Nvidia Rides AI Boom to Massive Quarter & India's Lunar Landing

0:28The best B2B marketing gets wasted on the wrong people. dot com slash mbd terms and conditions apply only on linkedin ads good morning brew daily show i'm neil freiman and i'm toby howell on today's pod india successfully landed on the moon's south pole but how they did it might be even more impressive and a new study found the most socio-economically diverse places in the u.s then nvidia reported earnings yesterday and all i'll say is it better buy AI a fruit basket. Plus, whether you like it or not, the pumpkin spice latte is back with no regard for what temperature it is outside. It's Thursday, August 24th.

1:05Let's ride.

1:10Toby, this podcast has grown a lot in the past few weeks and months, so I just wanted to take a beat to welcome all of our new-ish listeners. We are super glad you're starting your mornings with us just to give a high-level view of what's going to go on. On this podcast, Toby and I run through the biggest news stories in the business world in about 25 minutes. Sometimes we go a little bit longer and just try to add context and a few freezing cold takes while we're at it. Plus, randomly, a lot of track and field news because Toby's into that. The 25-minute number is solely dependent on what Messi did last night, what track and field news came out and then what socioeconomic impact Taylor Swift had on her latest concert.

1:51So yeah, that 25 minute number flexes up and down for sure. But yes, so great to have all the people tuning in. And it's just been amazing to see how this pod is growing. Feels like we have our own little family, whatever daily family. Yeah. So we appreciate each and every one of you. But let's jump into our top of the show today. Neil, we got Nvidia earnings yesterday and I won't beat around the bush they were better than the feeling of taking your ski boots off after a long day on the slopes yes that good 13.5 billion in revenue for the second quarter a record high data center revenue which includes their ai business was 10.3 billion dollars more than doubling since last quarter and even though its gaming unit is still down more than a billion from its pandemic highs it was still up 22 percent year over year added all together and it made 6.2 billion in profit, up, and this number is crazy, 843 % compared to last year.

2:47It was a huge quarter driven largely by its data center business, which includes the AI chips it makes for the who's who of big tech, like Amazon, Alphabet, and Meta. I really feel like we're running out of crazy things to say about NVIDIA at this point, but if I could point to one thing that stood out to me about this quarter, it's its view of the future, its forecasting revenue of$16 billion next quarter, powered by, You guessed it. It's data center business. Neil, I went through a million metaphors when I was writing this intro, but I truly don't know what to say about NVIDIA. It's over a trillion dollars at this point and still growing.

3:21It's a massive company. And it's showing that the AI hype is not just hype. It's real because NVIDIA sells the one thing that all AI companies need, which are these graphics processing units. They have an absolute stranglehold on the market. They own 70 % of this market share. and whenever any company needs to train chat GPT or any chat GPT competitor, like a large language model, or they need facial recognition software, anything that AI does, you literally, the first thing you call is NVIDIA and saying, hey, can I get some of these GPUs that you make because these things power everything that we need.

3:57So NVIDIA's success is a really good sign that the AI hype is real and that companies are actually spending money on it. Yeah, it truly is. I mean, and I always like to compare NVIDIA to Prime, Kelly Slater, one of the best servers of our generation, because they do, they ride the waves of each trend so well. I mean, the crypto wave, they had the GPUs that did process all the crypto mining output that you needed. The metaverse wave, they made high quality graphical chips, which was their bread and butter for a long time. And then AI, we have the chips that power these extremely hungry data models.

4:32So they truly do just bob and weave and ride the waves of every time you see something trending on Twitter. Chances are NVIDIA is profiting off that. And the CEO, Jensen Huang, who wears this leather jacket, this, you know, that's his signature style, kind of like Steve Jobs with the black turtleneck. He's been talking about AI for more than a decade. This is not new. He's been betting everything on AI for a long time, and it's finally coming to fruition. but it's so fascinating reading about NVIDIA's products, its GPUs and how much better they are than anybody else. Like I said earlier, like the first thing you do is call up NVIDIA to get their products because AI startups will wait 18 months to buy a NVIDIA system when they could just buy another one from another startup.

