Hi All,
Welcome to our brief overview of portfolio news from the past few days.
The AI Race Accelerates
The high stakes competition to build the next generation of AI continues to intensify, with new massive deals and strategic moves.
Amazon announced a $38 billion, seven-year partnership with OpenAI. AWS will provide the computing infrastructure, including hundreds of thousands of Nvidia chips, to support OpenAI’s AI workloads. Full capacity is expected to be deployed by the end of 2026. This is yet another massive deal for OpenAI as it scales its infrastructure.
Google is reportedly considering a significant new investment in Anthropic, which could value the AI startup at over $350 billion. This follows Google’s existing commitment of over $3 billion (for a 14% stake) and a separate deal to provide up to one million of its custom TPU chips. Anthropic itself is projecting an aggressive growth path, forecasting up to $70 billion in revenue by 2028.
Apple will use Google’s 1.2 trillion parameter AI model to power its new version of Siri. This is a significant validation and another major win for Google’s strategy in the AI era.
Amid all this investment, Nvidia CEO Jensen Huang issued a warning that China is poised to surpass the U.S. in AI. He cited cheaper energy and looser regulations as key advantages for Beijing. This highlights a critical bottleneck: if energy constraints are not resolved, the pace of AI innovation could be forced to pause despite the massive capital being deployed.
Other Portfolio Updates
Amazon and Nubank announced a partnership to integrate NuPay into Amazon’s Brazil website. This will provide customers with special payment options, including extra credit and more installment choices. This is a key strategic move that could be a catalyst for Amazon to win significant market share from competitors in Brazil.
Earnings Wrap-Up
Advanced Micro Devices: AMD reported a strong Q3, beating expectations with adjusted EPS of $1.20 (vs. $1.17 consensus) and revenue of $9.25 billion (vs. $8.76B consensus). Growth was led by the Data Center segment ($4.3B) and Client/Gaming ($4.0B). The Q4 revenue guide of $9.6B (+- $300M) was also above the $9.21B consensus. We will publish a detailed review in the coming days.
Fortinet: Fortinet delivered a solid Q3, with non-GAAP EPS of $0.74 (beating $0.63 consensus) and revenue of $1.725B (beating $1.705B estimates). Product revenue accelerated to 18% Y/Y, and the FortiSASE solution was a standout with 100% Y/Y billings growth. The company also hit a record non-GAAP operating margin of 37%. The main concern appears to be the guidance. We will publish a full analysis in the coming days.
Airbnb: Airbnb reported Q3 gross bookings growth of 14% to $22.9B, with room nights up 9%. This is comparable to Booking Holdings, which saw 8% room night growth (though 10% in its alternative accommodation segment). For Q4, while revenue guidance of 7-10% growth was provided, management expects adjusted EBITDA to be flat-to-down slightly Y/Y, with a margin decline. This is driven by investments in new growth and policy initiatives.
That’s a wrap. See you soon.