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NVIDIA EARNINGS LIVE $NVDA
Recorded: May 28, 2025 Duration: 4:02:45Space Recording
Short Summary
NVIDIA's latest earnings call reveals a strong growth outlook with projected revenues of $45 billion, driven by strategic partnerships and a significant shift towards reasoning AI technologies. The company is set to launch the Grace Blackwell architecture, enhancing its position in the AI landscape.
Full Transcription
All right, let's kick right into it.
We're starting off two minutes late here.
Yeah, no, I appreciate the squad.
NVIDIA Earnings Day.
Hopefully it is a good one
these numbers should be coming out I'm going to say this
if you're in here right now hearing this
probably hear it a bunch of times numbers are coming out at
4.20pm eastern
and then the earnings call is at 5pm
eastern on this conversation
today it's definitely going to be pretty
much all Nvidia talk so
definitely not going to have us going in all these different
directions and you know long pretty much all NVIDIA talk. So definitely not going to have us go in all these different directions
and long cut.
Talluliquies is what we will call them.
But it should be an interesting day
in the market today.
A lot of pressure, time, whatever
has been spent and thought about
in NVIDIA earnings.
And those are coming up today
after the close.
Market expectations are pretty high.
We're expecting revenue around
$43.25
billion and then 75 cents of EPS as well. NVIDIA has done a pretty good job at beating these
expectations for the most part. When I look at it, they beat revenue 16 out of the 17 last quarters,
and they beat EPS 15 out of the 17 last quarters. But as I'm sure some of the people up here will
come in and go in and talk about,
you know, the expectations for NVIDIA are pretty high,
where they don't even have to just come in and beat.
The kind of question is if there's any set of weakness there on NVIDIA.
Is that enough to knock it down?
I think this quarter might be a little different.
NVIDIA came in, I don't know, it feels like a couple weeks ago, a month ago.
It was probably less than a month ago.
They told us we're going to take a hit from our Chinese chips.
We're going to write them down to zero with import restrictions.
And now we've heard some kind of updates in that area.
So I do wonder where the expectation bar is set during these Nvidia earnings.
But I'm excited for the spaces.
Again, we're slowly getting our friends and everyone in here.
Should be an interesting conversation.
It's going to be centered around Nvidia and, uh, those numbers should be coming out at
4 20 PM Eastern followed by the earnings call at 5 PM Eastern, which we will also be listening
to live on here.
I've got a couple of stuff to talk about.
We'll, we'll go in that direction after, but stock talk, I want to actually come to
you a little bit earlier on this one and feel how you're feeling for these Nvidia earnings I want to get your thoughts on this though just to start us
off here and like how how important this Nvidia earnings is compared to some of the previous ones
when we're kind of comparing it in on itself it feels like for the last couple quarters Nvidia
has been like the centerpiece and everyone's like this is this is the thing that if you know
Nvidia comes in bad you you know, watch out.
I don't know if there's that much focus on earnings as much this, this time,
it feels like a lot of attention shifted,
but I don't know if Nvidia is like the center thing, right? It is,
but I don't know if it's as big as his previous quarter.
So I want to get your thoughts in there and just the general sentiment you're
feeling around how much people are watching these Nvidia earnings and just
kind of,
you have any high little thoughts here about it just because it's a big market
cap and obviously an important story for the AI revolution,
if you will. But no, I don't think,
I don't think it's as important as it has been in the past from the
perspective of the market can't perform without it.
You know, I think the market, like even if we don't get a positive reaction today,
I think the market can do fine without participation from this stock.
But, I mean, just by virtue of being a what's the market cap today, like $3.3 trillion market cap,
that makes it an important stock either way. I mean,
you know, people remember, you know, a couple of years ago, how much focus there was around
Apple and, you know, whether or not that stock holds up Apple and Tesla really for a period of
time were sort of the market leading stocks where, you know, if they didn't hold up
well, then the course of the overall market could change. You know, I don't think NVIDIA is
as much in that position now as it was, let's say, a year ago. But they're still important
earnings because they have implications for a lot of related companies, you know know up and down the supply chain other chip companies they have
implications for um tsm obviously they have implications for anybody who's down chained
from nvidia any of the people that are using the chips so um there are implications for the overall
data center ai gpu industry that that's where i would say there are implications. Should the overall market
view it as like a
green light, red light
scenario? No, I
don't think so. That's how I
would say it's a little bit different from
the previous earnings.
Definitely get Monitiv up here.
I definitely want to hear his thoughts.
We invited a couple people on here to uh to talk as well we also have salesforce earnings after the
close i don't know some interesting stuff going on uh let's let's shift it around here at the
start and then we'll kind of circle back options mike how you doing you got any thoughts on if you
want to give us a second or two in the market, feel free. But I do want to keep it to NVIDIA. If you're watching that, have any thoughts?
I know you're more of a trader.
Well, I did dump my NVIDIA position this morning on the open.
I couldn't decide what I wanted to do with it.
I didn't decide if I wanted to sell calls against it.
I couldn't decide how I really felt about it going into tonight.
So I decided I had about $23 in profits per share.
And I decided, you know what, I'm going
to take it here and we'll see what they say. I'm kind of on the fence as to how I feel. I'm not
worried about their actual report. I'm worried about their guidance. And I just don't know what
they're going to do to replace that $15 billion and if that's going to just cut into their guidance
here and it's not going to be what the market's looking for uh do i think the market needs nvidia to go no but i think if nvidia is bad it takes a big sector and a lot of these
names and makes them wonder uh you know are these big mega cap names that they run out of steam
again that could be an issue here but you know watching abgo which i've been trading today abgo
on highs of the day now now filling a gap i have a really nice move there. So I think ultimately NVIDIA,
the implied move is only like, it's under nine bucks. It's pretty low today, actually,
considering it's $137 stock. So they're not even implying a 10% move. That tells you that
they're not expecting much. As far as the market, it's been a very quiet day here in the market.
We just had a big drop on volume and we just took it all back and popped up
and popped up higher off of it. So some shenanigans going on here,
I suspect there's a lot of positioning here ahead of it.
SMCI is seeing a ton of call buying right now. You have the, uh,
the 30 calls for June and now the 45 is coming in.
So it looks like some fund is positioning heavily into SMCI here with some big
in the
money call buying here ahead of that. So I'm looking forward to seeing what NVIDIA has to
say tonight, because if it's good, it's in play tomorrow and all the semis are. And if it's bad,
well, then, you know, we'll see what happens. Maybe ABGO goes off of it. Maybe some of the
other names work, but you know, there'll be something else to do.
Should be, yeah, there's definitely going to be stocks moving off of it for sure
monotep i want to actually come right over to you because i know you're uh deep in the world
just uh i want to hear how you're feeling for these nvidia earnings kind of what numbers you'll
be looking forward to first where like your big question marks are out we appreciate you for in. Hey, it's good afternoon already for me. So good afternoon, guys. So look, this is going to
be a kitchen sink quarter. They have an inbuilt excuse of tariffs and restrictions to throw all
the bad news all in at once. So it's not so much what I'm looking for. They've already pre-announced
that. So what I'm looking for is on the backward looking numbers, purely the margin.
That's it.
That's all I care about.
Where is it?
And then the guidance.
Where is the margin guidance?
Where is the inflection on returning out of this kitchen sink quarter?
And what is that going to look like?
So those are the important things.
I mean, look, Blackwell numbers are going to be extremely good.
We know that.
Why?
Because I've been saying this multiple times already.
The TSM production numbers were massive beats.
That comes from either Apple or Nvidia at this point in time.
That comes from either Apple or NVIDIA at this point in time.
I don't think we have anything to support the runaway Apple iPhone sales or any other device sales yet.
So my guess is a lot of that is Blackwell's volume.
volume and that should reflect in making up more than what they lost in China.
The question, they will be asked the question about whether that entire 20 billion revenue
is irrecoverable and that 5 billion write-off takes the custom chipset to zero or whether they do
expect to recover something. Those are all interesting questions again, but the driver
is going to be margin looking back and guidance looking forward. So that's where all my time will be spent on.
Just so, you know, I do take the other side of what Stocktock said a little bit here.
It is important.
The rest of AI stack on the hardware data center side has run far more than NVIDIA has run in the recent weeks.
So at least for those, there will be a significant impact. And if it's positive,
it sort of justifies the run and maybe there's a little more run left for them. If it's negative,
then it's going to call into question everything in that AI space.
But for the market in general, we are done with the earnings season.
The market needs, you know, a big name to move it to the next level.
And that's all we have until, you know, we have either the next Fed session or major economic data or the next quarter earnings. So until then, all we have is today's NVIDIA results.
There's really nothing else that's a market mover.
And the last few quarters, NVIDIA has more been a negative mover than a positive that it was in all of uh you know 23 and uh early part of 24
where they were blowing out by you know double digits on on everything so so that is difficult
obviously to keep doing but but we are where we are with this i still think i still think nvidia
is the most important company uh for the next few weeks because we lack other data for the market to cling on to outside of the daily tariff trade.
I don't even know how many, if this, I think NVIDIA definitely is big enough to move the markets at this point.
But like I was saying earlier, what it was a year ago, just the company is still there.
But just the myopic focus on NVIDIA from the market just isn't there at this point in time.
I don't know. We'll see.
I hope we're up 10%.
That's also a function of the results not being as great as it was, you know, five quarters ago, right?
So it's like if you don't continue to beat by ever increasing numbers, the market just moves on to the next hot thing.
I see we got Wolfie up here. Wolf, you got any thoughts on NVIDIA?
Yeah, I think for me, the last point he made about other stocks and valuations is like the way that I'm looking at it.
I think there's also the commentary around the H20 for the Chinese market and how the tariffs have impacted that.
There's a story that just came out from Financial Times around semis that the Trump administration
is telling companies not to sell to China. Sorry.
There's Taco Trump, our first Taco Trump headline post-press conference.
So, no, I think for me, like that's the H20 is interesting.
To me, that H20 is interesting.
I want to see what they have to say around that.
They had $11 billion in Blackwell revenue, I think last in Q4.
So anything that upticks from there is solid.
But just take a look.
Again, I said it yesterday.
Take a look at stuff like CoreWeave that ran from $38 or $35 to 120 in a straight line
in like three weeks, right?
So things like that, if there's any sort of softness
or any sort of, you know, it met
and kind of kitchen sink some stuff,
I think the re-rating on stocks like that
would be aggressive.
So if I was looking for some sort of hedge,
I'd probably start looking, kick tires on options to the downside there instead of selling my position or whatnot.
If I want to take profits, I take profits.
But I'm just saying if I was looking for a hedge, I'd start to look there.
Because I think a lot of stuff, NVIDIA could have a lot of things go 90% of the way, and
then they can have a couple of things kind of not go the way that investors wanted. And they could, you know, Jensen is a is the superstar CEO. So you can just kind of go out there and people give the benefit of the doubt. Whereas I don't think other, you know, other semi companies, tech companies, you know, different companies that are ancillary players have that benefit
of the doubt.
So, you know, I agree with the majority of what Monit have said.
And I think that the re-rating on some of these names that have kind of just been bid
up in this performance chase the last few weeks is where I'd start to look.
Outside of that, it's, you know,
$3 trillion company, whatever it's at. It's definitely going to move things. The other
interesting thing I find now is it's gotten to that large enough of a company to where they're
not announcing before the 415 mark which i also think is
interesting because i think a few years ago it was like a one of my favorite one of my favorite
things to do just wait for them to kind of post the headline and then play the derivative off of
it um but yeah that's i mean nvidia specific that's that's where i'm talking the headline
that m just said i made a i made a joke about the taco thing,
but the headline that M just said,
I find it interesting ahead of these,
these numbers because there was a reporter earlier today that kind of
pressed Trump on him being nicknamed taco by wall street,
which is Trump always chickens out.
which he then kind of like doubled down and says, No, I don't. They think
I'm too strong or whatever. So I'm, you know, I'm kind of cautious now as we get closer to that,
that tariff deadline 90 day window as we get like past the halfway point, if he starts to ratchet
it up again on the back of just kind of being pressed that way.
And so any kind of commentary, any kind of color that NVIDIA is willing to kind of stake,
Jensen is willing to stake his reputation and name on, I'm really interested in that,
especially since he's had, I think, multiple now private dinners with the president or in the White House with the administration. So that's the majority of the stuff that I don't think I'm trying to cover
the stuff that wasn't talked about. But outside of that, revenue expectations of growth of 66%
year over year to 43.34 billion. Still a huge number, right? So like, you know, could I see a situation where
they get to like, you know, 32.9? Yeah. And that's basically in line. And then I don't,
again, in an instance like that, I don't think that these companies that have had that multiple
expansion in the last few weeks, months, whatever, get, I don't think they would get the benefit
of the doubt, whereas something like this could. Hey, let me jump in here. This thing with Trump,
it's two names being specifically mentioned. It's CDNS and SNPS. Outside of that, nothing else was
mentioned in it. So, you know, to me, the market's not dumping and the semis overall aren't dumping. Those two names are dumping, however.
Well, at some point in time, he's going to turn his attention to rest of the, you know, semi caps, right?
Because they're obviously the, you know, the frontline enablers of, you know, chip production in China.
So at some point, and they all have 40% or more of their revenue coming from China.
So that's, I think, inevitable.
I mean, we've gone ahead and tried to shut down ASML,
but we're not really, you know, hobbling our own, you know, manufacturers,
AGLAM and, you know and applied materials and the like.
So I think that's coming.
Maybe it was not mentioned today,
but if this gets any worse,
then it's not just going to be NVIDIA and AMD and Intel.
It will certainly be the semi-cap manufacturers
and Qualcomm for that matter.
Qualcomm, I think, has over 50% of its revenue from China. So one last thing, the margins that have
been mentioned, Wall Street's looking for non-cap gross margins, 70.5% to 71.5%. So that's
So that's basically the number somewhere around that 71% mark.
basically the number somewhere around that 71% mark.
One thing that I'd say is worth checking out.
You might as well look where all this AI stuff is at right now.
I did pin up in the Nest Above perplexity.
They kind of combine a lot of these AI products together so you can kind of use the best ones,
but they're working on a new finance product, which can help you with earnings.
You can type in, like, what is this number for NVIDIA?
Like, what's the historic thing?
So I would go check that tweet pinned up in the nest above,
kind of see where all of this AI stuff is at right now.
What's up, Monsiv?
Quick question for you.
Do you know if the consensus numbers are already adjusted down
for the pre-announcement that NVIDIA did?
They do tend to get adjusted in real time, yes.
So they should. should now sometimes these numbers
are still really far off but uh yes analysts do update their expectations pretty much in real
times so the number the number is for what it's worth it is a down like it is down versus the
expectation uh last quarter well 43.25 billion is what wall street is expecting last quarter. What, 43.25 billion
is what Wall Street is expecting last quarter?
No, I'm seeing 39.3, or is that
below what they guided?
I'm seeing a number
last quarter, 43.34,
and then now current guidance
for Q1 stands at 42.14
to 43.
That is not
adjusting for China. That's nowhere close to adjusting for china
you think so you think we're about to see a number closer to what they took a five
billion dollar write-off so i mean 43.5.5 four point billion. It's about a 15% margin hit, which was estimated.
My guess is numbers will have adjusted.
They should have at this time.
Stock talk, Mr. Analyst Lover.
How quickly are they adjusting their analyst expectations here?
Are they about to be caught off?
Right now?
What did you say?
Like as we speak, you're saying?
Or heading into the earnings?
No, basically.
So NVIDIA a couple weeks ago, whatever it was,
they said they're $5.5 billion write-down.
Have the analyst expectations for the earnings adjusted to inflation?
Not really.
So NVIDIA has no chance of beating numbers here is what that says.
I mean, they might have adjusted on the day or the day after that happened i don't remember but i
haven't seen any major revisions like over the past week so maybe they adjusted like overnight
when that news came out i i honestly can't recall so i don't want to tell you no they didn't adjust
to that right off because i i think any astute analyst probably would have.
But I did not see any major revisions in the past seven days.
That's what I can attest to.
I don't know about prior to that.
That is all good.
I appreciate that question there, Monitiv.
Kirk, I want to bring you into it. I know we go a bunch of different topics here. We're leaning into the NVIDIA one today. We have some earnings coming up after the close. I'm curious if you have any thoughts on that name, the sector, anything you're watching.
Real quick, they're adjusted. The numbers are adjusted. The search and AI, they said they've been adjusted by the analysts.
Okay, then they probably happened the night that that news.
Yep. Yep. I just wanted to interrupt you. I just wanted to get that out there. So they're adjusted.
There you go.
So I'm checking the same thing. That's interesting. It says 5.5 billion is an inventory write-off one-time hit.
So that's a one-time number.
So that's a one-time number. Okay. You don't have to adjust for that. Leave that alone.
Okay, you don't have to adjust for that.
Leave that alone.
But what is interesting is that $15 billion in potential sales loss that they might have to walk away from, that's not adjusted in the numbers.
However, I look at it from the old reports to now, all they're saying they've adjusted for is a potential 2 billion decline from late March peak,
reflecting impact of restrictions.
So 2 billion revenue decline they've adjusted,
but nobody is adjusted for a much larger potential decline
due to just not being able to sell at all, now or later.
That should be in their guidance
what's up kirk hey how are you doing i'm doing well i'm excited for these uh nvidia numbers we're
now less than an hour away i think that folks i don't know if they're expecting what I'm expecting, and I don't know if
it comes today, but I'm listening to what is unsaid. And, you know, Huang Jensen had said that
their market share has dropped from like 95% to 50% a few days ago in China.
I don't think people should expect that to reverse.
And in fact, I think that NVIDIA is going to lose most of their business in China
over the next couple of years.
years. Awei is right there on the AI chips into a world where it's a different type of AI chip that
will be needed in the future because most of the LLMs are built or close to built or in maintenance
mode. You know, I mean, there's not a whole lot of rapid building that needs to be done for the broad AIs.
Now we're going to get down to industry-specific or topic-specific,
and those are going to take on LQM characteristics.
I think China's closing the gap on technology with NVIDIA.
