Berkshire Hathaway Joins Tech’s $1T Club & Nvidia’s Data Centers are the Real MVP

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best I do win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, one of the most disappointing American tourist attractions is leaning into its bad reviews to great results.

0:42Then the most important company in the world reported earnings yesterday. Did NVIDIA live up to the market's lofty expectations? It's Thursday, August 29th. Let's ride.

0:57So we will dig into yesterday's NVIDIA earnings in just a bit. But first, you all will not believe where some of our Morning Brew co-workers spent their afternoons. They and a smattering of other tech-obsessed New Yorkers went to an NVIDIA earnings watch party hosted at a local bar. Imagine a cross between College Game Day and CNBC with a gender ratio of about 10 to 1 male to female and you'll get the picture. Neil, what stage of a bubble is getting drunk at 4.30 p.m. on a Wednesday to celebrate an earnings call? I'd say pretty close to Pete. Can you imagine being on a first date there and you're just enjoying a nice, quiet time?

1:36And all of a sudden, this horde of people come in, turn on CNBC, crank up the volume, and you have Jim Cramer talking about NVIDIA, EPS, and data center revenue as you're just trying to enjoy a nice time. But that being said, I was a little jealous that we didn't have the idea first to do this. It sounds like a good time, although they said the energy was rather low because it turns out CNBC isn't the greatest thing ever to watch while you're at a bar. Now, a word from our sponsor, MassMutual. Neil, you know that feeling of looking for the last puzzle piece after grinding away at a jigsaw puzzle?

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3:22Lowe's, we help you save. Basic install only. Date restrictions apply. Subject to availability. Install by independent contractors. See associate for details. Contiguous US only. Yesterday was basically a national holiday if you follow the stock market. The so-called most important company in the world, NVIDIA, reported its second quarter earnings. Now, everyone knew that NVIDIA, who builds the all-important chips that power the AI revolution, would report staggering growth from a year prior. But like Mondo Duplantis staring down the pole vault runway, the real question was, could they clear the incredibly lofty bar analysts set for them?

3:59Well, Jensen Huang ran down the runway, arced gracefully through the air, and beat Wall Street expectations. Yet still, the stock fell about 8 % after hours. The jury was in. The beat wasn't quite impressive enough. Digging into the numbers, revenue was up 122 % on the annual basis, which somehow felt a tad disappointing coming off three straight quarters of tripling growth. Its all-important data center business, which includes its AI chip division, was up 154%, bringing in over$26 billion, good for nearly 90 % of its entire business. But, Neil, investors were really just looking for signs that NVIDIA could keep on growing amid heightened competition from other companies like AMD and TSMC.

4:43And they got that for the most part. Yeah, I mean, NVIDIA's revenue and profits only doubled instead of tripling for the past four quarters. So I guess that was slightly disappointing. But Nvidia stock is still has paired its its losses a little bit. So it's now only down three percent in this morning's trading. But we just never seen anything like this in the history of financial markets where a company's earnings report has become as important as the jobs report or an inflation report or a Jerome Powell press conference where you hang on. It's every single word. And that's just because a handful of companies are driving gains in the stock market.

5:20the magnificent seven tech giants. And their share prices are skyrocketing because investors are bullish on their AI investments. NVIDIA is the primary customer for those AI investments. So that's why it's taken on such outsized importance. It's like Atlas holding up the stock market. There's all these memes going around social media of it just holding the global economy on its back. And that's why some people felt compelled to have a live watch party in Manhattan yesterday for these earnings. NVIDIA does account for a very large portion of the S &P 500, too. It's the third most valuable company in the world.

5:57It accounts for around 6 % of the entire index, but not only does it account for 6 % of the index, but it also contributed more than one quarter of its gains so far this year. So, S &P 500 is up 18%. Yeah, there you go. You can do the math there. It's second only to Apple in market value within that index. So it just really is not only important for just seeing if you're an investor in NVIDIA, it's important for lifting the entire market up as well. So yeah, you mentioned the memes. You mentioned I've been calling it the most important stock in the world. A lot of analysts have been saying it as well.

6:31And that is why you have just this mania around these earnings calls. Right. I mean, just go back last year to the April quarter. it did$7.2 billion in revenue. This last quarter, it did$30 billion. Just truly insane growth for a$3 trillion company. It's something we've never seen before, where a company this big is still growing this fast and doubling its revenue. Let's talk about what potentially might trip NVIDIA up. Obviously, its stock is down this morning. There are a few roadblocks, challenges, little speed bumps that NVIDIA is going through. One of them is delays on its new generation Blackwell chip.

