Hi All,
Welcome to our brief overview of portfolio news from the past few days.
The AI Race: Investments Surge, but Bubble Fears Persist
The technology sector continues to be defined by massive AI investments, even as market jitters around a potential bubble intensify.
Nvidia reported another blockbuster quarter, with Q3 revenue jumping 62% year-over-year to $57.0 billion, beating estimates. The company also issued strong guidance for Q4 revenue of $65 billion. CEO Jensen Huang described demand for the new Blackwell chips as “off the charts” and dismissed bubble concerns, emphasizing Nvidia’s leadership across all phases of AI. However, the stock fell over 3% post-earnings. The market reaction likely reflects concerns over the quality of earnings. Accounts receivable jumped by about $5.6 billion from the previous quarter and $15.7 billion from a year earlier, an 89% increase year-over-year against 62% revenue growth. This disconnect has fueled speculation that revenue may have been pulled forward to meet consensus and quell AI fears. Additionally, risks remain regarding customer concentration, as a large portion of data center revenue still comes from a handful of hyperscale buyers.
Google unveiled Gemini 3, its “most intelligent” AI model yet, designed to handle complex tasks with less prompting. Early benchmarks suggest it performs ahead of key rivals and signals that Google isn’t trailing in the AI race anymore.
Amazon plans to invest at least $3 billion in a new data center campus in Mississippi to support its cloud and AI technologies, signaling that hyperscalers have no intention of slowing down their capital expenditures.
Michael Burry, famous for “The Big Short,” has reportedly placed a $1 billion bet against Nvidia and Palantir, signaling his belief that the sector is inflated and vulnerable to a correction.
Google Targets Travel & The Autonomous Transport Race
Google’s Travel Push: Google launched new AI features in Search, including a “Canvas” tool to curate detailed travel plans and an upgraded Flight Deals feature. This caused shares of travel companies like Booking Holdings to fall. While a potential threat, Booking’s strong moat, with over 50% of bookings coming from loyal Genius members and 60% being direct, provides significant resilience against this competitive threat.
Waymo’s Expansion: Alphabet’s Waymo is pushing its robotaxi expansion, adding New Orleans, Minneapolis, and Tampa to its development pipeline while beginning service in Miami. The company also expects to roll out operations soon in Dallas, Houston, San Antonio, and Orlando.
Amazon’s Zoox: Amazon’s robotaxi unit, Zoox, has started offering free rides in San Francisco, marking the first time it is competing directly with Waymo in the same market.
Other Industry & Portfolio Updates
Adobe agreed to acquire Semrush for approx. $1.9 billion ($12.00/share). The move is designed to unlock Generative Engine Optimization (GEO) for marketers, a critical capability as consumers shift to AI-based search. While the price is below the 52-week high, it represents a 77.5% premium over Tuesday’s close and a forward P/E of roughly 30x. It’s not a cheap deal, but it strategically secures Adobe’s place in the evolving digital marketing landscape.
Meta Platforms won a major legal victory as a federal judge rejected antitrust accusations regarding its acquisitions of Instagram and WhatsApp. However, the company faces significant leadership headwinds. Chief AI Scientist Yann LeCun is leaving to start his own company after 12 years, and Chief Revenue Officer John Hegeman is stepping down after 17 years with the firm. Losing long-tenured leaders in such critical roles is a blow to Meta’s stability during the AI race.
AMD scored a major win by powering France’s first exascale supercomputer, showcasing its growing influence in high-performance computing.
Macro Headwinds: The Nasdaq hit a two-month low after a labor report showed the unemployment rate rising to 4.4%, the highest level since October 2021. This fuels economic uncertainty alongside ongoing AI bubble fears.
That’s a wrap. See you soon.
