Nvidia and the AI bubble

• Apple (No. 4) must pay medical technology company Masimo $634 million for violating its patent rights related to features used in the workout mode and heart-rate notification features on the Apple Watch. An Apple spokesperson stated that the company plans to appeal the ruling. Meanwhile, this week, the Supreme Court declined to hear a patent appeal from Gesture Technology Partners against Apple, Google (owned by Alphabet (No. 7)), and LG Electronics (No. 215 on the Fortune Global 500) regarding their use of motion-sensing technology.
• A federal judge ruled in favor of Meta Platforms (No. 22) in a case brought by the Federal Trade Commission that accused the company of engaging in monopolistic practices with its acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively.
• Comcast (No. 35), Netflix (No. 116), and Paramount (No. 147) have all submitted offers for Warner Bros. Discovery (No. 114), per the Wall Street Journal. Paramount, which made previous offers for the company that were ultimately rejected, is the only bidder pursuing an acquisition of Warner Bros. Discovery in its entirety. Netflix and Comcast’s offers are only for Warner Bros. studios, HBO, and HBO Max. Warner Bros. Discovery is already pursuing its own plans to separate its cable TV business from its streaming and studio operations. Variety reported that Paramount is bringing together multiple sovereign wealth funds in the Middle East to fund a $71 billion bid for Warner Bros. Discovery, which Paramount describes as “categorically inaccurate.”
• Abbott Laboratories (No. 107) acquired Exact Sciences, a developer of cancer screening and diagnostics tests, for approximately $21 billion. The acquisition is set to expand Abbott’s market share in the fast-growing cancer screening market.
• Microsoft (No. 14) and Nvidia (No. 31) announced a new partnership with Anthropic, investing $5 billion and $10 billion, respectively. Anthropic will purchase at least $30 billion worth of Microsoft Azure computing services powered by Nvidia systems, Microsoft enterprise customers will have broader access to Anthropic’s Claude models, and Nvidia and Anthropic will collaborate on design and engineering.

• Walmart (No. 1) far exceeded earnings estimates with $179.5 billion in quarterly revenue as the retailer attracted deal-seeking customers from all income levels and continued to see returns from its growing e-commerce business. The strong results prompted the company to raise its full-year earnings forecast for the second consecutive quarter. Read more: Walmart wins the economic anxiety trade as cash-strapped Americans’ hunt for deals delivers another blowout quarter
• Home Depot (No. 24) missed Wall Street’s estimates and only narrowly beat on revenue with $41.4 billion for the quarter, prompting the company to lower its full-year earnings forecast. On the earnings call, CEO Ted Decker cited weakness in the housing market that’s “disproportionately impacting home improvement demand” for the results and noted that a lack of major storms has also dampened demand for building materials. Read more: Home Depot blames its recent sales slump on a major funk in the housing market: ‘Our customers are homeowners’. Industry rival Lowe’s (No. 52) also cut its full-year profit outlook, pointing to continued economic uncertainty and sluggish consumer appetite for large renovation projects.
• Nvidia (No. 31) beat Wall Street expectations with $57 billion in quarterly revenue, driven by a 66% year-over-year increase in quarterly data-center sales to $51 billion. The company raised its outlook for the current quarter to $65 billion, up from $61.66 billion. Some analysts believe the results indicate that concerns over an AI bubble are overblown. But factors including uncertain policy signals from the Fed and a cautionary warning from billionaire Ray Dalio led Nvidia shares to give up all post-earnings gains by Thursday. Read more: Why Nvidia is being punished for delivering a blockbuster earnings report
• Target (No. 41) fell short of revenue expectations with $25.27 billion in quarterly revenue, down from $25.67 billion in the same quarter last year as store traffic dropped 2.2%. During a call with reporters, COO and incoming CEO Michael Fiddelke announced plans to increase capital expenditure to $5 billion for new locations and store remodels. Read more: Target profits slide 19%, forecasts sales slumping through holiday shopping season

• Chris Wood of Jefferies Financial Group (No. 403), who predicted Japan’s crash and the U.S. housing bubble, warned of an “AI capex arms race.”
• Shangri-La Hotels CEO Kuok Hui Kwong explained that the core of Asian hospitality is not “silver candlesticks,” but “warmth and attention to detail.”
• Alex Zhavoronkov, the founder and CEO of Insilico Medicine, said GLP-1s could end up being “the first true longevity drug” as the world battles a rising obesity crisis.
• Malina Ngai, group CEO of AS Watson, noted a trend of younger customers venturing back to real-world stores because “they want to be able to touch the product.”
• Chan Yip Pang, executive director at Vertex Ventures SEA and India, asserted that China’s focus on “diffusion” and open-source may prove a better AI play than the U.S.’s drive for “perfection.”
• Asia Partners cofounder Nicholas Nash said Southeast Asia needs to “think bigger” if it wants to compete at the same level as the world’s biggest companies.

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