7:11This is its newest chip that is rolling out, and it's had some production delays because of a new manufacturing process. And reports of those delays actually sent NVIDIA's stock down earlier this month. Jensen Huang, the CEO, said they're working through it. They've got a fix. They're going to ramp up production, so nothing to worry about there in the second half of the year. You mentioned some competitors trying to eat away market share. It doesn't seem like they're taking away that much market share with NVIDIA still owning 90 % of the market. And then you have some geopolitical regulatory issues.

7:43You have the U.S. regulators looking into certain antitrust violations, whether it owns too much of the market. And a lot of NVIDIA's revenue does go to selling products in China. And there has been rumbling, simmerings, a bit of an uptake in a trade war between the U.S. and China, where the U.S. is restricting advanced chip exports to China. NVIDIA could be caught up in those things. So there's a few, you know, stop signs here, but it looks like those are pretty much stoptional for NVIDIA and is rolling right through. I'm just looking at bars that we can book for next quarter because I think, Morning Brew, we got to host our own watch party when it comes to their third quarter earnings.

8:21Pavel Durov is having a worse time in France than the U.S. men's 4x100 relay team. The billionaire CEO of Telegram, who was arrested over the weekend by French police officers, was charged yesterday with a litany of crimes related to illicit activity on the app that he founded. The specific charges brought against him include complicity in managing an online platform to enable illegal transactions, drug trafficking and fraud, as well as refusing to cooperate with law enforcement. The charges could carry a sentence of up to a decade in prison. It's a stunning move by French authorities to hold a tech executive worth$9 billion personally liable for the behavior of the users on his app.

9:02And it has set off a massive debate around the role that tech leaders play when it comes to the privacy and security of their users. Neil, there is not a long list of tech execs who have been indicted due to crimes committed by the users of their service, but Pavel Dourav is now the biggest name on it. Seriously, I mean, when this guy got off his private jet in Paris last weekend and was arrested, it set off this global shockwave. Not only is Telegram one of the biggest social media companies in the world with nearly one billion users, but Dourav himself is a very much a citizen, a global citizen.

9:38Right. He was born in the USSR and then he has been, you know, kind of shuttling between Asia, Europe and the Caribbean. He holds citizenship in France, in Russia, in the UAE, in St. Kitts and Nevis, in the Caribbean. And so this has set off really a global power play where you have all these diplomats in various countries haggling with each other about what's going on with this guy in France. It also has raised a lot of discussion about free speech and where governments should draw the line on holding tech executives responsible for the content of their platform. So I just, when I think of this story, I'm just like, man, this is totally going to be a movie one day because it is just soaked with drama and soaked with so many of the most important issues of our time tied in in this one man.

10:27We just really don't see stuff like this happening very frequently. I mean, you could look at potentially other tech figures who got in trouble based on what their users are doing. A big name is Ross Ulbricht, who was the creator of the Silk Road. Remember that online black market that was really big kind of at the advent of the Internet. He was charged for crimes that were carried out on his platform. CZ Binance, the founder of Binance, also pled guilty last year to U.S. money laundering violations. Again, similar. It's stuff that is taking place on the platform that you are leading, but then you become liable for that.

11:03So it has been a big shift for if you're a tech executive right now, you are going to make sure that you are a little bit more aggressive with moderating your site to make sure you're not running afoul of any of these international laws because it seems like the landscape has shifted a little bit with France going after specifically Pavel Durev rather than Telegram as an entity. Telegram does seem to be an outlier in the social media space in that it has mostly refused to cooperate with authorities when they launch investigations into certain criminal activity on its platform. One of the most serious crimes that seems to be going on in Telegram is child sexual abuse material.

11:40and even in the United States, which has very strong protections for companies and tech executives for what happens on their platform, that kind of ends with child safety. So if you don't pay attention to that on your platform and you let that run rampant, as Telegram is alleged to have done, then that is a line it seems Western democracies are willing to cross to hold you accountable. So Telegram, its whole thing is this anti-authority ethos. And that's been both good and bad, according to Telegram. I mean, Telegram says that it is so popular because people in very oppressive regimes like Iran or Russia can use those, can use Telegram without peering by authorities, without censorship by the government.

12:27At the same time, it's allowed tons of very serious criminal activity to run rampant on its platform. And it just hasn't cooperated with authorities as nearly every other social media company has done. And that's why Pavel Dourav is in handcuffs in France. Warren Buffett just got himself an early birthday present two days before turning 94. His holding company Berkshire Hathaway hit a$1 trillion market capitalization, becoming the first non-tech U.S. firm to reach 13 figures. Only Apple, NVIDIA, Microsoft, Alphabet, Amazon, and Meta are worth more than Berkshire Hathaway. One trillion has been a long time coming.