I think they're doing it fast.
So I think that the thing that people should be worried about
is that basically all of NVIDIA's business in China
is going to disappear over the next couple of years.
And that's going to have a dramatic impact
on their growth rate and their margins.
So I don't think this is the first or the last write-off they're going to be taking. I think they'll take another write-off, write-down.
If you take a look at their forward PE, it has fallen dramatically in the last couple of years.
And people say, oh, that's good. Now it's more fairly valued and gives it upside. Well, no. The reason why PEs blow out is because expectations are so high.
And once the PE starts to come back, that means that the expectations are going down.
And I think that the expectations are falling rightfully.
That doesn't mean that I don't think NVIDIA can drift upward over time.
mean that I don't think NVIDIA can drift upward over time. However, I don't think that it's going
to be the juggernaut in the next few years that it was in the last seven or eight or nine, right?
Two giant periods of outperformance. So if I'm right, and NVIDIA's outlook is less certain and less growthy for the next few years,
which I think is almost a certainty, what does that mean for the stock price?
Does it come back down to a 20 PE?
I don't know, maybe.
But I don't think you're going to see it be a huge leader anymore.
Again, not a bad stock.
It'll never be a bad stock.
But I just don't think people should expect it to, you know, what has it gone up in the
last 10 years as a multiple?
I mean, a hundredfold.
I mean, that's just not going to happen again.
So I think you have to think of
it as a mature company. And what are the growth rates of mature companies? I think you can look
at it a little bit like Apple. Apple's not going anywhere, but they're never going to be a growth
juggernaut again. So, you know, mainly because everybody has their stuff. So against the indexes,
that means these indexes are really going to be challenged
because they're going to have to find new leadership.
Now, I think Alphabet is going to be a company
that probably surprises the upside in the coming years.
I think Apple probably doesn't.
I think Tesla probably doesn't. Amazon, I think they have
some financial engineering that they haven't done yet that they will. So they probably, I like
Amazon a lot. But as far as the Mag 7, I think you're going to see some rebalancing. And I think
NVIDIA is going to end up kind of in the middle of that pack versus being the leader
and I think China is
the big reason why
I know
we got Kirk I appreciate you
I know Shy you might be on the other side of some of those
ones always love getting your takes
and good disagreement up here
why do you I mean maybe you agree with him
but we're not sitting up here
you're not going to say NVIDIA is about a 20x, it's whatever.
But why do you disagree with him if you do?
I mean, I think it's absolutely wild to compare NVIDIA's growth rate to Apple's growth rate.
I think Apple has like a 2% or 3% CAGR trading at, I don't know what they're trading at probably 28 times pe
so i get the argument that china side of their business is probably going to start eroding
that's in the low teens percentage of their total again like i know nobody really knows the real
numbers fine because of all the loopholes but that's the thing about loopholes or continue
there's going to be constant loopholes.
And I think that comparing to Apple's growth rates is widely off sides because like they're
in videos growing 52% this upcoming year, 24% next year, I think 20% the following year.
I think they have like a 20, 20% Kager in the next five years.
And I think Apple has 2% and they're around the same earnings multiple.
So I think that's a pretty aggressive comparison going off of what I believe this afternoon
for Nvidia. Yeah, I mean, China is obviously one of those the narratives just like what
Kirk's talking about. Like, but that's a known variable. Like you have to ask yourself what's known in this print, like the $5.5 billion write
down that you guys were talking about before to export controls.
That's priced in.
So yes, it's a one off.
We'll see what happens in the future.
But the whispers of like the softer H 20 demand out of China, like that's also a known variable,
but what isn't pricing?
What can't be priced in and it's the foreign foreign cadence of Rubin.
So like i'm thinking
about if jensen step seven signals will pull forward of next gen silicon into 2026 not 2027
which is when ruben and ruben ultra supposed to come to market i do think that changes the
calculus a bit and i do think that's going to cause a re-rating catalyst and i think the irony
is that nvidia's biggest challenge really isn't valuation,
it's expectation. Hopper demand shattered every single prior cycle. I think Blackwell is projected
a triple it. And I think that for tariffs, for expert bans, for everyone's on edge because of
all those variables where like Nvidia is being used as a political pawn in this compute cold
war we're entering right now
with east versus west and that's going to create a noisy noisy environment setup for a public trade
company but you're seeing it jensen like i'm hearing people in the space specifically they're
surprised and enlightened to see that jensen is doing like a world tour in a way in the past like
one or two months and there's a reason for that like he kind of needs to start
accelerating their national runway uh on ai to offset the headwind on china and i think that
people need to stop uh saying that china's gonna create uh a cuda like competitor because i've
heard it a hundred times before from broadcom from and d like companies who build chips uh they can't disrupt nvidia because of cuda and all of a sudden we're supposed
to believe that hua under sanctions they're locked out of asml they're cut off from tsm they're going
to replicate not just the performance but the entire ecosystem that nvidia has essentially
cemented themselves into permanence as the kingpin the digital economy that somehow China is going to solve that within years.
Like I call BS on that.
I think that's it was that simple.
I think Google have done it.
I think Microsoft would have done.
I think metal have done it.
Tesla, Apple, Oracle, they've all tried to build their own AR hardware
stacks and none have replaced CUDA at the developer level.
And this is before I even get into the NVD link fusion announcement that happened last week at ComputeX
that essentially gave them not the white flag,
but just gave the open the Jensen
opened the gates to all these hyperscaler players
who are creating their own silicon chips that fine.
You don't have to go all in on NVIDIA's hardware,
but you do need NVIDIA's infrastructure to make it all work.
That just symbols to me that NVIDIA is owning the rails of this AI thematic, and they could care less what train gets built on top of it.
But you need NVIDIA's infrastructure to make it all work.
So that's kind of what I'm trying to get some more clarity on today's call.
But again, the three things I'm watching today is gross margins.
Clearly, I think everyone's eyes will be on gross margins.
How much of a hit that H20 chip is going to be on there.
And what matters more is whether or not NVIDIA shows pricing power on Blackwell, Rubin,
and if those margins hold, then if that's the case, I do think there's some upside surprise
on the EPS.
Blackwell demand clearly i think
i forgot what the exact numbers i think it's like three million blackwell gpus are kind of being collected by the top four cloud providers over the coming cycles uh i do think
that this is indicating to me that demand isn't soft and the constraints still remain supply even
if you see all this flood that's generated around uh and i do think that the rude ruben ramp is what
i'm looking forward to because i think that if jensen signals that's going to come in 2026
not middle of 2027 i do think that there's that's going to cause a re-rating catalyst
but yeah i think the engines of the of the uh fourth industrial revolution will be humming
and i think that india is going to just find stock price. I don't think it really goes anywhere today.
There's just too much of noise
due to the macro front.
And yeah, I'll pass it back to you, Evan.
See Kirk itching to get in
and then I see Sam's hand up too.
Yeah, I mean, a couple of things.
One, I'm comparing the future outlook
for NVIDIA's share price to Apple's of the recent past. I'm not saying that their growth rates will
be the same. I think it was kind of disingenuous to throw that out there, actually. But if you
take a look at... I mean, your words were the growth in Apple and NVIDIA. Same sentence. Okay, I'll let you finish.
But the growth for Apple came down, and NVIDIA's growth is going to come down.
And what I was pointing out is that the expectations when it comes to price to earnings, the growth rates, that contracts the valuation.
So if you take a look at the process for Apple over the last few years, as it slowed down, its share price is just chopped, right?
It's a wide range, but it's a range.
I expect that NVIDIA is going to do a similar thing.
They're not going to be the growth juggernaut that they were from 2015 to 18.
And then again, from post COVID to recently.
And I think that that's a reasonable expectation because they're a $3 trillion company now.
You know, just the law of small numbers means that if they double in the next five years,
which I don't think is unreasonable to say, that to me would be, that means that they
really out-competed in a world where it's naive to think that the competition isn't catching up.
The competition is catching up.
It's not an expanding universe for an NVIDIA anymore.
Now they're trying to keep their edge, keep their lead, and I think they can for a while.
But eventually the universe contracts and the competition catches up.
And that is something that the market always hates, right?
So you shouldn't expect NVIDIA just to roar the way that it's worded in the past.
And that's the point.
Now, did I say it's a bad company?
No, it's a great company.
Did I say Apple's a bad company? No, it's a great company.
Did I say Apple's a bad company? No, it's a great company. But our job is to find share price appreciation. So you can be a cheerleader all you want, but the reality is that that's not really
what the game is. So, you know, take it for what it's worth, but it's going to be much, much more difficult
for NVIDIA to have share price outperformance going forward,
given the expectations
and the reality of converging competition
than it has been in the past.
And I don't know that anybody who's reasonable
can't see that.
I mean, I don't know if you got the vibe that I was saying it's going to double.
I was just saying it was egregious on your end to compare NVIDIA to Apple.
Just look at Apple's growth the past eight years on the top line.
It's been single digits, and you've seen their stock price the past eight years.
It's gone up.
I get what you're trying to say.
I'm not expecting them to go triple digits every year
like they've done the past two years.
And I understand that your perspective is shorter term than mine.
What makes you think that?
I have 30 years of watching this,
and what I'm telling you is that these cycles play out a lot longer.
Truthfully, I want to keep the conversation going on the earnings anyway.
Sam, I see you got your hand up.
That conversation kind of took a left turn there.
I'm just going to say exactly what I heard.
I heard us talking about Apple's growth being compared to Nvidia,
and I also agree with Shai.
I don't think that Apple is going to go down a single – I'm sorry.
I don't think Nvidia is going to go down a single-digit growth.
I think there's a lot more than that.
But also, markets do come off of earnings expectations and beating those expectations.
And Apple has had that buyback program in financial engineering.
It's been doing for quite some time, even though its growth has been somewhat stagnant,
which has pretty much kept it performing in line
or at least somewhat in line with the S&P 500 returns.
I think NVIDIA is going to beat the S&P 500 returns
probably at least for the next couple of years,
as long as the market stays bullish.
And when I say outperform the S&P 500 returns,
that doesn't mean that, you know,
that means that if S&P is down like 20%,
NVIDIA might not be down at 20% or something. But with that being said, we did see that downturn
last April, just a month ago, right? And a lot of that was really driven by sentiment and
expectation that they were going to miss their numbers and so on, especially with all the trade
war and tariff retaliation escalations. And then now we're coming back from that. So now if we're talking about timeline, I think it's pretty hard to
determine even from like a five year plus perspective, if Nvidia is going to be stagnant
in price for the time moving forward. So if the S&P is up in five years, it's very likely Nvidia
is going to outperform that. I mean, given the beta of the stock as well, it's very likely it's
going to outperform whatever Kager or Despy is going to return for the next five years.
To say that that's not going to happen is very difficult to say, even at this point in the stage.
But NVIDIA, I don't think other companies are catching up to NVIDIA.
I just think that as far as the demand goes, the demand isn't going to fall off a cliff anytime soon, but the demand will eventually slow down.
And that will decrease the amount of expectations for NVIDIA earnings. And I think the demand will eventually slow down and that will decrease the amount
of expectations for NVIDIA earnings.
And I think the market will follow that.
And so let's share price.
However, NVIDIA is doing those buybacks, right?
And it's using its cash flows to finance those buybacks.
Apple, on the other hand, is taking a large amount of debt in order to finance those buybacks.
It's a bit different there from my perspective.
I honestly don't care about Apple versus NVIDIA omar i see we got actually flow let's go over
to you mr flow how you doing i know you got your uh the nvidia markets on austin austin is actually
uh uh pretty cool let's you trade you know uh your own leverage and control your leverage control
the time i pinned that tweet up the nest above shout out austin they let you kind of trade on video i'm curious if you guys have any insights and like
what people have been doing and if you have any thoughts on these in video earnings
um nothing kind of so into the weeds as some of these kind of some of these other panelists i mean
they have a lot of knowledge on on nvidia that i might but that i might not but uh maybe just uh
that I might not, but maybe just coming more from a trading perspective, I guess I'm not
really liking the setup, to be honest with you, going into earnings, whether long or
short, especially for swing trades.
It's kind of at the top of the range, overextended above 50 and 200.
There's kind of multiple divergence going on, but at the same
time, you know, it's Nvidia, you know, so gut says there's probably still more room to move
kind of upwards out of this kind of short consolidation period that it's been in over
the last couple of weeks before, you know, if there is, if there is any kind of downside,
you know, probably comes after earnings. As far as options, I've heard a couple other people
talk about options plays on it.
Obviously, for long options, definitely not worth it.
IVs are pretty juiced.
Unless there's a move way outside of expected variance,
it's not going to necessarily be a good play.
With NVIDIA recently, I think in recent quarters,
that it's actually tended to underperform kind of the expected move, which I think at this time it's the expected move is around 6%, maybe 6.5% with the average of about 7.1% expected move.
So, I mean, likely to underperform that.
So there's a couple of ways to go about it.
You know, there's a couple of different, you know, like credit spreads.
There's a couple of different credit spreads.
You could try that, but that's more of like a punt too,
not necessarily like a really strong,
wouldn't take a really strong directional stance either way.
More interested in kind of tomorrow and even next week,
once volume volatility has a chance to kind of stabilize.
I think there'll be a lot of good setups in NVIDIA once that happens.
So I guess I guess one thing on the fundamental side is just that a lot of people tend to forget
that. I mean, we obviously don't know the exact percentages, but there's, you know, if you pay
attention to their sales and their investment deals from their investment arm, there's it's what
seems could be a significant portion of their sales could be
to companies that they've actually funded, which makes the ecosystem potentially somewhat circular.
You know, if those companies, if those investments in, whether it's kind of like AI robotics or,
you know, et cetera, things like that don't pan out. And, you know, basically there's,
you know, some chance of that demand, not as, you know, not being stable over the long term.
So yeah, I mean, that's just where I stand on it in general.
Would be interested to hear any kind of opinions on that as well.
Appreciate your flow.
Definitely make sure that you are following all of the speakers up here by
the way we appreciate everyone for for joining in again these earnings should be out around 4 20 p.m
eastern so keep an eye out for that um you know i'll see i'm flow talking there also very interesting
one shout out to the co-host the host all that great stuff um and uh yeah i want to keep us
moving here omar how you doing sir? You got some thoughts on the NVIDIA earnings?
Hey, yeah, doing good.
So, I mean, you know, NVIDIA is a company that has had a crazy run.
Now, a lot of people are looking at this and saying, well, how is this growth going to be sustainable?
The growth has to slow
a little bit. The margins have to contract a little bit. You have some headwinds like the
$5.5 billion write-down associated with the H20 chips. So there's some headwinds short-term. Do
I expect it to perform as well as it has in the last couple of years and just
keep shooting up? Not necessarily. I mean, when you sort of get into this size, you're running
into constraints of, you know, grid capacity at this point when we're talking about some of these
data center build outs that are going to impact growth. But at the same time,
this is just a stock that I can't not own, right?
This is a company that was a very small position for me,
I think around $10,000.
That's ballooned to a six-figure position and
there may be ups and downs there may be sort of headwinds trade headwinds
you know issues with production that slow things down but these guys have one of the most important technologies for the future.
The things that people are doing with AI, the demands for both inference and training,
are just increasing more and more as we use AI for more things,
as we move from generating text to generating video.
It's something that I just couldn't leave out of my portfolio, given what we're going
to see in the coming years and decades.
I feel like, you know, I would probably kick myself.
So as I just look at the balance of risks, the risks of missing very high expectations, of growth slowing, of margins contracting,
compared to the potential upside, this is still one that I think is going to continue to get
quite a bit bigger over the year. I think their data center business has quite a lot of room to
run. I think you're going to see new markets form,
like sort of the chips that they're putting in robots, their Jetson line and others.
I think there's a lot of growth ahead for this company, and they remain undisputed as a central player in the AI boom. I mean, there's companies like AMD and others that make almost the exact
same product, but competitive dynamics have made it really difficult for them to make inroads into
NVIDIA's data center business. So it's one that I'm going to continue to hold, whether, you know,
times are good or times are bad things would have to be you know
I think pretty stark for me to not want to buy and hold this company long term
I appreciate you Omar Brad I know we got you up here I want to dig a little bit
more into some of the numbers on this one.
I know you are a self-proclaimed nerd.
I'm curious on what you're seeing Wall Street expecting.
I know Gerg has his numbers too, so the terminal will have some of those expectations as well.
But yeah, Brad, what are we looking at here for these Nvidia earnings?
Yeah, and sorry if this was already said, but the guide from Nvidia and sell side expectations
are way different. That's because of the $5.5 billion charge from the Chinese ship export
export restrictions that were issued during the quarter. So that's the reason for the gap. But
I mean, do you want me to just run through high level numbers or kind of what matters in the
report? It's up to you. Give me what matters in their report.
Yeah, for sure. So I'm again, if I'm repeating other people, you can interrupt me. But
I think like, obviously, data centers, the most important segment for this company. And I think it really comes down to two things. One, how solid is their tech lead? Some people think AMD's new
MI chip is going to catch up. They've been hearing that, I think, for maybe like 18 months
now. So it kind of remains to be seen, and it remains to be seen, especially with NVIDIA
sporting EBIT margins over 60%. I mean, that's just a signal to you that they can kind of sell
this with whatever pricing power they want at the moment, and that's because of the tech lead.
So as long as that stays intact, and it should, I mean, they're on an annual platform release
cadence. They're innovating like crazy. They're delivering exponential performance gains for every single chip that they're introducing.
Rubin's coming and Feynman's coming after that. It's supposed to continue just this chain of delivering incredible performance gains.
But the other thing that matters here, which I think people were getting into a little bit before, is how long is this chip runway?
Because every single cycle, even this gigantic super cycle is a cycle. So,
I mean, this is not a structural growth industry. There are going to be booms and,
for lack of a better term, busts throughout all these cycles. And we've heard from all the mega
calves reiterating their CapEx guidance. We've heard from people like Jensen and others in the
industry talking about reasoning models consuming 10 or 100x the compute of these first generation legacy.
