Almost CANCELLED After HONEST Nvidia Opinion!? - Dan Ives

yeah there's really a game of thrs that's playing out look I believe in the last 25 years it's probably along with eCommerce you really the start of the internet we're talking one of the most transformational themes that we've ever seen cover intact I think right now Microsoft Nidia are clearly the winners but but you have names like alphabet meta and others that are going for what I view as an $800 billion Market over the next decade just starting to play out but that's why investors recognize this is not hype this is a real monetization theme that we believe is going to have just a massive ripple effect across tech for years to come I certainly agree with you on that it's going to be with us years to come it's going to change the landscape it's going to change jobs as we know it for years to come but let's talk about the short term because we had a chart just there a moment ago meta is up 104% year to date inidia up 114% year to date so in the short term I wonder how much of this high is going to end badly because when I when I think about how governance hasn't kept pace with technology another area that comes to mind is our crypto right so maybe AI in the very short term is being ridiculously overhyped in the same way that crypto was and then when the Regulators come to Circle everything turns pear-shaped yeah and I think that would be like one of the big arguments right now that I hear from investors I think the difference here is the monetization I mean we're seeing for every $100 of cloud spend potentially $35 to $40 could be incrementally now monetized because of AI and I think on the consumer side you're seeing similar metrics for for the likes of alphabet meta and others so I think that's the difference here is that the monetization is real and it's near term now no doubt the regulatory guard rails that continues to be a big issue that needs to play out but I think right now in this arms race for AI investors they can't wait back and just watch they really need to pick their winners clearly Microsoft Nidia at the top of the mountain what is the risk then Dan if uh Microsoft and Nvidia are the house targarian in this AI Game of Thrones what is the risk that any premium they may be able to command could be undermined by the US China Tech war and they become collateral damage yeah look it's a great question and I think in terms of us China in terms of this cold Tech War that's playing out it's really and we saw it in Asia over the last few weeks there's really a the coupling going on I I I don't almost call it there's two battles there's the US battle and then there's China battle and obviously Alibaba JD 10 10 others that are going for that as well as a lot of innovative AI plays so I don't really view that in the near term that's going to negatively impact this I actually think there's AI arms race going on both in us and China and I think that's how investors are looking to play it but no doubt right now in terms of the US because of Microsoft Chat GPT in Nidia that continues to sort of be the one that I think is pulled ahead significantly Nvidia the eminent designer of Graphics processing units or gpus has been on a remarkable upward trajectory over the past several years this meteoric rise has been largely fueled by the surging demand for its Advanced chips particularly in the burgeoning field of artificial intelligence or AI as Nvidia continues to break records and expand its influence industry observers and investors are keenly interested in one critical question can this phenomenal growth be sustained in the long term to understand nvidia's extraordinary success it's essential to delve into the multiple factors that have driven its growth the AI revolution has been a significant Catalyst for nvidia's Ascent AI technologies have permeated various Industries transforming operations and creating new opportunities in particular nvidia's gpus have become indispensable in AI applications due to their unparalleled performance in processing complex algorithms these gpus are crucial for both training AI models and conducting inference operations in data centers where AI models are trained and deployed at scale nvidia's gpus are the Preferred Choice these high performance chips enable faster processing and more efficient handling of vast data sets which is critical for AI workloads nvidia's roots in gaming have also contributed to its success the gaming industry has seen exponential growth and nvidia's gpus are at the Forefront delivering the power needed for cuttingedge graphics and immersive experiences the automotive industry's push towards autonomous vehicles has further bolstered demand for nvidia's technology nvidia's gpus play a pivotal role in processing the massive amounts of data required for autonomous Driving Systems to function safely and effectively nvidia's commitment to technological leadership has been a Cornerstone of its growth strategy the company invests heavily in research and development consistently pushing the boundaries of what gpus can achieve this Relentless focus on innovation has resulted in a series of groundbreaking products that outperform competitors and new industry standards obviously a blowout report I think everybody's expectations were Sky High and like Nidia took it to the Moon I mean it just really went High um what was the Catalyst to raise your expectations uh excuse me your price Target um what did you hear that led to that because a lot of this was kind of priced in we were kind of expecting Nvidia to beat right right uh I would say well first of all obviously the numbers went up right so