Newsletter #43: NVIDIA Delivered. AI Bubble Question Persists + Is A Trap. Benedict Evans Has The Framework.

The conversation around whether we are or aren’t in an AI bubble led to heightened expectations around NVIDIA's earnings and the conversation they had with Wall Street last week.

While NVIDIA delivered, the AI bubble conversation persists.

I’m often asked questions about whether or not we’re in an AI bubble, whether the investments in data centers will pay off, my thoughts on energy constraints etc.

While I’m not sure what the “right” answer is to the question of whether or not we’re in an AI bubble, I try my best to calibrate my answer based on the technical quotient of the person asking the question and my sense for how deep into my nerdville world they want to go.

What I do know is every single time I answer those questions, I recommend 3-5+ pieces of content if the person wants to go deeper.

There are a small number of people who I would universally recommend to anyone, regardless of technical quotient or interest level, and Benedict Evans is without question one of those people.

If you know who Benedict Evans is, you know why I endorse his perspective so strongly.

If you don’t know who he is, I’m beyond stoked to put his work on your radar.

Twice a year, he publishes “a big presentation exploring macro and strategic trends in the tech industry” which personifies the term “brain food” (s/o Shane Parrish).

Last week, he published “AI Eats the World”.

An outstanding, 90-slide presentation that touches on so much of what I believe we’re living through that supports different dimensions of how I answer those questions.

Phenomenal research, data, insights and an incredible ability to distill the most complex topics into their essence via elegant visuals and storytelling.

So for Newsletter #43, I wanted to try something a little bit different.

Instead of a longer-form written newsletter, I tried to curate a number of "AI eats the world" slides that frame how one can think about answering those questions.

And then I wanted to leave you with a few key quotes by NVIDIA CEO Jensen Huang from the intriguing earnings call.

Hope you enjoy it.

Here we go.

1: We've been here before. History doesn't repeat itself but it most definitely rhymes.

What can we learn from previous platform shifts?

2: The risk of missing out is so much greater than the risk of over investing.

Therefore, CapEx investments from Big Tech are rooted in deep conviction.

3: FOMO is driving a CapEx surge

$400B in deep conviction in 2025 alone.

4: How will this new thing, LLMs aka electricity, work? We don't know, yet.

Important to have the conviction to figure it out aka never run away from AI, always run at it (s/o Bill Gurley).

5: How do we operationalize our AI-first ambitions? What do we do next that scales?

Low hanging fruit everywhere. Automate what you know, Augment what you do aka give your people superpowers.

6: How much software / product or human expertise do we need to wrap around LLMs to realize their promise, at scale?

Never underestimate the importance of AI-native Systems Integrators and Forward Deployed Engineers (s/o Palantir Technologies) to close the AI execution gap.

7: Once companies figure out Automation, what happens when they focus on Augmentation?

Critical that you figure out AI enabled augmentation to generate incremental and net new revenue streams before your competition does.

With the above context in mind, NVIDIA's CEO Jensen Huang's comments below during the earnings call land a bit differently.

*Comments below via The Wall Street Journal article NVIDIA's "Strong Results Show AI Fears Are Premature"

"There's been a lot of talk about an AI bubble. From our vantage point, we see something very different. As a reminder, NVIDIA is unlike any other accelerator. We excel at every phase of AI from pre-training and post-training to inference."

"The world is going - is undergoing three massive platform shifts at once."

"The first transition is from CPU general purpose computing to GPU accelerated computing and Moore's Law slows."

"Secondly, AI has also reached a tipping point and is transforming existing applications while enabling entirely new ones."

"Now a new wave is rising, agentic AI systems capable of reasoning, planning and using tools from coding assistants like Cursor and Claude Code to radiology tools like AIdoc, legal assistants like Harvey and AI chauffeurs like Tesla FSD and Waymo. These systems mark the next frontier of computing, the fastest-growing companies in the world today, OpenAI, Anthropic, xAI, Google, Cursor, Lovable, Replit, Cognition, OpenEvidence, Abridge, Tesla are pioneering agentic AI.

"So there are 3 massive platform shifts. The transition to accelerated computing is foundational and necessary, essential in a post-Moore's Law era. The transition to generative AI is transformational and necessary, supercharging existing applications and business models. And the transition to agentic and physical AI will be revolutionary, giving rise to new applications, companies, products and services."

"Well, these are all issues and they're all constraints. And the reason for that, when you're growing at the rate that we are and the scale that we are, how could anything be easy? What NVIDIA is doing obviously has never been done before. And we've created a whole new industry."

"Now on the one hand, we are transitioning computing from general purpose and classical or traditional computing to accelerated computing and AI. That's on the one hand. On the other hand, we created a whole new industry called AI factories."

"The idea that in order for software to run, you need these factories to generate it, generate every single token instead of retrieving information that was pre-created. And so I think this whole transition requires extraordinary scale."

A whole lot to consider when someone asks - "Do you think we're in an AI bubble?"

Critical to consider what is is driving the platform shift, the acceleration driven by Big Tech conviction and where we are in the platform shift when the question is asked.

Ultimately, it's about how that translates to your conviction.

Best time to close the AI execution gap? Yesterday.

Next best? Today.

Enjoy your week.

Alec