I'm using an air quote models for inferencing and training from OpenAI and all these other
companies that we're using in JATGBT and Gemini.
As we make this transition to the new agentic reasoning models where we're not just saying,
here's a task and here's how to do it and so go do it.
We're saying, here's the task and you go figure out how to do it in the best way possible.
That consumes a lot more compute, which is why we're seeing massive orders from Oracle,
which is why, again, we're seeing Google and Amazon and Meta
with their massive CapEx budget just being reiterated.
And people like Zuck and Sundar and Andy Jassy just continuing to sound the horn
on the risk being underspending versus overspending.
So the tough thing about this investment case is we don't know when the chip demand is going to slow down.
We don't know when performance gains from one platform to another are going to slow down enough to kind of make the cloud service providers and the consumer Internet giants more, I guess, more choosy about whether
they think these massive investments are worth it to keep just upgrading every single year.
But that hasn't really happened yet. We haven't really seen any signs of that happening.
It's been a few years now, and Blackwell's promising to just deliver explosive gains on
top of what Hopper 200 was delivering just a year ago. And again, every 12 months, they're
launching brand new chips and brand new platforms,
which is pretty unprecedented in the chip industry and why AMD has now switched to a 12-month cadence
because you got to keep up with the leader.
Otherwise, they'll just keep sprinting faster than you and extending the lead.
So two things that I think matter a ton are that performance gains or performance leads versus everybody else are in tax.
And I think that's pretty safe right now.
We'll see what AMD has in store for the rest of the year.
And then just any kind of signs of runways being maybe exhausted or maybe beginning to be exhausted.
We heard kind of anecdotal news from sell-siders about Microsoft maybe canceling some leases and Amazon doing the same thing.
Both of them came back and said that's just us figuring out how to allocate dollars in the best way possible.
And it does not change the amount of spend we're planning on making. The DeepSeek news with R1 and
how much efficiency that brought to inferencing didn't really make a dent on their demand at all,
because just like with the cloud computing revolution, cheaper compute means more usage
and more traction and easier access, which is a net positive for these companies, just like it was for AWS 20-something years ago. So that's a lot of words for me to say.
I don't think anyone has a really good idea of when this slows down. But before it does slow
down or even while it is slowing down, it kind of seems obvious almost at this point that NVIDIA
will just continue to lead. And I mean, you can put the data center ramps from AMD and NVIDIA right next to each other
and just see how starkly different they've been over the last few years.
And again, I think that has everything to do with the fact that it's just a better product
and a more efficient product.
And until that changes, we're going to continue seeing these really gaudy margins and this
really incredible growth until that changes.
And again, until the super cycle kind of peaks, which TBD and
when that happens. Back to you, Evan. No, I was letting someone else. I was here. I was hoping
because I saw Omar emoting during that a little bit. Yeah. Omar. Yeah. I mean, we're all talking
about slowing down. Obviously, you can't grow at this pace forever. But, I mean, we're all talking about slowing down.
Obviously, you can't grow at this pace forever.
But, you know, analysts are forecasting $43 billion of revenue for the quarter.
That's up from $26 billion a year ago.
61 cents of EPS last year.
They're forecasting 73 to 75 cents.
So 66% year-over-year growth on the top line.
This is still a business that anybody
would die to have, obviously. Now, the one thing that I think is kind of concerning long term for
the company is just this attitude we've started to develop in the Biden administration, in the
Trump administration, that selling these computers
is a national security issue. And while we need to be careful who we sell them to,
we can't sell them to China. They're doing these large sort of sovereign deals,
like their recent deal with Saudi Arabia. And there's a lot of interest, I think.
But if you start to adopt the attitude
that this is a national security risk
and we want to control who can really buy this,
that is going to put a lid on growth to some extent.
So I think they really need to sort of make their case that,
look, this is actually in the best interest
of the United States to sell these chips.
We want American technology to be dominating. We don't want a competitor to emerge that
doesn't have the same sort of restrictions that the US has, and they end up becoming
dominant in the market because of the US's desire to sort of hold these products back.
US's desire to sort of hold these products back. And I think largely the export controls have been
a failure. The black market has been extremely successful in getting these products into China
through other countries. So this is something that Jensen has spoken publicly about,
and that I think will be pretty important for them to sort of address with
the government if they want to grow at their full potential. Otherwise, you are going to see
homegrown competitors in China, like the Huawei chips, for example, that are going to have a huge
customer base handed to them in the Chinese market and overseas. And before you know it,
it won't happen overnight. But five to
10 years from now, the global standard could be Huawei instead of Nvidia if the US continues with
this policy stance, which I personally think is a very bad policy stance. I mean, to add additional
color to what Omar is saying, like, I absolutely agree with that.
I am not a fan of what being using Nvidia as his political pawn because we it's really
hard to win the race or the American AI rhetoric if we're rationing compute like, I don't know,
it's a commodity like it's oil in the 70s or 80s.
You win by unleashing it fast at scale and like with our trusted allies but if we bog our allies with all these red tape biocracies or licensing
paperwork you're gonna beijing's just gonna offer some kind of turnkey ai infrastructure solution
and now all of a sudden we open the door for a potential competitor and that's like the real
issue at play here with this compute code where we're entering
that if this lasts more than weeks the last months maybe into q4 that's enough of a time window for
beijing to create an actual it won't be like an nvidia video like competitor like with via cuda
and envi link etc but if it's 60 or 70%... Who's going to fabricate China's chips, though?
That's the thing.
I think there has to be some other ways to do that.
I mean, yeah, TSM reserves capacity for American companies.
And they likely will for the foreseeable future,
considering their geopolitical relationship with Taiwan.
And that is the crux of this entire problem.
Like, I mean, Jensen came out, what, three weeks ago, and he said, we can't make a single chip at this level without TSM. And China knows that too. And so's part of the reason why there's been such,
in fact, a bipartisan attempt, regardless of which side of the aisle you're on,
there's been a bipartisan attempt to reshore semiconductor manufacturing. Now,
the Democrats did it differently with the chips bill. The Trump administration is trying to do
it through tariffs and brute force. But the objective is the same, that we want, you know,
effectively two nanometer chips to be built in Arizona.
And once we get to that point, then I actually think that's a win for NVIDIA.
If NVIDIA has a domestic supply of cutting edge chips that can be fabricated in the United States,
that takes an enormous amount of geopolitical risk off the table for them and for other chip companies.
So, yeah, I do think china will create a competing product i'm just not sure they'll be able to fabricate a cutting edge product at scale that
remains the limiting factor for them i think 100 i mean this is china way they replicate
american ip but so so good not really at par at the same tier and you're absolutely right on the
tsm from me there there is like if china is stuck in a corner and
they see the um domestic progress we're making for our own fabs uh in the us like they might do
something way out of left field for taiwan because if you guys don't know the tsm nvidia correlation
like nvidia essentially is the gpu engine and they ship at scale tsm essentially prints that scale because every blackwell gpu
comes off of their line so like you need tsm just to get even the same ballpark arena as nvidia does
and right now at the current pieces on the board china cannot access them that line they just can't
so there is a world where things could get really, really brutal. I hope it doesn't get there.
I hope we resolve into, we're never going to get to pre-tariff rates,
but post-tariff, like 10% to 15%, I think that's digestible for U.S. and China.
But yeah, sorry, I didn't mean to interrupt you, Michelle, but I'll pass it back to you.
Oh, no, I interrupted you.
No, you didn't interrupt me.
But yeah.
I'll interrupt both of you.
Market did just close, everybody.
We got, again, NVIDIA Earnings coming out around 4.20 p.m. Eastern.
That's the time to expect the numbers.
Earnings call at 5 p.m. Eastern.
We're going to listen to that live on here as well.
Closed on the lows, too.
We were dumping that out.
I was still talking about a Perplexity reference,
since Perplexity Finance is one of our sponsors on this space.
But Perplexity CEO, Arvind arvin he said this couple of months ago maybe it was like six seven months ago but he was on an
interview and they asked them they're like hey isn't perplexity just a chat gpt rapper and then
he was like isn't nvidia just a tsmc rapper so i just thought that was relevant i love that i've
never heard that before that's a really that's a I mean, it's funny, but it's also like kind of true, right?
And his point was, was that like, if you want to be really cheeky about it, like almost
every tech company is a rapper of some other piece of hardware or some other piece of software.
But the idea is, is like, does the company at whichever stage in that chain that it is
provide enough value at that stage to be
not considered a rapper and nvidia does and so as a consequence of that as a consequence of being
the designer of the most cutting-edge chips no one thinks of nvidia that way right and so
his argument was yeah well you know people start finding perplexity to be extremely useful nobody
would think of it as a chat, a cheap, a tea wrapper.
And so, I mean, this type of thinking,
I think, should apply to all industries.
But in this case specifically,
you are dealing with a limiting factor of fabrication
when it comes to cutting edge chips.
And like the whole story dilutes back to that
no matter which angle you take.
And it's scary.
Salesforce just came out.
Sorry, what'd you say?
Salesforce just came out.
It's flying up 4% or 5% right now.
Yeah, there were other companies reporting, guys, by the way.
No one cares.
Yeah, on the subject of...
I'm not kidding.
On the subject of fabrication...
I know you're not, that's why I'm laughing
on the subject of fabrication
I think Stock Talk is exactly right
I mean
China's way behind
in the process of making chips
but fast forward
5, 10 years into the future
I mean
they believe that
Omar
good news for you
Tesla just came out and gave a date.
June 12th.
Oh, really? Wow. Hell yeah.
And they have been conducting tests already,
and this started on Monday, so two days ago.
So June 12th is the official launch,
and testing started on Monday.
Where are you seeing this?
Bloomberg.
I don't know if it said official launch, though,
or this is, like, rumors.
But I do see it, yeah.
Yes.
It said the target June 12th.
You sound a little muffled there, by the way.
I've been sick the last few days,
but the headline is Tesla targets June 12th for launch
slash early access of the Austin Road Act service.
And Sarasota said,
this week Tesla tested the Model Y
on Austin roads without
a safety driver in the driver's seat.
You know,
we talk about NVIDIA in all these different
areas. NVIDIA talks a lot
about full self-driving,
NVIDIA talks a lot about
these humanoid robots which get
nothing right now, but I
imagine there's a lot of compute that would be going behind
those ones. Not even just to train
them, but to maintain as well.
Well, I mean, this RoboTaxi launch is really
brought to you by NVIDIA. It wouldn't have happened
without their technology.
And on the point of
fabrication, China believes
that they own Taiwan.
They believe Taiwan is part of China.
It's ruled independently today, but there's always that sort of question mark.
And they've got more scientists and engineers coming out of their universities than we have university students total.
They're exploring techniques like alternatives to ultraviolet lithography,
the technology that ASML has. I mean, this is really why it's so tough, because TSMC
is so hard to catch, and because ASML is really the only way to make these high-end chips.
But they're looking at alternatives to ultraviolet lithography that could completely change the
equation for them.
Now, these things won't happen overnight, right?
They take years, maybe five years, maybe a decade.
But I wouldn't underestimate these forces and how they can play into competitive dynamics
over time.
I'm going to keep reminding you guys, 15 minutes till these video numbers come out we're here
yeah gurg we'll dig into that i do just want to remind you gurg appreciate you being here
i know you got that to term also read the numbers out right away everyone should make sure you're
following the speakers up here uh stock talk talked a little bit about perplexity up there
and the ostium tweet pinned up in the nest above go Go check that out. You know, Replexity is an AI tool that's using these Nvidia chips to create a lot of stuff.
And, you know, I think they also have a really great finance tool, which you can ask a bunch
of questions specifically about these Nvidia earnings. But Gurg, why don't you run through
some of those numbers there on what Wall Street is expecting? I think forward guidance will be
very interesting here. Data center margins is another another one which i'm sure the market is focused in on pretty pretty closely uh but what's uh
what are these numbers gurg i think wolfie covered the five billion dollar charge so this is why we
have a big difference in the gap and non-gap numbers and i think it was Wolfie. I'm not exactly sure who covered that. I assume it was him.
But the margins are expected to contract by a bit.
Cross margins last year were 78.9%. And this time the market expects 71.1%.
So the main thing is revenue.
Top line is expected to be 43..34 billion, which is up 66% year over year.
And the breakdown is 90% data centers.
$40 billion of the $43 billion is going to be data centers.
Gaming is remaining 7%.
Automotive OEM is just another 2%.
EPS of 88 cents, up from 61 cents year over year, up 44%.
Free cash flow up slightly from 15 to 20 billion, which is up around 33%.
The main thing that matters is the guidance.
The guidance is $46.5 billion.
That's what the market estimates.
Up from $30 billion in Q2 or Flasher.
Gross margins would be slightly down to $72.1 billion.
Up from 75.7% in the previous quarter.
Is that what you have to
do or do you have different numbers for us?
Every number I have is extremely
different. Really? No, I'm kidding.
No, I'm kidding. We're similar
in there.
I'm excited for these numbers. Is there one or two
that you think you'll be looking at specifically first?
I would say the gross margin
and free cash flow.
But end of the day,
Enrique is probably going to be at $45 billion for this quarter,
but the main thing that matters is the guidance.
The guidance matters.
Gross margin matters a lot
just because they said on the last call
that they're going to return to all-time highs
in gross margins this year.
And so you need to see signs of that this quarter,
or else the market might call back on that.
They won't get that.
I think that might cause some downworts on the stock price.
I don't think that's going to happen this year.
I agree with you.
I don't think they're getting back to all-time highs.
So Stock Talk, last year in Q1,
they posted 78.9, highest ever.
But now the market expects only 71.1.
So, it's exact.
Yeah.
I think Jensen said, like, return back to mid-70s.
So, let's just say 75% sometime this year.
I think that you can, they have a scapegoat.
They can just say the macro is pushing that terminal rates to next year.
But I don't know how the market is going to react to that.
Because I do not think it's going to get to 75%. I actually think they'll settle in the 60s next year but that might be a
little special that would be a bit that that would be pretty big on i mean look look look this is the
reality like we talked about this yesterday there's no industry in the history of earth where
competition doesn't eventually come okay and it usually gets mocked in the early stages i mean
we talked a little bit about tesla
yesterday like initially there's a first mover advantage and you're able to leverage that and it
especially to the onlooking public it looks like no one can compete right it's like wow your product
is so much better that you're not going to have any competition you're just going to enjoy all the
market share forever that's never happened for any company ever.
And it won't happen.
And so is NVIDIA the leading product?
Yeah.
Do they make the best GPUs in the world?
Yeah.
If you want to have a leading AI training program today, are you going to be entirely outfitted with NVIDIA GPUs?
Yes.
All of those things are true today.
And most of the Mag 7 AI infrastructure spend is going to them.
All of those points are true.
You can't contest any of that because it's just fact.
But eventually, someone will make a reasonably priced, relatively competitive product.
It doesn't need to be on the same level of performance as NVIDIA's packages.
It doesn't need to have peripheral advantages like the CUDA software or NVIDIA, the rest of the stack of software they have.
There's going to be differences like there are when you buy a Samsung phone versus an iPhone, but there will be competition.
And when that comes, gross margins will compress.
This is just business 101.
Like this isn't shouldn't blow anyone's socks off.
That will happen.
The hard part is knowing when. And
I think gross margins will plateau this year for NVIDIA. I think it's already really hard
in any business to maintain 70 plus percent gross margins, let alone in a business that has
the eyes of the entire world on it, you know, trillions of dollars of investment globally from
the Middle East, from China, from Europe, from the United States, eventually you will spawn
other winners.
It just always happens.
And, you know, I don't, my bias is probably not towards it being AMD.
I know that's the default option that a lot of people go to.
We talked about this yesterday.
I think, you know, designers like Broadcom might be in a better position with the A6.
We talked about that yesterday.
But the point is, there's a lot of angles of attack here to take incremental market share.
NVIDIA can still be the overall leader with the vast majority of top-level spend,
but there's going to be other players, and we just have to figure out when and who they're going to be.
And that's, you know, there's a trade to be made there at some point.
I don't think gross margins are going to collapse this year.
I think they can probably hold onto the 70 handle for the rest of the year.
I would imagine, unless there's a big surprise.
But next year,
I think you could start seeing gross margins bleed into the sixties and then,
you know, we'll see what volume looks like at that, at that point,
if volume's high enough to compensate, then, you know, maybe it won't be an issue, but that's just an inevitability. you know, we'll see what volume looks like at that point. If volume is high enough to compensate, then, you know, maybe it won't be an issue.
But that's just an inevitability.
You know, it shouldn't shock anyone to hear that.
It's not really an opinion.
It's just sort of an inevitability.
The other thing we talked about yesterday that kind of gets overlooked a little bit.
First of all, like with valuations where they're at and with the market cap where it's at, like it doesn't take much to kind of not bleed the stock aggressively,
but bleed it sideways for a while. But there's also the incremental demand shifts from companies
trying to like create their own type of chips for whatever projects they might want to do.
And though they can't do that right this second, like the
advancements of AI itself and like the ability to kind of, you know, grow out further, the companies
that are, that are large enough are going, they already have, you know, certain divisions dedicated
to creating chips, whether it be quantum, whether it be, you know, chips for vehicles, whatever the
case may be, they're going to try to create something
that works for them, keep things in-house as much as possible.
And it just takes a little bit of incremental less demand, incrementally less demand to
kind of plateau it, just like you said.
So I'm in the camp that there's not just one competitor.
It's not like, you know, like yesterday we were talking about Tesla.
It's not like you have a car and then there's another car competitor this is like a little bit different
especially with the advancement of technology like how fast things are moving and how rapidly
changes are happening like for all we know in like 36 months there could be like a real viable
candidate for not quantum as we know it but something close right so as far as so those
changes along with some of the in-house stuff,
I think I agree with you.
I think it's going to be tough.
And then especially if we actually do see tariffs stick here
for a little bit, that's just another release valve
for some of that pressure, in my opinion.
Ernie, coming on two minutes?
I think, no, it should be 420.
So it should be seven minutes actually.
And the earnings call again, 5 p.m. Eastern.
A couple of tweets pinned up on Nespa.
