Why NVIDIA’s Awesome Earnings Tanked the Market

0:05Jenn Cutter: This is the Daily Tech News for Thursday, February 26th, 2026. Give you the important context and help each other understand.

0:15Tom Merritt: Today, NVIDIA had great earnings and everybody was disappointed.

0:19Jenn Cutter: I'm Tom Merritt. I'm Jenn Cutter. Let's start with what you need to know with the big story. yes uh nvidia reported bumper earnings q4 earnings numbers on wednesday showed revenue up 73 percent on the year that was more than people had estimated data center revenue up 75 percent on the year also more than people estimated gaming and automotive missed the estimates but they did all right and those are presently small portions of the business anyway nvidia's forecast for Q1 revenue was also above estimates. They said, we're going to make more in Q1 than you thought we did. In fact, it beat estimates by the widest range in two years.

1:03Jenn Cutter: NVIDIA now makes more money in a quarter than most chip companies make in a year. So of course, NVIDIA stock fell on Thursday. Why, you might ask? Well, here are some of the theories. concern about the circular deals and a potential bubble. So the idea that NVIDIA is giving people money to then spend back with NVIDIA, worry that its potential customers are running out of cash. Even companies like Google are spending a lot of cash. They are spending down their cash and investors are concerned whether that can continue. NVIDIA has purchased obligations of$95.2 billion. That's compared with$16.1 billion a year earlier.

1:47Jenn Cutter: It also disclosed that it has given$3.5 billion in guarantees to companies leasing land, power, and data centers. Some of those firms don't have credit ratings, so NVIDIA is, you know, standing surety, so to speak, for them. There's a concern of whether NVIDIA will remain dominant as the industry shifts from training to inferencing. Will you still need as many NVIDIA chips if you're not doing all the training, If you're doing more of the serving, will competitors be able to eat into that? There's a worry about public backlash against AI growing, and maybe that reduces the usage of AI as people are negative about it.

2:23Jenn Cutter: And also, more practically, investors are shifting to the makers of components. Remember, NVIDIA makes the cards that go to data centers, but it requires memory to make its chips. And so investors are like, well, if we're going with NVIDIA because they're making the stuff for the data centers, then maybe we should go with the people who make the stuff for NVIDIA. Memory chip makers, hard drive makers, fiber optic cable makers, even power generators. For example, Caterpillar is up 30 % this year. Now, NVIDIA says it has enough components to meet demand, but it's still a concern. And NVIDIA still isn't making any money on China, although I think that's less a part of the concerns.

3:01Jenn Cutter: It excludes China from its forecasts. The U.S. has issued the license to sell some H200 chips, but China has only allowed companies to prepare their orders. They haven't allowed shipments yet. But again, that's not figuring into NVIDIA's forecasts. And it would be a boon if it was able to sell a lot to China. But I don't think anybody's expecting it. So mostly, this is a debate over one question. Can companies make money off LLMs? Because if they can, then all those circular deals don't matter because the companies will be spending more on NVIDIA than they got from NVIDIA. They won't matter because that cash flow will start coming in.

3:41Jenn Cutter: The fact that they spent their CapEx cash flow down will pay off. It is a bet that they are going to continue to get users and make money and this will all be fine. The companies selling LLMs say the more compute they get, the more money they make. And they don't see any reason why that won't continue. This is not like they're trying to sell you goods. This is what they're telling themselves. they're saying like we should spend money on this compute because every time we add compute power we make more money people are able to do more things we get more subscribers now the pessimists don't believe that's guaranteed and they wonder if the promise of llms is exaggerated that maybe these companies are fooling themselves meaning the boom won't continue usage will level off faster than the companies think and then all of this infrastructure they're building would sit for a while unused, something that has happened before with things like fiber optics.

4:39Jenn Cutter: So that is why you see Nvidia have a bump for earnings and yet see everybody fairly pessimistic about it and tech in general.

4:48Tom Merritt: Yeah, well, the gaming pessimist in me is, well, in order to make money on gaming, you have to have things available for gamers to buy.