5:17And they're like, no, I need NVIDIA. I need to wait for this one. And so they just kind of hold the keys to the entire AI universe. I know their competitors are trying to get on par with them. You have AMD, Intel, but they just aren't doing great right now. And their CEOs, it's always so interesting on their earnings call where they have to say that they're building towards AI, but they also try to downplay it because clearly they're not the same level as NVIDIA. So it is always, I always enjoy seeing the quotes that come out. It was like, yeah, AI is important, but we're also doing all this other great stuff because they're just leaps and bounds behind NVIDIA right now.

5:51So what a huge company. Really amazing. Yeah, I mean, if we just want to bookmark it by talking about its stock price, the stock has more than tripled already this year. It's already the best performing stock in the S &P 500. It was up another 8 % in after hours trading, closed at another record high, and it's sitting at a$1.16 trillion market cap. A lot of stuff happened yesterday in the world from Purgosian to the debate, but Nvidia's stock was the number four thing trending on Google. So it's hit the mainstream this tech giant. It's also really good news for the entire stock market because that's all the tech companies have risen a lot this year and they've been kind of propped up on the AI hype of things and NVIDIA showing it's real.

6:31So that could really propel the stock market going forward. It's kind of hit a rough patch this summer. All right, let's move on to our next story. After Russia crashed its spacecraft trying to land on the South Pole of the moon on Sunday, which by the way, no one has done before, all eyes turned to India, which was trying to do the same thing yesterday. And mission accomplished. India softly landed its Chandrayaan-3 spacecraft on the dark side of the moon yesterday. And for the first time ever, I didn't find it cringe when people clapped after a plane landed, because this is a huge deal for India.

7:03It is a sign its small but growing space sector can compete with the big boys, because after all, just three other countries have landed on the moon before, and none on the South Pole. Plus, the most impressive thing about this mission was the low cost. As of 2020, the mission had a budget of just$74 million. And to put that in perspective, that's less than half of the money it took Christopher Nolan to make Interstellar. So India not only landed on the moon, but showed it could do it on a Kirkland level budget. The thing that stands out to me is that this is not the first time India has done something like this, because in 2014, it landed a rover on Mars for a similar budget,$73 million.

7:42And this is also really funny. The orbiter was designed for a lifespan of six months. It lasted for about eight years. So not only is India balling on a budget, reaching these places that you wouldn't think they'd be able to, but they're also executing. Like they're not just getting to the surface of the moon. They're landing on it. They're not just getting to Mars. They're landing on it. So it truly is an inspiring thing to see someone on a shoestring budget accomplish things that these major superpowers have been struggling to accomplish. Yeah. And compared to NASA, I mean, NASA's budget was twenty five billion dollars last year in India's space programs budget was one point six billion.

8:20Obviously, the NASA guy is like, OK, but like we're doing a lot more, you know, we're not we're not doing kind of equivalent things. But it really is important for the space industry more broadly to get expenses down because it's so costly, obviously, to go to space. And the more you can bring costs down, the more activity you can do, obviously. So the whole industry, I mean, Elon Musk has spearheaded this with his reusable rockets for SpaceX. But if you can bring costs down from where they were, the space shuttle, each time the space shuttle went to orbit, it was$1.6 billion. And those costs have come down dramatically.

8:54And India is showing that you can do space on a budget which is going to unlock a lot of this economy. Although I do love the director of the Indian Space Research Organization. His quotes were so cheeky yesterday where he was saying, everyone's like, how did you pull this off on such a cheap budget? And he says, I won't disclose such secrets. We don't want everyone else to become so cost effective, kind of tongue in cheekly. And then he said, these are very cost effective missions. No one in the world can do it like we do. So I'm totally for him kind of because he did something amazing. But what do you, okay, the real reason it's so cheap is because labor doesn't cost as much.

9:30It is a different, yeah, different kind of playing field. We're paying engineers$300 ,000,$400 ,000,$500 ,000, and just based on differences in our economies, they're not getting paid as much over there. I was also very happy to see, though, how big of a deal this was for India. Over 8 million people at one point were tuning into their live stream. You saw the images of people clapping and just celebrating when this happened. So it is always a great moment of national pride whenever something like this happens in the space race. This is the year of India. They become the most populous country in the world.

