Hello everyone, welcome to this episode of “Extraordinary Finance”.
Today’s focus is on how a market economy can emerge even in a prisoner of war camp! NVIDIA’s financial report defies expectations, but the stock price plunges, what’s the logic behind it? The stock god company’s market value surpasses a trillion, breaking the Silicon Valley curse! Speed and luxury, the world’s most luxurious car feast!
Yesterday, a non-tech company in the United States saw its market value surpass the trillion-dollar mark, and that company is Warren Buffett’s “Berkshire Hathaway.” This reflects investors’ continued confidence in the stock god.
Currently, there are a total of seven giants with market values exceeding a trillion dollars, which include Berkshire Hathaway, NVIDIA, Apple, Microsoft, Google’s parent company Alphabet, Amazon, and Meta, the parent company of Facebook. Among them, only “Berkshire Hathaway” is not a tech company.
Buffett is approaching his 94th birthday, and since he took over as chairman of Berkshire Hathaway in 1970, this small textile company has transformed into one of the most valuable companies in the world, proving once again that the stock god’s reputation is well-deserved.
In recent years, overseas friends must have noticed a super low-priced shopping website, Temu. I haven’t bought anything there myself, but I’ve heard a lot of feedback about how poor the quality of products on Temu is. I have friends who have bought things there, and while the prices of many items are incredibly cheap, the quality is also unbelievably bad.
Temu’s parent company is the well-known low-cost shopping company in mainland China, Pinduoduo. Pinduoduo’s strategy for the overseas market is to subsidize merchants heavily and then dominate the overseas online shopping market with ultra-low prices. Initially effective, many Westerners were amazed at the incredibly low prices, rushing to try something fresh, but after receiving the products, they found the quality to be surprisingly poor. Many items could only be used once or twice and couldn’t be used again. Over time, the negative word of mouth about the poor quality of products on Temu spread, and Pinduoduo not only failed to grab market share through Temu, but also saw its performance collapse. Recently, Pinduoduo’s stock price has fallen by over 29%.
So, how is the performance in the domestic Chinese market? For Chinese manufacturers, Pinduoduo has long been known for its ruthless competitive strategy. Over the years, suppliers have continuously complained about the low profit margins on Pinduoduo. In recent months, Temu’s suppliers have continuously launched protest activities, accusing Pinduoduo of extremely unfair punitive measures that have led to many suppliers going bankrupt.
In addition to the stock price collapse caused by the drastic decline in reputation, concerns about the safety and quality of Temu products, as well as worries about laborers and data privacy policies, have become increasingly important for the U.S. and Western governments. It is reported that bipartisan members of the U.S. Congress are jointly launching a proposal to limit a tax provision. This tax policy allows low-cost packages below a certain price to enter the U.S. without tariffs or customs inspection. Temu has taken advantage of this policy to invade the U.S. online retail market on a large scale. Currently, the European Union and several other countries are also discussing canceling similar tax preference clauses. Once this proposal is passed, Pinduoduo’s development in Europe and the United States will become more difficult.
Recently, OpenAI’s valuation has surpassed a trillion dollars, and companies vying to invest are lining up outside the door.
According to sources in Silicon Valley, this round of financing worth up to $1 billion is led by the venture capital firm Thrive Capital, with participation from several old-school companies in Silicon Valley, and Microsoft, the former home, is also one of the main participants in this round of financing.
This will be OpenAI’s largest external capital injection since receiving about $10 billion in investment from Microsoft in January 2023. Since then, Silicon Valley has launched an “AI arms race,” with several tech giants investing heavily in building their own AI systems, hoping to get a piece of the pie in the upcoming wave of industrial revolution.
After the turmoil of the coup, OpenAI’s leader Ultraman has shown a strong ambition this year. He clearly told investors that OpenAI’s current goal is to build the most advanced general AI, and achieving this goal requires a large amount of funding.
“General AI” refers to autonomous systems that can outperform humans in tasks in most important economic activities. This leap in technology requires supercomputers equipped with expensive and high power-consuming chips to process massive amounts of data. OpenAI has built GPT-4, which costs over $100 million, making it the most powerful AI model to date. The company is currently developing the next-generation model, which is expected to cost even more.
However, so far, all artificial intelligence companies have been losing money, and it is difficult to say when they will truly turn into a profitable normal business.
This week, the world is eagerly awaiting a major event: “the number one company in space” NVIDIA releases its second-quarter financial report.
