Nvidia’s growth looks healthy af
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
Thursday! Nvidia failed to ruin third-quarter vibes yesterday (more below), while Russia continued to pound Ukraine. Reading the news these days is an exercise in emotional whiplash. If you want even more earnings news, here are results from CrowdStrike, NetApp, Bill.com, and Snowflake earnings. To work! — Alex
📈 Trending Up: Steam … steam … steam … Didi … Bytedance’s worth … hey it’s that one XKCD comic … internal LLM benchmarks … Swedish IPOs … US GDP amidst import/export whipsaws … rate cut expectations … Starship … the ick … spine …
📉 Trending Down: AI hallucinations? … cybersecurity … eras … Tesla in Europe … industrial profits in China … Russian GDP growth … the CDC … US covid policy … free speech online …
Things That Matter
Google Cloud Universal Ledger: Everyone wants in on stablecoins. Crypto folks because they represent a massive use case for blockchain. Tech folks because they allow technology companies to eat into financial markets. Hungry for growth, megacorps like Google are not sitting still. Enter Mountain View's Google Cloud Universal Ledger (GCUL), a new layer-1 blockchain that will undergo private testnet trials before a rollout in 2026. Will Google’s bid to help undergird the future of finance win market share? I have no idea. But I do now that the crypto revolution is looking less and less like rebellion and more like corporate/state value capture than ever before.
We’ve gone from ‘not your keys, not your coins’ to ‘institutional demand via ETFs will boost bitcoin’s value,’ from ‘fiat systems are risible and should be overthrown,’ to ‘stablecoins will help the Federal government continue to borrow.’ Punk rock indeed.
Stablecoins really are a big deal, though.
Teamwork: OpenAI and Anthropic swapped models over the summer to run stress tests on one another’s work. Looking at Claude Opus 4 and Claude Sonnet 4 from Anthropic and GPT‑4o, GPT‑4.1, OpenAI o3, and OpenAI o4-mini from OpenAI, the two companies found that their respective models were a mixed bag when stacked against one another. For example, OpenAI reports that Claude 4 has strong “ability to respect the instruction hierarchy,” while Anthropic writes that “OpenAI's o3 specialized reasoning model showed better-aligned behavior than Claude Opus 4 along most of the dimensions we tested.”
More of this please. The deep technical discussions are beyond our scope, but collaboration of this sort sharpens all swords.
Gusto buys Guideline: Payroll tech provider Gusto reached $500 million worth of trailing revenue back in mid-2023, making it one of the larger private-market tech companies by revenue scale. Valued at $9.5 billion in 2021, Gusto is one of a cohort of companies that help folks hire and pay staff that have reached valuations of ~$10 billion or more (Rippling, Deel, Remote, etc).
Gusto snapping up Guideline, a retirement savings provider for customer companies, makes synergistic sense. Guideline’s tens of thousands of customers won’t hurt, either, but while Gusto is a public company pretending to be private, it appears that Guideline felt it had a clearer path to success by partnering instead of going solo. A good next question is what vertical Big Payroll will decide to roll up next.
Nvidia’s growth rate looks healthy AF
Yesterday after the bell, the world awaited Nvidia’s quarterly earnings. With earnings per share of $1.05 (adjusted, ahead of expectations of $1.01) and $46.74 billion worth of total top line (ahead of an anticipated $46.06 billion), the company’s trailing results were mroe than solid.
But for the world’s most valuable company, a simple beat is not enough to whet investor expectations. Nvidia’s earnings, built atop spend from other Mag7 companies, represent an early-warning system for the current genAI cycle. If Nvidia's growth slows, one could infer that AI demand growth is slowing, which would spell trouble for a great number of other concerns.
Thankfully, Nvidia not only beat in trailing terms, it also guided to $54 billion worth of top line in its current quarter. That’s about $1 billion more than the street expected. And critically, doesn’t include possible China revenue for its H20 chips.
Nvidia grew 56% YoY in its most recent quarter, and 6% compared to the preceding quarter. Gross margin fell 2.7% YoY, but rose 11.9% on a sequential basis. Net income rose 59% YoY, and 41% from the company’s first quarter.
In its earnings call, the company said that it has yet to recommence H20 sales to China due to regulatory uncertainty (transcript source, edited for clarity):