Make sure you're following the speakers.
A lot of great tools out there.
We'll talk more about the numbers in a second.
But yeah, 420 p.m. Eastern is what time you should be expecting those.
One thing that I think, you know, I hear what you guys are saying,
this, that, blah, blah, blah.
I think people misunderstand know, I hear what you guys are saying, this, that, blah, blah, blah.
I think people misunderstand how big AI is, how much compute it's going to end up taking.
Margins might end up coming down, but at what scale are we talking about those margins coming down at?
And, you know, I'm not saying, I don't think anyone's going to come up here and say,
in videos of 10x over the next five years, God, that we would be printing so much money if that's the case um but uh you know i i think we're still i still think we're in the first or second inning of this ai i think we definitely are i think the biggest argument is
what's the one-to-one correlation on the training demand headwind and the inference demand tailwind
nobody really knows that's going gonna take some time to phase
out because all the bearish argument is on the hardware side of nvidia competitive headwinds
the geopolitical tensions that's all on the hardware side of their business the eco side
everything else inference demand is going to go through the roof once the product is actually
cheaper it's just like as gas becomes, more people are willing to drive their car
from point A to point B.
That's essentially what AI is gonna do eventually.
And I do think that their CUDA specifically
is like kind of in a perfect position
to capitalize on multiple secular growth themes,
not just AI.
I think Evan just remade some commentary
on the physical AI component of it through RoboTaxi.
There's also a quantum component. Like who knows what other secular growth themes are going to capitalize on it as well but
i think they print so much cash that even if they go let's just say it goes to like what vishal
saying 60 next year not this year but next year they're still printing a hundred plus billion
dollars every single year they're gonna go go do the financial engineering routes and the stock won't go diminish that
much or won't go that much lower.
It just might not go anywhere.
Worst case scenario, if the margins go to mid 60% and this might be opportunity cost,
dead money until the weighted of their revenue profile skews more on the CUDA and MVLink
rather than the hardware side. and that takes years to phase out
But again, it's I think it's a riskier predicting the end of this AI party for Nvidia than predicting
I think it's I know Omar's hand up
So I want to jump over there but shy I have one question for you
So I'm actually curious what your opinion on this. I know you mentioned earlier like if
The next gen is pulled forward that you think that that's bullish I think for now I would
agree with you but at what point do you think a more quickly reiterated refresh cycle will actually
dampen pricing power like at what point do you think it's going to be at a deterrence to regular
upgrade cycles for customers if they think okay
well jensen's just going to make a new more powerful chip next year like at what point do
you think that inflection happens as soon as we have domestic fabs up and running at a certain
point i think that's going to be the tell for that when the supply constraints go away exactly
okay but i think that's going to take years that's that's a tricky thing like it's gonna take a while but as soon as that gets to the green light i think it's really
important to reevaluate the future next like two years of nvidia's route whenever that happens
because it's gonna change the form the calculus once the supply the constraint stops being the
supply but i'm gonna pass to you omar because you're unmuted. Yeah, I think StockTalk made a good point earlier
about competition.
You know, obviously when you see a product
with 70% gross margins,
that's probably not sustainable long-term.
You've got a big target on your back.
But I think the aspect of this that people miss
is there already is a ton of competition i mean there are other
makers of gpus there's amd of course google's got a great product called the tpu the tensor
processing unit that they sell through google cloud there is actually you know quite a few
alternatives in terms of gpus and training nIA is just wiping the floor with the competition,
so much so that we don't even consider there to be competition.
And in AMD GPU, which does almost the exact same thing,
the software tooling, the drivers are so far behind
that they're essentially useless.
So in the short term, I think people could be disappointed.
You could maybe see growth a little bit slower than people expect, especially with all of these
trade tensions. I think you're going to see margins compress. But the high order bit here
that I think most people miss because they can't imagine it is that in the future, the entire
global economy will be run by these chips. Pretty much every job you see anybody doing,
any sort of physical thing with robotics, any sort of mental or knowledge task,
there's going to be GPUs behind every aspect of it, right? And I just remember this interview from the 80s where people, someone asked Steve Jobs,
you think there could really be a computer in every home?
That was considered crazy, you know, one computer in every home.
Now we've got a phone with a computer, a watch with a computer, you know, computers in our
you know, computers in our TVs, computers on our desks, laptops.
TVs, computers on our desks, laptops.
The demand for these computers ended up being much greater than anyone could imagine at the time.
And I think we're standing at the practice of a similar moment.
Real quick, I just want to add on top of this in the next 30 seconds.
There's also the smartphone penetration that's not really accounted for when we're discussing the GPU expansion across the entire world. Like people think that the data center really just relies on servers. We're also
talking about the edge when it comes to Cloudflare as far as providing compute for strategically
closer positioning data centers. All right, go ahead.
Yeah, numbers are out. EPS.
81 cents.
$44.1 billion in revenue. so that's a beat in revenue.
You're saying $0.81, you're saying?
Yeah, $0.81, which is a beat on EPS as well.
Beat on top and bottom line for NVIDIA.
Datacenter revenue, $39.1 billion.
Forward guidance.
Expect $45 billion of revenue next quarter.
Do you have what was expected again?
A margin was 60.5, which doesn't seem correct.
That might include the loss of 4.5 billion that they included.
Yeah, it does say margins were 60.5%.
Yeah, Outlook is 45 billion dollars. Mark%. Yeah, outlook is $45 billion.
Market expected 46.
That's a miss.
Stock is not moving too, too much in After Hours, actually.
That is a small miss.
Are you sure EBIT was a beat?
I have it at 75 cents is my expectations.
I'm seeing it being reported at 88 cents in other places.
Yeah.
And I'm also seeing 94 cents.
And I saw one that's posted 96 cents.
I don't know.
You guys are all over the place.
96, 98, 94, 88, 81.
Yeah.
Even Bloomberg.
Bro, Bloomberg has four numbers there.
I have 81 cents versus 73 44.06 first 43
So a 93 was the adjusted
Guy estimate but and we did about 81 cents adjusted EPS, but actually PS was 81
Yeah, I have 81 cents versus 73
expected.
I have 81 versus 74 expected.
I mean, I don't know.
The revenue next quarter,
$45 billion below expectations.
This is not a good report.
I was stuck up. Again, you have to ask yourself billion below X or 45 billion below expectations. This is not a good report. I'll stop.
Again, you have to ask yourself what's not being priced in. A lot of these headwinds were being
priced in a couple weeks ago. So I think the report right now I'm looking through. There
isn't any new variables yet. Looks like the Q2 guides right in line, basically.
44 to 46. No, you take the midpoint, and so it is a little bit below.
And for a company like NVIDIA,
that's going to be, you know,
a lot of times it's going to be punished.
I have the EPS numbers, correct?
That's definitely taking into account that thing.
Let me dig in a little bit deeper,
but it is saying 61%.
Well, okay.
Well, maybe not next year, guys. Maybe right now.
What did I say 10 minutes ago? I was like, yeah, it'll fall to 60% next year.
No, it's actually going to fall to 60% right now as we speak.
Guys, talk talk.
Yeah, the scoop guy is he's insider.
It says that the Q2 rev number outlook reflects a loss of
$8 billion dollars in H20 revenue
Nvidia stock up three and a half four percent in after I was unable to ship and added
2.5 billion of H2
20 in Q1 so that might be pushed to Q2. Wolfie, what number did you say compensated
for the 8 billion loss, the gross margin? I said, it says NVIDIA sees Q2 revs 44.1 to 45.9 billion
versus 45.92. Facts that consensus. This outlook reflects a loss in H20 revenue of approximately a billion due to the recent export control limitations. Oh, wow. So they're, they're relatively in line even after that
compensation. Exactly. Yeah. That's pretty good. That's the relief. That's pretty good then. That's
probably why the stock's getting a bit of a bid here. I mean, we've seen some crazy moves on this.
It's only up 2%. Yeah no i'm not i'm not
saying let's wait for the call i'm just saying i can yeah no for sure that bidders are probably
like the bidders that are stepping in right here are probably stepping in on that the fact that
the guides yeah it's not as bad yeah if you if you would have told people ahead of it that you
know the q2 would be in line uh the gross margins would be with a six handle.
Because without that headwind,
then theoretically you'd be at about 52?
Yeah, about 52.
Gross margin is up.
It's 75%.
I was just going to say, the gross margin is 75%.
What's that 61% number?
Where are you seeing that, Evan?
That's probably the gap number with the $5 billion loss.
Okay, okay, okay.
So this is what we're dealing with.
We're dealing with some people posting the adjusted numbers.
No, then it says the non-gap is 61% respectively,
excluding the $4.5 billion charge.
It's 71.3%.
Yeah.
Okay.
Well, okay, there you go. So a bit messy,
but now we got to the bottom of it.
I think this is the point also
with earnings, by the way.
It's really messy for
a simple start here. You have to figure out what's happening.
And that's why
you also might see, if you look at these stock moves,
there might be a move like a minute after
and then two minutes after, and then you digest
something and it's five minutes after.
And then you get to the earnings call and it's something completely different so so monitor that that that gross margin is above expected then correct for the full year yeah i mean remember
it was much higher you know four quarters ago but the point is they're not losing margin at the speed
people are talking about even with all this mess of lost sales it's essentially
showing blackwell has pricing power that's the only way that they can justify exactly exactly
we are we are already into the start of a replacement cycle potentially so you're going
to replace you know the hopper margins with a much higher black hole margin if i play if i play
i was getting so upset earlier but yeah i'll let you
guys can do sorry let's but but if you play stock market right obviously there's a conference call
if with all now let's flip it with all these headlines if i told you you're up two and a half
percent kind of scratching your head why is it only two and a half percent well it ran up entering
this frame i think it's whole if it holds that's a huge w it was just a 95
dollars i think that was a question from a from a hater if you asked me no i've been you know
i'm kidding no i've owned i like there's 5 000 people in here you can fuck with me other times
i've owned nvidia since you know low low double digits so i don't have i don't hate the company
i like the company i'm just playing if you want to play stock market,
if you get a conference call
and it just kind of sits here
up 2.5%, that's the
question people are going to ask. Why is it only...
If you're going to tell me it ran up, cool, yeah.
I don't disagree, but I'm just going to say
that's the devil's advocate comment.
To add some commentary on that,
it went up 65% to 70%
in a matter of six weeks and it went
up a trillion 1.5 trillion dollars worth of value so i think again a lot of the variable headwinds
were known in his prints i don't think there's any additional color that's going to add to like oh
that's a new fud or new bears a head Like, I think they actually showed that they have pricing power
on a Blackwell chip that's just getting started
legit right now, and it's
going to give them more than enough cushion
to get through all this macro chaos.
And I think that's why it's holding steady, but
Manojit, I'll pass it to you. No, no, real quick
before he goes. I don't disagree,
but we're only back to, what,
we're back to that level for the DeepSeek
stuff back in late February.
That's the argument basically that I'm saying.
That's the sideways.
We're still reacting to a confused set of numbers, right?
Let's wait for the guidance
and we'll see whether there's any other reaction there.
It's fair that such a good number is not giving much of the upside,
but I think there's still, it's very difficult to read these numbers.
I mean, look, a lot of us live and die by these numbers every day for many companies,
and we can't agree on a clear picture from these numbers.
It's a gut reaction from a very confused state of affairs.
We can probably get a better picture.
Certainly, we'll look at the guidance as it comes out.
But at this point, if I just look forward based on $0.90 a quarter, we're talking about
NVIDIA being lower than S&P multiple on a forward basis.
It's pretty clear why we need to wait for the call here. about Nvidia being, you know, lower than S&P multiple on a forward basis.
And it's pretty clear why, look, it's pretty clear why we need to wait for the call here,
because there's an $8 billion H20 revenue being compensated for Q2. That is speculation, right?
They lost 2.5 billion of H20 revenue in Q1. They're expecting to lose 8 billion in Q2. We need specific commentary on that. We need to know if there's going to be a diversion of some of that
H20 supply. There was a new deal just signed going to be a diversion of some of that H20 supply.
There was a new deal just signed in the Middle East. Are some of the Middle Eastern buyers going to pick up some of those H20s at a discount? If so, what will be the margin impact? These are
the answers you need on the call. Hopefully we have good questions that ask them, but those are
the questions you need on the call. And that's probably why we need to wait and probably why,
you know, I mean, the stock's up 2.8% here after hours.
Let's wait for the call.
Let's see what they say.
I agree.
If they come out and say, you know, without the H20 impairment, we would have been guiding for $52 billion or $54 billion in Q2 revenue at the midpoint.
The market's going to like that. That's bullish.
Because that implies that that entire $8 billion loss will see no compensation to the upside,
which it will. Those chips aren't going to be thrown in the garbage. So even though they were
designed for Chinese buyers, Middle Eastern buyers will probably pick up some of them.
You'll probably have other European, some of your smaller European buyers pick up some of them. So you probably won't
take that $8 billion in total loss. And then if you have a surprise to the upside in Blackwell
volume, the numbers could look good. So I actually think the guidance here is pretty strong,
all things considered. We'll see what they say on the call but i think you know i don't i think it's a good idea that's that's the that's why i prefaced it by saying if we're if after the call we're only
up two and a half percent that's the i'm just saying like what's i'm just playing stock market
like if if we get the call and everything happens and you're only up like three percent that's going
to be like the bear case that people are going to use that's all i was saying
present a bad move on a 33.3 trillion company, so I
wouldn't say that's a bit.
I agree.
I think people need to, like, this is the thing, is once
companies rise to
the trillion dollar club,
everyone expects them to keep moving like
they did when they were $100, $150
billion market caps on their way up.
And it just, eventually, the volatility
dims, right? Like, Apple's a great example of this. Apple was a really volatile stock on their way up and it just eventually the volatility dims right like apple's a great example of this apple was a really volatile stock on the way up and made some crazy
crazy entry year moves where it was up 80 90 percent that stopped happening after a while you
know once you get to being a multi-trillion dollar market cap yeah three percent a three percent move
to the upside is should be fantastic if you're in a multi-trillion
dollar company, in my opinion.
No, you're right.
And I think that entering this print, we were also, Vishal, you and I were talking about,
or we talked in the past about the inference demand versus the headwind for GPU.
Well, the networking component of NVIDIA's print was the big driver, I think, on the
top-line growth.
Because estimates were supposed to be $3.4 billion.
It came in at $5 billion.
That was a massive beat on the networking revenue component of their business line.
So I think you're seeing the comms here from inference demands just really take,
blowing everyone's socks off.
I think you saw that in that print.
He was talking about this, and Monod was talking about this in discord and in the chat just 30 40 minutes ago saying you know he he thinks people are under underrating the networking side
of the business and he was right you know there's a nice beat there and so look there's there's a
lot of alternatives to this scenario there's an alternative to this scenario where and shy you've
talked about this before too where there's a greater pivot to the software side of their
business for them and you know that can potentially be an area where some of the
headwinds to the hardware side, whether they're export controls, whether they're tariffs,
whether they're, you know, supply constraints via TSM, any of those problems can be not solved,
but can be compensated for on the networking side and the software side. So, yeah, look, this impressive quarter, I think.
I was actually expecting a worse quarter.
And I think on the guidance side especially,
I would consider that an upside surprise.
I know that if you look at the numbers on a sheet of paper,
it doesn't look that way.
But I think once you take into account the $8 billion H20 compensation,
I think that's a very strong guide. What's up, Sam? Actually, really quickly, really quickly. Sorry. I'm seeing
this. I don't know if we talked about this yet. In the CFO commentary, it says they took the hit
because of the China market. As a result of these new requirements, we incurred a $4.5 billion
charge, which I think is less than the 5.5 billion dollar charge so the charge
that they took was less 4.5 billion dollars was less than we initially anticipated as we were
able to reuse certain materials so i think it was 5.5 billion 4.5 sam you can go though sorry
um oh you guys just basically said everything i just said over here but uh i broke 10k followers
let's go so so real quick i'm going to circle back with like three percent for three trillion
dollar company is impressive i'm not undermining that but the market expected of depends on where
you look expected a five and a half six and a half percent move. So currently it's sitting half the move.
Oh, are you saying like it's bearish for people who took overnight calls?
It's just, it's just, that's the argument people are going to make from a bearish standpoint on the short run. Stock fell within the implied move that it's bearish.
That's not a good argument.
Well, I mean, you just told me, you just told me how great the quarter was.
It was great.
Right? Stocks usually fall within their implied move, right?
It didn't hit its implied move.
It said it's a 6% move.
I said they fall within the range of their implied move.
Sure, sure.
What do you mean falls?
Can I say something quickly?
Stocks typically fall within the range of their implied move.
That's what I'm saying.
Oh, so it's like under 6%.
I'm saying it's like a
non-point let's uh let's go to monitor anyway no just to this point first i'd have a few points
to make but you know again there's so much confusion because there was a pre-announcement
so close to the earnings so even the implied moves probably predicated on some assumptions that just didn't
hold out so so i don't think that itself is a tell on anything to do with nvidia other than you know
that the entire market has been confused about some facet of that number or the other that's
been the problem since since they had to make that announcement so so i don't think i i don't think i
would i would put a negative connotation on it. Again, I would still wait for, you know, the, the conference call and
the explanations of the guidance to go through it. Right. But, but, uh, the one other point I was
making in discord also, uh, stock talk is, is remember black will also offers, uh, you know,
a CPU, right. A data center CPU. So they are going to gain some traction there.
That's a high margin business anyway.
So that does not exist for them.
So there's a lot of short-term drivers.
I don't disagree that the margin will come off
at some point in time.
I just don't think it's around the corner.
That's the only difference between you and me
is a timing perspective. I think it's four or five quarters off and i think we're gonna say
by the end of next year back to back to high 70s before it goes down yeah but i said by the end of
next year that's four or five quarters you know hey look it could it could be even two quarters
if the if the economy craps out or it could be 10 if the economy strengthens.
That's my point.
We can't base our opinions based on if the economy strengthens or if the economy recedes.
I'm just saying gross margins will come down.
That's what I'm saying.
They will come down.
