00:57:29 · Feross Aboukhadijeh, John Coogan, Tae Kim, Jordi Hays
[00:57:29] S7: Yeah. Literally, our end of quarter was, you know, the end of last month. We, you know, we already were super busy and then there were three major software supply chain attacks that happened that same day. It's it's wild. It's it's like more than we've ever seen and it's totally unprecedented. [00:57:44] S0: Was the GitHub issue that I saw a supply chain attack or was that something else? I saw like a couple posts but I didn't get to dig into it. [00:57:52] S7: So I I don't think they've released that information yet. Yeah. There's definitely been some speculation. Mean, the the timing right now, every time a company gets popped or their source code leaks, it's it's it's the first question that people think of now. [00:58:04] S3: Yeah. [00:58:05] S7: And the group, I believe that claimed responsibility is this Team PCP group that has been responsible for a lot of the attacks. And so, you know, I wouldn't be surprised if that's what we learned, but I I don't think, you know, that's something that we know right now and I wouldn't want to speculate. [00:58:18] S0: Yeah. I wonder if there will be movements to find, like, the compute infrastructure for Team PCP at some point or like the hackers because at a certain point you would imagine that they're [00:58:28] S1: Well, they don't. I mean, some of this a lot of this is still social engineering. Right? So it doesn't doesn't they don't necessarily need, you know, a country of geniuses [00:58:36] S0: Yeah. [00:58:36] S1: Data center. Can just
00:58:36 · Jordi Hays, John Coogan, Feross Aboukhadijeh, Dylan Field, Tae Kim
[00:58:36] S1: Data center. Can just [00:58:38] S0: couple dudes with phones. Who knows? Well, congratulations on the progress. [00:58:42] S1: Yeah. Incredible [00:58:43] S0: coming on the show. [00:58:44] S1: Thanks for keeping us all safe. [00:58:46] S0: And we'll talk to you soon. [00:58:47] S7: Cool. Thanks, guys. [00:58:48] S0: Have a good one. Goodbye. Up next, we have Tae Kim from KeyContext, the hottest substack on the Internet. We have Tay Kim in the waiting room. Let's bring him in to the TV and Ultra Home. Tay, how are doing? Hey, guys. Awesome. Here we go. Kicking it off strong. Oh, good. Good fit. That you know what we need to do? We need to figure out how to do a, like, real time real time recognition of the face face tracking and then land your glasses on the correct on the correct face. [00:59:21] S1: For next For next [00:59:23] S6: AI. I'd like that. [00:59:23] S0: Yes. And maybe before we get into AI and and different companies, I'd love to just know how a key context is going. How like, what what it's been like since we last checked in. How is life? [00:59:39] S3: It's much better. It's going great. I think the last time we talked was March 30 and the market was right at the bottom. [00:59:46] S0: Yeah. That's right. [00:59:47] S3: Weary. Everything was going terrible. [00:59:50] S1: Yeah. You never worried though. [00:59:52] S3: I did not. [00:59:53] S6: I Trust her. [00:59:54] S3: Tripled, quadrupled down on here and said CPU shortage Yeah. Five CPU, five memory, Yeah. All those ideas are up 50 to a 150. [01:00:04] S0: Oh. That's
01:00:04 · John Coogan, Tae Kim, Jordi Hays, Immad Akhund
[01:00:04] S0: Oh. That's [01:00:05] S3: pretty good. I said I think 13 out of our 14 ideas are solidly in the green. I I joke that like Shoei Ohtani numbers with like three It's $4 not gonna last, but it it worked out. I [01:00:18] S0: mean Yeah. [01:00:19] S3: We trusted in the actual would love memory stocks. [01:00:22] S1: Yeah. Right? I think [01:00:24] S3: he would. I'm sure he his his financial adviser's long HBM stocks. I'm sure [01:00:30] S0: Yeah. Yeah. I read some I read some report that in in South Korea, there's folks who are liquidating insurance plans to go long SK Hynix. It's a huge, huge moment over there in South Korea. [01:00:40] S3: And everyone's making fun of these Koreans for being long memory stocks, but, I mean, we're talking single digit PE multiples. [01:00:47] S0: Wow. [01:00:47] S3: Probably going to lots two, three two to three more years Mhmm. Triple digit growth. I mean, I I quoted this Michael Dell thing where he spoke to a Wall Street conference. He said, it's twenty five twenty five. That's the thing you need to know about memory stocks. AI accelerators gonna have 25 times more like, AI GPUs from NVIDIA, two years from now, gonna have 25 times more memory per GPU. [01:01:11] S5: Mhmm.