13:07And by long, I mean since 1839, when Berkshire was founded as a textile manufacturer and was probably considered a tech company back then. Buffett entered the scene in 1965 and transformed a couple of struggling textile mills into a sprawling business empire that wholly owns businesses like Geico Insurance and Dairy Queen, with having meaty steaks and other blue chip firms such as Apple and American Express. Here's a little how it started, how it's going. When Buffett gained control of Berkshire, it had two textile mills, about 2 ,300 employees, and recorded less than$5 million in after-tax earnings.

13:43Fast forward to today, and the company rakes in more than$37 billion in operating earnings while employing nearly 400 ,000 people. Oh, right. And it's worth$1 trillion. One trillion. Congrats to Warren Buffett. It is a bit ironic that the first so-called non-tech firm to reach a trillion dollar valuations has its biggest holding of its Apple, which is a tech firm. Around 30 % of Berkshire Hathaway's portfolio is Apple. So I don't know. I don't know if I'm willing to declare it the first non-tech, but it is a massive conglomerate that owns a ton of businesses. Why is it still going up after nearly six decades?

14:21And I think, I mean, you can ascribe any explanation that you want, but it's kind of an investor confidence in just the American economy as a whole because Berkshire Hathaway is so big at this point. It is a nice cross-section of just America. So you have this confidence that America is still doing well, Berkshire Hathaway is still doing well, and Berkshire Hathaway is famous for never splitting its stock. A lot of people use it as almost a proxy for just their entire savings account. You just buy Berkshire. You don't think about anything else. You watch that number go up until it reaches a trillion dollars.

14:55So pretty remarkable, though, that this in this era of very concentrated tech companies, you can have this sprawling conglomerate reach. It's just incredibly huge value. Right. It owns Dairy Queen. It owns railroads. It owns insurance companies that had stakes in credit card companies and banks and used to be airlines until he sold them all. But, you know, when you talk about what is the most important company, what is the best proxy for the American economy? You know, we just talked about it being Nvidia, at least in the stock market size. But truly, it's Berkshire Hathaway because they touch every aspect in a way that Nvidia and these other tech companies do not.

15:31But what's going on with Berkshire Hathaway right now? They are selling a lot of stocks. So Buffett sold half of its Apple stake, sold a lot of its Bank of America stake, and now he's built a cash war chest of$277 billion. He's plowed most of those into T-bills, which are short-term treasury bills. He has more of those than the Federal Reserve. And with interest rates being high right now, that is another reason that Berkshire has been doing well, because they're just making cash, doing absolutely nothing by putting that$277 billion to work on bond yields, which are netting, you know, 5%. I did some calculations.

16:11So last quarter, Berkshire Hathaway did$5.25 billion in interest income. So literally doing nothing,$5 billion. That amounts to$58 million a day. So I know Buffett's been lamenting the fact that he can't find any acquisitions that are priced well for him, But he's also very content just leaving his money in some bonds and raking in$58 million a day for his very pleased shareholders. Up next, it's your favorite time of the week, maybe even of the year. It's Neil's numbers. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the Internet last year.

16:54And I think this season's lineup is even cooler. and so does my wife who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

17:15When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will give you plenty of opportunities to sound smart during the upcoming three-day weekend. And my first number is something that seems completely backward.

17:57At least one crypto mining company in Texas has been making a lot more money by stopping mining than from doing its actual job of creating Bitcoins. According to The Economist, Bitcoin miner Riot Platforms made$32 million from hitting a pause on mining in August 2023, while it made just$8.6 million from selling Bitcoin in the same month. Okay, so how does this happen? Well, in Texas, the Bitcoin mining capital of the world, power hungry Bitcoin miners are paid by the state utility to switch off their computers and conserve electricity during the hottest and coldest days of the year when the grid is under strain.

18:37They also have the option of selling power back to providers at a profit. Critics of Bitcoin miners call the scheme an energy arbitrage business in all but name and accuse companies like Riot of squandering taxpayer money. Advocates of the industry respond that miners can act as effective dimmer switches to help Texas's grid stay online when everyone is cranking the AC. But they're fighting an uphill battle. After rolling out the red carpet for crypto miners only a few years ago, Texas lawmakers have recently begun attacking the industry for gobbling up precious power supplies. seems like a reckoning could be coming for Bitcoin miners in Texas.

19:13It's just a wild stat that not doing the thing that you are set up to do can somehow be more profitable. And it just shows you how crazy Bitcoin mining is as just kind of an industry. I mean, they're not actually making anything. So they can just shut off their input source or energy source because they don't need to make steel or make paper or anything like that. There is no output is just magic internet money. So it's just a very backwards industry. And you are seeing some of these cracks start to form between Texas, who has just wholeheartedly embraced Bitcoin mining. We did a story a few weeks ago about how the noise from these mines are setting off local residents as well.