10:07They get their first Apple store. They land a spacecraft on the dark side of the moon. First Apple store, land a spacecraft. Very similar. This is interesting. It's not necessarily a guarantee to get. You would think that, okay, it's 2023. We can land something on the moon, right? We can do it. We did in 1969 with basically no technology. But in the past decade, we're only three for eight on landing on the moon. We have a 375 batting average, which would be good for the MLB. The Yankees would take that every day, but we're not that good. And then we're also 23 for 50 overall since mood landings began.

10:42Gravity 27, Earth 23. There you go. Okay, Neil, let's move on to our next story that's all about Starbucks and its disrespect for the rhythms of the season. 100 degrees out still, Starbucks could not care less. To them, it's fall, and fall means pumpkin spice lattes, baby. Starting today, Starbucks' seasonal fall menu is officially live, and it's bringing back the iconic PSL latte, or PSL, for the 20th year in a row. Now, Neil, I know we're not ready for summer to end and for it to be dark out when we finish this podcast every day, but Starbucks has its finger on the heightened pulse of America and has decided that it wants pumpkin now.

11:23Two things that stood out about its fall menu to me. one three out of the five drinks on it are iced and then two its research and development team has definitely been watching tiktok because one of the menu items the iced pumpkin cream chai tea latte wow that's a mouthful is a copycat of a popular and viral tiktok order yeah so neil i kind of dig this strategy from starbucks even though they rolled it out six days earlier this year than last year and i don't want summer to end but the people want what the people want Well, it's what is it? A hundred degrees in the Midwest. They're suffering the worst heat dome of the summer.

11:58So maybe this is a smart strategy. But it is really interesting to talk about the rise of ice drinks and the popularity of ice drinks, because this was not a thing. Five years ago, half of whatever Starbucks sold was ice drinks. And now it's 75 percent. So I don't know what behavioral change is going on in the world that or in the United States, at least. That means that people are favoring ice drinks. But obviously they are. So yeah, three out of five of their fall drinks are ice. Maybe it's a climate change thing. Yeah, it's also just more cost effective for Starbucks in the drink. If 75 % of the drink is ice.

12:33So I think that might have something to do with it. But also we got to talk just about pumpkin spice and how popular it is. Pumpkin size product sales have increased about 47 % in the last five years. A quick Amazon search for pumpkin spice returns more than 138 ,000 items. So it truly is crazy how much pumpkin spice has taken over the world. And Neil, we read about kind of like the psychological phenomenon behind this. So tell the people why pumpkin spice might be so popular. There's this great article in The Guardian that was kind of a meditation on why we're so obsessed with pumpkin spice, which it seems we are.

13:07And they compared pumpkin spice to pumpkin pie, not pumpkin. So pumpkin pie has all of the spice mix. And that's why pumpkin spice is so popular in just North America. It's because the United States and Canada are the only countries that eat pumpkin pie. Right. So when we eat pumpkin spice, we're thinking of pumpkin pie, which reminds us of fall. Yeah. It's also, too, like no one's really tried pumpkin before. It's kind of like this blank slate in people's minds. And so these marketing, the forces that be, were able to create a spice blend that basically you just associate with all the good parts of fall.

13:44Taylor Swift albums, cozy nights by the fire and not actually with pumpkin. So they literally took this food item that was a blank slate in people's minds and imprinted upon them what they wanted them to feel. So I always think that the psychological bit behind pumpkin spice and the fact that there's scarcity, like it only is sold. It's only popular in the fall months, and the rest of the year it kind of goes into hibernation. So I think that plays a big part of it as well. Okay, Neil, before we jump into the next part of our show, we're going to take a quick break. In America, half of every dollar spent on brand medicines goes to entities who don't make them.

14:24While middlemen like PBMs and 340B hospitals drive up costs, Biopharma is investing$500 billion in new infrastructure and manufacturing here at home and helping patients buy medicines directly at lower prices. Tell Washington to end middlemen markups and put American patients first. Visit phrma.org slash middlemen. When you walk into a Burlington, you're walking into amazing prices and great gifts. That's main character energy. Because at Burlington, the holiday savings aren't the only things turning heads. Discover quality finds and perfect presents for everyone on your list, even those who are hard to shop for.