01:01:11 · Immad Akhund, Tae Kim, John Coogan, Dylan Field
[01:01:11] S5: Mhmm. [01:01:11] S3: And there's gonna be 20 a need for 25 times more GPUs. Wow. So he said, multiply 25 by 25, you get 625 more revenue, etcetera. And you layer onto the fact that four years ago, all these memory companies saw their revenue, you know, get cut in half. So they didn't expand capacity. It takes three to four years to expand capacity. So Mhmm. We're gonna see, like, mega pricing power. Like, we haven't seen anything yet. These stocks are gonna go keep going higher, and their revenue revenue rates are are gonna be astronomical. So everyone makes fun of these Koreans Yeah. For piling into single digit PE stocks growing at triple digits. And this cycle is different because there are only three companies that can make make the HBM memory. [01:01:58] S0: Yeah. [01:01:59] S3: So don't make fun of the Koreans. They're [01:02:00] S0: right. Don't. Is the the the pullback that you pushed to that you mentioned, like, the when they were beaten up, was that the post crypto slump when semiconductor equipment and and GPUs were being used to mine crypto, and then there was a pullback there. Is that what you're referring to? Like, what is the prehistory? Why were these stocks beaten up? [01:02:19] S3: So in 2022, like, we had a kind of a a tech recession. [01:02:24] S6: Mhmm.
01:02:24 · Dylan Field, Tae Kim, John Coogan, Marcus Milione
[01:02:24] S6: Mhmm. [01:02:24] S3: Like, everyone's all these tech companies were laying off people. Yeah. Even Intel and NVIDIA had these 50% drawdowns. Yeah. The whole you know, everything was it's almost like the the post COVID kind of overhang Yeah. Where people bought too many digital computers, electronics Yeah. And there was too much overcapacity. [01:02:43] S0: And so what yeah. What was [01:02:44] S3: is different this time, really? [01:02:45] S0: What was NVIDIA doing during that 50% drawdown? Were they buying the stock back? [01:02:51] S3: Not not really. NVIDIA's if if they buy [01:02:54] S4: a little [01:02:54] S3: bit of stock Okay. Back, but not not really. And back then, this is a different NVIDIA where, like Yeah. Data centers 10% of the revenue and gaming is 89%. Now now it's Yeah. Yeah. Where data centers nearly everything. Yeah. What happened with NVIDIA back then is everyone's mined their GPUs to mine Ethereum. Mhmm. And then Ethereum did the whole proof of stake group of work thing, so demand for GPUs collapsed. [01:03:17] S0: Mhmm. [01:03:17] S3: And NVIDIA had like a terrible quarter. They where they missed by like 2,000,000,000, which was a big number back then for that. [01:03:23] S0: Now That's a rounding error. [01:03:25] S3: Back then, it was 20% of the revenue, and the stock got hit hard. [01:03:29] S0: Yeah. So what are you looking forward to from NVIDIA this quarter, this year? What are you watching?
01:03:29 · John Coogan, Tae Kim
[01:03:29] S0: Yeah. So what are you looking forward to from NVIDIA this quarter, this year? What are you watching? [01:03:35] S3: So we had, like, two unbelievable quarters the last two quarters, and I expect another great amazing quarter. I mean, Jensen is out there saying GPU consumption is through the roof. On Monday, he said AI demand is far exceeding supply and capacity. So I think the numbers are gonna be great, this is without even China. So, I mean, the absolute scale of these numbers are mind blowing. We're talking, like, 80 growth on $80,000,000,000 numbers, 79 or 80,000,000,000. Just think about it in three months. Right? [01:04:06] S0: Yeah. [01:04:06] S3: So the absolute scale and the stock is, like, almost as cheap as it's ever been. Like, it's trading at 19 times forward, below the, S and P 500, which is growing at, like, 10%. Yeah. NVIDIA is growing at 80%. So this this dichotomy where NVIDIA is becoming more and more undervalued Yeah. And we could talk about why. [01:04:26] S0: Yeah. Yeah. I'd love to know. Is that just because they're the largest company, 5,000,000,000,000. It's hard to wrap your mind around a $10,000,000,000,000 company. [01:04:34] S3: So every year we go through this cycle, the last three years during this whole upswing up, everyone says peak is here. Right? NVIDIA can't grow anymore. Mhmm. And NVIDIA keeps growing at some ridiculous growth rate. So the the skepticism the only reason why it's trading at below market multiple is that the AI skeptics believe that the peak year is near. Right? There there's gonna be a no growth