they did beat you said about you know investor expectations were elevated but you know consensus expectations were lower than where the numbers came in there were whisper numbers I mean there were whisper numbers and you know I would say yes and in many way we hear the whisper numbers and Nvidia met the whisper numbers let's let's let's put it that way but our numbers went up and with the numbers going up keeping the same multiple uh on our uh new earnings estimate our price Target went up now having said that there were some concerns going into the quarter about sustainability of demand you've got a product transition this is a transition year and uh Nvidia answered a lot of those concerns uh the demand on the existing Hopper architecture remains very strong is expected to remain strong there's a new version of the hopper coming out h200 uh Invidia talked about uh demand exceeding Supply through the rest of this year on h200 and then when you look ahead Blackwells around the corner which is a new architecture and with all of that in mind demand uh potentially exceeding Supply well into 2025 uh the numbers are going up and uh the Outlook looks quite strong medium term I just want to be clear when you're talking about the product transition you were there were some concerns about a quote unquote air pocket some companies would hold off on buying so you feel like they addressed all those concerns Nvidia has introduced a range of innovative products such as the RTX series of gpus which have revolutionized gaming and professional Graphics the RTX gpus feature realtime Ray tracing capabilities which significantly enhance visual Fidelity Nvidia has also developed specialized chips designed specifically for AI workloads the tensor core gpus for example are optimized for deep learning applications offering unprecedented performance improvements Beyond Hardware Nvidia has made substantial advancements in software platforms like Cuda have become essential tools for developers enabling them to harness the full power of nvidia's gpus for a wide range of applications a robust ecosystem of Partners developers and manufacturers has been another critical factor in nvidia's success this ecosystem amplifies the value of nvidia's products and creates a network effect that drives further adoption Nvidia collaborates with a diverse array of Partners including leading tech companies academic institutions and startups these Partnerships facilitate the development of innovative solutions that leverage nvidia's technology Nvidia has cultivated a large and active developer community Through initiatives like the GPU technology conference or GTC by providing res resources training and support Nvidia empowers developers to create cuttingedge applications that push the boundaries of what's possible with gpus many Hardware manufacturers integrate nvidia's gpus into their products ranging from consumer laptops to Enterprise servers this widespread integration ensures that nvidia's technology reaches a broad audience and meets a wide array of needs nvidia's dominance in the data center Market is a critical driver of its growth I do and uh one of the things Nvidia talked about on the call which I think was really interesting is about AI monetization now so if you can make money on AI now which you can using Nvidia gpus companies service providers are doing that and the other thing Frank that was really interesting to me was that there's a broadening of the spend I think on AI so Nvidia talked about Enterprise customers coming in consumer internet companies coming in of course the big cloud service Riders we've all seen the capax numbers contining to go up and so there's a broad-based demand right they also had uh healthcare companies they threw those in there we I'm going to talk to you guys about that in just a minute James I'm going to come over to you you're an Nvidia investor uh we were just showing the revenue chart I mean that's incredible just that ramp up when it comes to revenue I also want to talk to you about valuation so um about a year ago uh Nvidia was trading at about 61 times for earnings now it's about 41 times um as an investor with this kind of massive growth is this actually cheap are you looking to maybe even get even deeper into Nvidia now well it's our biggest position so I'm not sure how much bigger we can get um but that being we wen't sure how much bigger Nvidia could get so that's fair that's fair um but I mean we're we're playing the entire data center infrastructure buildout so from that standpoint our exposur is significantly overweight relative to the indices that being said your question on nvidia's valuation yes so long as the earnings continue to grow in the manner in which they have you know we see that valuation uh Justified so we'll continue to stick stick with it for the forceable future the only questions we have really are around what do the economics of the business look like uh as the new chips and the next stage of chips uh enter into the fold you know do they come in at lower margins and and and uh what does that earnings path look like but that being said all the things that they said on the call you know we think that coming away from this the confidence in estimates is only bolstered and strengthened um at least for the next 12 to 18 months so I think that should count keep the valuation intact and um and it contines the momentum in the stocks for sure data centers are the backbone of the digital economy and nvidia's gpus have become the gold standard for AI workloads in these environments training AI models require significant computational power and nvidia's gpus Excel in this