Nvidia Buys Hugging Face for $12.9B & Pharma Companies are Bullish on Baldness

0:01Molly Gibbons:Marketers, tell us if this sounds familiar. You invest in something that seems incredible, like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn ads generates the highest ROAS of all major ad networks. Spend$250 on your first campaign on LinkedIn ads and get a$250 credit. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd terms and conditions apply good morning brew daily show i'm neil priman and i'm toby howell

0:33Mitch Ginsburg:today why balding treatments could be the next pharma goldmine then did the official launch of

0:38Molly Gibbons:the tesla cybercab wow or disappoint it's friday september 4th let's ride

0:47Mitch Ginsburg:good morning labor day weekend is here the glorious three days that mark the unofficial transition from summer to fall. The Brew office is closed on Monday, Labor Day itself, so we've taped a special interview episode to tide you over. Tune in to find out who the mystery guest is. Toby, among other things, this weekend marks the return of a full slate of college football games, and I, for one, am already hyped. Last night, my hometown team of UMass pulled off one of the greatest upsets of all time in the sport, crushing Rutgers despite being 29-and-a-half-point underdogs. UMass did not win a single game last year.

1:25Molly Gibbons:Watching you see that score go up, it was like a kid in a candy shop. You had so much joy in your face, so much joy. In fact, I got a little bit jealous because I do not have a college team to call my own. Famously, Marquette and Brown are not exactly powerhouse football programs. So the last couple of years, I have been asking our listeners to weigh in and give me a good college football team to support. Not going to lie, last year I was on the Indiana bandwagon, so it's going to be very difficult to live up to the highs of that. But please, write it in the comments, email us, DM me on Instagram.

2:02Molly Gibbons:Give me a reason to root for your college football team, and I guess I will reveal my choice after the long weekend.

2:09Mitch Ginsburg:I'm going to make you pick, though, today because you can't pick after they play. That is cheating.

2:14Molly Gibbons:I need people to state their claims first. The only team I've had my eye on so far is the Utes, Utah Utes, for some reason, we're going out west. And now a word from our sponsor, American Express.

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3:15Molly Gibbons:Two years ago, Elon Musk unveiled the first ever CyberCab on a Hollywood studio lot. Yesterday in Austin, Texas, Musk promised to release a storm of them to the world. The reality was more like a sprinkle than a deluge. The glitzy event to celebrate the official commercial launch of the CyberCab was closed to the public. Attendees mostly consisted of Tesla influencers, and Elon himself couldn't be bothered to show up. But it was the first chapter in one of Elon Musk's oldest dreams, a dream he's bet the company's entire future on. In 2024, Musk promised to go, quote, balls to the wall for autonomy, a move he called blindingly obvious.

3:54Molly Gibbons:How to the walls were his balls? Well, the Cyber Cab is designed to be a two-seat car that has no pedals, no steering wheel, no side mirrors, and of course, no driver. Elon has promised to mass produce the car, putting a fleet in every city and remaking urban transportation as we know it. But so far, its robo taxi service has mainly been operating in Austin since June of last year using modified Model Ys. And it's gone well for the most part with only a few minor incidents to speak of. But concerningly, after the hype of last summer, the number of paid miles actually being driven by the network is declining.

4:29Molly Gibbons:Which brings us back to yesterday's event. It was really a handing of the torch from those modified Model Ys to the Cyber Cab, which has a more advanced version of Tesla's full self-driving technology and is designed and built for maximally efficient autonomous operation, according to a Musk tweet. Neil, many analysts have pointed to this as a fork in the road moment for Tesla, where it finally shows it's more than just an EV company and justifies its gaudy valuation, which is more than the next 59 automakers combined. Was this impressive enough?

4:59Mitch Ginsburg:Well, we'll see. It's got a lot of catching up to do. Currently, Tesla has just over 200 unsupervised robo-taxis in a cluster of cities in Texas and Florida. Most of Tesla's robo-taxi, and I'm putting those in scare quotes, network has a human safety driver in the front seat. Compare that to Waymo, which is the leader in this space. They have more than 4 ,000 unsupervised robo-taxis, no one in the front seat, no driver, in 14 cities. I'm just so fascinated to watch this. It's a real clash of the titans and two ways of going about autonomy, because from the very beginning, Elon Musk has talked down about LiDAR, which is what the rest of the industry uses.

5:43Mitch Ginsburg:That's pulsed laser light that measures distances, and you build 3D maps. So Waymo and a bunch of the other companies working on autonomy have used LiDAR. This will be a real test of Tesla's approach, Elon Musk's approach. He's always done things his own way and says that light are way too expensive. If you've seen a Waymo, it has all these bells and whistles around. The cyber car is much more sleek because it just used cameras and an AI neural net to get it around. That's one of the big things that we'll be watching to see whether Elon Musk's unorthodox way of approaching autonomy will work out.