15:06Toys and jewelry to new beauty brands and styles, these gifts go seamlessly from our stores to under your tree. Seriously, with these savings, why shop anywhere else?

15:20Welcome back to Neil's Numbers, our Thursday segment where I share three stats from the week's news that will make you smarter than a fifth grader. To kick off my first number, I want to make a controversial but factual statement. While America is a melting pot, each ingredient rarely interacts with the others. Rich people hang out at their golf courses and lake homes and rarely rub shoulders with lower income people on a daily basis. People just live in their bubbles. But there is one type of place where all of America's flavors meld together to form a beautiful, harmonious broth. The good old chain restaurant.

15:55A new study found that affordable chain restaurants like Olive Garden and Applebee's were the places where high-income and low-income people are most likely to encounter one another. These chain restaurants are the most socioeconomically diverse places in the country, according to the researchers. And even more surprisingly, they enable way more cross-class interaction than civic spaces like churches, parks, and schools, which also isolate people by class in their own way. And the study found that dollar stores and pharmacy chains like CVS only deepen isolation. So maybe it's time to recognize half-priced apps as the glue holding our country together.

16:31I think part of this study comes down to the fact that these places are so predictable. You know what you're going to get no matter where you're coming from. You could be in Iowa or you could be in Florida. If you go into an Olive Garden, you know you're going to get the breadsticks. You know you're going to get the soup or the salad. And I just think that that sort of predictability makes it a very accessible space from people across the income spectrum. My first thought also when it comes to Olive Garden or Applebee's or these chain restaurants comes down to like sports teams and sports tournaments because everyone has a core memory of being at a tournament and you go, all right, where are we going to eat?

17:07And it's always Olive Garden, it's always Applebee's. And I do feel like youth sports is another big socioeconomic melting pot as well, where you have people from all sorts of the income spectrum. So my, when, when I read this study, first thought was soccer tournaments and just seeing all the other teams there as well. So, but that might just be a me thing as well. Yeah. Well, chain restaurants are good. I mean, that's, they have decent food, but more often they're just like this comfort, the bread. What's your, what's your favorite chain restaurant? Well, okay. My favorite menu item at chain restaurant is the breadsticks from Olive Garden because I unironically think they're some of the best breadsticks I've ever had.

17:43And I've been to Italy. I've been I've been all over the world. But I would go back to the breadsticks 10 times out of 10. All right. For my second number, I want to let everyone know that you won't have to fight for the last pod for the office Keurig machine today because there might not be anyone at work. Today, August 24th, is the day that American workers most often call out sick, according to a survey by HR firm Flamingo. For whatever reason, maybe it's because it's late summer. Maybe people are still hungover from my birthday party. Today is the nation's sickest day. And can anyone guess what the second most popular day to call out sick is?

18:19It's February 13th, which lines up curiously with the day after the Super Bowl. Then the list goes October 15th, October 25th, December 15th. I don't really know. It seems pretty random. Yeah, I have no idea what's going on here. August 24th. All I know is that we should send this data to the u.s government and make these days national holidays make august 24th the national holiday because clearly people want it off definitely make the day after the super bowl the national holiday because that's just ridiculous asking people to show up to work after after a sunday super bowl so yeah totally ridiculous to ask people to show up to work after a sport it is it is a national pastime making a national holiday i know i'm to get support on that.

19:02There's no one going to be fighting for like, no, I got to show up to work on that Monday. Overall, February is the sickest month though, which checks out because it's winter and there's just more, more stuff going around. Okay. My final number is a perplexing return to office statistic. There's one city in the U S that has really low office occupancy rates, the worst in the country next to San Jose while Dallas and Austin, Texas have up to 65 % of workers showing up to offices and New York has a rate of 45 percent. Philadelphia is hovering around 40 percent. Now, that is a bit weird. Why would Philadelphia, of all places, be a remote work hub?

19:39Why would New York or Boston or any other large East Coast city have more people going to the office? One theory is that the data is wrong. Other measures have Philly's return to work rates as much higher. And the national standard run by Castle Systems doesn't track Comcast, which is one of the largest private sector employers in Philly. Another theory, Philadelphia has a wage tax, unlike many other major cities. So our Philly area listeners probably know all too well that their income in the city is taxed at nearly 4%. So this could also be keeping workers away. But it still remains a bit of a mystery why Philly, of all places, can't get people back to work.