4:56Jenn Cutter: Yeah. And sadly, that is not even a rounding error in this conversation, right? And it's more of a problem for us than it is for NVIDIA. If they shut down their gaming business tomorrow, it wouldn't affect their forecast. It wouldn't affect their profit. They are not going to do that. They have been very clear that they believe the gaming business is still useful to them. But it is, you know, it's not a priority, sadly.

5:22Tom Merritt: Yeah, well, neither would be their automotive division. Because I remember the announcements on stage, it's like, we can do this and you can do real-time stuff And we have all this training data and then nothing. You haven't heard about new partnerships or any development on that because it's not the big growth area right now.

5:38Jenn Cutter: Yeah. I mean, when we say nothing, usually we get somebody email us and go, actually, you guys did notice that they made this announcement, that announcement, this announcement. So I always I always like to throw that out there. We don't mean nothing, nothing. We just mean like it's it's you're not seeing a lot of headlines about this. And I think to your point, Jen, like automotive is a growth area. It's not a heritage area, not like consumer GPUs are. And NVIDIA would like that to become a new place like physical robotics, where it has a hedge against any potential downside. And the fact that we're not seeing more headlines about automotive and NVIDIA means that that hedge isn't quite there yet.

6:20Jenn Cutter: It's happening, but maybe it's not happening as fast as NVIDIA wants, but it's certainly not an alternative yet where it's like, oh, well, that will clearly take over.

6:29Tom Merritt: Yeah. And now that we've said that, I'm sure that on Monday morning it's going to be NVIDIA announces this huge deal with everyone.

6:35Jenn Cutter: Mercedes, BMW, Audi, et cetera. Yeah, yeah. Yeah, you're probably right.

6:41Tom Merritt: DTNS is made possible by you, the listener. Thanks to Reid Fishler, Larry Bailey, and Michelle Sergi.

6:49Jenn Cutter: Yay. Thanks, everybody.

6:54Jenn Cutter: All right, there's more we need to know today. Let's get to the briefs.

6:58Tom Merritt: Yesterday, we talked about the Galaxy S26 announcement, and today we wanted to focus in a little on a part we mentioned but didn't get to discuss as much. Samsung is combining three different models into its deployment of LLMs. Gemini is being used for agentic tasks, like asking your phone to take all the steps to book a ride on Uber, for example. Perplexity is being used for web-based queries. And Samsung's own in-house model power, Bixby, to help manage your phone settings itself, which is the stuff that I like. Also getting some attention is the audio eraser function that can amplify the volume of spoken dialogue, not just in your own videos, but now in third-party video apps like YouTube and Netflix, which you can turn on from quick settings, which my mom who has a Samsung would love because she turns on subtitles a lot.

7:51Jenn Cutter: Yeah. And Netflix already has their own dialogue enhancement. But I guess this is something that could enhance the enhancement, make it go even farther and work on apps that don't have that enhancement because it's on device. It's just happening on device. I think this is not a model for what Apple's going to do with Siri because I think they're using Gemini to power most things, although they use some of their in-house models still. But I do think that the breakdown of having a model for agentic tasks, a model for web-based queries, and a model for settings, even if they're all three different models from Google, could be a plan that Apple is possibly going to follow here.

8:33Jenn Cutter: A lot of people have looked at this and said, Samsung's already doing what everyone expects Apple to do, which is a competitive advantage for Samsung.

8:42Tom Merritt: Yeah, I'm always a big fan of accessibility features. And I think that these things will perform better being so specialized. So I'm glad that they're out first with this. We can all see how it works. And I'm sure Apple's like, all right, well, let's see how this goes and we can refine accordingly.

8:59Jenn Cutter: Kind of a bigger coup than I thought that perplexity is the web search provider here. While Google is, you know, quite important with the agentic stuff. And Gemini still worked into everything. And Google, of course, has a search engine, still quite prominent. But when you're just asking your phone for a query and it goes to perplexity, that's very interesting to see Samsung decide to do. Well, Google itself has launched Nano Banana 2 powered by Gemini 3.1 flash image. Basically, Gemini 3.1 flash image is the name of the model, but Nano Banana 2 is the brand name that they put on it because everybody liked the name Nano Banana.