Eventually, yes, I agree.
But I think Blackwell will bump it up.
They're going to come down tomorrow or they're going to come down.
My point is they will come down.
And I'm just saying people shouldn't operate this is what often happens okay
this is what happened with a lot of tesla investors too they thought tesla was going to keep their
gross margins forever in the automotive business like i just i try to say make these points to
sober people up to the reality that no matter how sexy your company is no matter how far in the lead
they are no matter how good the product is, eventually everyone's gross margins come back down to earth. It's just the name of the game,
especially in hardware. Software is a little bit of a different story. You can float very high
software margins for a very long time, but that's an entirely separate ballgame. On the hardware
side, it's inevitable. It always is. And that's the only point I was making. But yeah, to your rebuttal,
I guess, I don't think we're far apart of the timeframe. You said four or five quarters. I said
maybe by the end of next year, maybe a little longer. That's relatively in the same timeframe.
And it could be sooner, like you said, not because the economy slows or strengthens,
none of us know when or if that's going to happen, but because it could be sooner by virtue of innovation.
It could be sooner because Broadcom or AMD, I don't think it's going to be AMD, but who
knows, or any of these other companies come forward with a reasonably priced product that
can train AI models relatively effectively, especially when you consider the price point. If that happens, then it happens then. So yeah, I don't think we
were actually too far apart on our opinions when you break it down. Sam, what's up?
Yeah, no, I was going to comment on a lot of the driving and the revenue when it comes to
other companies besides NVIDIA delivering ASIC chips. And you have the NVIDIA is delivering generalized GPU compute, which is used broadly across the
board for a lot of verticals.
But when you think of other companies, you know, Broadcom, for example, also you have
Amazon Tranium, Google TPUs, Marvell is also helping Amazon design their Tranium chips
and so on.
They're all designing gpus that are
specifically catered for certain for certain needs and i feel like that's the market that's
really going to take a leap forward i'm not saying nvidia is not going to be there you know i mean
it's just you you need generic compute when it comes to gpus but you also need specialized needs
i feel like as as the ai tailwind continues and technology and software starts to evolve
you're going to need specific type of GPUs for your processing workloads.
I think NVIDIA is definitely going to benefit off that, especially with the NVLink Fusion that they did release.
And I think that Jensen did see that coming. That's why he released it.
When you think of the CUDA platform that actually manages everything under that entire stack, including the network infrastructure from NVLink, as well as what other companies have to offer.
structure from NVLink, as well as what other companies have to offer. I think that's where
I think that's where it continues.
it continues. I mean, certainly, of course, especially with the server building companies
like Dell, SMCA, and so on, they definitely have very low margins for the business. That's because
it's very competitive and it's not that much pricing power. But at the same time, when you
think of NVIDIA, they do have much more remote than just the hardware business that could sustain
that gross margins high enough for a longer period of time. But of course, it's going to come back to earth. At the same time, you know,
they're going to be doing their buybacks. They're probably going to be growing with the market and
so on. You're going to have this quarter over quarter expectation that one day it's going to
fall off and then it's not going to fall off as bad as people expected. And that's probably what's
going to keep it afloat. The fact that they're able to do their financial engineering as well
as the buybacks to keep that EPS afloat above expectations. That's really what's going to keep them outperforming the market, in my opinion.
But I think at this point, the alpha in the market, and you can already see it with the other companies,
basically outperforming NVIDIA for the last few quarters, especially Estera Labs.
That's where the real alpha when it comes to the data center comes in.
These other places, even NVIDIA is already buying into these companies,
it's a large portion of their portfolio in.
But like we were talking about earlier with Nebius, right?
Nebius owns the entire stack when it comes to developing a data center and AI platforms or other companies to borrow or to use their company to rent out the GBs and so on.
That's what alpha is, those kind of companies.
I mean, NVIDIA certainly is like an easy play to do if you want it if you want to outperform the market for a long term but at the same time you know to really develop that alpha
that's really what i'm looking at those other companies in the data center realm that are
probably not performing you even saw with the avgo and brockham they have they have two different
verticals or two different businesses they're working and they're working in data center business
specifically networking and they're also working in a software business with the acquisition of VMware that's propelling the revenue there.
Like that kind of, I'd say that, I don't know if I'm going to explain, but having those
two different verticals definitely diversifies where the revenue streams are.
So it's not totally reliant.
I think that's what Jensen is probably aiming for at this point.
Yeah, I agree with Stock Talk that the margins long-term are not going to be 70 plus percent.
But rewind a year ago, we were having the exact same conversation about the margins being
unsustainable. And if you had asked me then if they could hold up this well, I don't think I
would have predicted it. So at the end of the day, this is a business where the data center segment grew 73% year
over year.
Without the adjustment, the gross margin is 75%.
This is a phenomenal business. would you guys see this headline that's coming out in video would have to foreclose from
competing in china market the stock is getting massively bid on that i guess we will like that i'm just seeing these
headlines coming out right now financial juice tweeting on bloomberg's putting them out
china market foreclosure would materially hit our business um if current export restrictions
remain we would have to foreclose from competing in the chinese market and the stock's just getting
absolutely bid on that dude post it on your timeline,
man. I want to see that.
I'm just reading them right now, but
there's a bunch of headlines.
What does that mean?
We would have to foreclose on the Chinese market.
I don't even know what that means.
It says market foreclosure would
materially hit business.
Yeah, in China.
I don't know what that means.
Yeah, I saw that.
That is why I didn't post it.
And the way that is being written is like it's from NVIDIA itself.
So I don't know.
Here's a crazy earnings mover while this was going on.
Michael Burry's Elf Beauty was down from $93 to $77 at one point.
Recouped all the losses, now turning green.
Yeah, so Elf just bought Road Beauty for a billion to the...
You guys know Road Beauty?
Wait, is that Justin Bieber's wife's product?
Yeah, it's the one
with the phone cases and you know
the lab bombs
oh wow
is Hailey Bieber
more wealthy than Justin Bieber now
after that sale yeah I think Justin Bieber
is broke
cause there was a story that he owned his manager
on 18 million last month from the tour
he canceled and he couldn't pay it off so this deal is 800 million in cash in stock with additional
200 million payout based on performance of next three years and it just came out after hours i know i know your gabin capital loves investing in makeup and
other type of uh brands like that do you have any thoughts on it i do like the consumer
industry because i feel like if you look at the right places you can get an edge that
other people don't really see.
You're a big Victoria's Secret investor as well.
I mean,
Autodew Tech hit an all-time high today,
for example. Before the show came out,
the stock doubled in three months.
But right now,
I think Bot and Body Works has an easy 70 to 80% upside.
Guys, I'm pretty sure this is the first time Singapore revenue for NVIDIA has declined quarter for quarter, so it's working.
They're moving it through some different country now.
I don't think that's why Elf reversed its games.
They had that on its commentary,
the acquisition of Rhodes.
Oh, really?
Oh, really?
Yes, really.
The NVIDIA earnings call starts in about 15 minutes,
and we'll listen to it on these spaces,
so keep hanging with us.
Stock's up a little bit.
Still up around 3%, 4%.
Is our friend Walter around?
I don't get what you mean by that.
What? what the one that brings the clear concise earnings calls for us
William is who you're asking about there
that's why I was very confused
I can just play the call if we need to
so it's not a problem that call is coming out in 14 minutes or so we'll listen to it in here That's why I was very confused. My bad, Omar. I could just play the call if we need to.
So it's not a problem.
Yeah, that call is coming out in 14 minutes or so.
We'll listen to it in here.
I was looking through some of the other numbers.
NVIDIA, $53.7 billion of cash on their balance sheet now,
up from $31.4 billion last year.
Spent $14.1 billion buying back its own stock in Q1.
So I wonder if that's also something that... I don't know what their stock dilution ends up looking like what the net of this is but
interesting dividend was around 200 million dollars they spent one cent dividend is safe
again for another quarter for anyone who is worried about their one cent per share nvidia
dividend yes that is still happening.
DocTalk, I know we're talking here.
We still have some questions.
What are you excited for on this earnings call?
What are you listening about? By the way, I'll slip it in here one more time.
If you're not following the co-host, if you're not following the host,
shout out Gerg and Omar and Shai and everyone else, Wolfie, Sam, Monitive.
We appreciate you guys for joining in.
We should definitely make sure you're following up to the speakers.
If you enjoy this type of live free spaces, every single Monday through Thursday, 3 to 5 p.m. Eastern at least, make sure you're following the host.
Shout out Ostium for helping support in the squad.
Check that tweet pinned up in the nest above.
But let's stock talk.
Tell me a little bit more about what we're expecting for, hoping for on this earnings call.
I mean, at this point, I'm probably mainly focused on just what they're planning to do
with age 20 inventory,
how they expect to redesign any export compliant chips for the Chinese market.
If they plan to do that at all,
what they expect the total impairment to be in a hypothetical scenario where
chip restrictions are
absolute you know according to the article that came out today that's what the trump administration
and the commerce department are reportedly telling chip companies now cadence systems dropped like
fell off a cliff intraday when that headline came out um i don't know if that's true because there's
been a lot of stuff that's reported that like that they say the Trump administration is going to do and then the headlines come out and it moves the market and they end up not doing it.
So I don't know.
But there have been headlines to that effect recently that they're considering basically an absolute embargo on cutting edge chips for China.
I imagine an analyst will ask that since that headline came out today.
But maybe not. I don't know. Sometimes they just throw softballs. So maybe they won will ask that since that headline came out today, but maybe not.
I don't know.
Sometimes they just throw softballs, so maybe they won't ask that.
But I'd like to know the answer to that.
I'd also like to know what their plans are with this new Middle East package that was announced, if they are capitalizing on it currently.
I don't think their Middle Eastern market currently is very big.
Shia, you might know the answer to that.
What's the size of it currently?
Do you know?
It's tiny.
It's minimal.
Like you would not, let's just say every other region outside of the East
is legit 4% of their revenue.
So it's big.
Yeah, that's what I thought.
I knew it was small.
I just didn't know how small.
But yeah, so I think there's an opportunity there to maybe grow that market to maybe not a material market on the overall business, but you know, a decent size market, at least a high growth rate market.
about their international business just because of the state of affairs currently.
And I think it's important.
You know, every major American behemoth company has found some way to leverage international
exposure, whether it's outright with their core business or whether it's through investments
in other companies.
But all of the Mag7 have found their way to leverage the power of their businesses internationally.
And, you know, NVIDIA has done an effective job of that, too, over the past few years.
But now there's this huge export control overhang.
And, you know, Jensen has seemed concerned, at least anecdotally in his commentary about China, that it would be material impact to the business.
So I'd like to hear his plans
on how they're going to compensate for that.
Any other areas they're focused on internationally for growth.
But yeah, circling back,
really my main questions are just around H20 inventory,
the impact that they stated,
why they think it's going to be that much larger than Q1,
all that good stuff.
I like specific stuff like that, but I know people are probably interested in more top level headline stuff but monitive go for it
and then wolfie so so a couple of things quickly so they don't break out uh middle east but their
asia pacific headquarters is singapore so everything outside of china tai Taiwan is built through Singapore. So the revenue you see in Singapore is every part of Asia Pacific outside of China and Taiwan.
And then there's the rest of the world, which is, you know, the catch all for everything else.
So that's your Singapore revenue.
It's not just Singapore.
So that's that.
But I'm looking at it. So it looks like in the first quarter, before the ban came in,
they were able to ship $4.6 billion prior to new export licensing requirements.
So they were unable to ship $2.5 billion in the first quarter.
So that's why the smaller charge.
So they were able to ship some out.
The question is, what is the real inventory,
whether that 15 billion is a number that they threw out as their complete sales of
everything to China, right? So we have to start parsing those numbers carefully to see
exactly what is the number of H20s that is in inventory that has to be discounted substantially
because they would have been able to cancel all forward, you know,
builds of H20 almost certainly by this time.
So they're not going to build any more of those.
It's just, you know, what's in hand and what are they going to do with it?
But assuming that they were written off two and a half billion or whatever did they write off, four and a half billion, you're already looking at them potentially being able to sell this at a 30% margin versus a 70% margin or whatever the heck it was for age 20.
My guess is it was lower anyway in the first place
so so they're already assuming that if they sell this this is going to be at
probably somewhere in the 20 margin range have they directly said they're discontinuing the h20
they're redesigning it i think that's to try to fit export controls yeah
I think that's...
To try to fit export controls?
Yeah.
See, I think that's a losing game.
I think that's a losing game.
Like, I'm not trying to tell Jensen how to do his job,
but he obviously is much smarter than me and knows how to do his job.
But I just think the idea of continually redesigning these Chinese compliant chips
is going to be met with policy change I mean
yeah but my my retort to that I'll let you keep going is they sold 4.6 billion dollars of chips
before that go in so if you when you get it you hit it you're making 20 billion dollars and yeah
I get what you're saying you hit that pocket you hit the air pocket in between the policy change And it's worth a lot. a pretty bipartisan consensus issue that American legislators do not want China to have access to
American chips, period. And especially cutting edge American chips. And so, I mean, I guess
they're technically Taiwanese chips, right? But whatever. I mean, American design chips, I guess,
is the right way to put it. But that's an an issue for nvidia if they want to continue to just
reiterate this product ad infinitum until the u.s is just gonna say all right we're banning
high high performance compute exports all together to china because you're clearly just trying to
evade this the sanctions by redesigning the chip over and over and over again i mean that's what i
would say if i was a legislator right like? Like put yourself in the, we often up here in these panels,
put ourselves in the shoes of the business manager, right?
But when we're talking about how policy can affect business,
put yourself in the shoes of the legislator.
If you're a legislator whose objective is to prevent the Chinese
from developing cutting edge AI,
which we've obviously failed to do a la DeepSeek.
But if your objective is to prevent the Chinese
from competing with us in AI, and you view the route to that objective as the restriction of high performance compute,
then a company redesigning chips to evade those restrictions is, you know, is something that
you'll view as a slight, or you should view as a slight from a
legislator's point of view. So I think there's going to just be a continual battle there until
we hit the point of just absolute restriction on China for high performance computer. I think that
that's going to come because if NVIDIA is going to keep doing this, then eventually the U.S.
the US government will just say, okay, you can't ship them at all to China. But what's up? We'll
government will just say, OK, you can't ship them at all to China. But what's up? We'll see.
see. I was just going to say, Avago hasn't announced earnings yet. They announced earnings
next Thursday. I kind of feel like this, you know, relief, you know, sigh of relief from the market
on the back of these earnings kind of sets up for the stock to kind of potentially gravitate towards
its all time high into that report, given that the all time high is 4% away on today's
close basically. So I just wanted to say for, you know, for people listening in there, like
obviously, people are a lot of people are accustomed to just kind of chasing stocks
or whatever. I kind of would try to look for derivatives that could play catch up. And I
feel like that might be a good one. Well, I think the best derivative, I think Sam mentioned this
earlier on this company, but the biggest W from this print was the networking side of
Nvidia's business. Who benefits from that substantially? It's not just Broadcom. I think
that's Stair Labs. Labs recently made an announcement with
NVIDIA's NVLink. I forgot what it was specifically, but essentially Astaire Labs is trying to solve
a bottleneck issue that is becoming maybe a competition on that side of the business for
NVIDIA. But rather than try to price them out, NVIDIA is trying to partner up with them because
I think the NVLink Fusion is trying to create an with them because i think they're the ending link fusion
is like trying to create an open source like they want as many partnerships as possible but you just saw their networking side of their business just kill it that was the strongest
part of the print you see the craig halm note shy on a lab uh earlier uh no tell me i opened up an
a lab position last week because of it so that's why i laughed let's go yeah i got along on a lab last week i thought the daily chart was popping over the 200 day anyway
but i just got along on it technically and i read the craig hallam note they made they had a great
note they just said like the market's vastly underestimating ua links potential um they were
talking about how they think that there's a much larger market opportunity than
their than the stocks being given credit for at the current market cap so uh they raised their
price target to 120 bucks uh it was on may 23rd but yeah it was a nice note let's go that's awesome
i mean i will say a stair labs is very directly linked to the tranium or aws so it's kind of got
some customer concentration risk but hopefully over
time like i do think that envy link fusion announcement that jensen may at compute x a week
ago that was way under that flew way under the radar that was a big time game changer pivots
for them because they are trying to offset that hyperscalers create their own silicon chip
approach and they everyone wants to reduce
their own dependency on nvidia everybody because they're sick of paying the price that makes sense
but now like this emmely fusion is going to change a lot and that's part of the ecosystem i think
acera labs is going to be one of the biggest beneficiaries off that and i was shocked in
their last earnings for that was like one of the stronger earnings in my holdings and it was red
afterwards although i was missing something but a lot of the sell side research i've seen
since that print have been strong so i think it was just out of the china debacle because they do
have a heavy exposure to china but yeah look look for whatever networking uh networking is where the
hot pocket is right now in the semi semiconductor chain and Broadcom is clearly the king.
They're going to do well.
They are, if you think that the NVIDIA is a GPU engine, like Broadcom is a glue holding hyperscaler AI infra together with their networking.
So they're going to do really well.
But I think that the hidden gem or like the moonshot is Astaire Labs.
And I think it just broke 100 after hours on that print too.
Yeah, i was more
i was more just speaking like just for like a trade uh they have a catalyst next thursday just
kind of like you know a little relief maybe anticipation positioning ahead of it i wouldn't
be surprised to see all-time high ahead of the report that's basically what i'm speaking to
outside of that like you guys covered all of of the nuts and bolts of the hidden stuff.
I was just more speaking to a trade.
Well, there's also Marvel Technology.
They do report tomorrow.
They're also partnered with AWS with their training chips, the ASICs.
Like I was saying before, they're GPU-specific or specialized GPUs that are built for specific workloads.
specific or specialized GPUs that are built for specific workloads.
But I mean, as Sha was saying, you know, the play is really the,
I wouldn't say ex-NVIDIA,
but the other data center plays that are focusing,
that are focusing on the earnings call is about to be starting here in a
second. NVIDIA stocks up 5%.
