Breaking Analysis with Dave Vellante

Nvidia wants to completely transform enterprise computing by making datacenters run 10X faster at 1/10th the cost. Nvidia’s CEO, Jensen Huang, is crafting a strategy to re-architect today’s on-prem data centers, public clouds and edge computing installations with a vision that leverages the company's strong position in AI architectures. The keys to this end-to-end strategy include a clarity of vision, massive chip design skills, new Arm-based architectures that integrate memory, processors, I/O and networking; and a compelling software consumption model. Even if Nvidia is unsuccessful at acquiring Arm, we believe it will still be able to execute on this strategy by actively participating in the Arm ecosystem. If its attempts to acquire Arm are successful, however, we believe it will transform Nvidia from the world’s most valuable chip company into the world’s most valuable supplier of integrated computing architectures.

The convenience of online access to bank accounts, payment apps, crypto exchanges and other transaction systems has created enormous risks, which the vast majority of individuals either choose to ignore or simply don’t understand. The Internet has become the new private network and unfortunately, it’s not so private. APIs, scripts, spoofing, insider crime, sloppy security hygiene by users and much more, all increase our risks. The convenience of cloud-based services, in many respects, exacerbates the problem. But software built in the cloud is a big part of the solution.

Cloud repatriation is a term often used by technology companies that don’t operate a public cloud. The marketing narrative most typically implies that customers have moved work to the public cloud and for a variety of reasons - expense, performance, security, etc. - are disillusioned with the cloud and as a result are “repatriating” workloads back to their safe, comfy and cost effective on-premises data center. While we have no doubt this does sometimes happen, the data suggests that this is a single digit, de minimis phenomenon.

The pandemic not only accelerated the shift to digital, it highlighted a rush of cyber criminal sophistication, collaboration and chaotic responses by virtually every major company on the planet. The SolarWinds hack exposed supply chain weaknesses and so-called island hopping techniques that are exceedingly difficult to detect. Moreover, the will and aggressiveness of well-organized cyber criminals has elevated to the point where incident responses are met with counter attacks designed to both punish and extract money from victims via ransomware and other criminal activities. The only upshot is the cybersecurity market remains one of the most enduring and attractive investment sectors for those that can figure out where the market is headed and which firms are best positioned to capitalize.

Recent survey data from ETR shows that enterprise tech spending is tracking with projected U.S. GDP growth at 6-7% this year. Many markers continue to point the way to a strong recovery including hiring trends and the loosening of frozen IT project budgets. However, skills shortages are blocking progress at some companies, which bodes well for an increased reliance on external IT services. Moreover, while there’s much talk about the rotation out of work from home plays such as video conferencing, VDI and other remote worker tech, we see organizations still trying to figure out the ideal balance between funding HQ investments that have been neglected and getting hybrid work ‘right.’ In particular, the talent gap combined with a digital mandate means companies face some tough decisions as to how to fund the future while serving existing customers; and transforming culturally.

UiPath has had a long strange trip to IPO. How so you ask? Well, the company was started in 2005 but its culture is akin to a frenetic startup. The firm shunned conventions and instead of focusing on a narrow geographic area to prove its product/market fit before it started to grow, it aggressively launched international operations prior to reaching unicorn status. Well prior - like when it had very little revenue. Today, more than 60% of UiPath’s business is outside of the United States, despite its New York headquarters. There’s more. According to recent SEC filings, UiPath’s total revenues grew 81% last year...but its free cash flow is modestly positive. There’s more. The company raised $750M in a Series F in early February at a whopping $35B valuation. Yet the implied back of napkin valuation based on the number of shares outstanding after the offering multiplied by the proposed maximum offering price per share, yields a valuation of just under $26B. And there’s even more to this crazy story. #BreakingAnalysis #theCUBE #UIPath

Moore’s Law is dead right? Think again. Massive improvements in processing power combined with data and AI will completely change the way we think about designing hardware, writing software and applying technology to businesses. Every industry will be disrupted. You hear that all the time. Well it’s absolutely true and we’re going to explain why and what it all means. #BreakingAnalysis #theCUBE #ETR #MooresLaw

Exactly one week after Pat Gelsinger’s announcement of his plans to reinvent Intel, Arm announced version 9 of its architecture and laid out its vision for the next decade. We believe this vision is very strong as it combines an end-to-end capability, from edge to cloud to the datacenter to the home and everything in between. Arm’s aspirations are ambitious and powerful leveraging its business model, ecosystem and software compatibility with previous generations.

Intel’s big announcement this week underscores the threat that the United States faces from China. The U.S. needs to lead in semiconductor design and manufacturing; and that lead is slipping because Intel has been fumbling the ball over the past several years. A mere two months into the job, new CEO Pat Gelsinger wasted no time in setting a new course for perhaps the most strategically important American technology company. We believe that Gelsinger has only shown us part of his plan. This is the beginning of a long and complex journey. Despite Gelisnger’s clear vision, deep understanding of technology and execution ethos, in order to regain its number one position, Intel will need help from partners, competitors and very importantly, the U.S. government.