Hey, welcome to today's Bay Area Times daily newsletter. If you haven't yet already, follow us on Twitter!

Top stories today:
1. Twitter repeatedly goes down during Ron DeSantis’s announcement
2. NVIDIA jumps 25% even as revenue is -13% YoY
3. OpenAI closes $175M fund to invest in startups
4. Fitch puts U.S. on credit watch, as no deal is reached; 7 days until June 1
5. FOMC minutes show Fed officials were divided over future rate hikes

0. Data and calendar

1. Twitter repeatedly goes down during Ron DeSantis’s announcement

• Very curated and DeSantis-friendly questions.

  • And, of course, no direct attacks on Trump.

• Elon is positioning himself as a political kingmaker. - Bloomberg

Trump and the media were very fast in ridiculing DeSantis

Including an AI-generated meme video

Trump remains the heavy favorite for the GOP nomination, at 64% odds on betting markets

The Fox News poll released Wednesday showed Trump 53%, DeSantis 20%, Ramaswamy 4%

• Quinnipiac has Trump 56%, DeSantis 25%.

  • Biden 48%, Trump 46%. - Quinnipiac

Our view: this was a failure of Twitter and of DeSantis

• Twitter broke with “just” 500K people on Spaces.

  • In contrast, Fox News reaches 3M people every night without glitches. In fact, DeSantis went on Fox after the Twitter Spaces, where host Trey Gowdy joked, “Fox News will not crash during this interview.”

• We expect DeSantis’s announcement polling pump to be smaller than normal.

  • FiveThirtyEight still believes he has a shot, given his high favorability ratings and 9 months until the Iowa caucuses.

2. NVIDIA jumps 25% even as revenue is -13% YoY

The numbers were not remarkable: revenue -13% YoY to $7.2B, non-GAAP income -21% to $2.7B

Investors were very happy with NVIDIA’s guidance

• “Revenue is expected to be $11.00 billion, plus or minus 2%.”

Our view: the stock now trades at impressive multiples

• The stock now trades at an unusual 175 P/E.

  • And a forward P/S of 17, assuming their $11B revenue guidance is correct.

• Investors are pricing in that NVIDIA will be one of the top beneficiaries of the AI revolution.

  • 91 mentions of AI in the previous earnings call; anecdotally, the current one was similar.

Read more: CNBC, NVIDIA.

3. OpenAI closes $175M fund to invest in startups

• The fund was previously announced at $100M. - Bloomberg

  • 4 investments were announced in December: Descript, Harvey AI, Mem, and Speak.

  • OpenAI also ran the Converge accelerator, investing ~$1M in 10 startups, which haven’t yet been announced. - OpenAI Fund

4. Fitch puts U.S. on credit watch, as no deal is reached, with 7 days until June 1

• Fitch blamed “debt ceiling brinkmanship”, but also said that they “would expect the U.S country ceiling to remain at 'AAA' even in the scenario of a debt default.” - Fitch Ratings

McCarthy remains optimistic, telling House GOP they may have to return from recess to vote on a bill

• McCarthy: “I still think we have time to get an agreement, and get it done. We’re not going to default.”

  • No comment on Fitch’s report, though. - Bloomberg

• Dems have all 213 signatures for the discharge petition.

  • Now need 5 Republicans to bring a clean debt ceiling bill to the House floor. - The Hill

• Treasury’s cash +$8B to $77B on Tuesday. - Treasury

Treasury yields remained high for very short-term maturities, with the June 1 bond yielding 6.9%

Our view: spending cuts would be healthy, but 4% GDP growth solves the debt issue without cuts

• The original GOP proposal would decelerate the growth of debt-to-GDP by about half, from 2 p.p. a year to 1 p.p. a year (above).

  • But we don't expect they will get all they asked for. A good rule of thumb for predicting is that the final bill will contain half of the cuts, so debt-to-GDP would still climb by 1.5 p.p. a year.

• The debt problems would be solved if the U.S. grew at 4% rather than 2%. At that growth rate, debt-to-GDP would be stable, even without spending cuts.

  • What matters most for U.S. economic growth is innovation, i.e., new technologies. What can accelerate that is not macro but microeconomics, e.g., how long it takes for the FDA to approve a drug.

  • Micro/regulatory reform, in all sectors of the economy, would be the greatest unleasher of economic growth.

5. FOMC minutes show Fed officials were divided over future rate hikes

• Further policy firming: “Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary.” - WSJ

Markets still price in one 25 bps hike, then 200 bps of cuts over 12 months

Our view: markets are almost always wrong in long rate predictions, so take them with a grain of salt

6. Figure raises $70M Series A for AI robots

• This comes after a self-funded $100M seed.

  • CEO Brett Adcock also invested in the A, led by Parkway Venture Capital. - Techcrunch

Our view: AI robots will bring even more value than AI chatbots

• Most of the world’s economic problems are due to a lack of things in the real world, not the digital one.

  • AI robots can enable cheaper homes, energy, food, medicines — the core human needs that haven’t seen much technological progress over the past decades.

7. Other headlines

Tech

• OpenAI CEO Altman: we might leave Europe due to EU AI Act over-regulation.

• Snowflake stock was -13% even with revenue +48% YoY.

  • Neeva acquisition confirmed: example of AI not favoring startups.

• TikTok employees post user info on internal chats.

• Former GitHub CTO raises $26M seed for new AI foundation model.

• Minnesota approves right-to-repair law.

• Microsoft warns China hackers attacked U.S. infrastructure.

• iOS 17 to include smart-home display when positioned horizontally.

• Grimes interview on AI’s impact on music.

• AI-generated podcasts are pretty boring: Wired.

Biotech

• Paralyzed man can walk again with brain and spine implants.

• Less sleep and longer life, a desirable mutation?

• 20 under 40, biopharma edition.

Business

• Semafor has 400K subs, $10M+ revenue in 2023 already.

• Washington Post creates AI teams to focus on innovation.

• Alphabet: ISS supports changing Chair, founders’ supervoting shares.

• Activision: Microsoft officially appeals UK decision blocking deal.

• Google x Genius: Biden sides with Google on copyright matter.

• Cayman Islands setting up office in Singapore and HK to lure Asia’s wealthy.

Crypto

• Do Kwon’s bail revoked by upper court in Montenegro.

• Shaq finally served in FTX lawsuit.

• DeSantis: Bitcoin represents a threat to current regime.

U.S. politics

• 1st interview with IRS agent that whistleblowed on Hunter Biden.

World

• Prigozhin warns of Russian revolution, wants martial law “like North Korea.”

• 20K Russian troops died in Bakhmut: Prigozhin.

8. Interesting tweets, memes, and images

Was this newsletter forwarded to you? Sign up here. Liked it? Forward it to friends and get rewards (see below).

Thank you for reading Bay Area Times. Got any tips? Email us at [email protected].

Disclaimer: The Bay Area Times is a news publisher. All statements and expressions herein are the sole opinions of the author. The information, tools, and material presented are provided for informational purposes only, are not financial advice, and are not to be used or considered as an offer to buy or sell securities; and the publisher does not guarantee their accuracy or reliability. You should do your own research and consult an independent financial adviser before making any investments. Assets mentioned may be owned by members of the Bay Area Times team.