The financial report brings both good news and bad news. The good news is that Mr. Huang has once again withstood the pressure, and NVIDIA is still going strong. The bad news is that after the financial report, NVIDIA’s stock price plummeted. A string of impressive figures and Mr. Huang’s bold statements ignited users’ passion, but failed to satisfy Wall Street’s appetite, with the stock price dropping over 9%, causing a collapse in the entire U.S. tech stock market.
Keep in mind that NVIDIA’s profit growth over the past three quarters has averaged a staggering 500%, with the stock rising 1202% from its low point over two years, and surpassing Microsoft for the first time in June this year to become the world’s most valuable company. However, after July, internal mass sell-offs of stock, delays in the production of next-generation chips, antitrust investigations by the U.S. government, and restrictions on exports to China have all led to a drop in stock prices. In addition, Warren Buffett sold a large amount of Apple stock, the Federal Reserve continued to maintain high interest rates, and the global economy remained weak, causing the U.S. stock market to experience the darkest “Black Monday” on August 5. Tech giants collectively plummeted, losing $5 trillion overnight, leaving investors in mourning and the “AI bubble theory” in full swing. That’s why NVIDIA’s financial report has attracted so much attention.
So, why is Wall Street still not satisfied, despite such a remarkable financial report? Analysts point out that the reason for the stock price drop is that NVIDIA’s performance indicators this quarter did not meet Wall Street’s most optimistic expectations.
Based on guidance, NVIDIA expects third-quarter growth to range from 75.8% to 82.9% year-on-year, which sounds pretty good, right? But bear in mind that analysts have projected 109.2%, and for the past six quarters, NVIDIA has maintained horrifying three-digit growth. So, seeing only two digits naturally disappoints Wall Street.
Of course, the demand for three-digit growth is a bit excessive for any company, but who made you the “leader of the $3 trillion pack” that Wall Street held up?
In addition, NVIDIA’s highly anticipated next-generation chip, Blackwell, was recently reported to be delayed, causing market worries and impacting stock price increases. Furthermore, increased U.S. government chip restrictions on the Chinese regime, global economic downturns, and uncertainties in the field of artificial intelligence have led Wall Street to show pessimism.
Mr. Huang once said in an interview, “today is good, tomorrow is good, but the day after tomorrow is uncertain.” It seems even Mr. Huang himself may not be able to predict how long this AI frenzy will last.
The world’s top luxury car event, Salon Privé car show, is happening at the famous Blenheim Palace in the UK. Since 2012, each year’s Salon Privé gathers various super luxury sports cars and top modified cars, earning it the title of the “car show on the top of the pyramid.” This year’s car show runs from August 28th to 31st, so let’s take a look at the highlights.
Each year, Salon Privé at Blenheim Palace features a different color theme, with 2024’s theme being “blue.” The lawn in front of Blenheim Palace is filled with stunning and expensive blue-themed luxury cars.
Salon Privé co-founder David Bagley said, “Every year, we hold a color-themed event in the center of the South Lawn, on the cricket pitch. Four years ago, it was the red series, followed by the platinum series, then the gold series, and now the blue series this year. The cars we are showcasing on the lawn are worth over £120 million. Among them are two Ferrari 250 GTOs, Bugatti Cheyrons, Bugatti Veyrons, F40s, 512s, 250 short-wheelbase, 275 GTBs; we have showcased the most stunning blue car series.”
In addition to these stunning blue-themed cars, this year’s Salon Privé has many other exciting highlights that you shouldn’t miss.
The Naran supercar, making its UK debut at Salon Privé, had its moment in the spotlight. This unique 5-liter V8 limited edition car, with over 1000 horsepower output, accelerates from 0 to 60 mph in just 2.3 seconds. From 0 to 200 mph, it only takes 16.5 seconds, offering a thrilling experience on the racetrack.
Naran’s Market Manager Harry Hughes said, “This is a supercar, designed with 2+2 seating, in a raw, intuitive GT3-style road car. This is a supercar, with only 39 units produced. Our concept is to make people feel like they’ve regained the feeling of yesteryear when they drive out in it, the feeling of accomplishment, enjoyment, and challenge.”
As a limited production of only 39 units, the Naran supercar starts at €2 million, making it an exclusive pursuit for super-rich individuals.
Harry Hughes, Naran’s Market Manager, said, “The starting price is €2 million, but it’s all customized. The car’s own brand is Naran, but the naming rights for each car belong to the owner. It’s all customized from the beginning; some customers request to be decorated with horsehair, marble, and some people request no internal decoration at all. So, it’s all customized, starting at €2 million.”