I put a link up on the nest above right there where you can listen to it.
If it, if it needs to sound better or something,
but we are about to be playing that call, which is now shout out earnings up you can actually hear it in the
background right now but yeah this is the nvidia earnings call starting up right now uh one more
time shout out to everyone make sure you're following the speakers shout out ostium uh again
if you want to see this tweet to uh or if you want to listen to this without us or if maybe it sounds
better or something that tweet is pinned up in the next above. There's a live chat
on there. Say hello.
But yeah, we are jumping into this
NVIDIA earnings call, listening to it live.
There we go.
It's rugging a bit for me.
I don't know if anyone else is rugging for them.
On your telephone keypad.
That might be better.
If you would like to withdraw your question, please press... Yes.
Sushia Hari, you may begin your conference.
Good afternoon, everyone, and welcome to NVIDIA's conference call for the first quarter of fiscal 2026.
With me today from NVIDIA are Jensen Wong, President and Chief Executive Officer, and Colette Kress, Executive Vice President and Chief Financial Officer.
I'd like to remind you that our call is being webcast live on NVIDIA's Investor Relations website.
I want to remind you that our call is being webcast live on NVIDIA's Investor Relations website.
The webcast will be available for replay until the conference call to discuss our financial results for the second quarter of fiscal 2026.
The content of today's call is NVIDIA's property. It can't be reproduced or transcribed without our prior written consent.
During this call, we may make forward-looking statements based on current
expectations. These are subject to a number of significant risks and uncertainties, and our
actual results may differ materially. For a discussion of factors that could affect our
future financial results in business, please refer to the disclosure in today's earnings release,
our most recent forms 10K and 10Q, and the reports that we may file on
Form 8K with the Securities and Exchange Commission. All our statements are made as of today, May 28th,
2025, based on information currently available to us. Except as required by law, we assume no
obligation to update any such statements. During this call, we will discuss non-GAAP financial measures.
You can find a reconciliation of these non-GAAP financial measures
to GAAP financial measures in our CFO commentary,
which is posted on our website.
With that, let me turn the call over to Colette.
Thank you, Toshio.
We delivered another strong quarter with revenue of $44 billion,
up 69% year over year,
exceeding our outlook in what proved to be a challenging operating environment.
Data center revenue of $39 billion grew 73% year on year.
AI workloads have transitioned strongly to inference,
and AI factory buildouts are driving significant revenue.
Our customers' commitments are firm. On April 9th, the U.S. government issued new export controls on
H20, our data center GPU designed specifically for the China market. We sold H20 with the approval of the previous administration. Although our H20
has been in the market for over a year and does not have a market outside of China, the new export
controls on H20 did not provide a grace period to allow us to sell through our inventory. In Q1, we recognized $4.6 billion in H-20 revenue, which occurred prior to April 9th, but also recognized a $4.5 billion charge as we wrote down inventory and purchase obligations tied to orders we had received prior to April 9th.
to April 9th. We were unable to ship $2.5 billion in H-20 revenue in the first quarter due to the
new export controls. The $4.5 billion charge was less than what we initially anticipated
as we were able to reuse certain materials. We are still evaluating our limited options to supply
data center compute products compliant with the
U.S. government's revised export control rules. Losing access to the China AI accelerator market,
which we believe will grow to nearly 50 billion, would have a material adverse impact on our
business going forward and benefit our foreign competitors in China and worldwide.
Our Blackwell ramp, the fastest in our company's history, drove a 73% year-on-year increase in
data center revenue. Blackwell contributed nearly 70% of data center compute revenue in the quarter
with a transition from Hopper nearly complete. The introduction of GB200
NBL was a fundamental architectural change to enable data center scale workloads and to achieve
the lowest cost per inference token. While these systems are complex to build, we have seen a
significant improvement in manufacturing yields and rack shipments are
moving to strong rates to end customers. GB200 and VL racks are now generally available for modern
builders, enterprises, and sovereign customers to develop and deploy AI. On average, major hyperscalers are each deploying nearly 1,000 NBL 72 racks or 72,000 Blackwell GPUs per week and are on track to further ramp output this quarter.
deployed tens of thousands of Blackwell GPUs and is expected to ramp to hundreds of thousands
of GB200s with OpenAI as one of its key customers. Key learnings from the GB200 ramp
will allow for a smooth transition to the next phase of our product roadmap, Blackwell Ultra.
Sampling of GB300 systems began earlier this month at the major CSPs,
and we expect production shipments to commerce later this quarter. GB300 will leverage the same
architecture, same physical footprint, and the same electrical and mechanical specifications as GB200. The GB300 drop-in design
will allow CSPs to seamlessly transition their systems and manufacturing used for GB200
while maintaining high yields. B300 GPUs with 50% more HBM will deliver another 50% increase in dense FP4 inference compute
performance compared to the B200. We remain committed to our annual product cadence with
our roadmap extending through 2028 tightly aligned with the multiple year planning cycles of our customers.
We are witnessing a sharp jump in inference demand.
OpenAI, Microsoft and Google
are seeing a step function leap in token generation.
Microsoft processed over 100 trillion tokens in Q1,
a five-fold increase on a year-over-year basis. This exponential growth
in Azure OpenAI is representative of strong demand for Azure AI Foundry, as well as other
AI services across Microsoft's platform. Inference-serving startups are now serving models
using B200, tripling their token generation rate and corresponding
revenues for high-value reasoning models such as DeepSeek or One, as reported by artificial
analysis. NVIDIA.NMO on Blackwell NBL72, Turbo charges AI inference throughput by 30x for the new reasoning models
sweeping the industry.
Developer engagements increased with adoption ranging from LLM providers such as Perplexity
to financial services institutions such as Capital One, who reduced agentic chatbot latency
by 5x with Dynamo.
In the latest MLPerf inference results, we submitted our first results using GB200 and BL72,
delivering up to 30x higher inference throughput compared to our 8-GPU-H200 submission
on the challenging LAMA 3.1 benchmark.
This feat was achieved through a combination of tripling the performance per GPU,
as well as 9x more GPUs, all connected on a single NVLink domain.
And while Blackwell is still early in its lifecycle, software optimizations have already improved its performance by 1.5x in the last month alone.
And while Blackwell is still early in its lifecycle,
We expect to continue improving the performance of Blackwell through its operational life as we have done with Hopper and Ampro.
For example, we increased the inference performance of Hopper by four times over two years.
This is the benefit of NVIDIA's programmable CUDA architecture and rich ecosystem.
The pace and scale of AI factory deployments are accelerating with nearly 100 NVIDIA-powered AI factories in flight this quarter.
powered AI factories in flight this quarter. A two-fold increase year-over-year, with the average
number of GPUs powering each factory also doubling in the same period. And more AI factory projects
are starting across industries and geographies. NVIDIA's full-stack architecture is underpinning
AI factory deployments as industry leaders like AT&T, UID, Capital One, Foxconn,
MediaTek, and Telenor are strategically vital sovereign clouds like those recently announced
in Saudi Arabia, Taiwan, and the UAE. We have a line of sight to projects requiring tens of gigawatts of NVIDIA AI infrastructure in the not-too-distant
future. The transition from generative to agentic AI, AI capable of perceiving, reasoning,
planning, and acting, will transform every industry, every company, and country. We envision AI agents as a new digital workforce
capable of handling tasks ranging from customer service
to complex decision-making processes.
We introduced the Lama Nemotron family
of open reasoning models designed to supercharge
identic AI platforms for enterprises.
Built on the LAMA architecture,
these models are available as NIMS
for NVIDIA inference microservices
with multiple sizes to meet diverse deployment needs.
Our post-training enhancements have yield
a 20% accuracy boost and a 5x increase in inference speed.
Leading platform companies, including Accenture, Cadence, Deloitte, and Microsoft,
are transforming work with our reasoning models.
NVIDIA, Nemo, microservices are generally available across industries
that are being leveraged by leading enterprises to build, optimize, and scale AI
applications. With Nemo, Cisco increased model accuracy by 40% and improved response time by 10x
in its code assistant. NASDAQ realized a 30% improvement in accuracy and response time in its
AI platform's search capabilities. And Shell's custom LLM achieved a 30% increase in accuracy and response time in its AI platform's search capabilities. And Shell's custom LLM achieved a 30% increase in accuracy when trained with NVIDIA Nemo.
Nemo's parallelism techniques accelerated model training time by 20% when compared to other frameworks.
We also announced a partnership with Yum Brands, the world's largest restaurant company, to bring NVIDIA AI to 500 of its restaurants this year and expanding to 61,000 restaurants over time to streamline order-taking, optimize operations, and enhance service across its restaurants.
service across its restaurants. For AI-powered cybersecurity, leading companies like Checkpoint,
Cloudstrike, and Palo Alto Networks are using NVIDIA's AI security and software staff
to build, optimize, and secure agentic workflows, with Cloudstrike realizing 2x faster detection
triage with 50% less compute cost. Moving to networking, sequential growth in
networking resumed in Q1 with revenue up 64% quarter over quarter to $5 billion. Our customers
continue to leverage our platform to efficiently scale up and scale out AI factory workloads.
scale up and scale out AI factory workloads.
We created the world's fastest switch, EnvyLink.
For scale up, our EnvyLink compute fabric in its fifth generation offers 14x the bandwidth of PCIe Gen 5.
EnvyLink 72 carries 130 terabytes per second of bandwidth in a single rack, equivalent to the entirety of the world's peak internet traffic.
NVLink is a new growth vector and is off to a great start, with Q1 shipments exceeding a billion dollars.
At Computex, we announced NVLink Fusion.
At Computex, we announced NVLink Fusion.
Hyperscale customers can now build semi-custom CCUs and accelerators
that connect directly to the NVIDIA platform with NVLink.
We are now enabling key partners, including ASIC providers,
such as MediaTek, Marvell, Alchip Technologies, and Astero Labs,
as well as CPU suppliers, such as Fizitsu and Qualcomm
to leverage NVLink Fusion to connect our respective ecosystems.
For scale out, our enhanced Ethernet offerings deliver the highest throughput, low latency
networking for AI.
Spectrum X posted strong sequential and year-on-year growth and
is now annualizing over $8 billion in revenue. Adoption is widespread across major CSPs and
consumer internet companies, including CoreWeb, Microsoft Azure, Oracle Cloud, and XAI. This quarter, we added Google Cloud and Meta to the growing list of Spectrum X customers.
We introduced Spectrum X and Quantum X silicon photonics switches featuring the world's most
advanced co-packaged optics. These platforms will enable next-level AI factory scaling to millions of GPUs through the increasingly power
efficiency by 3.5x and network resiliency by 10x while accelerating customer time to market
by 1.3x. Transitioning to a quick summary of our revenue by geography. China has a percentage of our data center revenue
slightly below our expectations and down sequentially due to H20 export licensing
controls. For Q2, we expect a meaningful decrease in China data center revenue. As a reminder,
while Singapore represented nearly 20% of our Q1 build revenue, as many of our large customers use Singapore for centralized invoicing, our products are almost always sold elsewhere.
Note that over 99% of H100, H200, and Blackwell data center compute revenue built to Singapore was for orders
from U.S.-based customers. Moving to gaming and AI PCs. Gaming revenue was a record $3.8 billion,
increasing 48% sequentially and 42% year-on-year. Strong adoption by gamers, creatives, and AI enthusiasts have made Blackwell our fastest
ramp ever. Against a backdrop of robust demand, we greatly improved our supply and availability
in Q1 and expect to continue these efforts in Q2. AI is transforming PC and creator and gamers.
With a 100 million user installed base,
GeForce represents the largest footprint
for PC developers.
This quarter, we added to our AI PC laptop offerings,
including models capable of running Microsoft's Co-Pilot Plus.
This past quarter, we brought Blackwell architecture
to mainstream gaming with its launch of GeForce RTX 5060 and 5060 Ti, starting at just $299.
The RTX 5060 also debuted in laptops starting at $1,099.
These systems that double the frame rate and slash latency. These GeForce RTX 5060 and 5060
Ti desktop GPUs and laptops are now available. In console gaming, the recently unveiled
Nintendo Switch 2 leverages NVIDIA's neural rendering and AI technologies, including next-generation custom RTX GPUs with DLSS technology,
to deliver a giant leap in gaming performance to millions of players worldwide.
Nintendo has shipped over 150 million Switch consoles to date,
to date, making it one of the most successful gaming systems in history.
making it one of the most successful gaming systems in history.
Moving to crow visualization.
Revenue of $509 million was flat sequentially and up 19% year-on-year.
Tariff-related uncertainty temporarily impacted Q1 systems.
And demand for our AI workstations is strong, and we expect sequential revenue growth to
resume in Q2. NVIDIA DGX Spark
and Station revolutionized personal computing by putting the power of an AI supercomputer in a
desktop form factor. DGX Spark delivers up to one petaflop of AI compute or DGX Station offers an incredible 20 petaflops and is powered by the GB300 Superchip.
DGX Spark will be available in Calendar Q3
and DGX Station later this year.
We have deepened Omniverse's integration and adoption
into some of the world's leading software platforms,
including Databricks, SAP, and Schneider Electric.
New Omniverse blueprints, such as Mega, for at-scale robotic fleet management,
are being leveraged in Keyon Group, Pegatron, Accenture, and other leading companies to enhance industrial operations.
At Computex, we showcased Omniverse's great
traction with technology manufacturing leaders, including TSMC, Quanta, Foxconn, Pegatron.
Using Omniverse, TSMC saves months in work by designing fabs virtually. Foxconn accelerates thermal simulations by 150x.
And Pegatron reduced assembly line defects rates by 67%. Lastly, with our automotive group, revenue was $567 million, down 1% sequentially, but up 72% year-on-year.
Year-on-year growth was driven by the ramp of self-driving across a number of customers and robust end demand for NEVs.
We are partnering with GM to build the next-gen vehicles, factories, and robots using NVIDIA AI, simulation, and accelerated computing.
And we are now in production with our full-stack solution for Mercedes-Benz, starting with the new the new cla hitting rose in the next few months
we announced isaac group and one the world's first open fully customizable foundation model for human
humanoid robots enabling generalized reasoning and skill development we also launched new open
We also launched new open NVIDIA Cosmo World Foundation models.
Leading companies include One X, Agility Robots, Robotics, Figure AI, Uber, and Wabi.
We've begun integrating Cosmos into their operations for synthetic data generation,
while Agility Robotics, FOSA Dynamics, and XPEN Robotics robotics are harnessing Isaac simulation to advance their humanoid efforts.
GE Healthcare is using the new NVIDIA Isaac platform for healthcare simulation
built on NVIDIA Omniverse and using NVIDIA Cosmos,
the platform's fees, development of robotic robotic imaging and surgery systems.
The era of robotics is here.
Billions of robots, hundreds of millions of autonomous vehicles, and hundreds of thousands of robotic factories and warehouses will be developed.
All right, moving to the rest of the P&L.
Gap gross margins and non-gap gross margins were 60.5% and 61% respectively.
Excluding the 4.5 billion charge,
Q1 non-gap gross margins would have been 71.3,
slightly below above our outlook
at the beginning of the quarter.
Sequentially, gap operating expenses were up 7%
and non-gap operating expenses were up 6%,
reflecting higher compensation and employee growth.
Our investments include expanding our infrastructure capabilities and AI solutions.
We plan to grow these investments throughout the fiscal year.
In Q1, we returned a record $14.3 billion to shareholders in the form of share repurchases and cash dividends.
Our capital return program continues to be a key element of our capital allocation strategy.
Let me turn to the outlook for the second quarter.
Total revenue is expected to be $45 billion, plus or minus 2%.
We expect modest sequential growth
across all of our platforms. In data center, we anticipate the continued ramp of Blackwell
to be partially offset by a decline in China revenue. Note, our outlook reflects a loss in
H20 revenue of approximately $8 billion for the second quarter.
Gap and non-gap gross margins are expected to be 71.8% and 72% respectively,
plus or minus 50 basis points.
We expect better Blackwell profitability to drive modest sequential improvement in gross margins.
lack of profitability to drive modest sequential improvement in gross margins.
We are continuing to work towards achieving gross margins in the mid-70s range late this year.
Gap and non-gap operating expenses are expected to be approximately $5.7 billion and $4 billion,
respectively, and we continue to expect full year fiscal year 26 operating expense growth to be in the mid 30% range.
GAP and non-GAP other income and expenses are expected to be an income of approximately $450 million,
excluding gains and losses from non-marketable and publicly held equity securities.
equity securities. GAP and non-GAP tax rates are expected to be 16.5 percent,
plus or minus one percent, excluding any discrete items.
Further financial details are included in the CFO commentary and other information available
on our IR website, including a new financially information AI agent.
Let me highlight upcoming events for the financial community.
We will be at the B of A Global Technology Conference in San Francisco on June 4th,
the Rosenblatt Virtual AI Summit and NASDAQ Investor Conference in London on June 10th,
and GTC Paris at Viva Tech on June 11th in Paris.
Look forward to seeing you at these events.
Our earnings call to discuss the results of our second quarter of fiscal 2026 is scheduled for August 27.
Well, now let me turn it over to Jensen to make some remarks.
Thanks, Colette.
We've had a busy and productive year.
Let me share my perspective on some topics we're frequently asked.
On export control, China is one of the world's largest AI markets and a springboard to global success. With half of the world's AI researchers based there, the platform that wins
China is positioned to lead globally. Today, however, the $50 billion China market is effectively
closed to U.S. industry. The H20 export ban ended our Hopper data center business in China.
We cannot reduce Hopper further to comply.
As a result, we are taking a multi-billion dollar write-off on inventory that cannot be sold or
repurposed. We are exploring limited ways to compete, but Hopper is no longer an option.
China's AI moves on with or without U.S. chips.
It has to compute to train and deploy advanced models.
The question is not whether China will have AI.
It already does.
The question is whether one of the world's largest AI markets will run on American platforms.
Shielding Chinese chip makers from U.S. competition only strengthens them abroad and weakens America's position. Export restrictions have spurred China's innovation in scale.
