Dear Reader,
A bit disappointing, but the SpaceX launch was scrubbed yesterday due to weather conditions. We’re back on for Saturday afternoon. Fingers crossed for better weather. I’ll provide another reminder tomorrow for those who are interested…
On the economic front, good news and bad news today.
As I was reviewing the U.S. jobless claims this morning, the additional 2.12 million claims brought the 10-week total above 40 million. But there was a silver lining.
The ongoing benefit claims dropped for the first time during this pandemic. This is the total number of current claims that are still receiving unemployment benefits.
Considering that most U.S. states’ unemployment benefits last up to 26 weeks and we’ve only been in dire straits for the last 10 weeks, that likely indicates that businesses have already started to rehire and bring people back to work.
Outstanding. We can see it in the numbers…
It doesn’t mean that we’re out of the woods yet, however, as the second quarter is still a disaster. But the U.S. economy is definitely on the right track toward recovery.
We’re not going to recover back to what we remember as normal, though.
Take Starbucks, for example. We’d be hard-pressed not to find one in almost every major city in the world. We can find a Starbucks, or several, in just about every town in the U.S.
And while the company expects 90% of its stores to be reopened by early June, things won’t be like they used to. Right now, stores offer only drive-thru and to-go orders… no in-store dining or drinking.
In fact, the corporate strategy is shifting significantly. Starbucks is planning to build more stores with drive-thrus and will close Starbucks stores in malls across the country.
Starbucks is the largest coffeehouse company in the world with more than 30,000 locations. And we can already see how it is adjusting its retail strategy for a post-pandemic world before we are even halfway through COVID-19’s full lifecycle.
I used to work for Kevin Johnson, the current CEO of Starbucks, when he was the CEO of Juniper Networks. Back then, I was the president of Juniper’s Japan subsidiary. Howard Schultz, the former chairman of Starbucks, also served on Juniper’s board when I worked there. He eventually recruited Kevin to run Starbucks.
It might seem like an odd jump to move from information technology to coffee, but we can see the same agility common to the high-tech world in a proactive move like this by Starbucks.
We’re going to continue to see shifts like this in the retail space: drive-thru service, curbside pickup, outdoor dining, home delivery, and for those who can afford it, highly personalized private shopping experiences.
And for retail businesses, maintaining connections with existing and new customers through platforms like social media (Instagram) will be more critical than ever to survive.
I was absolutely floored by our first insight…
Last week, NVIDIA held the first digital version of its GPU Technology Conference (GTC). For newer readers, NVIDIA is a technology company known for its graphic processing units (GPUs), which are commonly used in artificial intelligence applications.
GTC is the company’s big annual event where it reveals major product announcements. And this year sure didn’t disappoint…
NVIDIA announced its A100 artificial intelligence (AI) chip. And this thing is an absolute horse. It has 54 billion transistors on a single chip. It can run at five petaflops, which means it can do five quadrillion operations per second. That’s 20 times more powerful than NVIDIA’s previous-generation chip, Volta.
Most sequential product releases in the semiconductor industry deliver maybe 2–3 times performance. To see a 20x jump like this in a single generation is unheard of.
Allow me to put this in context…
To handle AI training tasks today, one customer needs 600 central processing unit (CPU) systems to handle millions of queries. To achieve this level of processing power, the customer requires 25 racks of servers, costing $11 million and 630 kilowatts of power.
But with NVIDIA’s new product, all that’s needed is a single server rack, costing $1 million and just 28 kilowatts of power.
So NVIDIA’s new product provides the same processing power at one-tenth of the cost and just 4% of the power requirements. Wow.
I worked as a technology executive for decades. It’s not often that a breakthrough really stuns me.
What we’re talking about here isn’t even exponential growth. It’s a massive leap in one shot. And that’s going to accelerate the development of AI. After all, without the hardware to run more advanced AI software, the industry quickly grinds to a halt.
This chip’s cost makes it accessible to all corporations and government agencies. And we can expect companies like Amazon Web Services to acquire the tech and make it available for rent in the cloud.
That will put it in the hands of any researcher or data scientist who wants to experiment with the world’s most advanced AI hardware.
The industry is going to jump all over this. We can expect to see extraordinary breakthroughs in AI come in the second half of the year.