area leading tech companies including Google Amazon and Microsoft rely on nvidia's gpus to train their AI models ensuring that Nvidia remains deeply embedded in the AI ecosystem once AI models are trained they need to be deployed for inference making predictions or decisions based on new data nvidia's gpus are equally Adept at inference tasks providing the speed and efficiency needed to support realtime AI applications the rise of cloud computing has further Amplified nvidia's impact major cloud service providers offer GPU based instances powered by Nvidia enabling businesses of all sizes to access high performance Computing resources on demand while nvidia's future looks promising several potential challenges could hinder its sustained growth as the AI Market continues to expand Nvidia faces increasing competition from both established players and new entrance companies like Intel and AMD are investing heavily in AI Technologies seeking to capture market share Intel for instance is developing its own AI specific chips while AMD continues to enhance its GPU offerings to compete directly with Nvidia a wave of startups is also entering the AI Hardware Market bringing innovative solutions and fresh perspectives these new entrance May introduce disruptive technologies that challenge nvidia's dominance increased competition could lead to price pressure impacting nvidia's profit margins as Rivals introduce competitive products Nvidia may need to adjust its pricing strategies to maintain market share the global semiconductor shortage has highlighted the fragility of Supply chains and poses a significant risk to nvidia's growth the ongoing chip shortage has affected many Industries including Tech nvidia's ability to meet demand for its products could be hampered by supply chain disruptions leading to delays and potential revenue losses ensuring adequate manufacturing capacity is crucial Nvidia relies on third-party foundaries like tsmc for production and any capacity constraints or disruption options at these facilities could impact nvidia's ability to supply the market Beyond production logistical challenges such as shipping delays and geopolitical tensions can affect the timely delivery of products you know we often talk about this company kind of being uh really focused on data centers but in the release they said they're seeing a broadening out of their customer base in your mind does that change your outlook on the company of course in a positive way does it kind of raise your expectations for not only the next quarter but going forward the fact that they're seeing so many more different types of companies looking to utilize their chips and they mentioned Healthcare which I thought was really interesting earlier this week we had cop on um they're partnering with open AI so we're seeing just a broadening out of what I would call I guess AI use cases yeah I mean I I think obviously that underscores the bullishness for Nidia but I think what it does most of all is the is um uh solidifies the fact that this this movement toward Ai digitization and of services um will continue to happen and happen at an accelerating rate so you have a target-rich environment of companies that can capitalize on that NIV of course being the fuel uh to that fire uh via their chips so you know we take it uh that being said as a very bullish stance on me in the entire um geni um transition you know I also thought it was interesting they mentioned Sovereign Nations they went out their way to say that when I was in uh London um talked to a couple companies about the build out of the Sovereign Cloud across Europe so that could be an interesting story going forward Ruben I want to come back to you as you look at this stock increasing the dividend by 150% so that's a popping number but in reality after the split it's going to be a 1-cent dividend per share is that meaningful does that change anything about this stock and how you view it it's going in the right direction and uh comes back to cash flows cash flow numbers continue to go up and uh I think the company you know is uh is doing the right thing uh share holder allocation U you know philosophy I think is going in the right path Nvidia has done some small t Acquisitions and I think they're going to continue to bolster the software part of it something that James just said is really important the margin structure of the company has been going up and to the right maybe comes back down a little bit with the new uh product uh family that launches next year but there's a big software aspect to nvidia's you know kind of longer term strategy and I think that that is really interesting as you think about the multiple the valuation and then margin structure of the company so up and to the right in the right direction any holes in this report I mean I have to ask you any any questions anything that's like a you know a bad mark would you look at these numbers I I really couldn't find anything to nitpick uh you know like I said we we had some concerns going in and Nvidia I think answered a lot of the concerns I guess the one concern that came up last night from some investors is what do you think about China Nidia did discuss China on the call a little bit and uh you know still unclear it's going to be a competitive market but okay yeah as you said there's there's a lot of um strength elsewhere and I think we're still in the very early Innings of AI uh investment so James as an investor I'm sure you're happy about the dividend even though it's only going to be one penny a share asking the same question to you any holes in this anything that raises even an eyebrow of concern no no not at