What's the deal with Nvidia?

Hi, Friends —

Welcome to [our digital disco]! I’m excited to have you here. Keep scrolling for this week’s key themes in tech: the wild stock market rally around Nvidia, and some interesting shifts in the fintech sphere. You can also check out last week’s newsletter here.

Notable Themes

☞ What’s the deal with Nvidia?

Last week, shares of Nvidia soared 24% following its latest earnings release — adding $184B in one day to the market cap. (For reference, that’s the third-largest one-day jump in US stock market history.) The news is important because Nvidia plays a key role in AI innovation, and its popularity speaks to today’s near-wild interest in artificial intelligence.

Demand for Nvidia’s products is fueled by the boom in AI development. As companies pour resources into developing AI products, suppliers like Nvidia offer the necessary hardware to make such innovation possible. The market rally has also fed into the AI hype, igniting billions in investments across other AI companies. Nvidia’s moat, or competitive advantage, lies in its expertise in graphics processing units (GPUs). Originally designed for gaming, GPUs can also handle multiple tasks simultaneously (‘parallel process’), making them integral components in advanced AI systems.

• Why does it matter? Unlike some of its rivals, Nvidia recognized the potential of parallel processing architecture to deliver lightning-fast computations. Nvidia's prowess in AI has not only elevated its own brand, but also feeds innovation (and hype) in the AI market. Given its large market share of the tools critical for training AI models, the firm stands to benefit hugely from the ongoing AI competition among OpenAI, Google, StabilityAI, and others.

• Pros: Nvidia is a well-established leader in AI hardware, powering the demands of major players including NASA, Microsoft, and even Google’s new supercomputer. The company is, in many ways, the workhorse of today’s AI arms race. Given Nvidia’s revenue forecast for the current quarter surpassed Wall Street’s predictions by 50%, it’s no surprise the company is the best-performing member in S&P 500. AI is also an incredibly cost-heavy sector, so it’s unlikely there will be many overnight success stories to compete with Nvidia. (That being said, other AI hardware providers, such as chipmaker Taiwan Semiconductor Manufacturing, might prove better-fit to ride out the AI heat without Nvidia-esque volatility.)

• Cons: While AI chip demand is off the charts, many experts are wary that there isn’t much bite behind the bark. The latter fits into a larger theme of overvalued AI companies. In startup world, venture capital (VC) funding has generally been in a downturn. AI has proven a very large exception, however. These days, it seems VCs hurl dollars at artificial intelligence companies in hopes they’ll find success to the likes of OpenAI. The AI sector is considered to be risky, as many of these startups aren’t likely to live up to their hype. Nvidia’s stock valuation could fit in with that pattern — evidence that the AI obsession might just be a forming a very dangerous bubble. If faith in the AI market tanks, demand for Nvidia’s products — and Nvidia’s stock — will likely tank as well.

☞ Tech is powering financial inclusion.

One field that has largely benefitted from AI advancement? Personalized finance. Personalization has emerged as a key trend shaping the future of money, as financial technology (fintech) companies seek to make finances more relevant and equitable for everyday people. This trend recognizes that the "one size fits all" approach falls short in the realm of personal finance. People from diverse backgrounds encounter unique financial circumstances and harbor individual aspirations. To tackle these differences, fintech companies have been arming themselves with the technology to provide customized solutions — hoping to mirror the expertise of a dedicated financial advisor (without the high fees).

• Why does it matter? By tailoring financial products to individual needs, fintech companies might help level the playing field and bridge the gap between the haves and have-nots. The hope is that individuals who were previously overlooked or underserved can now have a shot at building their financial future. It's like removing barriers that once prevented certain groups from enjoying the benefits of the financial system. Some startups worth looking into:

  • Revolut — Global money management app; strives to help people gain more financial control and reach their money goals

  • Stride Funding — Alternative education financing for students & families

  • Kiwi — Helping Latinx consumers build credit history and improve financial literacy (Kiwi also just raised $80M!)

• Pros: Personalization allows financial institutions to tailor offerings to the specific needs of borrowers; lenders can provide more suitable solutions (e.g., customized loan terms and credit options) based on factors like income, credit history, and financial goals. This approach increases the likelihood of successful repayment and enhances borrowers' financial well-being. More efficient, accessible, and affordable lending options can promote financial inclusion by reaching underserved individuals and communities.

• Cons: While personalization promises many benefits, it also raises valid concerns regarding privacy, data security, and discrimination. Consumers must volunteer personal information for access personalized financial services; it is up to the fintechs to provide secure and ethical data usage. Ensuring transparency and accountability in the algorithms and decision-making processes is also crucial. There have been countless cases of bias resulting from automated lending programs; without government regulation, many fear that such discrimination will perpetuate unjust inequalities in financial inclusion and other domains.

Snacktime

📓 Reading: Waluigi, Carl Jung, and the Case for Moral AI — Thoughts by Wired’s Nabeel Qureshi on mitigating the risks of AI and aligning it with human values.

♬ Listening to: Harlem by New Politics (the start of summer calls for a throwback).

✰ Thinking about: Environments, productivity, and focus. I’ve spent quite a bit of time trying to over-engineer my everyday tools — sleep, meditation, exercise, lighting, etc — rather than trying to specifically not to control. Turns out, most of my flow states occur due to my obsession with the content (or a time crunch), rather than any other aspect. It’s a good reminder how acts of control can just spiral into a self-fulfilling prophecy of dissatisfaction… and maybe a reminder to me to stop thinking and just do the damn thing (thanks, Owen Reese).

Next up

✎ New advancements in neuroscience tech. Oh, and whatever happens in the news.

✿ As always — any and all feedback is welcome! In the meantime: give someone a hug and say an ‘I love you’ this week. Make the world a little happier.