6:15Molly Gibbons:Not only is it the technology under the hood, just the interior of the cabin looks entirely foreign because Elon Musk describes it as a lounge on wheels. There is no steering wheel. It looks bizarre. You get in and there's just two chairs and a big screen. The fact that he made this bet is the business biggest risk that Tesla has made because he made the bet before the rules have actually caught up. U.S. auto safety regulators have proposed changing some standards to eliminate regulatory barriers for fully autonomous vehicles, but none of those changes have been finalized yet. You can't really bring a car onto the road that doesn't have any of the things that the entire industry has built the safety standards upon.

6:55Molly Gibbons:So that is one big risk. The way they think they'll get around it is another self-driving company, Zoox, ultimately received an exemption from federal safety standards that allowed it to deploy its commercial vehicles. vehicles. Tesla is hoping for something similar, though it doesn't have that yet. So not only is there a differing of approaches when it comes to the LiDAR, the computer bits of it all, but there's also a differing of approaches when it comes to how the cars themselves were designed.

7:21Mitch Ginsburg:All right. So Tesla's entire future hangs on this. Elon Musk's fortune hangs on whether they can roll out the cyber car in a mass capacity in the next few years. At least on Polymarket, People are not so bullish on this happening imminently. The question, will Tesla sell a CyberCab for$30 ,000 or less in 2026, is 15 % on Polymarket. Currently, CyberCabs are not for sale to the public. Moving on, NVIDIA isn't content being the lord of the chip makers. Now it wants dominion over the entire AI kingdom. To further that quest, the world's most valuable company agreed to pay$12.9 billion to buy Hugging Face, a library of more than 3 million open source AI models.

8:05Mitch Ginsburg:The move, which has been rumored since last week, cements NVIDIA's ambition to expand and control the entire AI ecosystem. Hugging Face is more than just an AI library. It's a collaborative hub where engineers and machine learning experts work together on AI models, data sets, and applications. Just 10 years old and based in New York, Hugging Face was most recently valued at$4.5 billion in 2023, so it's had a pretty major glow-up in recent years. That's gone with some growing pains, however. If you feel like you've heard the name Hugging Face before, it's because this was the same company that rogue OpenAI agents broke into in that hack herd around the world earlier this summer.

8:44Mitch Ginsburg:But instead of going into a shell, Hugging Face used the incident as an opportunity to launch a promotional blitz touting open-source models, which has been a key point of contention as Chinese open models become more popular. And it's on this open source question where Hugging Face has found an ally in NVIDIA, which has also gone to bat for open source AI. Toby, this seems like a match made in bot heaven.

9:06Molly Gibbons:Hugging Face is a very cool company to me, not just because it has a funny name that's named after the Hugging Face emoji. Go back a decade ago, three French entrepreneurs had this idea for an AI companion app. I found their original product hunt listing. Product Hunt is this site where you launch your tech projects. And they were described as the, oh my gosh, how do you say Tamagotchi? Tamagotchi?

9:31Mitch Ginsburg:Tamagotchi.

9:32Molly Gibbons:Tamagotchi. The Tamagotchi powered by artificial intelligence. One of the founder's descriptions was that it was an artificial intelligence whose goal is not to be useful or accurate, but to be fun and emotional. That was the original vision for this. Obviously, that failed to catch on. But while building it, they ended up creating their own natural language processing tools that led them to the much bigger opportunity of making AI technology easier for developers to access and to use. And now it's the hugging face that we know of today. Clearly one person saw something in them in the early days though.

10:06Molly Gibbons:And that person is Kevin Durant. KD put around$250 ,000 very early into this company. And that stake has now likely grown to more than$60 million. I found his original tweet after he invested. This was back on March 9th, 2017. He goes, excited for the new release of hashtag hugging face, proud investor, and then put a URL to the site there. So KD has made$500 million on the basketball court, but he made an extra$60 million by investing in this company.

10:37Mitch Ginsburg:A 24 ,000 % return. Not bad. Not bad. Let's talk about NVIDIA, why it's doing this. First of all, it's just been on this insane spending spree. It's spending hundreds of billions of dollars backstopping data centers and all kinds of AI deals because it finds itself at the center of the AI universe. And what it wants to do, as in the real universe, is make it expand because they know that they are the building blocks of everything that AI runs on, especially open source AI. So if they can finance more deals and get more AI models out into the world that run on its systems, then they just make more money.

