Nvidia Sees Major Surge in Cash Flow

Now more than 30 years old, Nvidia reported revenue for the second quarter ended July 28 of 30 billion US dollars, up an extraordinary 122% from a year ago. The vast majority of that performance was down to the data centre business, which saw a 154% year-on-year rise to 26.3 billion dollars. 

Perhaps, even more impressively, Nvidia's net cash from operating activities in the six months to July 28 tripled year-on-year to 29.8 billion dollars. 

Net cash flow from operating activities in 2023 versus 2020
Source: The Magnificent Seven - Follow the Money

In this decade, Nvidia has seen a massive increase in its cash flow, thanks to its leadership in the development of the GPUs (graphics processing units) underpinning the recent advances in AI. In particular, Nvidia has benefitted from a step change in spending on AI-related computing capacity by other members of the so-called Magnificent Seven, notably Amazon, Meta, Microsoft and Alphabet.

Like Apple, Nvidia makes an extraordinary return on capital employed (ROCE). Nvidia made a ROCE of more than 80% in 2023, compared with an aggregate ROCE of the Magnificent Seven of 29%.  In the telecoms industry, ROCE tends to be below 10%.  

Source: The Magnificent Seven - Follow the Money 

Apollo Go Now Fully Driverless in Wuhan

Chinese Internet giant Baidu reported that its Apollo Go ride-hailing service has successfully transitioned to offering 100% fully driverless services in "practically the entire Wuhan municipality." It said that all its vehicles in the city are now operating without the need for human safety officers on board, reducing the cost per vehicle in the second quarter of 2024 by more than half compared to the same period in 2023. In the first quarter of 2024, 55% of trips in Wuhan were fully driverless.

In Wuhan, Apollo Go's 400 vehicles are now available to seven million people around the clock, Robin Li, CEO of Baidu, told analysts, but its share of the city's ride hailing market is just 1%. The number of Apollo Go's pickup points at the end of June had increased by over three-fold from the previous quarter, he added. Nationwide, Apollo Go provided about 899,000 rides to the public in the second quarter, marking a 26% year-over-year increase. That equates to about 69,000 rides a week. Waymo, Alphabet's self-driving ride hailing service, recently reported that it is now making 100,000 paid trips a week in the US.

Apollo Go has also begin large-scale open-road testing of its sixth-generation autonomous vehicle, the RT6. Equipped with a battery-swapping solution, RT6 is priced at below 30,000 US dollars for mass production, Baidu said. "After thorough testing, we plan to officially roll out RT6 into our fleet, establishing a strong foundation for further substantial cost reductions in Apollo Go operations," Li added. Source: Motley Fool transcript

Waymo Claims to Have Doubled Paid Trips

In a short LinkedIn post, Waymo reported that its self-driving vehicles are now taking 100,000 paid trips a week - that's double the figure it reported on August 6th. The company didn't provide an explanation for the sudden leap, but the August 6th blog post did reference "well over 50,000" paid rides a week.

Waymo has also published some details of its sixth generation hardware - a modified Zeekr electric vehicle. It said the vehicle's new sensor suite - 13 cameras, 4 lidar, 6 radar and array of external audio receivers - is optimised for greater performance at a significantly reduced cost, without compromising safety. "It provides the Waymo Driver with overlapping fields of view, all around the vehicle, up to 500 meters away, day and night, and in a range of weather conditions," Waymo claimed.  Source: Waymo blog post

Streaming Sales Drive Disney Forward

 

The Walt Disney Company reported a 4% year-on-year rise in revenues for the quarter ending June 29th to 23.16 billion US dollars. The uptick was driven by a 4% rise in revenues in its entertainment division, where its direct to consumer streaming business lifted revenues by 15% to 5.8 billion dollars. Source: Disney collateral

SK Telecom Talks Up AI Prospects

SK Telecom reported that its data centre revenue grew 20.5% year-on-year to 59.2 billion Korean won (43 million US dollars) in the second quarter of 2024 "thanks to AI-driven demand growth for data centre and higher utilisation rates of the data centres." 