9:39Jenn Cutter: It can use the world knowledge and reasoning that Nano Banana Pro did. So Nano Banana 2 kind of taking over for Nano Banana Pro and bringing a lot of that Pro feature to everybody, but at a faster speed because it is not as big of a model, but it can still do the same stuff. So, for example, it can maintain character resemblance for up to five characters and 14 objects in a single workflow. that's important if you're doing something like storyboarding and you want all the characters to look the same so you know who they are and you want all the objects to stay in there. It can also follow precise instructions better and generate up to 4K with better texture and sharpness.

10:18Jenn Cutter: It replaces Nano Banana Pro in the Gemini app, in Lens and AI mode in Search, in AI Studio, Google Cloud, the Video Editor Flow, and any of the ad tools you use. Whereas Google AI Pro and Ultra subscribers will still have access to Nano Banana Pro if they need it for particular specialized tasks, maybe something that needs that bigger power that Nano Banana 2 can't mimic with the smaller, faster model.

10:45Tom Merritt: Yeah, I just need to get in on saying Nano Banana because Google is right. It's definitely the term they need to go with.

10:53Jenn Cutter: Kind of fun to say, yeah. And I think it is cementing that they put this out so fast, really. it's cementing that Google wants to keep its lead as being known as the image editor. In fact, Veronica Belmont, who has been using tools to make the Sword and Laser album art for a couple of years now, has gone from mid-journey to ChatGPT and now switched to Nano Banana just this week because lots of different reasons, but it is a perfectly capable, if not the best, at making images these days.

11:27Tom Merritt: Have you used it for anything like in lens or AI search, like by accident or on purpose? Yeah.

11:34Jenn Cutter: I mean, it's made some stuff in, in AI mode search that I didn't find particularly compelling, frankly. I was like, I didn't need an image right now. Thanks for trying. I have used it though, to make images that I just needed for throwaway purposes. And I used it once to put some text. That is one thing that it's really good at. Nano Banana 2 apparently even better at is handling text when you're like, hey, take this image, leave it exactly the same and put some text on it. So I've used it for that as well. Yeah.

12:06Tom Merritt: Just like an overlay or like text on somebody's shirt kind of thing?

12:09Jenn Cutter: No. Yeah. Just an overlay. Like I had an image and I'm like, I want this image to have, you know, Tom's great image. Okay, okay.

12:18Tom Merritt: The U.S. state of New York filed a lawsuit against Valve, alleging that its randomized loot boxes in games like Counter-Strike and Team Fortress constitute unregulated gambling. Valve lets users sell items from loot boxes in its own and third-party marketplaces. The state alleges that Steam wallet funds are equivalent to cash and can be converted to cash by reselling a Steam deck. The state is asking Valve to modify or eliminate its loot box system, make full restitution to consumers, and pay a fine three times its gain from selling loot boxes. And this is huge for people who are not in this ecosystem.

12:59Tom Merritt: When Counter-Strike and Team Fortress first enabled the trading and selling of these items, it was a gold rush. There was a whole secondary issue of children gambling their$10 ,000. And yes, I do mean$10 ,000 nigh on third party sites and getting ripped off and influencers getting legitimately criminally busted for misleading their fans into how much they won on these sites when they were just working with house money.

13:29Jenn Cutter: Yeah. Correct me if I'm wrong, because I'm not as close to this as I know you are. these are skins, right? They're not, they're not things that are going to help you in the game play itself.

13:41Tom Merritt: Yeah. Tirely cosmetic.

13:43Jenn Cutter: They are entirely cosmetic. Valve has cracked down on the misuse of them to try to fend off and correct some of the, the fraud and abuse that was happening. So they, they've been sued about that. They've had lawsuits dismissed and they've taken measures to stop that. But what this case is saying is because, I mean, I think it rests on that Steam Deck thing, which I'm not sure what a judge is going to make of it. But because -

14:07Tom Merritt: Yeah, well, you have to have a Steam Deck to sell it.

