The Transition from Generative to Agentic AI

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IN THIS WEEK’S NEWSLETTER:

📈 Nvidia Earnings Continue to Eclipse Estimates
🤖 Transition from Generative to Agentic AI
🇪🇺 EU Plans Non-Bank Stress Test
🪙 Impact of Stablecoin Adoption
🌍 Real World AI Success Stories
📊 Key Points from FOMC Meeting Minutes
🏦 Factor Driving Bank Valuations

QUOTE OF THE WEEK:

“AI trade is only beginning—the implementation and utilization of AI. I see it in my own company. We are on our front foot, leading the way in incredibly innovative ways in terms of deploying AI, and it's only starting to impact us in positive ways. So I think the benefits of AI are going to be unprecedented—it’s all still in front of us. And Nvidia is the key supplier of critical chip componentry underlying that trend, which is an unappreciated investment opportunity. - John Porter, CIO, Newton Investment Management.

KEY US ECONOMIC EVENTS NEXT WEEK:

MARKET CLOSE:

WEEKLY MARKET WRAP:

CURATED INSIGHTS & ANALYSIS:

• Key Points from Nvidia Results:

  • YoY revenue growth is 69%. The data center's year-over-year (YoY) revenue growth is 73%.

  • The company believes that the transformation from generative to agentic AI will change every industry.

  • The company took a $4.5 billion write-off on inventory that can not be sold or repurposed due to the impact of export controls on China.

  • The CEO, Jensen Huang, stated in no uncertain terms that the US policy to ban exports to China is based on an incorrect assumption that they cannot manufacture chips.

  • The company mentioned that the export controls have closed the $50 billion China market for the firm and are driving the AI talent to rivals.

  • The company highlighted multiple AI success stories from its clients to demonstrate that the capital expenditures firms were making were starting to pay off.
    
    Below is the overall list of -
    

    🏦 Capital One
    Reduced chatbot latency by 5x using NVIDIA Dynamo on Blackwell, improving real-time customer response.
    
    🍔 Yum! Brands
    Deploying NVIDIA AI across 500 restaurants, expanding to 61,000+, to automate ordering, optimize operations, and enhance service quality.
    
    🛡️ CrowdStrike
    Achieved 2x faster threat detection with 50% lower compute cost using NVIDIA’s AI security stack.
    
    💡 Cisco
    Boosted code assistant accuracy by 40% and speed by 10x using NVIDIA NeMo.
    
    📊 NASDAQ
    Improved AI search performance with 30% gains in both accuracy and response time.
    
    ⛽ Shell
    Raised custom LLM accuracy by 30% through training with NeMo.
    
    🏭 TSMC, Foxconn, Pegatron
    Using NVIDIA Omniverse for industrial digital twins:
    • TSMC cut fab design time by months
    • Foxconn accelerated thermal simulations by 150x
    • Pegatron reduced assembly defects by 67%
    
    🚗 Mercedes-Benz, GM
    Leveraging NVIDIA’s full-stack AI platform for next-gen vehicle and factory systems.
    
    🤖 Agility Robotics, Boston Dynamics, XPENG Robotics
    Using:
    • Isaac – Robotics simulation and autonomy
    • Omniverse – 3D digital environments
    • Cosmos – Synthetic data and model training
    
    🧠 OpenAI, Perplexity, DeepSeek
    Running next-gen reasoning models with up to 30x throughput gains using Blackwell + NVIDIA Dynamo.
    
    🌍 Saudi Arabia, UAE, Taiwan, Sweden, India, and others
    Building sovereign AI infrastructure on NVIDIA’s platform to support national digital capabilities.
    
    🧬 GE Healthcare
    Developing robotic surgery and imaging systems using NVIDIA Isaac, Omniverse, and Cosmos.

• Key Points - FOMC Meeting Minutes:

  • Average inflation targeting or flexible inflation targeting is a more robust policy strategy capable of correcting persistent deviations.

  • The Treasury yield curve steepened materially, as short-term Treasury yields declined about 20 basis points over the intermeeting period while longer-term yields increased on net.

  • The dollar depreciated substantially. Decline was attributed to increased foreign exchange hedging prompted by heightened policy uncertainty.

  • No evidence indicated that foreign investors had sold material amounts of U.S. assets. Available data indicated modest outflows from fixed-income securities, which were primarily offset by inflows into equity securities.

  • The drop in GDP in the first quarter was due to measurement issues. Real private domestic final purchases (PDFP)—which comprise PCE and private fixed investment and often provide a better signal than GDP of underlying economic momentum—posted a solid gain.

• Stablecoins Impact:
  
  A rise in stablecoin issuance and use is expected to drive the demand for the US Treasuries. Issuers will have to back stablecoins with high-quality and liquid collateral, and US treasuries will be an obvious choice. This is a good development for the US, as it will help fund the Government and support the dollar. According to major institutional projections, the demand for US treasuries is expected to be between $600 billion and $1 trillion over the next few years.
  
  I believe this is the primary reason for the significant push from this administration to expedite stablecoin regulation, specifically the GENIUS Act, so that the US can take the lead.
  

  

• BCG - The Future of Finance Report:
  
  BCG published its Future of Finance report this week. The report contains a wealth of valuable information. Below are some of the most critical insights:

  • Success is not just about being the largest, but also about achieving scale in specific areas. Banks with scale and concentration in digitizable products have an edge. Banks with leadership in deposits lead the valuations. Deposit leadership is a direct reflection of a bank’s share of valuable primary client relationships and provides several advantages, including lower funding costs, enhanced cross-selling opportunities, and greater resilience. During periods of market turmoil, clients consider the leading players a haven, moving their deposits to these institutions and widening the gap.

    

    Source: BCG

  • Four key operating levers for banks are:

    • Front-to-Back Digitization

    • Offshore Capability and Innovation Hubs Customer Centricity From Service to Multiproduct Digital Sales

    • Focused Business Models

    • M&A at Speed: Digitization Makes the Difference

FRONT PAGES:

EARNINGS UPDATE:

EARNINGS PREVIEW:

VIDEO’s OF THE WEEK:

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