11:12Mitch Ginsburg:And of course, you're thinking 13 point. What is it? 12.9 billion dollars. That's kind of a lot of money. But I mean, NVIDIA makes so much money. They made 60 billion dollars in profits in their recent quarter. They have nearly 200 billion dollars in assets. So they are clearly on the offensive. A couple of years ago, we just knew them as this really fast growing chip maker. They made the accelerators that all these all these models run on. Now they just want to be the sun in the entire AI galaxy.

11:39Molly Gibbons:I'm glad that you almost said$13 billion because the acquisition price is very specifically$12 ,930 ,300 ,000. That is a specific number. And we know that because one of the co-founders of Hugging Face tweeted out essentially, hey, there's some hidden references in that acquisition price, one relating to us and one relating to NVIDIA. it's actually pretty easy to find the easter egg that references hugging face because the number 129303 is the decimal representation of the unicode point that represents the hugging face emoji i said that was obvious it's obvious to the people that operate in these circles the nvidia one was a little harder to parse through some commenters spotted the 93 combination that's in reference to Nvidia's founding year, 1993.

12:30Molly Gibbons:And then other people went even further. They broke it down into 12, 93, and 03. The 12, he says, referenced Nvidia's$12 IPO price, which, by the way, crazy that that's what it debuted at. And then 03 pointed to Nvidia's three founders, Jensen Huang, amongst other people. So that was the deep dive into this acquisition price. I feel like -

12:55Mitch Ginsburg:It's a little more creative than just going 69 and 420.

12:59Molly Gibbons:I also feel like you feel like acquisition prices should be, you know, based in facts, based in numbers, revenue, whatnot. Nope. They just wanted Easter eggs that referenced their two companies in there.

13:09Mitch Ginsburg:I love nerds. OK, welcome to Stock of the Week, Dog of the Week, where we pick one stock that sings like Kelly Clarkson and another that just can't hit those golden high notes. I won the pre-show triathlon, so I get to go first. And my stock of the week is all the companies trying to fix that fledgling bald spot appearing on your skull. Stocks of drug makers attempting to treat baldness have gone nuclear this year as investors set their sights on the second coming of the weight loss revolution just for hair loss. According to Bloomberg, shares of Varidermics, which trades under the ticker M-A-N-E or Maine, have jumped almost 500 percent since it went public in February.

13:45Mitch Ginsburg:Meanwhile, another company working on this problem, Absci, has more than doubled. An estimated 50 million men and 30 million women are impacted by pattern hair loss in the U.S. However, no new drugs have been approved in almost three decades. Investors view potential new treatments like the ones being cooked up by these drug makers as a goldmine reminiscent of the boom in GLP-1 weight loss drugs, Bloomberg reported. Because right now, if you're going bald, your options are limited. You could go the minoxidil, better known as Rogaine, or finasteride, branded as Propecia, but both have considerable side effects.

14:19Mitch Ginsburg:If Veridermix or Abcci or another major player in the space, Cosmo, can add a compelling new entrant, then we might be looking at the next big blockbuster consumer drug. Because speaking from experience, this is a massive market.

14:32Molly Gibbons:Let's dive into these three companies to watch and their unique approaches to hair loss. Cosmo wants to block the hormone at the follicle level. level. They are developing, God, this is a tough story for me because there's a lot of really long medical words, but Clascoteron. And they do think that it can treat male pattern baldness by going after the hormone directly that causes hair loss. Those treatments are still likely a year away from US selves. Then you go to Vera Dermix wants to turn minoxidil into a pill form. They are uniquely going after both male pattern and female pattern hair loss if they are approved by the FDA, that would be the first pill for female pattern hair loss in the US.

15:17Molly Gibbons:And then Absi, they are going crazy. They have an AI designed shot. So it's actually most akin to the GLP-1 shots where it's a injectable treatment for pattern hair loss. So those are kind of the three biggest names right now, three very different approaches. But again, the pie is so big. The prize is so great that they are going all out for this.

15:37Mitch Ginsburg:And analysts are just so bullish on this because it just affects so many people. I mean, that's 80 million people collectively in the United States. And the demand is there because, according to Gil Blum, who's an analyst at Needham, said people will fly all the way to Turkey to have some hair moved around on their head. Can you imagine if you could do that without getting a hair transplant? The big difference that you need to point out with the obesity situation and the hair loss situation, going bald, not necessarily a health crisis. GLP ones have been mostly covered by insurance. There is probably no chance that your hair loss treatment will be covered by insurance.

16:17Mitch Ginsburg:So it's going to be an out-of-pocket expense still. And I just think that, you know, if these treatments come down the pipe, we haven't had one, like I said, in decades, then people are just going to go crazy for it.