🎯 Nvidia's Big Tech dependency

Hello,

We're back from summer break! I hope you've enjoyed the warm weather and Olympic excitement.

I'm testing a new format for the next few weeks.

While I've previously focused on creating my own visualizations, I'll now curate and comment on insightful data visuals from various trusted sources (in addition to occasionally building my own).

This shift enables us to cover a wider range of topics more frequently, helping you become a more knowledgeable reader of business, market and company trends. I hope you will like it.

Let’s dive in today’s post - where we’ve five key insights across Nvidia, Big Tech, AI, Uber and S&P 500.

1) Nvidia’s revenue is highly concentrated

A lot of the Capex (capital expenditure) spent by Big Tech companies is going straight to Nvidia, which has huge concentration risk as a business. 5 companies account for ~45% of Nvidia’s revenue (Microsoft alone is ~20%). Can this Big Tech giants design and develop their own chips?

Nvidia reports earnings on Aug 28.

2) Big Tech “out-invests” Big Oil

Speaking of Capex, Big tech companies invest hundreds of billions of dollars in capital expenditures (Capex) every year. Big Tech Capex in the last 3 years have surpassed that from the Big Oil companies (huge spenders in their own right).

Difficult to see how other tech companies catch up to the Big Tech in this high interest rate environment. (Yes, OpenAI did it, but the Microsoft owns a chunk of it)

3) September isn’t a great month for stocks

If you have been stressed by market volatility recently, then brace yourself. Last 96 years of data suggests that September is the worst month of the year for stock returns. Will it be different this time?

4) Google has the most number of LLMs in the world

Google boasts twice as many foundational LLMs as OpenAI, yet ChatGPT dominates in user count. Is it better to have more LLMs or the best one? Where does the competitive advantage lie?

5) 50% of Uber customers use the ride app sparingly

Uber had great earnings call last week (Q2-EPS was 51% higher than estimate).

If you look within its rides business, most Uber consumers only take 1-2 trips per month. Is this a business risk or a business opportunity? (I believe it is the latter)

That’s all for this post!

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