NVIDIA, Amazon, and the Path Ahead for Investors

June 2025 Client Letter

Politics can stir emotion. Investment research should rise above it.

We all hold strong beliefs—about leaders, policies, and the social issues that shape our world. That’s part of being human. But when it comes to managing investment portfolios, clarity often matters more than conviction. It’s not about how we hope the future unfolds—it’s about understanding the world as it is, and positioning accordingly.

Artificial Intelligence: A Foundational Shift

One area of growing distinction for investors is artificial intelligence. Regardless of political leadership or economic cycles, AI continues to gain momentum as a transformative technology across industries. From healthcare and finance to logistics and education, AI is reshaping how businesses operate, make decisions, and deliver value.

The demand for smarter, faster, and more adaptive technologies isn’t tied to short-term trends—it reflects a long-term shift toward automation, efficiency, and innovation. While the pace of adoption may vary, the trajectory appears clear: AI is becoming an integral part of modern life.

NVIDIA: The AI Bellwether

NVIDIA is widely regarded as a bellwether of the AI economy. It dominates the GPU market—essential for training and deploying AI models—and its software platforms, CUDA and cuDNN, are deeply integrated into AI development workflows. As a result, NVIDIA’s performance often reflects the broader trajectory of the AI industry.

On May 28, 2025, NVIDIA reported its Q1 2026 Earnings:

• $44.1 billion in revenue, up 69% year over year
• $24 billion in free cash-flow—a substantial figure

Free cash-flow—sometimes called “owner’s cash”—is what remains after a company covers its operating expenses and capital investments. It’s the capital available to reinvest in growth, pay dividends, or repurchase shares.

At this pace, NVIDIA is on track to generate $96 billion in free cash-flow this fiscal year. Yet according to The Motley Fool, citing S&P Global Market Intelligence, the consensus estimate is even higher—$103 billion—suggesting that $96 billion may understate the company’s true potential.

This level of cash generation can provide NVIDIA the flexibility to navigate uncertainty, invest aggressively in innovation, and return capital to shareholders. It’s a sharp contrast to the dot-com era, when many tech firms had minimal revenue, negative cash flow, and heavy debt. Today’s leaders are built differently—with strong balance sheets, real earnings, and durable growth potential. 

Quantum Computing: From Theory to Traction

In my September 2024 letter, I referenced physicist Richard Feynman’s 1981 talk, where he argued that classical computers are fundamentally limited in simulating quantum systems. Classical machines follow classical physics, which can’t fully capture quantum phenomena like superposition and entanglement—concepts essential to understanding the quantum world.

At the time, I highlighted emerging quantum players such as IonQ, Rigetti, and D-Wave. While these companies have begun generating revenue, their persistent losses make them less suitable for inclusion in our portfolios at this stage.

Still, investor interest is accelerating. On certain trading days, volume in these smaller names has rivaled that of the largest tech firms—a potential noteworthy signal of growing momentum in the quantum space.

Looking ahead, the path to commercial viability is becoming clearer. NVIDIA is advancing its chip roadmap with the Blackwell GPU, followed by Rubin in 2026 and Feynman in 2028. After that, we may approach the physical limits of transistor density—raising a compelling question: does NVIDIA pivot toward quantum?

At NVIDIA’s GTC 2025 Quantum Day, CEOs from D-Wave, IonQ, and Rigetti joined Jensen Huang and leaders from Pasqal, QuEra, and Quantinuum to discuss the future of quantum computing. While NVIDIA isn’t building its own quantum computer, it’s playing an important role through its CUDA-Q platform, collaborating with hardware makers to develop hybrid quantum-classical systems.

NVIDIA’s goal is to make quantum computing more stable, scalable, and practical for solving real-world problems. While pure-play quantum companies remain speculative, the broader ecosystem—especially firms enabling quantum development like NVIDIA—offers, in my view, a more stable and strategic exposure for investors.

NVIDIA and the Robotaxi Revolution

NVIDIA’s momentum extends beyond data centers. Its AI-powered infrastructure—now dubbed “AI factories”—is scaling rapidly to meet surging global demand. Analysts suggest the number of these facilities may need to double over the next decade.