14:10Jenn Cutter: Yeah, exactly. And they're trying to say, because you can convert these to cash, the loot box aspect of it therefore becomes gambling, which is different than the sort of misuse of the resale of them that we were talking about earlier. That's a tough argument to make. I think Valve can say like, these are not meant to be converted to cash. They are only meant to be converted to Steam Wallet funds. And the state of New York trying to say like, well, Steam Wallet funds are basically cash. Honestly, probably an easier argument to make with a judge, even though it's not cash than saying like, and then all you have to do is buy a Steam Deck and then install Steam on it and then sell that Steam Deck and then hand over access to the account.

14:57Jenn Cutter: Like that's quite a lot of hurdles to fall through, at least if you ask me.

15:01Tom Merritt: There's a lot of steps, but they could be opening the door for gacha stuff in general. Because like, so in Counter-Strike, just playing the game, you get cases, but you have to buy the keys to open the case. So that is where your money comes into play here. And yeah, it's going to be a big push to say like, oh, and here's the cash thing, as you've said. But if this is to open the door, we'll see if Valve fights this or make some sort of settlement because Epic and Fortnite stopped having the llamas where you had random stuff. And now it's just you buy skins directly.

15:35Jenn Cutter: Yeah. Yeah. I mean, it's gambling if I can lose a lot of money or make a lot of money and there's nothing related to my skill or anything and how that works. It's just random. Uh, and so to prove that they have to prove that you can convert that to cash. It's, it's not the same thing to be all entirely in game funds. Courts have generally agreed like, Hey, if this is properly just part of the game, you can, you can have, you can have someone in super Mario, you know, you gamble to get more stars. That's not going to hurt anything. It's when you can convert them to cash that, that it then becomes possible to say that it's gambling.

16:13Jenn Cutter: So it'll be interesting to see what the judge.

16:14Tom Merritt: Yeah, and you can't entirely blame Valve for people using very third-party marketplaces to sell their knife or their skin or their badge for real cash, which is definitely a thing that goes on. But again, that's harder to hold Valve liable for.

16:30Jenn Cutter: Yeah, and I think that's where this case is going to turn on. The Verge reporting that Burger King is now using a chatbot to prompt its staff through their headsets. It's called Patty. Get it? because burgers are made of patties. Anyway, Patty will assist with meal prep. So if you need like, wait, what's the next step here? Or how do I make this? Or anything like that, probably good for training. Also will help update inventory. So you know like, hey, it's time to order more French fries from local office or whatever. And the thing that's getting all the headlines, coach the staff to be friendly and say please and thank you, which has caused so many outlets to turn this into like, it's a dystopian judgment of everyone.

17:16Jenn Cutter: If they are not nice enough, the chatbot will come down on you. It feels like this is taking territory away from the on-site managers.

17:27Tom Merritt: So I kind of wonder how they feel about this, whether this lightens their workload or they feel like, oh man, how long am I going to be here? And as far as names go for these things, because I have been critical of names in the past, Patty's not bad. Not bad. That's at least related.

17:43Jenn Cutter: Could have been worse. Could have been buns or something.

17:47Tom Merritt: Yeah, it feels like a thing out of like, you know, SpongeBob working at the Krusty Krab.

17:52Jenn Cutter: Yeah, exactly. Right. It is directly out of that in a certain sense. I would imagine this could be really annoying to me if it's constantly like, don't forget to say thank you. Like it kind of depends on the implementation there. It would be dystopian if this comes up in your performance review. Like you had to ask for assist with meal prep this many times or, you know, you didn't say thank you. And Patty had to remind you this many times, which could happen. We don't I don't know that that's happened. Everyone's kind of jumping to the conclusion that that could happen. And if Burger King does that, then, yeah, I think that that could be misused.

18:30Jenn Cutter: But even if they do it, it doesn't have to be misused. It could be, you know, holding employees to account so that they get better isn't a bad thing. Punishing employees because they've been surveilled and every mistake was caught is a bad thing. And I think everybody's jumping to the conclusion that it'll be the latter. And I don't know if it will or not. But I also think this could, and maybe it won't, but it could also be a really useful thing. Like if I'm starting at Burger King and I have a chatbot that can tell me what to do next, and eventually I get to where I don't need it anymore, but it made it easy from the start, I would love that.

