story
AI's darling reports
The last week of August isn't typically a big one for markets, but this year is different.
Nvidia reports earnings today after the bell in what investors view as a critical juncture for the AI industry, writes Business Insider's Matthew Fox.
Tech companies have been pressed this earnings season about when their AI investments will start paying off. Now the firm benefiting from all that spending takes center stage.
Most Wall Street analysts expect Nvidia to beat revenue and earnings-per-share estimates, but concerns remain about the release of its newest product. BI's Filip De Mott summarized what six top firms expect from Nvidia's earnings.
Wall Street isn't alone in its excitement. At least one bar is hosting a Nvidia earnings watch party, a sign of the AI hype (or just a good excuse to start drinking early on a Wednesday).
It hasn't been smooth sailing for Nvidia since its last earnings report in late May. Its share price initially took off after a blowout report, surpassing Microsoft as the world's most valuable company in June.
But the crown was quickly relinquished amid a sell-off in the semiconductor space throughout July and questions about AI's practicality. More recently, Nvidia has rallied back, with shares up more than 17% this month.
The volatility isn't set to die down anytime soon. Options pricing data suggests Nvidia could see a nearly $300 billion swing in its stock price depending on its earnings.
Ultimately, Nvidia's not just selling investors on itself, but on the future of AI, writes BI's Hasan Chowdhury.
So what are the biggest questions for Nvidia heading into earnings?
BI's Emma Cosgrove and Helen Li broke down what investors are interested in hearing from the chip giant.
Demand remains a key part of the equation. The industry's insatiable appetite for Nvidia's AI chips is what sent the stock soaring in the first place.
With tech firms facing scrutiny over the money spent on AI projects, Nvidia risks seeing a pullback from customers looking to appeal to their own investors.
But Big Tech companies like Microsoft and Meta representing Nvidia's biggest customers have shown no signs of backing away from their AI bets.
Of course, that doesn't mean they won't look for alternative ways to cut costs. Nvidia is essentially the only game in town for the type of hardware firms need for their complex AI plans. But it might not always be that way, as Amazon and Google try to build out their own offerings.
A new product could ease demand concerns, but Nvidia is facing trouble here too. CEO Jensen Huang said the company was aiming to release a new product every year, but its next-generation AI chip, Blackwell, is reportedly facing delays.
But even with those headwinds, beating analysts' revenue expectations might be all Nvidia needs to stay in investors' good graces.
News brief
Top headlines
- Hundreds of private planes are touching down at a makeshift airport for billionaire favorite Burning Man.
- Meet the 35-year-old CEO who wants to turn around bankrupt Red Lobster.
- Meta leans away from augmented-reality creators as it plans to shut down its AR studio.
- Eli Lilly just halved the price of its weight-loss drug — declaring war on the booming market of knock-offs.
- Super Micro Computer falls as short-seller Hindenburg Research accuses the AI darling of 'accounting manipulation'.
3 things in markets
- The internal tech projects Wall Street's top firms are betting big on. From "Condor" to "Legend," BI got an inside look at innovative projects in the works at eight top finance firms. Some are focused on encouraging programmers to build their own tools (D.E. Shaw) while others are about organizing and automating access to a massive data library (Goldman Sachs).
- The best place to invest might be outside the US. Domestic stocks have dominated the rest of the world for a decade. But William Blair's global equity team sees more opportunity outside the States in places like Japan and India going forward.
- Brat summer may be a sign of economic slowdown. Demand is high for the other kind of brat this summer: sausage. It could signal that US households are aiming to save more on food costs as they replace steaks with the lower-priced option.
3 things in tech
- Inside Zuckerberg's letter to Congress. Conservatives led by Rep. Jim Jordan are touting Zuck's letter, which admits the tech giant made some content moderation mistakes, as a "big win" for free speech. BI's Peter Kafka breaks down what Zuckerberg actually said.
- Is Google using AI to dodge employees' toughest questions? The tech giant has begun using AI to moderate its monthly town halls. But some workers say the AI moderator waters down question submissions and lets employers avoid concerns — leading certain Googlers to stop attending altogether. Here's how the moderator works.
- The Sam Altman stans are reaching Swiftie levels of fandom. AI superfans are speculating about an unreleased OpenAI feature called Strawberry, based on nuggets of "information" from a few viral posts. Altman has stoked some of the rumors; fans flipped out when he posted a pic of a homegrown garden strawberry on social media.
3 things in business
- Culture wars killed the media star. Brands are so afraid of causing controversy on either the left or the right that many advertisers avoid news and politics altogether. That's left many in the industry feeling like it's fundamentally broken.
- Bright lights, small paychecks. City dwellers have historically put up with less space, higher prices, and noisy neighbors in exchange for bigger paychecks. But because of skyrocketing housing costs, that urban wage premium is going sideways. Some workers even pay a penalty for living in the big city.
- Google claps back at Amazon's AI diss. The search giant had some words for the king of e-commerce after internal documents revealed how Amazon instructs salespeople to cast doubt on competitors. "We're flattered they're worried about us," a Google spokesperson wrote in an email to BI, "but fiction doesn't become fact just because it's in talking points."
In other news
- Don't give smartphones to kids under 11, a major cell operator advises parents.
- Klarna CEO comments show the AI workplace everyone has been dreading is already here.
- I interned at JP Morgan and Microsoft as a software engineer. This is my secret to landing offers.
- The stock market is poised for record highs this week as $85 billion floods equities, Goldman Sachs says.
- DirecTV is on the warpath against Disney in a battle it says is existential for cable TV.
What's happening today
- Nvidia, HP, and other companies report earnings.
- The Paralympics Opening Ceremony is held at Paris' Place de la Concorde.
- Venice Film Festival begins with the world premiere of Tim Burton's "Beetlejuice Beetlejuice," the sequel to the horror classic.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, senior editor, in London. Milan Sehmbi, fellow, in London. Amanda Yen, fellow, in New York.