The AI race is not just about chips. It's about which stack the world runs on. As that
stack grows to include 6G and quantum, U.S. global infrastructure leadership
is at stake. The U.S. has based its policy on the assumption that China cannot make AI chips.
That assumption was always questionable, and now it's clearly wrong. China has enormous
manufacturing capability. In the end, the platform that wins the AI developers wins AI.
Export controls should strengthen US platforms, not drive half of the world's AI talent to rivals.
On DeepSeek, DeepSeek and QN from China are among the best open source AI models.
Released freely, they've gained traction across the US, Europe, and beyond.
DeepSeek R1, like ChatGPT, introduced reasoning AI that produces better answers the longer in things.
reasoning AI that produces better answers the longer in things.
Reasoning AI enables step-by-step problem solving, planning, and tool use,
turning models into intelligent agents.
Reasoning is compute intensive, requires hundreds to thousands more,
thousands of times more tokens per task than previous one-shot inference.
Reasoning models are driving a step function surge in inference demand.
AI scaling laws remain firmly intact, not only for training, but now inference too
but now inference too requires massive scale compute.
requires massive scale compute.
DeepSeq also underscores the strategic value of open source AI.
When popular models are trained and optimized on U.S. platforms,
it drives usage, feedback, and continuous improvement,
reinforcing American leadership across the stack.
U.S. platforms must remain the preferred platform
for open source AI.
That means supporting collaboration
with top developers globally, including in China.
America wins when models like DeepSeek and QN
runs best on American infrastructure.
Regarding onshore manufacturing,
President Trump has outlined a bold vision to re-shore advanced manufacturing, create jobs, and strengthen national security.
Future plants will be highly computerized in robotics.
We share this vision.
TSMC is building six fabs and two advanced packaging plants in Arizona to make
chips for NVIDIA. Process qualification is underway with volume production expected by year-end.
SPIL and Amcor are also investing in Arizona, constructing packaging, assembly, and test
facilities. In Houston, we're partnering with Foxconn
to construct a million square foot factory
to build AI supercomputers.
Wishtron is building a similar plant in Fort Worth, Texas.
To encourage and support these investments,
we've made substantial long-term purchase commitments,
a deep investment in America's AI manufacturing future.
Our goal from chip to supercomputer built in America within a year. Each GB200 and V-Link 72
racks contains 1.2 million components and weighs nearly two tons.
No one has produced supercomputers on this scale.
Our partners are doing an extraordinary job.
On AI diffusion rule,
President Trump rescinded the AI diffusion rule,
calling it counterproductive,
and proposed a new policy to promote U.S. AI tech
with trusted partners. On his Middle East tour, he announced historic investments.
I was honored to join him in announcing a 500-megawatt AI infrastructure project
in Saudi Arabia and a 5-gigawatt AI campus in the UAE.
President Trump wants U.S. tech to lead.
The deals he announced are wins for America,
creating jobs, advancing infrastructure,
generating tax revenue, and reducing the U.S. trade deficit.
The U.S. will always be NVIDIA's largest market and home to the largest install base of our infrastructure.
Every nation now sees AI as core to the next industrial revolution.
A new industry that produces intelligence and essential infrastructure for every economy.
Countries are racing to build national AI platforms to elevate their digital
capabilities. At Computex, we announced Taiwan's first AI factory in partnership with Foxconn
and the Taiwan government. Last week, I was in Sweden to launch its first national AI infrastructure.
AI infrastructure. Japan, Korea, India, Canada, France, the UK, Germany, Italy, Spain, and
more are now building national AI factories to empower startups, industries, and societies.
Sovereign AI is a new growth engine for NVIDIA.
Toshia, back to you. Thank you. Operator, we will now open the call for questions.
Would you please pull for questions? Thank you. At this time, I would like to remind everyone,
in order to ask a question, press star, then the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
We'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Jill Moore with Morgan Stanley.
Your line is open.
Great.
You guys have talked about this scaling up of inference around reasoning models for, you know,
at least a year now.
And we've really seen that come to fruition, as you talked about.
We've heard it from your customers.
Can you give us a sense for how much of that demand you're able to serve?
Can you give us a sense for maybe how big the inference business is for you guys?
And do we need full-on NBL 72 rack scale solutions for reasoning inference going forward?
Well, we would like to serve all of it.
And I think we're on track to serve most of it.
Grace Blackwell and V-Link 72 is the ideal engine today,
the ideal computer thinking machine, if you will, for reasoning AI. There's
a couple of reasons for that. The first reason is that the token generation amount, the number
of tokens reasoning goes through is a hundred, a thousand times more than a one-shot chatbot.
a thousand times more than a one-shot chatbot.
It was essentially thinking to itself,
breaking down a problem step-by-step.
It might be planning multiple paths to an answer.
It could be using tools, reading PDFs,
reading web pages, watching videos,
and then producing a result, an answer.
The longer it thinks, the better the answer, the smarter the answer is.
And so what we would like to do, and the reason why Grace Blackwell was designed
to give such a giant step up in inference performance is so that you could do all this and still get a response as quickly as possible.
Compared to Hopper, Grace Blackwell is some 40 times higher speed and throughput compared.
throughput compared. And so this is going to be a huge, huge benefit in driving down
the cost while improving the quality of response with excellent quality of service at the same
time. So that's, that's the fundamental reason that was the core driving reason for Grace
Blackwell and V-Link 72. of course of course in
order to do that we had to reinvent literally redesign the entire uh way that these supercomputers
are built and and um but now we're in full production uh it is it's uh it's going to
be exciting it's going to be exciting. It's going to be incredibly exciting.
The next question comes from Vivek Aria with Bank of America Securities. Your line is open.
Thanks for the question. Just a clarification for Colette first. So on the China impact,
I think previously it was mentioned that at about $15 billion,
so you had the $8 billion.
I think you do, so is there still some left as a headwind for the remaining quarters?
It's how to model that.
And then a question, Jensen, for you.
Back at GTC, you had outlined a path towards almost a trillion dollars of AI spending over the next few years.
Where are we in that build out?
And do you think it's going to be uniform that you will see
every spender, whether it's ESP, sovereign enterprises,
all build out?
Should we expect some period of digestion in between?
What are your customer discussions telling you
about how to model growth for next year?
Yes, Vivek.
Thanks so much for the question regarding age 20.
Yes, we recognized 4.6 age 20 in Q1.
We were unable to ship 2.5 billion, so the total for Q1 should have been 7 billion. When we look at our Q2,
our Q2 is going to be meaningfully down in terms of China data center revenue. And we had highlighted
in terms of the amount of orders that we had planned for H20 and Q2, and that was 8 billion.
H20 and Q2, and that was 8 billion.
Now going forward, we did have other orders going forward
that we will not be able to fulfill.
That is what was incorporated therefore
in the amount that we wrote down of the $4.5 billion.
That write down was about inventory
and purchase commitments.
And our purchase commitments were about what we expected regarding the orders that we had received.
Going forward, though, it's a bigger issue regarding the amount of the market that we will not be able to serve.
We assess that TAM to be close to about 50 billion in the future, as we don't have a product to enable for China.
In fact, probably the best way to think through it is that AI is several things.
is that AI is several things.
Of course, we know that AI is this incredible technology
that's going to transform every industry,
from, of course, the way we do software
to healthcare and financial services,
to retail, to, I guess, every industry, transportation, manufacturing.
And we're at the beginning of that.
But maybe another way to think about that is where do we need intelligence?
Where do we need digital intelligence?
And every country is in every industry.
And we know because of that, we recognize that AI is also an infrastructure.
It's a way of delivering a technology that requires factories.
And these factories produce tokens.
And they, as I mentioned, are important to every single industry in every single country.
as I mentioned, are important to every single industry in every single country.
And so on that basis, we're really at the very beginning of it,
because the adoption of this technology is really kind of in its early, early stages.
We've reached an extraordinary milestone with AIs that are reasoning or thinking
what people call inference time scaling.
And of course, it created a whole new,
we've entered an era where inference is going to be
a significant part of the compute workload.
But anyhow, it's going to be a new infrastructure
and we're building it out in the clouds. The United States
is really the early starter and available in U.S. clouds and this is our largest market,
our largest install base and we can continue to see that happening. But beyond that, we're going
to have to, we're going to see AI go into enterprise, which is on-prem.
Because so much of the data is still on-prem.
Access control is really important.
It's really hard to move all of every company's data into the cloud.
And so we're going to move AI into the enterprise.
And you saw that we announced a couple of really exciting new products.
And you saw that we announced a couple of really exciting new products.
Our RTX Pro Enterprise AI server that runs everything enterprise and AI.
Our DGX Spark and DGX Station, which is designed for developers who want to work on-prem.
And so Enterprise AI is just taking off.
Telcos. Today, a lot of the telco infrastructure will be in the future software defined and built
on AI. And so 6G is going to be built on AI. And that infrastructure needs to be built out. And
it's very, very early stages. stages and then of course every factory today
that makes things will have an ai factory that sits with it and the ai factory is going to be
drive creating ai and and operating ai for the factory itself but also to power the products
of the things that are made by the factories so it's very clear that every car company will have AI factories,
and very soon there will be robotics companies, robot companies,
and those companies will be also building AIs to drive the robots.
And so we're at the beginning of all of this build out.
We're at the beginning of all of this build out.
The next question comes from CJ Muse with Cantor Fitzgerald.
Your line is open.
Yeah, good afternoon.
Thank you for taking the question.
There have been many large GPU cluster investment announcements
in the last month, and you alluded to, you know, a few of them with Saudi Arabia, the UAE,
and then also, you know, we heard from Oracle and XAI, just to name a few.
So my question, are there other that have yet to be announced
of the same kind of scale and magnitude, and perhaps more importantly,
how are these orders impacting your lead times for Blackwell
and your current visibility sitting here today you know almost halfway through 2025.
Well we have more orders today than we did at the last time I spoke about orders at GTC.
However we're also increasing our supply chain and building out our supply chain. They're doing a fantastic job.
We're building it here on shore in the United States,
but we're going to keep our supply chain quite busy for several,
many more years coming.
And with respect to further announcements, I'm going to be on the road next week through Europe.
And it's just about every country needs to build out AI infrastructure and their umpteen AI factories being planned.
AI factories being planned. I think in the remarks, Collette mentioned there's some
100 AI factories being built. There's a whole bunch that haven't been announced.
And I think the important concept here, which makes it easier to understand, is that like other technologies that impact literally every single industry, of course, electricity was more and it became infrastructure.
Of course, the information infrastructure, which we now know as the Internet, affects every single industry, every country,
every society. Intelligence is surely one of those things. I don't know any company,
industry, country who thinks that intelligence is optional. It's essential infrastructure.
And so we've now digitalized intelligence.
And so I think we're clearly in the beginning of the build-out of this infrastructure.
And every country will have it.
I'm certain of that.
Every industry will use it.
That I'm certain of.
And what's unique about this infrastructure is that it needs factories.
You know, it's a little bit like the energy infrastructure, electricity.
It needs factories.
We need factories to produce this intelligence.
And the intelligence is getting more sophisticated.
We were talking about earlier that we had a huge breakthrough in the last couple of years with reasoning AI and now there are agents that reason and there's super agents that
use a whole bunch of tools and then there's clusters of super agents where agents are
working with agents solving problems. And so you could just imagine compared to one-shot chatbots
You could just imagine compared to one-shot chatbots and the agents that are now using AI built on these large language models,
how much more compute intensive they really need to be and are.
And so I think we're in the beginning of the build-out.
There should be many, many more announcements in the future.
There should be many, many more announcements in the future.
Your next question comes from Ben Reitzes with Melius.
Your line is open.
Yeah, hi.
Thanks for the question.
I wanted to ask, you know, first to Colette,
just a little clarification around the guidance
and maybe putting it in a different way.
You know, the $8 billion for H20 just seems like, you know, it's roughly $3 billion more than most people thought with regard to what you'd be foregoing in the second quarter.
So that would mean that, you know, with regard to your guidance, the rest of the business, you know, in order to hit 45 is doing two to three
billion or so better. So, you know, I was wondering if that math made sense to you. And then, you know,
in terms of the guidance, that would imply the non-China business is doing a bit better than
the street expected. So, you know, wondering, you know, what the primary
driver was there in your view. And then this second part of my question, you know, Jensen,
I know you died one quarter at a time, but with regard to the AI diffusion rule being lifted
and this momentum was sovereign, you know, there's been times in your history
where you guys have sat on calls like this, where, you know, you have more conviction and
sequential growth throughout the year, et cetera. And given the unleashing of demand with AI
diffusion being, you know, revoked and the supply chain increasing, you know, does the environment give you more conviction
and sequential growth as we go throughout the year?
So first one for Colette and then next one for Jensen.
Thanks so much.
Thanks, Ben, for the question.
When we look at our Q2 guidance and our commentary
that we provided that had the export controls not occurred,
we would have had orders of about 8 billion for H20. That's correct. That was a possibility for
what we would have had in our outlook for this quarter in Q2. So what we also have talked about here is the growth that we've
seen in Blackwell, Blackwell across many of our customers, as well as the growth that we continue
to have in terms of supply that we need for our customers. So putting those together,
that's where we came through with the guidance that we provided.
I'm going to turn the rest over to Jensen to see how
he runs. Yeah, thanks. Thanks, Ben. I would say compared to the beginning of the year, compared
to GTC timeframe, there are four positive surprises. The first positive surprise is the step
function demand increase of reasoning AI. I think it is
fairly clear now that AI is going through an exponential
growth. And reasoning AI really busted through. Concerns about
AI really busted through. Concerns about hallucination or its ability to really solve
problems. And I think a lot of people are crossing that barrier and realizing how incredibly
effective agentic AI is and reasoning AI is.
So number one is inference reasoning and the exponential growth there, demand growth.
The second one, you mentioned AI diffusion.
It's really terrific to see
that the AI diffusion rule was rescinded.
President Trump wants America to win.
And he also realizes that we're not the only country in the race.
And he wants the United States to win
and recognizes that we have to get the American stack out to the world and have the world build on top of American stacks instead of alternatives.
And so AI diffusion happened, the rescinding of it happened at almost precisely the time that the countries around the world are awakening the importance of AI as an infrastructure, not just as a technology of great curiosity and great importance,
but infrastructure for their industries and startups and society.
Just as they had to build out infrastructure for electricity and internet, you got to build
out an infrastructure for AI. I think that that's an awakening and that
creates a lot of opportunity. The third is enterprise AI. Agents work and agents are doing,
these agents are really quite successful. Much more than generative AI, agentic AI is game-changing.
agentic AI is game-changing. Agents can understand ambiguous and rather
implicit instructions and able to problem-solve and use tools and have
memory and so on. And so I think this is a enterprise AI is ready to take off. And it's taken us a few years to build a computing system
that is able to integrate, run enterprise AI stacks,
run enterprise IT stacks, but add AI to it.
And this is the RTX Pro Enterprise server
that we announced at Compx uh just last week and just about
every major i.t company has joined us and super excited about that and so computing is one stat
one part of it but remember enterprise i.t is really three three pillars it's compute storage and networking and we've now put all three of them
together for finally and we're going to market with that and then lastly industrial ai remember
one of the implications of of the the world reordering if if you will, is regions on-shoring manufacturing and building plants everywhere.
In addition to AI factories, of course, there are new electronics manufacturing, chip manufacturing, being built around the world.
And all of these new plants and these new factories are creating exactly the right time when Omniverse and AI and all the work that we're doing with robotics is emerging.
And so this fourth pillar is quite important.
Every factory will have an ai factory associated with it and and in order to create
these physical ai systems you really have to train a vast amount of data so so back to more data more
training more ais to be created more computers and so these four these four drivers are really kicking into turbocharge. Your next question comes from Timothy Arcuri
with UBS. Your line is open. Thanks a lot. Jensen, I wanted to ask about China. It sounds like the
July guidance assumes there's no SKU replacement for the H20, but if the president wants the U.S.
to win, it seems like you're going to have to be allowed to ship something into China. So I guess I had two
points on that. First of all, have you been approved to ship a new modified version into
China and you're currently building it, but you just can't ship it in fiscal Q2? And then
you were sort of run rating seven to eight billion dollars a quarter into China. Can we get back to
those sorts of quarterly run rates
once you get something that you're, you know,
allowed to ship back into China?
I think we're all trying to figure out
how much to head back to our models and when.
So, you know, whatever you can say there would be great.
Thanks.
The president has a plan.
He has a vision, and I trust him.
With respect to our export controls a it's a set of limits
and the new set of limits uh
pretty pretty much make it impossible for us to to reduce hopper any further um
reduce hopper any further for any productive use.
And so the new limits, the new limits, you know,
it's kind of the end of the road for hopper.
We have limited options.
And so the key is to understand the limits.
The key is to understand the limits and see if we can come up with interesting products that could continue to serve the Chinese market.
We don't have anything at the moment, but we're considering it.
We're thinking about it.
Obviously, the limits are quite stringent at the moment.
And we have nothing to announce today. And when the time comes, you know, we'll engage the administration
and discuss that.
Your final question comes from the line of Aaron Rakers with Wells Fargo.
Your line is open.
Hi, this is Jake on for Aaron.
Thanks for taking the question and congrats on the great quarter.
I was wondering if you could give some additional color around the strength you saw within the
networking business, particularly around the adoption of your Ethernet solutions
at CSPs, as well as any change you're seeing in network attach rates? Yeah, thank you for that.
We now have three networking platforms, maybe four. The first one is the scale up platform to turn a computer into a much larger computer.
Scaling up is incredibly hard to do. And MV link is is
comes with it
chips and switches and
you know.
And dealing fines and
it's really complicated.
But anyways, that's our new platform,
scale up platform.
In addition to InfiniBand,
we also have Spectrum X.
We've been fairly, fairly consistent that Ethernet was designed for a lot of traffic that are independent.
But in the case of AI, you have a lot of computers working together.
And the traffic of AI is insanely bursty.
Latency matters a lot because the AI is thinking
and it wants to get work done as quickly as possible.
And you got a whole bunch of nodes working together.
