After a really horrible Thanksgiving (see below) we’re back with technology earnings galore this next week, and perhaps a clean non-farm payrolls report: what employment picture is President Joe Biden handing off to President-elect Donald Trump? We may get a clear indication of the hiring picture (absent two-hurricanes, a Boeing strike and that whole election thing.)

Our big reports last week on Crowdstrike (CRWD: Nasdaq),  Dell (DELL: Nasdaq) and Elastic (ESTC: Nasdaq), Nvidia (NVDA: Nasdaq) are available to clients, with video summaries on YouTube and, of course our popular summaries of the summaries – c’mon, it’s one minute – on Instagram and Tiktok. (A calendar of our upcoming video reports at the end of this note). 

As always, I’m focused on three things:

1. Technology-driven-change;

2. the latest startup trends and;

3. stock fraud. 

In this note:

Table of Contents

• Elastic, AI’s Quiet King

• Cybertruck Tragedy: A Tesla Problem?

• Eyes On Synopsys

  • Upcoming Earnings In Focus

  • My Plans This Week

Elastic, AI’s Quiet King

The company is often overlooked. But last week’s results showed us that, as much as any company, Elastic (ESTC: NYSE) drives enterprise AI infrastructure. 

While Alphabet (GOOGL: Nasdaq), OpenAI’s Chat GPT and NVIDIA (NVDA: NYSE) capture headlines, Elastic has become essential to practical AI deployment. Founded in 2010, Elastic transformed from search provider to AI infrastructure cornerstone – talking about vectorization and AI long before anyone noticed. In today’s early AI-era, Elastic has become a standard for powering Retrieval Augmented Generation (RAG) applications across industries. 

Earnings last week proved this: ;ast quarter showed strong growth, with Q2 FY2025 revenue reaching $365 million. Revenue grew 18%.

Technical innovation sets Elastic apart. Its vector database leads downloads globally. Better Binary Quantization (BBQ) technology reduces memory requirements by 32x versus traditional storage methods. This matters. All sorts of organizations are battling rising AI computational costs and, while we often focus on the nuclear power as a way to accelerate AI implementations, efficient software like Elastic and Synopsys (SNPS: Nasdaq) (see below) do just as much to lower costs.

Data confirms Elastic's AI momentum. Over 1,550 customers use its AI capabilities. Of these, 240 spend above $100,000 yearly. Q2 FY2025 brought three new AI contracts exceeding $1 million each. GenAI commitments doubled from Q1.

Announced partnerships were almost silly, including Alphabet, Amazon (AMZN: NASDAQ), Microsoft (MSFT: NASDAQ), NVIDIA, and OpenAI – a who's who of AI. This ecosystem approach positions Elastic as vendor-neutral AI infrastructure. Enterprise deployment accelerates and production use grows.

To be sure, the company needs to expand from the silos of Observability, Security and Search to the opportunity at hand – a broader solution across the enterprise. As generative AI moves from experiment to implementation, it offers Elastic that chance. 

The search company has quietly become an essential part of the AI ecosystem. 

Cybertruck Tragedy: A Tesla Problem?

On Wednesday morning in Piedmont, Ca. three college sophomores -- Soren Dixon, Jack Nelson, and Krysta Tsukahara -- died after Dixon’s Tesla (TSLA: Nasdaq) Cybertruck crashed and instantly burst into flames. The sole survivor, Jordan Miller, 20, was pulled from the burning vehicle by another friend who came upon the scene seconds later. All of them were Piedmont High School graduates home for Thanksgiving.

I’ve known all four kids since they were in elementary school – they’re so close to my own children. My kids talked to or hung out with all of them the day of the accident. I can’t possibly overstate the weight of this tragedy on our community.

I think it’s also a looming business story. 

The Cybertruck likely exceeded speed limits before jumping a curb and becoming wedged between a cement wall and tree. Before I wrote this note, I walked again to the accident site: the cement wall has just a few brick capstones loose, otherwise the damage is limited to a scuff on its yellow painted wall. But rather than airbags deploying at the scene of a crash and the kids walking away, the truck erupted in a fireball. The branches on the tree thirty feet overhead are singed black. 

Now that tree is a community memorial, piled with flowers, votive candles and papered with photos of the kids at all stages of their short lives, elementary school, prom, graduation… I was there for all those events.

At least one of them had an iPhone loaded with iOS 16: the “Crash Detection” feature notified Piedmont Police at 3:08 am with the latitude and longitude of the accident, a full minute before the first 911 call. Police were on the scene just three minutes later, but unable to extinguish the fire. The Piedmont Fire Department arrived shortly after and put it out – they said flames were already raging at least 20 feet high. 

The Fire Department told me this was not an issue with the Cybertruck’s lithium batteries, because, they said, they were able to put it out more easily than a lithium fire. 

But is the Cybertruck unsafe? I don’t know. 

On Wednesday, the California Highway Patrol seized the vehicle to investigate potential mechanical failure. Saturday morning came word that the National Highway Traffic Safety Administration (NHTSA) launched an immediate inquiry, marking their second fatal Cybertruck crash investigation in four months.