19:51So I think that maybe we might see that partnership start to fray a little bit if you start seeing stats like these keep coming out in the news. Absolutely. My next number is a trip you probably can't afford. The number of U.S. hotels with an average daily rate of$1 ,000 or more for a room has skyrocketed in the past few years. In 2019, that number was 22. This year, it's 80, according to the Wall Street Journal. And the same phenomenon is happening in Europe, where the number of places has tripled to 183. Here are some prices from hotels around the country for the first weekend of October. Not a special weekend by any means.

20:28There's not a Taylor Swift concert. The Ritz-Carlton New York Nomad is charging$1 ,300 for a standard room. The Four Seasons Miami Surfside is offering rooms starting at$1 ,500. There's an absolute steal going on in Hawaii. If you prepay for the one-hotel Hanalei Bay, it'll only cost$1 ,110. Clearly, demand for luxury travel has kept growing, even as middle - and lower-income consumers are pulling back. Analysts call it the wealth effect. The top 0.1 % is sitting on huge gains from the stock market and home value since the pandemic, and they seem unfazed by skyrocketing prices for high-end hotel rooms.

21:04If they will come and you can charge it, then they're going to charge it. So I butchered that quote a little bit. But yeah, one luxury hotel chain has said that there is just demand is holding up no matter if they rise to prices. They said they've increased rates 51 % since 2019, and yet they still are seeing these people come in. And it is signaling in a way, too, because a lot of people think that hotel service is declining in many ways. You just can't get the service that you used to. So luxury hotels are just jacking these rates up to unheard of levels to send almost a signal about, hey, we are still the cream of the crop.

21:40We're still superior. So I think part of it's social signaling. Part of it is just that there's enough demand to actually have to charge these prices. But all I know is that if I see a comma in my nightly room rate, I am going so I'm looking at Airbnb or I'm just canceling the trip altogether. If you had to pay$1 ,000 for a hotel room, what amenities would you expect? It's probably just the view and stuff. Like I want a balcony. It's probably going to be in Hawaii looking out over the ocean, at least a big infinity pool or two. So I'm going to need some good weather. Let's just put it that way.

22:18All right. My final number concerns the U.S. Open. And no, I'm not even talking about the tennis. I'm talking about the Honeyduce, the signature cocktail of the tournament that has become a booming business in its own right. Last year, the Open sold more than 450 ,000 Honeyduces over the 20-day event, up 11 % from 2022. Priced at$22 a pop, that's nearly$10 million in sales, which is more than the combined$7.2 million awarded to the winners of the men's and women's tournaments. At this year's U.S. Open, which started on Monday, the drink got a price bump to$23, and attendance is running higher than last year.

22:56So expect that record sales number to be shattered. The drink itself is simple, and you can easily make it at home. Grey Goose vodka, lemonade, the raspberry liqueur chambord, and a honeydew garnish meant to resemble tennis balls. Of course, the whole point is not to make it at home, but get one while you're at the tournament. take a pic for Instagram and show off that you've attended what's become one of the buzziest events in America, sports or otherwise. Toby, what is the recipe behind the Honey Deuce's insane popularity? Because we know it ain't the Honey Deuce. It's just so good. I mean, come on.

23:28I still have my cup. We went last year and I've held on to it because the cup is very commemorative. You just love to have it displayed on your desk. And I think that they're making a smart move to this year they started adding honey deuce to restaurants and bar menus throughout new york city kind of to prime people to get ready for the honey deuce so i do think it's just becoming top of mind it is so associated with the event i mean we talked about it last year we're talking about it again this year but it does have a challenger kind of emerging from the weeds maybe challengers maybe yeah challengers maybe vodka isn't your thing there's another drink called the ace paloma which debuted last year, that has tequila, lime, grapefruit soda, dehydrated grapefruit slice, and then a black salt rim.

24:10So I think if the U.S. Open was smart, they'd play up this almost challenger's mentality, honey deuce or the Ace Paloma. I don't know, create a little bit of signature drink wars. Nothing cool, very dark, not enjoyable. Those are the words of disappointed tourists who visited Mammoth Cave National Park in Kentucky. But rather than shun these less than stellar testimonials, the national park home to the world's longest cave system is leaning into the shade. On a Facebook post that has over 100 ,000 likes, the official account wrote, experience what has disappointed millions of people for over 225 years and a world of regret awaits you at Mammoth Cave.