In the automotive sector, NVIDIA’s chips already power advanced driver-assistance systems (ADAS) in vehicles like GM’s Super Cruise. But the real excitement lies in the emerging robotaxi market.

Today, competition in this space is accelerating:

• Waymo (Alphabet) is operating fully autonomous ride services in San Francisco, Los Angeles, and Phoenix—reportedly delivering over 250,000 rides per week.
• Tesla is launching a pilot robotaxi program in Austin this summer using Model Y vehicles equipped with full self-driving (FSD).
• Uber is partnering with Volkswagen to roll out a robotaxi fleet in 2026 using electric ID.Buzz vans—and is also collaborating with NVIDIA.

Some clients have expressed hesitation about driverless cars. But consider this: human drivers can be distracted, fatigued, or impaired. Autonomous vehicles—especially those using lidar (light detection and ranging)—offer a different kind of safety, creating detailed 3D maps to detect pedestrians, signs, and obstacles even in complex environments.

So, who wins the robotaxi race? Waymo? Tesla? Uber?

For NVIDIA investors, it may not matter—because NVIDIA supplies the chips and platforms that power all of them. CEO Jensen Huang has taken an agnostic approach: support every major player in the ecosystem. No matter who crosses the finish line first, NVIDIA appears well-positioned to win. 

Amazon: Addressing the Last Mile

Amazon continues to push the boundaries of AI—especially in logistics. According to The Information, the company is developing AI software to power humanoid robots capable of navigating real-world environments and delivering packages.

To support this effort, Amazon has built a specialized indoor testing facility—nicknamed the “humanoid park”—at its San Francisco office. The obstacle course includes stairs, doorways, and even a Rivian delivery van. The goal: train robots to “hitch a ride” and “spring out” to complete deliveries.

This marks a major leap beyond Amazon’s current fleet of 750,000 robots, which operate in closed fulfillment centers. The “last mile” of delivery remains one of the most complex and costly parts in the logistics chain—making it a prime target for innovation.

In parallel, Amazon has launched a new agentic AI team within its advanced technology division. Their mission: build systems that can interpret natural language and act autonomously—turning warehouse robots into flexible, multi-talented assistants.

“We’re creating systems that can hear, understand, and act on natural language commands,” Amazon told Silicon Valley.

While still early, this project reflects Amazon’s long-term vision: a hybrid logistics network where AI-powered robots work alongside human drivers to boost efficiency and reduce costs.

Amazon’s Takeover of Your Closet

AI isn’t just powering futuristic tech—it’s transforming everyday life, including how we shop. One standout example: Amazon’s growing dominance in fashion.

Once a bookstore, Amazon is now one of the largest apparel sellers in the U.S. According to Wells Fargo:

• Amazon accounted for 13.2% of total U.S. apparel and footwear sales in 2023—roughly $68 billion in revenue.
• It captured over 41% of all online apparel sales—more than Walmart and TJ Maxx combined.

And the momentum continues. Projections suggest Amazon’s apparel sales could exceed $76 billion by the end of this year.

What’s driving this growth? Strategy and scale. Amazon’s in-house brands—like Amazon Essentials—have become go-to options for affordable basics. A Wells Fargo survey found that basic apparel is the second-most popular category consumers are willing to buy on Amazon, just behind electronics.

With intuitive shopping, fast delivery, and competitive pricing, Amazon has become a default destination for clothing. Even traditional retailers are adapting—or partnering—because competing with Amazon’s scale and AI-driven logistics is no easy task.

Investing in the Future

As we look ahead, one thing appears clear: artificial intelligence isn’t a passing trend—it’s a foundational shift. But investing in innovation doesn’t have to mean chasing speculative startups or unproven technologies.

Companies like NVIDIA and Amazon are at the heart of today’s most transformative trends—from AI infrastructure and quantum computing to autonomous vehicles and next-generation logistics. Yet they’re also established, resilient businesses with strong balance sheets, real earnings, and positive free cash-flow.

As always, we’re here to help you navigate what’s next. If your financial situation has changed—or if you have questions about your investment portfolio—please don’t hesitate to call us at (800) 843-7273.

Warm regards,

Matthew A. Young
President and Chief Executive Officer