Episode 528: Toby and Ann recap Nvidia’s latest Q4 earnings that quelled the concerns of Wall Street after DeepSeek made its way into the scene. Phew. Then, Amazon unveils its new beefed up Alexa that’s taken the AI juice. Also, AppLovin is caught in the crosshairs of short sellers that have raised many eyebrows about its expansion strategy. Meanwhile, Toby and Ann share their favorite numbers on religion, the ‘null’ number, and Argentina soccer players. Finally, it’s a rundown of headlines to close out the day. LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Go to LinkedIn.com/MBD Terms and conditions apply. Only on LinkedIn ads. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Check out https://linkedin.com/MBD for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Hear more from Ann on After Earnings: https://open.spotify.com/show/5I5q3LIg1ueDWoTM8AZsHQ?si=d427df87994941e2 Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are the key highlights of Nvidia's Q4 earnings report?
But I do think it quelled some of those fears, quelled some of those deep-seek fears, saying that, hey, this is a model that isn't going to cause people to use less chips. It probably will cause them to use more chips to train models that are on a similar level. So I do think it was – the future looks pretty bright.
And it is all about the future. I remember you and I talked about the watch parties. Last year, whenever NVIDIA delivered amazing results, the share price response still seemed to be just about what the forecast was. It was always forward looking.
Just in terms of the importance, Toby, of NVIDIA to all investors, just one thing that I saw that this fact really struck me, the NVIDIA share price was up about 170% in 2024. Wow. That gain made up over 20% of the S&P 500's overall return for the year. So the significance of the company is just really striking.
Yeah, you are absolutely right. The market goes as NVIDIA goes at this point. Let's dive into demand post DeepSeek a little bit. So obviously, NVIDIA raised some questions about NVIDIA to sell its newest generation Blackwell model. Jensen Huang pushed back on the idea yesterday, saying that DeepSeq popularized reasoning models that will need more chips.
He actually said that the demand for the next generation of AI models will need 100 times more compute than older models. And the result of that, a lot of people think that mostly NVIDIA's chips are used for training these new models, which is true. They are used to train the models. But also, you need these chips to...
do this process called inference, which is inference is when a model is making predictions or decisions based on new data. So how it works is basically the AI models are trained on these large amounts of data to learn these patterns. It eats the whole internet, as we've been saying.
But once they're trained, when the model is deployed out in the real world, they have to make these predictions on real world data. Whenever you prompt a reasoning model like OpenAI's O1 or something like that, it has to go through this process of applying what it learned. And that input is called inference.
And that's what Jensen Huang is pointing to and saying, all of these thinking models are going to require far more compute than the previous generation of models, which is why we feel so good about continued demand for our AI chips.
He's also, just final thought, been popping some seeds for the future as well. There was one little nugget in there, automotive and robotics. Jensen Huang's called it physical AI. Came in at $1.7 billion of revenue for 2024. A little teeny tiny part of the $130 billion overall. But Jensen Huang has been saying, watch this space.
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Chapter 4: What is the Crespo scale and which animals are considered most dangerous?
Two short sellers released slamming reports, causing company shares to sink down nearly 20%, though it did make up some ground after the report came out, closing the day down just about 12%. Now, prior to these reports, the market was excited about Apploving expanding beyond the mobile gaming advertising, where it's really had its strong history, to e-commerce brands and elsewhere.
But some were left wondering if maybe the company was being overvalued. The short sellers Fuzzy Panda and Culper Research questioned the credibility of the expansion, saying Apploving has been misrepresenting the benefits of its AI advertising platform and force-feeding app installations onto phones to inflate its revenue numbers.
Now, in a post on the Fuzzy Panda website, we've got it in front of me, they said Applovin's Axon model was, quote, the nexus of a house of cards built on fraudulent advertising tactics. Applovin CEO Adam Faroge denied those claims, saying, quote, it's disappointing that a few nefarious short sellers are making false and misleading claims aimed at undermining our success.
Now, if we remember, Applovin stock shot up over 700 percent in 2024, making it one of the year's best performers. But Toby, whenever short sellers go after a company like this, eyebrows do get raised with people asking, is there no smoke without a fire? Do they have a legitimate claim here?
More like app hatin', am I right? And app lovin' is a little bit of a confusing business on the surface. It basically helps mobile apps make money and get more users through these ads. It helps app developers earn money by placing ads inside their apps. And also, some of those apps bring in new users for apps as well.
So it's a lot of these mobile gaming ads that, I don't know, if you play Candy Crush or something like that, you might see a banner ad pop up. It's stuff like that. It's a big industry. I mean, this stock has been the apple of Wall Street's eye for a long time now, which is why we're talking about it.
Because when you see multiple short seller reports come out like this and the stock kind of react pretty violently to it, you do want to talk about it. The idea behind these Fuzzy Panda and Culper Research reports is that they've been misrepresenting the benefits of its AI advertising platform.
Again, they are saying that they're force-feeding app installations and passing it off as if their new Axon platform is driving increased revenue. And that is a real problem because AI is the thing that's been the rocket fuel to this stock's rise. And if you are misrepresenting exactly what that AI is capable of, then of course you're going to see its valuation take a hit.
For sure. And when I took a look, I mean, this report's really long. I was holding up this really chunky wadge of paper where I printed out the Fuzzy Panda report. One of the things it talks about is app loving. It suggests it's just waiting to get the ire of Meta. It basically accuses app loving of just reverse engineering Meta's data and saying it's only a matter of time before Meta takes up.
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