In the past two years, SK Telecom has invested more than 300 million dollars in AI, including a 10-million-dollar investment in Perplexity, which is developing an AI-based search engine, and a 200-million-dollar investment in Smart Global Holdings (SGH), a provider of AI data centre solutions. 

SKT says SGH developed "ultra-large AI clusters" with 16,000 GPUs for Meta in 2023 and was selected in 2024 as an AI cluster operator of the Voltage Park with 24,000 GPUs. "We plan to combine SGH’s capabilities to build and operate AI clusters with SK Telecom’s solutions, such as data centre management system and liquid immersion cooling, to target the global AI data centre market aggressively," SKT added. "SGH owns edge solutions specialised for industrial applications. The two companies will cooperate to develop telecom edge AI solutions by combining AI with telecom infrastructure."  

Also targeting the PAA (personal AI assistant) market, SKT has started to offer a call recording and summary service and real-time call interpretation service for Android handsets via its A. (A dot) app. As of the end of June, the cumulative downloads of A. (A dot) had exceeded 4.55 million. "In the second half of the year, we will upgrade (the) UX to make it more user-friendly and introduce a generative AI search feature of Perplexity," the telco added. SKT also plans to develop localised PAAs in collaboration with telcos in various countries and expand the service worldwide.  Source: SK Telecom collateral

.  

Waymo Reports 50,000 Paid Trips per Week

Waymo, Alphabet's driverless ride hailing service, is expanding its service area to cover more places in the San Francisco Bay Area and Los Angeles County. Waymo said its operations now cover 55 square miles of the Bay Area. 

The company said that Waymo One is growing steadily, serving well over 50,000 paid rides per week across San Francisco, Los Angeles and Phoenix, up from 10,000 a week in May 2023. However, Waymo had hoped to be serving 100,000 trips a week by the summer of 2024.

"In total, members of the public have taken more than two million paid trips with Waymo, and our vehicles have driven more than 20 million miles fully autonomously," it added. Source: Waymo blog post

AI Prompts Meta to Crank Up Capex Again

Meta reported a 23% year-on-year rise in revenues for the second quarter of 2024 (in constant currencies) to 39.1 billion US dollars. Capital expenditure rose 33% to 8.17 billion dollars. That equates to a capital intensity of almost 21%.

Meta anticipates its full-year 2024 capital expenditures will be between 37 billion and 40 billion dollars, and it expects significant capex growth in 2025, "as we invest to support our AI research and our product development efforts." 

Mark Zuckerberg, CEO of Meta, again highlighted the stronger than expected sales of Ray-Ban Meta glasses "thanks in part to AI." He said that "demand is still outpacing our ability to build them, but I'm hopeful that we'll be able to meet that demand soon. EssilorLuxottica has been a great partner to work with on this, and we're excited to team up with them to build future generations of AI glasses as we continue to build our long term partnership."

He went on to suggest that the glasses need to be significantly better to go mainstream: "Compared to, I think, what it needs to be, to be like a really leading piece of consumer electronics, I think we're still early, but all the signs are good." 

Zuckerberg also said that Quest 3 sales are outpacing Meta's expectations. "In addition to gaming, people are increasingly taking advantage of Quest's capabilities as a general computing platform, spending time watching videos, browsing websites, extending their PC via virtual desktop, and more."

Within Meta's Reality Labs segment, revenue was 353 million dollars for the quarter, up 28% driven primarily by Quest headset sales. But Reality Labs expenses were 4.8 billion dollars, up 21% year-over-year. Source: Meta's collateral

Reporting its quarterly results, chipmaker Qualcomm added: "We remain excited about the continued positive momentum in XR (extended reality), particularly the success of Meta’s Ray-Ban smart glasses. Sales are exceeding our expectations, due in part to the integration of Llama (Meta's AI model), and we foresee an acceleration in demand for extended and mixed reality devices as new use cases enabled by generative AI gain scale." Source: Qualcomm results