19:06Jenn Cutter: That would be great. It's like using a navigation app. Eventually you don't need to for the places you go to regularly, but when you're in a new area, it's very helpful to get you to learn to get to places.

19:16Tom Merritt: And this is all based on whether it works, because we all know that some of the ordering software. It just gets a little glitchy and you can have your hundred waters ready to go.

19:25Jenn Cutter: That was the one thing I didn't see is like, what model are they using? That tells me a whole lot. And models hallucinate less than they used to, but is Burger King cheaping out and using a Quinn model from two years ago? Or is it like the most up-to-date Gemini, OpenAI, Claude, whatever? I didn't see that either. So that's a really good question.

19:48Tom Merritt: Apple CEO Tim Cook posted on X, a big week ahead. It all starts Monday morning. This confirms previous reports that Apple will announce new things each day leading up to the press event it announced will take place on Wednesday in New York, London, and Shanghai.

20:04Jenn Cutter: Yeah, so I guess we're getting five products. Might be the bargain iPhone, a new base level iPad, a couple of MacBook Pros. I really want there to be a new MacBook Pro 16 inch because I would like an excuse to talk myself into buying one because mine's five years old now, even though it's totally fine, which I've said over and over. But yeah, what do you, what do you expect in that next week from them?

20:29Tom Merritt: All I want is, Hey, we fixed spell check. That was just, I'd be doing cartwheels.

20:37Jenn Cutter: That sounds more like a WWDC thing to me than a five device announcement. All right.

20:42Tom Merritt: Well, at the end of one of the devices, do one more thing. And again, just make everybody happy.

20:47Jenn Cutter: What do you think of this strategy of saying, like, we're not going to do an announcement. We're not even going to do a live stream. We're just going to announce something Monday, announce something Tuesday, announce something Wednesday, and then let the press get their hands on it.

20:59Tom Merritt: I think it's great because it gets people more involved and there will be more discussion on the specific thing instead of things getting buried in the here is everything at once.

21:09Jenn Cutter: Yeah, yeah. No, I think it does give you a chance to actually wrap your head around the individual products. Let's Apple dominate the news cycle a little bit more probably as well. So, yeah. Well, folks, if you want honest reviews from people who actually use products, not just review products, the products that we actually live with, you need to get the show Live With It. hosted by Sarah Lane every week looking at tech, either she or somebody she has on the show are using in their daily life. And this week it's me, uh, Joe Kuntz, uh, our video editor, a video producer and Roger Chang talking about Opus clip, uh, which is a way to automatically add captions, get clips out of longer videos.

21:52Jenn Cutter: Uh, you can find out all about it and see if like, I don't know, maybe it'll help you with your creations on live with it, wherever fine podcasts are found or watch it at youtube.com slash daily tech news show.

22:06Jenn Cutter: Now some quick headlines that are just good to know might make you look smarter in the future.

22:12Tom Merritt: The Connectivity Standards Alliance, the folks who brought you Matter, issued the Alero 1.0 standard for digital keys, standardizing how mobile devices unlock doors.

22:23Jenn Cutter: Oh, something we were excited about at CES. Finally happened. Good job. Alphabet is rolling its company Intrinsic, which makes software for industrial robots, into Google. That way it can work closely with DeepMind and Gemini on what is one of the buzzwords of the year, physical AI. Putting AI into robots.

22:43Tom Merritt: OpenAI, says ChatGPT, refused to assist an individual associated with Chinese law enforcement who wanted help planning an online campaign to amplify negative comments about the prime minister of Japan. OpenAI also found evidence of a social media content farm in Russia and a romance scam targeting Indonesians.

23:03Jenn Cutter: Whatever this says about OpenAI, it is a reminder that when you see something crazy that makes you angry on social media, assume it's from a bot before you go any further. It's a good first option. Yeah. Even if it's coming for someone you know, they may have got it from a bot that did this. Like, this stuff happens all the time. So I'm glad they're putting that out there. Anthropic announced that it will publish a substack as an extension of its retirement interview with deprecated Claude Opus 3 model. The substack, which will be written by the retired model, will be called Claude's Corner.

23:41Tom Merritt: Always with the naming things. Francis Mistral has reached an agreement with Accenture to provide models to assist Accenture clients in leveraging AI.