all I mean I would Echo I would Echo the the China but I mean we're staying away from China all together you know obviously Nvidia is somewhat exposed but um you know aside from that I think I think it's great and obviously the dividend boost but I think the the stock split is also a really big deal um that obviously no economic implications but you know we up even a bigger pool of retail invest we keep saying that but I mean stocks seem to go higher after the split we always say it doesn't mean anything but it means something to somebody Nvidia must navigate these complexities to maintain a reliable supply chain regulatory changes particularly in areas like export controls and trade policies pose another significant risk changes in government regulations regarding technology exports could impact nvidia's ability to operate in key markets like China stricter export controls could limit nvidia's access to critical components or restrict sales to certain customers geopolitical tensions and shifting trade policies can create uncertainty and disrupt Global Supply chains Nvidia must stay a breast of regulatory developments and adapt its strategies accordingly to mitigate potential impacts as regulations evolve compliance requirements may become more stringent Nvidia must ensure that it meets all regulatory obligations to avoid penalties and maintain its license to operate in various ious markets while the AI Market is still in its early stages there is a risk of eventual Market saturation as AI Technologies become more widely adopted the explosive growth rate may slow down Nvidia must continuously innovate to create new applications and markets for its products to counteract potential saturation diversifying into new markets and applications Beyond AI will be essential for sustained growth high performance Computing for instance offers opportuni for expansion and revenue diversification retaining existing customers and expanding their use of nvidia's products will be critical Nvidia must ensure that its products continue to deliver value and meet evolving customer needs to maintain strong relationships and drive repeat business to maintain its upward momentum Nvidia will need to adopt proactive strategies Innovation Remains the lifeblood of nvidia's growth the company must persist in its aggressive investment m in research and development to stay ahead of the curve developing Next Generation products that push the boundaries of performance and efficiency will be crucial Nvidia must anticipate Market needs and deliver solutions that address emerging challenges continuing to invest in AI research will ensure that Nvidia remains at the Forefront of this rapidly evolving field collaborating with leading academic institutions and research organizations can drive breakthroughs that keep Nvidia ahead of competitors enhancing the software ecosystem around nvidia's Hardware is equally important providing robust tools Frameworks and support for developers will ensure that nvidia's technology remains accessible and versatile expanding into new markets and applications Beyond AI can provide additional revenue streams and reduce Reliance on any single Market segment high performance Computing or HPC is a natural extension of nvidia's capabilities by targeting industry such as scientific research finance and Healthcare Nvidia can tap into new sources of demand for its high performance gpus the rise of edge Computing presents another opportunity for diversification nvidia's gpus can power Edge devices enabling real-time data processing and AI inference at the edge which is critical for applications like iot and autonomous systems expanding into consumer electronics such as smart home devices and wearable tech technology can also provide New Growth Avenues nvidia's expertise in graphics and AI can drive innovation in these markets collaborating with key players in the AI ecosystem can strengthen nvidia's Market position and drive further adoption of its technology partnering with software developers to create optimized applications and solutions that leverage nvidia's Hardware will enhance the value proposition for end users joint ventures and co-development initiatives can accelerate Innovation and Market penetration collaborating with Hardware manufacturers to integrate nvidia's gpus into a broader range of devices can expand nvidia's reach these Partnerships can drive adoption in New Markets and applications strengthening relationships with cloud service providers will ensure that nvidia's technology is widely accessible and integrated into cloud-based Solutions further driving demand and usage despite the challenges nvidia's future remains bright the company is well positioned to leverage the growing demand for AI powered Solutions with its strong technological leadership robust ecosystem and strategic initiatives Nvidia is likely to continue its upward trajectory however the pace of growth May moderate as market dynamics evolve and competition intensifies nvidia's unprecedented growth has been driven by the AI boom and its unwavering commitment to technological leadership to sustain this growth Nvidia must focus on continuous innovation diversification strategic Partnerships and supply chain resilience while challenges such as competition supply chain constraints and Regulatory risks exist nvidia's future looks promising the company is poised to remain a significant player in the ever evolving AI landscape adapting and thriving as it navigates the complexities of a dynamic Market

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Id: ja86voO-3Fs

Length: 22min 25sec (1345 seconds)

Published: Mon Jun 17 2024