Tesla's Cybertruck faces mounting safety concerns amid its rollout. The vehicle has undergone six recalls already this year. The largest affected 27,100 trucks for rearview camera delays, while the most recent recall covered 2,431 vehicles for drive inverter issues. 

Tesla urgently needs this vehicle to sell. Electric vehicles are winning in the market, but Tesla is losing share in electric vehicle sales. 

Tesla delivered approximately 35,000 Cybertrucks in its first six months, with a current production rate of about 1,500 vehicles per week at its Texas factory. Additionally, Tesla recognized $326 million of “Full Self Driving” revenue for Cybertruck in Q3 (it is unknown if the Piedmont kids had deployed “FSD.”) 

Tesla company is in a hurry to get these vehicles sold, not least because CEO Elon Musk, with a newly minted job leading the Department of Government Efficiency (D.O.G.E.), is promising to slash “unnecessary” government funding. This new Trump Administration railed against electric vehicles, thinks climate change is a “China hoax” and wants to cut government subsidies across the board. 

And yet without government tax credits, Tesla would have no free cash flow in the last year. 

So Tesla needs a successful, profitable Cybertruck. A  hit to its image of invincibility, and associated liabilities, poses a significant risk to the company. 

Since its 2023 launch, Cybertruck owners have filed 19 NHTSA complaints, including a troubling incident where a passenger door unlatched with a baby inside. An August 2024 a Cybertruck driver was killed when his vehicle left the roadway, crashed into a concrete structure and burst into flames in Baytown, TX, mirroring the Piedmont accident - both involved vehicles veering off road and erupting in flames for undetermined reasons.

The incident rate appears higher than typical for new vehicles – though to be sure comprehensive data remains limited. There are fewer than 40,000 Cybertrucks on the road.  Now four people have died in Cybertruck fires this year – that’s 1-out-of-10,000. 

Other vehicles? 1-out-of-1.5 million.

(In 2022, there were 430 deaths from vehicle fires among 284.4 million registered vehicles in the United States, according to the National Fire Protection Association's Vehicle Fires Report and the U.S. Department of Transportation's Bureau of Transportation Statistics.)

One is too many. This week three were way too many – more than I can handle. 

Eyes On Synopsys

Synopsys' (SNPS: Nasdaq) upcoming earnings report is a window into the critical role its chip design software plays in shaping the future of technology. Pay attention, because the company's results will showcase the progress of tools that are transforming industries from data centers to AI.

Synopsys is at the forefront of a revolution in chip efficiency. Its generative AI solutions, like DSO.ai, are in high demand, helping create energy-efficient chips. Synopsys' Fusion Compiler is certified for cutting-edge processes like Samsung's 3nm technology, enabling powerful, efficient AI hardware. The company's collaboration with Socionext deploys advanced 3DIC Compiler solution and HBM3 IP for 5nm AI (!) and high-performance computing.

Other Synopsys products to watch include its Verification Continuum Platform, which helps catch design bugs early, and PrimeSim, a suite of next-generation simulation solutions. The company's Silicon Lifecycle Management platform is also gaining traction, providing insights to optimize chip performance and reliability.

And recent investments in its portfolio of plug-and-play IP licensing is proving that Synopsys is selling the Lego-blocks of semiconductor design. 

These tools are critical as the industry shifts from x86 to Arm (ARM: NYSE) and RISC-V architectures for energy savings. Synopsys helps optimize an unimaginable “picojoules-per-bit-transferred,” a metric cut in half over a decade through advanced modeling, packaging, and power management.

This is the anti-nuke play. With data centers consuming a growing share of U.S. electricity and a third of that power wasted, Synopsys is leading the charge in improving chip efficiency. While nuclear power makes headlines, it's Synopsys' atomic-level design tools that are truly revolutionizing the industry.

Synopsys' earnings are more than “beat or miss” – they're a barometer of progress in the technologies shaping our world. For those tracking the pace of change, this week's report is one to watch closely.

Upcoming Earnings In Focus

My Plans This Week

I'll be in San Francisco all week and thankful to have work to focus on. 

I hope these thoughts are helpful to you and thanks for indulging in my personal crapola. I’d love to discuss all of this further and, as always, comments, questions and ideas are appreciated.

^{The information contained here is provided for informational purposes only and should not be construed as legal, financial, or professional advice. While we strive to ensure the accuracy and reliability of the information presented, we make no warranties or representations as to its completeness or accuracy.}

^{This note and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error, please notify the sender immediately and delete this email from your system. Any unauthorized use, dissemination, forwarding, printing, or copying of this email is strictly prohibited. We do not endorse or guarantee the content herein and have no obligation to update or correct any information that may be found to be inaccurate or incomplete. The full context and additional information may be necessary for a complete understanding of this communication, which may be known only to the intended recipient.}

^{This is not a recommendation or solicitation to buy or sell securities. Any investment decisions should be made in consultation with a qualified financial advisor and based on your own research and judgment.}

^{We may retain and archive copies of written communications, including emails, indefinitely. This may include this note and any replies to it. By reading and acting upon the contents of this email, you acknowledge and agree to the terms outlined in this disclaimer. If you do not agree with these terms, please notify the sender immediately and delete this note.}