Another highly anticipated car introduced at Salon Privé is the GT ONE introduced by the famous German carmaker Brabus, known for modifying classic Mercedes-Benz sports cars. This all-new mid-engine supercar is an homage to the classic Porsche 911 GT1 race car. The body is entirely made of carbon fiber, equipped with a 4-liter, flat-six-cylinder engine, with a maximum output power of up to 600 horsepower.
Richard Tuthill, CEO of Tuthill, said, “The special thing about rally racing is that you have to navigate through all kinds of terrain. The chassis of the race cars is very low, with very short suspension travel, and encountering bumps can lead to problems. Therefore, this car’s chassis design is higher than other cars of its type, with a longer suspension travel. We believe this will be a perfect road car that can navigate in various daily roads, not just flat roads, but also rural roads. That’s my expectation for this car.”
The Tuthill GT ONE car is globally limited to 22 units and has already been fully booked.
Richard Tuthill, CEO of Tuthill, said, “We will produce 22 units. I think even if it were 122 units, they would all be sold. But we are very excited to produce 22 units for customers from various countries. The starting price is £1.5 million, and I don’t underestimate that figure.”
At this year’s exhibition, other well-known car companies, such as the famous German carmaker Brabus known for modifying Mercedes sports cars, have also brought their new products to showcase their own highlights.
If you happen to be in London, you still have the opportunity to attend this dressed-up luxury car gathering at Blenheim Palace, sipping champagne while admiring the world’s top luxury cars on the lawn.
Alright, after enjoying the luxury supercars, let’s shift our focus to some down-to-earth news in the automotive industry. On Thursday, two of the world’s leading consumer consulting firms, J.D. Power and Global Data, released a report stating that in August, U.S. new car sales will increase by over 4% compared to the same period last year. One major reason is that this year’s “Labor Day” long weekend falls in August, instead of the usual September, prompting many consumers to buy a new car before “Labor Day,” boosting August sales.
According to the report, the total new car sales in the U.S. in August, including retail and non-retail transactions, will reach 1,437,954 vehicles, an adjusted increase of 4.2% from last August. Retail sales are expected to reach 1,209,800 vehicles, up 6.8% from last year.
However, the seasonally adjusted annual rate (SAAR) of new car sales is forecasted to be 15.3 million vehicles, a decrease of 100,000 from the same period last year.
Analysts believe that the discounts offered by car manufacturers and dealers are increasing, resulting in a slight decrease in the average transaction price of new cars, thereby boosting sales velocity. Yet, some popular brands are facing inventory shortages, which in turn are limiting the pace of sales.
Also this Thursday, the ride-hailing giant Uber, and the U.K.-based artificial intelligence startup Wayve announced that they will collaborate on autonomous driving technology.
In a joint statement, the two companies said that as part of the deal, Uber will transfer a minority stake to Wayve as an investment, further expanding on Wayve’s $1 billion Series C financing earlier this year. This round of funding is led by Japan’s SoftBank, with participation from NVIDIA and Microsoft.
Wayve’s CEO Alex Kendall stated that they are developing a “universal” AI driving technology that can provide any level of autonomous driving for any type of vehicle anywhere in the world.
Uber CEO Dara Khosrowshahi also said that the two companies “share a common goal of rebuilding a better travel experience.” In the future, Uber will introduce vehicles equipped with Wayve’s autonomous driving technology on its platform.
Just recently, Uber announced a similar partnership with Cruise, a self-driving startup backed by General Motors, demonstrating its strong commitment to the field of autonomous driving.
This year being an election year in the United States, the most concerning topics for everyone besides border security are the economy. The economy is something that affects everyone’s personal interests, so both Trump and Harris have introduced their economic proposals.
People often hear economists advising governments: do not implement price controls, do not set high tariffs, do not discriminate in tax policies, and do not expand budget deficits, etc. But look, hasn’t the government done all these things? Especially when Harris outlined her economic policy, she directly stated that she would use government measures to combat price gouging, in response to inflation.
Well, economists would probably shake their heads in unison by now. Today, I want to tell you an interesting story. I hope our program, “Extraordinary Finance,” can bring you more interesting stories on a regular basis.
Alright, thank you for watching this episode of “Extraordinary Finance.” See you next time!
Subscribe to the YouTube channel: https://www.youtube.com/@NTDCHINESE.