I first publicly recommended NVIDIA back in early 2016 to a group of wealthy investors. Some people thought I was crazy. But I saw the company’s potential. NVIDIA was the No. 1 S&P 500 stock of that year. The stock is up more than 1,000% since that original recommendation.
Four years later, NVIDIA is still innovating. Shares of NVIDIA (NVDA) are going higher. This company is unstoppable.
Speaking of AI… AI-enabled chatbots are growing like crazy right now.
We’ve talked about chatbots before with Google’s Meena and Facebook’s Blender. These are conversational AI that can understand human language – including nuanced questions – and formulate meaningful responses.
It’s not surprising that chatbots are on the rise. Much of our economy has been on lockdown these last two months.
Corporations and municipalities have transitioned to a remote workforce or have had to furlough employees for the time being. That’s reduced their ability to handle customer service functions, and it’s led to call centers becoming overloaded. I’ve even experienced this personally, to my great frustration.
As a result, traditional organizations have quickly moved to adopt chatbots to handle customer service questions. In fact, IBM saw a 40% increase in the use of its Watson Assistant from February through April. That’s a huge spike in just two months.
And much of that spike came from public sector adoption. One of the examples IBM cited was a municipality in New York that adopted Watson Assistant and trained it to answer its citizens’ most pressing questions. The AI was fully trained and ready to go in just a few days.
In addition, Google has stated that its chatbot, Rapid Response Personal Agent, has been flying off the shelves.
And there are all sorts of private companies operating in this space as well. We are witnessing the birth of the chatbot industry right before our eyes.
And here’s the thing – most of these traditional organizations would never have adopted chatbots if hadn’t been for the COVID-19 pandemic. It has forced them to make decisions that they’ve put off making for years.
And they won’t be going back. Chatbots just make too much economic sense. After all, a single chatbot can do the work of almost an entire call center without any of the overhead. Only the most complex and difficult questions – or customers – will be left for humans to manage.
One of the greatest biotech success stories of all time is Illumina…
Founded in 1998, Illumina provides the bulk of the world’s DNA sequencing technology. That’s the technology that allows us to sequence… or blueprint… our genetic material.
And Illumina has been an incredible investment over the years. Since its IPO in 2000, Illumina (ILMN) has returned around 2,000%.
Well, an early stage company called Nautilus Biotechnology is taking a page from Illumina’s book, and it could become the next blockbuster biotech investment of this decade.
Nautilus Biotechnology just raised $76 million in its Series B funding round. This is a company I have been tracking closely since its seed round in 2017. It’s gone from nothing to a $311 million valuation in just three years. That’s impressive.
The reason I’m tracking this company so closely is that I believe it just might be the next Illumina.
Illumina delivered early investors a small fortune by being the premier provider of DNA sequencing technology. Well, Nautilus Biotechnology is going to do the same thing for an area of study called proteomics.
Proteomics is the study of human proteins. This is one area where we haven’t seen much progress. Yet we know proteins serve important and complex functions within the body.
And get this – the majority of all FDA-approved drugs target proteins in the body. But we still don’t know that much about them. That’s why only two out of every 10 drugs return revenues that exceed their research and development costs.
Nautilus Biotechnology is going to change that.
Its goal is to analyze and completely map out human proteins. Its theory is that if we better understand proteins, we’ll be able to produce better medical therapies to fight disease and improve health. That way, we’ll also improve the commercial success rate and overall profitability of the drugs that get approved.
So let’s add this exciting company to our early stage watchlist. It is still private, so we can’t really invest in it now.
And for readers of my premium research services like Exponential Tech Investor, we’ll be looking for a chance to invest in Nautilus when the company goes public.
If Nautilus can do for proteomics what Illumina did for DNA sequencing, I expect we’ll make a killing with this one investment.
Regards,
Jeff Brown
Editor, The Bleeding Edge
P.S. Nautilus is still a private company. We’ll have to stay patient and wait for an initial public offering. But it’s not the only small-cap biotech company with “blockbuster potential.”
Right now, I’m tracking an early stage biotech company that’s on the verge of releasing a breakthrough therapy to address a problem that poses a $65 billion threat to the U.S. health care system.
It’s no wonder that this small biotech stock has the backing of a government agency and was even “fast-tracked” by the FDA. Get the full story on this biotech stock right here.
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