20:13I think this is just a marketing campaign for its suburbs. Because saying that not a lot of people are going into the office might mean that the burbs are awesome around Philly and that people are just living there and maybe commuting in or not commuting in, working from home. So I would turn this into a positive and say, Philadelphia, our suburbs are so nice that you don't even want to go into the city. I mean, my whole family is from the suburbs. Exactly. They are very nice. And more importantly for this discussion, they have a lot of large employers out there up near King of Prussia. And I could go on and on.

20:47But anyway, yes, the suburbs of Philly have a lot of people. They are nice. They have their own little downtowns and they also have large office parks with huge corporations out there. But downtown Philly is so nice. Oh, my God. Redding Terminal. Here he goes. Here he goes. So I hope I hope downtown Philly. We'll see what happens. They're supposed to be the big Sixers development. They're supposed to move the arena up to 13th Street down there. So like right on Market Street. I love when it's going to be. I love when Neil starts waxing poetic about some of his city centers. But I will tell you, we're going to be talking about the Sixers arena because it is a very contentious debate coming up about whether to put this arena downtown.

21:23So I'm sure that's going to be big business news coming up. Put it down. Okay, Neil, let's move on. Our next story is about NFTs, which is weird to say in the year 2023, but they are in the news again for all the wrong reasons. Bored Ape Yacht Club, which is one of the more famous and expensive NFT collections, saw the price of its cheapest ape, a.k.a. its floor price, fall 18 % yesterday. after news broke that the auction house Sotheby's is being named in a class auction lawsuit against Bored Ape creator Yuga Labs. The gist of this lawsuit claims that Sotheby's, as well as a who's who of A-listers like Paris Hilton, Justin Bieber, and even Adidas, misleadingly promoted the project and conspired with Yuga Labs to artificially inflate the prices of Bored Apes in order to generate more hype around the brand.

22:10Neil, the Sotheby's angle in particular is super interesting to me because they held an auction for a collection of 100 Bored Apes last year that eventually sold for$24 million, which is$240 ,000 an ape. Right now, the floor price is sitting around$38 ,000, so a big fall from grace. Neil, the Bored Apes has long been upheld as the standard for the NFT world, so is this a sign that the NFT era is finally fully winding down? Yes, I think so. I think we can all agree that NFTs were a low interest rate. I'm at home doing absolutely nothing phenomenon. So I think I think NFTs will stick around for in a very niche community because a lot of weird stuff and different collectible communities are around in that sense.

22:57but I don't think they will ever hit mainstream like they were during the pandemic. A lot of people didn't understand the value of them to begin with. Actually, most people did not. So they were just doing it in terms of trying to make money. So now that all the money has kind of been washed out of the system and people are just kind of doing it because they love the industry and they love the idea of it, I think it's just going to be an extremely small part of the broader collectibles ecosystem. Yeah, and if you zoom out to the broader ecosystem, everyone is kind of jumping ship right now. Sega and Disney abandoned their Web3 plans earlier this year, and Meta is also winding down its NFT efforts.

23:36So all the blue chip big companies that we are seeing jump into the space are now jumping out of the space a lot quieter, I should add. Like, you don't hear about these announcements. And then also another big, if we want to go a little more inside baseball into the NFT industry, OpenSea, which is one of the biggest exchanges for NFTs out there, they are getting rid of royalty fees, which was once like the core tenant of the NFT culture. And royalty fees are every time a piece of collectible internet art changes hands, the original artist would get part of that fee. And that was supposed to be like this new wave of how value is accrued by the artist.

24:17Every time a secondary sale is made, they still get a piece of it. And that was what they hung their hat on. But now it's like a race to the bottom on NFT exchanges. And anytime someone lowers fees, someone else has to react. So OpenSea is kind of going back on really what the core of NFT ecosystem was about. So a lot of people are mad and it just feels a little bit like an end of an era getting rid of royalty fees. All right. Moving from one potential grift to another. Billy McFarland is back. The fraudster who created Fyre Festival, that influencer hype music festival down in the Bahamas that turned out to be a total scam, is out of prison and he's bursting with new ideas to rehabilitate his career.