23:52Jenn Cutter: And the U.S. Federal Trade Commission issued a policy statement Wednesday assuring companies it will not bring action under the Child Online Privacy Protection Act, or COPA, for the practice of verifying age as long as the data collected from children is solely used for that purpose and deleted promptly.

24:12Tom Merritt: Instagram said Thursday it will notify parents if children repeatedly search for terms clearly associated with suicide through its parental supervision program.

24:22Jenn Cutter: Chainalysis reports that total ransomware payments fell by about 8 % in 2025. That's despite attacks rising by 50%. So they're getting more per paid attack, but people are paying less often.

24:38Tom Merritt: Bloomberg reports Apple is talking to multiple key banks in India in advance of a plan to launch Apple Pay there in mid-2026. It will be compatible with India's unified payments interface.

24:50Jenn Cutter: Yeah, making it part of UPI is a big deal there. Back to NVIDIA. Thanks to RWNash for posting this one on our subreddit. NVIDIA rolled out a security update for the Shield TV. That's the first update in more than a year.

25:01Tom Merritt: Man, that was a real surprise. And Motang tipped us off on our subreddit that Warner Brothers Discovery said in its earning call that it will expand its password sharing crackdown globally this year. So be ready for that.

25:14Jenn Cutter: Yeah, it's been happening in the U.S. since August, but now everybody gets it. Yay. And finally, Semaphore reporting that all those reports we've been telling you that PayPal was taking meetings about a sale, including one with Stripe, are not true. According to Semaphore sources, PayPal has been working with bankers to prepare for an activist campaign or possible unwanted takeover bid. So maybe those reports are the people preparing an unwanted takeover bid and PayPal's trying to fend it off. Kind of changes the tone of that anyway.

25:46Tom Merritt: We end every episode of DTNS with some shared perspectives. Today, Brian and Ryan both have use cases for a touchscreen MacBook.

25:55Jenn Cutter: Yeah, we asked for these yesterday. Thanks to you guys for sending them along. Here's a couple of the ones we got. Brian wrote, I have a use case for the rumored touchscreen MacBook. I'm a groundskeeper by day, but on weekends, I'm an audio engineer for a local music venue. I often use a Mac and an iPad. Our Mac is great for multi-track recording of audio and recording our video, but it's not as good at running our app that allows us to control our mixer. But the touchscreen of an iPad is far easier. If I could use one device for both, I would buy it at once. And then Ryan has a similar use. He says, I use a variety of software for field production.

26:30Jenn Cutter: They use large tap targets for cues and performance tasks, firing off slides in ProPresenter, lighting scenes in various DMX lighting applications, playback controls in DJ software when no controller is present, game show software for stage events, all benefit from touch capabilities for convenience over a mouse and keyboard application.

26:52Tom Merritt: I'm using an old ThinkPad with a touchscreen. It's a tablet, one of the fold around ones. Yeah, yeah, yeah. Just to test various Linux distributions and Pop! OS, still my favorite. But after I get used to using that and I just touch on icons and touch on menu items to do things, when I go back to a regular laptop, I still want to reach out and touch things because you just get into that habit without thinking about it. And I was surprised at how easy it feels and how I actually notice when it's gone after I use it for a while. So for people who use iPads as part of their workflow, this makes perfect sense.

27:25Jenn Cutter: Yeah. If you need something more than an iPad or like Brian, you need to have the mouse and keyboard sometimes, but then the touch stuff other times, this is the best of both worlds.

27:38Tom Merritt: What are you thinking about? Do you have insight into a story, whether we ask for it or not? Please share with it over at feedback at dailytechnewshow.com. Yes.

27:47Jenn Cutter: Thanks to Brian and Ryan, not only for having rhyming names, but for contributing to today's show. Thank you for being along for Daily Tech News Show. You keep us in business, folks. Become a patron right now, or at least thank the folks who are paying for the show to happen at patreon.com slash DTNS.

28:09Tom Merritt: The DTNS family of podcasts. Helping each other understand.

28:14Jenn Cutter: The Ryman Club hopes you have enjoyed this program. Thank you.