Just to hammer home the points made in March 2024's "In Nvidia's World, If You (and your company) Don't Have Money You Will Not Be Able To Compete (NVDA)":
The advantage flywheels keep spinning and reinforcing each other to the point that the Pareto distribution of profits - 20% of companies reap 80% of the profits - is becoming Super-Pareto where 5% of the companies reap 95% of the profits and is approaching Hyper-Pareto at maybe 2% of companies reaping 98% of profits.
It all comes down to having the resources to keep up.
I watched Mr. Huang give the keynote and it's all a bit much to digest before firing out comments that would make any sense at all so here are some of today's headlines to give a taste of what the intro paragraph is based on.
These are Nvidia's press releases via GlobeNewswire....
From Observer, July 24:
Alphabet is boosting its predicted capital expenditures for 2025 from $75 billion to $85 billion, upping its A.I. ante with investments to fuel infrastructure, device innovation and a high-stakes talent war.
Earlier this year, Alphabet sent Wall Street into a panic when it unveiled plans to spend a staggering $75 billion on A.I. investments in 2025. Now, the Big Tech player is taking its spending spree one step further as it prepares to invest an additional $10 billion throughout the year, bringing its total predicted capital expenditures to $85 billion. These funds will not only flesh out the Google parent company’s A.I. infrastructure needs and meet a surge in customer demand for its products, but help fund the demand for new talent amid an all-out hiring war brewing in Silicon Valley.
“It’s exciting to see the traction,” said Sundar Pichai, CEO of Alphabet and Google, of his company’s A.I. efforts during its second-quarter earnings call on Wednesday (July 23). “We’ll continue investing in the people, talent and compute needed to make sure that we are set up for the opportunity ahead.”
Alphabet reported revenues of $96.4 billion for the April-June quarter, surpassing analyst expectations and representing a 14 percent year-over-year increase. The bulk of this figure came from its Google Services division, which includes Google’s search business and totaled $82.5 billion worth of sales during the quarter. Revenue also jumped across its Google Cloud and Other Bets departments. The tech behemoth’s quarterly profit, too, exceeded Wall Street’s predictions and climbed to $28.1 billion compared to $23.6 billion last year.
Progress was also recorded across the A.I. front, with Alphabet’s Gemini A.I. model and AI Overviews search tool continuing to grow in popularity. The Gemini app now has more than 450 million monthly active users, while Alphabet’s A.I.-generated search summaries are used by more than 2 billion monthly customers and have become especially well-received by younger viewers, said Pichai.
That growth doesn’t come without a cost. Alphabet’s capital expenditures for the second quarter came in at $22.4 million compared to the $17.2 billion it spent between January and April. Its ballooning investments are expected to carry on into next year. “Looking out to 2026, we expect a further increase in capex due to the demand we’re seeing from customers as well as growth opportunities across the company,” Anat Ashkenazi, Alphabet’s chief financial officer, told analysts.
Some of those customers include Mattel, the toymaker behind Barbie, which is using Alphabet’s A.I. features to review and act on product feedback, said Pichai. Other clients, such as Target, have tapped Gemini to improve cybersecurity services, while Wayfair is personalizing customer experience with the help of Alphabet’s A.I.-integrated databases....
....MUCH MORE
Various iterations of the intro:
"Elon Musk says any company that isn’t spending $10 billion on AI this year like Tesla won’t be able to compete" (TSLA)
This.
This is such an important concept to grasp. It's the advantage flywheels, the rich get richer, winner-take-all reality of business in 2024....
"Jensen Huang’s extraordinary interview" (NVDA)
And many more, we are playing for keeps.
The Hyper-Pareto Distribution Of Profits Is Happening Right Now (plus an anniversary)
It's not some cutesy management* fad or pop insight like "Business secrets of Genghis Khan."
To the rich go the profits and internalizing that fact makes the rest of this portfolio construction/fund management/investing stuff easier to conceptualize and execute.
And AI is accelerating the already extant dynamic....
