03.07.2025

ForwardThinking 🤔

Nvidia's whirlwind week

We are living in a volatile world, so perhaps it should come as no surprise that even a company like Nvidia, fresh off a successful earnings report, should find its stock experiencing dramatic fluctuations this week. Perhaps it reflects the emotions of investors unclear on what’s coming next, or maybe it’s because of a variety of mixed messages coming from the market, but whatever the reason, it was an erratic week for the GPU chip giant.

The roller coaster ride began last week when Nvidia announced Q42025 earnings. It was by most measurements an excellent report with the company reporting $39.3 billion in revenue up 78% YoY. Guidance for Q12026 was also positive with company projecting revenue of $43 billion, above expectations. If you wanted to nitpick, gross margins slipped to 73% from 74.6% the prior quarter, suggesting that there might be some pricing pressure bubbling up.

Seems like overall though, it was the kind of report that would get Wall Street’s attention in a positive way, but that’s not what happened.

The stock slid 8.5% the day after the report.
It was back up 1.2% the next day.
On Monday, it registered a 9% loss.
On Tuesday, it was back up 1.7%.

You get the idea. It was a wild ride, particularly on Monday when it registered an astonishing one-day value loss of $265 billion. That can happen when your market cap is in multiple trillions.

So what’s driving the turbulence?

It’s hard to pinpoint a specific reason for the stock price volatility from a company that is growing at the rate it is. As we've noted in this space recently, there is a data center building boom fueled by the demand for generative AI, and that requires lots and lots of GPUs. You may recall that Amazon, OpenAI, Microsoft, Alphabet and Meta have committed a combined $420 billion to building data centers this year.

But in spite of that, the continuing on again-off again news about tariffs could be feeding investor anxiety. Whether tariffs will have a material impact on Nvidia is unclear, especially when it comes to its core GPU chip business, but it’s creating an atmosphere of uncertainty and confusion that is making investors uncomfortable.

Sculpture of blue up arrow and red down arrow in a wooded setting.

Photo by Susan Q Yin on Unsplash

It’s also worth noting that in a recent podcast interview, Microsoft CEO Satya Nadella said that instead of building data centers in 2027 and 2028, he’s planning on leasing more as he anticipates an oversupply coming from all this building. That could mean taking advantage of existing capacity, ones that have presumably already purchased GPUs, rather than requiring new ones.

It's unclear whether this is a harbinger of something bigger, but what is clear is that all of these mixed messages and inconsistency is causing investor trepidation, and that could account for what happened this week. Nobody can predict the future, but it’s difficult to imagine a scenario, in the short term at least, where demand for Nvidia GPUs declines in a significant way. In any case, weep not for Nvidia. They have a diversified portfolio of products, and the company market cap remains over $2.7 trillion (as of publication).

-Ron

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News of the Week 📣

big week for agentic Ai in the enterprise

We are less three months into the year, but it's clear that there is a big push for agentic AI in the enterprise. If you doubt that, consider that there were three announcements this week from major vendors involving this technology. Clearly, everyone wants a piece of this action (even if there isn't a clear sign that enterprise buyers are ready).

Let's start with Salesforce, who you may recall admitted last week after their earnings report that they wouldn't start to see a significant revenue impact from agents for at least a year. That didn't stop them from marching forward with two big announcements: an agent marketplace and an updated agent development platform that purports to enable truly autonomous agents that work in the background.

Photo by Andrea De Santis on Unsplash (cropped)

Meanwhile, not to be left out of the party, Microsoft announced two new agents related to the company's Dynamics 365 CRM tool, which just happens to compete with Salesforce. The company released these agents on Wednesday morning, the same day Salesforce was holding its developer conference in San Francisco and making its big announcements around agents (total coincidence I'm sure).

Finally, we had news that Amazon would be forming a group devoted to developing AI agents. Reuters reported that AWS CEO Matt Garman said that this could be "the next multibillion business" for AWS. Clearly his peers think so too as this week's flurry of agent-related news shows.

Coreweave files for ipo

There has surely been a dearth of tech IPO announcements in recent years. CoreWeave took a step towards changing that this week when it filed its S-1 form to go public in a $4 billion IPO that values the company at around $35 billion.

The company sells cloud-based GPU services, which if you haven't noticed are just a bit in demand these days. Those GPUs, by the way, come from Nvidia, which has a 6% stake in the company. One of the more interesting points in the filing was that Microsoft accounted for 62% of its $1.9 billion revenue last year, not the kind of news that tends to make investors warm and fuzzy, especially when there are reports that Microsoft coud be cutting back on that commitment.

It's also worth noting, per Julie Bort at TechCrunch, that the company's three founders have already cashed in close to $500 million worth of stock, which is a pretty unusual move before going public.

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Report: OpenAI could be charging big bucks for agents with specific levels of intelligence

We know that it's expensive to build large language models, and OpenAI intends to invest as much as $500 billion in data centers in the next four years if Project Stargate gets fully funded. While there are external investors aplenty, the company also needs some serious revenue to justify those dollars.

One way they could do that is by charging huge sums of money for access to different levels of intelligence. This week, The Information reported that the company intends to charge $2,000 per month for knowledge worker agents, $10,000 a month for developer agents and $20,000 per month for PhD-level research agents.

If these reports are true, and it remains to be seen, it's extremely pricey. The Information also reported that CFOs are increasingly getting involved in AI buying decisions, and if that's the case, they probably are going to want some substantial proof of ROI before spending that kind of money. And so far, many companies have found it difficult to measure return on their AI investments.

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You could argue that Google has nobody but itself to blame, as the results have become increasingly cluttered over the years, but you can't expect the company to just sit back and watch these other companies take away users.

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“While we encourage people to use AI systems during their role to help them work faster and more effectively, please do not use AI assistants during the application process.”

- Anthropic job application language, per 404 Media.

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