And so we enhanced Ethernet,
added capabilities like extremely low latency,
congestion control, adaptive routing,
the type of technologies that were available only in InfiniBand to Ethernet.
And as a result, we improved the utilization of Ethernet in these clusters.
These clusters are gigantic from as low as 50% to as high as 85%, 90%.
And so the difference is if you had a cluster that's $10 billion and you improve its effectiveness
by 40%, that's worth $4 billion.
It's incredible. And so Spectrum X has been really, quite frankly, a home run.
And this last quarter, as we said in the prepared remarks, we added two very significant CSPs to the Spectrum X adoption.
And then the last one, the last one is Bluefield, which is our control plane.
And so in those four, the control plane, the network, which is used for storage, is used
for security and for many of these clusters that want to achieve isolation among its users, multi tenant clusters, and still be able to use and have extremely
high performance bare metal performance.
Bluefield is ideal for that and is used in a lot of these cases.
We have these four networking platforms.
They're all growing and we're doing really well.
I'm very proud of the team.
I'm sorry, what do you?
We've got it all the time we have for questions.
Vince and I will turn the call back to you.
This is the start of a powerful new wave of growth.
Grace Blackwell is in full production.
We're off to the races.
We now have multiple significant growth engines. Inference, once the lighter workload is surging with revenue generating
AI services. AI is growing faster and will be larger than any platform shifts before, including
the internet, mobile, and cloud. Blackwell is built to power the full AI lifecycle from training frontier models to running complex inference and reasoning agents at scale.
Training demands continues to rise with breakthroughs in post-training like reinforcement learning and synthetic data generation.
But inference is exploding. Reasoning AI agents require orders of magnitude more compute.
The foundations of our next growth platforms
are in place and ready to scale.
Sovereign AI, nations are investing in AI infrastructure
like they once did for electricity and internet.
Enterprise AI, AI must be deployable on-prem
and integrated with existing IT.
Our RTX Pro, DGX Spark, and DGX Station Enterprise AI systems are ready to modernize
the $500 billion IT infrastructure on-prem or in the cloud.
Every major IT provider is partnering with us.
Industrial AI, from training to digital twin simulation to deployment,
NVIDIA Omniverse and Isaac Groot are powering next generation factories and humanoid robotic
systems worldwide. The age of AI is here from AI infrastructures, inference at scale,
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Thank you for joining us
at the earnings call today.
See you in Paris.
There we go.
And that is the NVIDIA earnings call.
Stock hanging up around near those highs.
I'm curious what people's uh initial thoughts
there were so we got uh hamid down below uh shout out earnings hub was looking through there you
got kevin too what's up mantiv okay can i can i start off okay so so i did some i've been posting
a lot on on discord uh stock talk you can it out. But I did some back of the envelope calculation here, right?
So $39.3 billion in data center revenue last this reported quarter.
Forget the inventory write down.
So they said 71.3% margin, you know, without the write down, right?
margin, you know, without the write down, right?
And by most analyst calculations, the H20 margin is somewhere below 50%.
So let's even take it as 50%.
So if you kind of take that out, the rest of the rest of data center is at 74% margin
today, right?
This reported quarter, just doing, you know,
just taking that number out.
And, you know, if you take out, you know,
four and a half billion that they sold to China
before the ban at 50% margin, take that out,
you know, you're left with 25.75 billion
from, you know, 34.8 billion in revenue
for the rest of the world.
That's a 74% margin.
So I think they are still being very conservative on the high 75%, you know, for the year margin
guidance.
I think they're going to beat it rather comfortably as we go.
The other important thing I wanted to point out is is again sort of reading
between the lines here they are talking about potent i mean potentially lost sales not really
lost from from inventory i think that part is done they they have mentioned multiple times about
that part is done they they have mentioned multiple times about you know re uh using
components in in in other places which is why he was slightly less uh of a margin hit then or or
a or a charge off then than expected so so i i don't think there's much if any of of uh of h20 left to be you know uh lost in any sense right it's
probably close to being written off uh you know close to you know zero value i don't know whatever
you call it so so they have from everything i can read from everything i heard them say today in
the call they stopped h20s right after and immediately reused the components in other
places because they had the demand right so so most logically they would have used the memory
and whatever you know other possible components but mostly memory in the rest of the hopper line so so i don't think this
problem is going to i don't think there's anything left to lose on the h20s that exist in inventory
in some form or the other i think that that part is done what is going to be missing is that 8
billion potential order that they expected to get this current quarter that we are in.
That will be lost.
So that 4 billion margin loss that they have to make up from the Blackwell line,
and based on what they said in other parts of the call, they're more than making it up. So, so I don't see this.
I don't, I didn't see anything in the call that leads me to believe that the
margin upswing is, is at risk at all.
Uh, if anything, I think they're being conservative on the margin.
Were you talking there too? No, sorry. gonna i was gonna jump before i thought he gave
a really good answer around um the rest of the business when he there were actually some good
questions i was not expecting there to be that many good questions but there were some good
questions um the i think i think i ask you a question on that as a big fan of analysts why don't you think
analysts ask good questions i i do think they ask good questions but not on popular companies
like i think and this is a broad stroke statement again like i said there are sometimes quality
questions and i think on this call there were but i think broadly speaking with the blue chip
names analysts throw a lot of softball questions.
That's just, I mean, I don't have any data to inform that opinion.
I've just listened to thousands of earnings calls and, you know,
I feel like they ask better questions on more niche companies calls.
And maybe that's also a function of specialization.
You know,
the analysts that are covering some of those more niche mid cap and small
cap companies have a generally have a greater degree of specialization. The analysts that are covering some of those more niche mid-cap and small cap companies generally have a greater degree of specialization in those industries so they can
ask more specific questions. And I think sometimes when it comes to these blue chip stocks that every
institution covers and every firm covers that you sometimes have generalists covering those stocks, right? Like tech generalists who
are covering like all the big cap tech stocks. And, you know, maybe they don't have like intimate
knowledge of the inner workings of the business and don't ask great questions. But anyway, that
I didn't want to get into that conversation. That's a separate conversation. But there were
some good calls, good questions on this call. And I think it was the second to last or third to last question about the $8 billion H20 impairment and how he said, you know, the street wasn't expecting anywhere near that.
And as a function of that, with the guidance at $45 billion at the midpoint, it probably means the rest of the business is doing much better than expected, which was what we were talking about before the call.
is doing much better than expected, which was what we were talking about before the call.
And at least that was the deduction that I made. And Jensen, I thought, gave a great answer to that
and was like, look, you know, there's a lot of stuff that's not in the headlines that is happening
in the background. And he said, that's helping float demand. Like he was talking about these AI
factories that are being built. And he's like, man, most of them have not even been announced yet.
So I thought that was a really good answer. And, uh know, he, I think, did a good job of sort of managing expectations around China as well.
You know, he didn't outright say, we're going to exit the Chinese market. He just said, look,
we don't really currently have an alternative to the previous rendition of the H20. He said,
we basically can't dilute Hopper anymore,
which is a fair concern for him to have. And so they're just going to have to redesign or
slightly redesign a ship that's going to be compliant. But again, to kind of call back
what we talked about earlier, I'm not sure US government policy is going to be cool with that. And maybe it will be. Maybe he'll,
you know, go to the White House and convince Trump. He actually said that directly,
that they'll engage with the administration once they do have a product ready for China. But
I imagine it'll be met with more resistance by policymakers in the United States. You know,
again, this is a bipartisan issue of restricting Chinese access to American AI chips. So I don't know where the buck ends with China. I think that
remains an uncertainty for the business, but clearly the market was happy about the guide
here because, again, without that impairment, you have a $53 billion guide. And if you say,
okay, well, that's cheeky, you can't just take out the impairment. Then the question is, you know, well, the street was only compensating a three to four billion dollar impairment.
So where's the other four billion coming from? The answer is the rest of the business.
And so anyway, you slice it. I think it's a pretty decent guide.
And I think the market felt that way, too, considering at least the initial reaction here.
We'll see what happens to the stock tomorrow. I don't know whether it's going to go up, down, or sideways.
But all in all, I thought it was a pretty good call,
and I thought he did a pretty good job of managing expectations.
Monitin, do you have any thoughts on what Stock Talk was saying there?
saying there no no i think look i this a lot of what jensen said today was really aimed at the
No, no.
government to you know give them a message that you know don't don't don't cut the industry
completely out of the chinese market that's a big loss to the country, not really going to buy
as much by doing that. We are continuously forging ahead, so we'll stay ahead, but we cannot
completely ignore that size of a market, especially since it's not something we prepared for.
So that's really a message aimed at
regulators and government and people like that. But as far as, you know, directly to the
analyst community in the market, everything he said was positive. He's like, you know, we're,
we are busy, we can sell anything we can can make we have more order intake in the recent
weeks than we've had in you know prior months all of those things are hyper positive in my
in in my opinion they did not take down um you know any part of the guidance uh you know they
they just had some you know sort of fluffy language around China. They don't want to come
out and say it's a stupid policy, but they said it's a stupid policy without putting it in those
words. I don't think there's a huge amount to recover if the policy gets reversed altogether.
think there's a huge amount to recover if the policy gets reversed altogether probably you
know some some little piece will be recovered but i think jensen clearly wants to close this chapter
and move on forward and and figure out how they can build something that won't face this if anything
at all so it it's uh i don't know how else to put it.
He's been pushed to a corner on this and they don't have anything at hand to sell to China.
So they took the hit and they're moving on, but they don't like it.
So let me put it that way.
Do we have kevin up here
no worries if not always love hearing from kevin yeah i got you kevin how you doing kevin
doing all right about yourself um i'm doing solid enough we had these nvidia earnings
quite a large day nvidia holdingIA holding up, still up 4%,
$140 per share. Oh, there's some interesting comments. I don't know if there's anything
going on there. Yeah. And that's actually a pretty decent call wall. So I know we kind of
broke through it, but I'm actually curious to see how we're going to resolve that by tomorrow.
I'm not going to continue to reiterate what everybody else is saying here. Obviously, it was a good report. I thought I actually am kind of interested to see if I thought that the tone coming from Jensen was actually very interesting. And I made a joke about Trump with a true social post. But honestly, I would not be surprised if you actually do see them kind of like addressing it, right?
It is a little bit of a problem, as Mountain have talked about.
They're kind of like moving on from it.
But the problem that you kind of have, you kind of open up that window towards the end.
Like we're looking at it.
Like as long as we know what the rules are, we might look at something different.
But you got to think to yourself, like, do you want to kind of go through that again?
Do you want to kind of go through that again? I mean, this is the what the third? This is the third adjustment to GPU sets going out of China, going to China that have now been restricted. I mean, at some point, is it even worth the dev? Probably over the long term, if you have some stability in the policy, but I don't know in the short term if it's, if it's really worth it. And I'm sure that they're probably going to be looking into that. You know, something that's not data center related, though, is the gaming segment, gaming
I mean, this is the, what, the third?
and AI segment.
I had them at a beat of over a billion dollars, which I think is actually a really decent
sign.
Seeing a growth of around, what, 40%?
I'm going off of the top of my head, what, 40% growth year over year.
I think that really did kind of push the needle over the top for revenue for this quarter.
If they did not see that type of growth, I think they would have came up pretty, you know, came up short.
So the fact that they are seeing maybe some promising signs from some of the smaller businesses,
obviously like automotive is not going to really push the needle,
but gaming is something that's really depressed right now. So if they do see a little bit of an uptick with that business, that can also soften maybe some
of the blow or offset some of the blow when it comes to the lack of China sales. So I thought
it was actually a pretty decent report, decent response when it comes to the market so far.
Let's see if it's going to be able to hold up. But I did think that his comments actually were a little bit more direct, in my opinion, to the policy, the China policy, but I'm sure he's probably trying to speak on behalf of others that are executives that are running companies that might not even be related to AI that are having some difficulties when it comes to the current policy and how it's destabilizing not only their guidance and their outlook moving forward, but also top line revenue growth.
So, Rod, that was a pretty decent corner. I don't have any other comments on the running video outside of that.
One thing I will add in, Jensen Huang is scheduled to speak,
I believe, on Bloomberg in 13 minutes.
So I wonder – I thought it was interesting that the prepared remarks
did definitely mention China there, and that wasn't a question that he got
or something that was directly going after it so i thought it was more direct now he he kind of either there was another
quote coming out of this saying like he he trusts the president and stuff like that so definitely
trying to walk that line i don't think he went over it but he definitely did share his his thoughts
there i do want to quickly also i just want to go for. I want to see one of those like all cap, just belligerent, you know, truthful social posts.
You're lucky you could even sell those chips if it wasn't for me, something like that,
and I would just be laughing as the stock drops.
But who knows?
This actually could be a Tim Cook moment, you know, maybe Tim Cook can actually like
be the next favorite CEOo while jensen takes
a back seat who knows that could be good for you uh what's up sam
i am not hearing anything is that me i don't hear him either kevin you want him to sign off the the tweet with a taco
emoji i don't even know what that's about i've seen a couple of comments around that i don't
even know what that is about no i look i am i'm making a joke but it's kind of like half serious
like i would not be surprised if you did see some type of comments around it. And it is what it is, right?
I mean, NVIDIA is doing a phenomenal job.
You know, every quarter, even myself, sometimes when you see, well, not this quarter, because I mean, it dropped down to 88 bucks.
I mean, that was pretty much a steal at those levels.
But you kind of get this question around, do you see a deceleration in demand?
Do you see a deceleration in demand?
We always have those conversations, right?
All of us.
We see a contract being canceled for a data center rental or whatever.
And then we start to question the viability of this business.
But at the end of the day, they're able to show the resiliency of artificial intelligence
and that we are in that first inning.
I think the market is, you know, I don't know if the market's fully priced in the whole China impact, which I think is fine. I think if you kind of look at it,
the China impact compared to all of, you know, sovereign demand over the next, let's say five
years, I think is actually probably a bigger pie that they want to be able to capture and probably
a little bit more valuable if you had to choose one over the other, in my opinion. So you can make
the case that, yeah, China impact, maybe it's a little bit overvalued, but I think the sovereign
impact of this business over the next couple of years is probably still trading at a pretty
decent discount. And there's always going to be a risk of deceleration of CapEx spend from the
hyperscalers. I do believe at some point they're not going to be able to keep up with the current
pace, but you got to look forward and see where can you have these orders being
backfilled. And there's nothing like government money or sovereign money in order to try to
backfill demand. And so I'm a little bit more optimistic on that story long-term than maybe
some of the hyperscalers continue to stay at this current pace for CapEx. But I might be be the only one there i know a lot of you and i have a conversation about that every once in a
while i just think that's a risk i don't think it's a near-term risk next quarter risk but i
mean at some point i just find it very hard to believe that they're you know you know the metas
of the world microsoft teslas the googles are going to be able to keep up with this pace
the Googles are going to be able to keep up with this pace.
Well, he has been saying at least the last four quarters, he's been saying to the analysts,
to the, you know, directly to everybody that there is an enterprise market that is larger,
much, much larger, and they are starting to pick up.
So it's easy to sell to 10 hyperscalers and neoscalers, obviously, because they buy it all in bulk and you don't have to go to hundreds of companies to do it.
But it's not the only market, right?
He's been trying to make that message come through.
It's not stuck.
So at some point in time when you start you know parsing
through the numbers you're going to see that i think last quarter it jumped back again to 50
percent but it's been just below 50 uh you know starting mid 2024 already so so there is a pickup
from the enterprise side already happening and i I think that accelerates, right?
So as you start adopting AI, you do need compute for that.
So you are going to see enterprises that still have their own captive data centers
are also going to start having to upgrade and buy.
having to you know upgrade and buy so so to some extent it will get you know it'll get uh watered
down by by other buyers but yeah it is easier obviously to just just have 10 buyers that that
pick up everything you can make and more right and and get on the waiting list i think those days are
over effectively you can't you can't You can't depend and it's become
too big already the market, right? You can't depend on those 10 buyers to pick up everything.
So it's changing but probably the message is not getting through to the market. do we lose oven there he is no i'm just here i was waiting to see if uh you or someone else
is going to come in um i just want to see for this uh bloomberg interview with cycle questions
he ends up getting asked
Which we could still listen to it. It should I think it starts in a couple minutes
Did I see did they share the deck from the from for the quarter or no, I don't see it
I was updating it the website like during the call and I didn't see it but i haven't checked back
That would be your cue to jump in.
Nixon 6, am I right?
There we go.
I was hoping somebody would say it.
Stock target, do you have any other takeaways that we didn't hit on i thought it was uh
interesting he addressed the china stuff i thought he addressed it well
if and if there's any black eye or or negative i guess that you take away from this it would be
just essentially having no plan for china right just just not having a plan at all right now
is that the only negative you could really take away out of this?
Yeah. I mean, look, these are moments for concession for shareholders, right? Like,
if you're a shareholder here, you just accept the China risk, right? It's that simple. You just say,
okay, they may be able to escape policy regulation on this issue, come up with a compliant chip that regulators don't just knock down.
Because so far, it's been a game of dominoes, right?
So far, it's like, we'll make a Chinese compliant chip.
Two months later, regulations change to restrict that Chinese compliant chip.
So we make edits and make another Chinese compliant chip until we can't do it anymore and then need
to redesign the architecture like you mentioned with Hopper. And then they're going to introduce
another Chinese compliant ship. And if the U.S. government doesn't like that, then they'll change
the restrictions again. So as a shareholder at this juncture, you just accept that that is a
headwind. And if you're OK with that, then you rock and roll, right? Like China's not the majority of their revenue.
It's a material part of the business.
But, you know, you make the you make the calculus that they can compensate for that revenue, either by virtue of increasing the pricing of their products or by finding pockets of international expansion to absorb the Chinese supply over time.
You know, we were referencing the Middle East earlier.
That'll probably become a much larger market.
It's a nothing burger market right now for them.
That'll probably become a couple billion dollar market, theoretically.
So you have to do this calculus as a shareholder.
You're like, look, can they find outlets to compensate for the risk to China or can they not? And if you believe they can, then, you know, you rock with
the stock at this juncture. And if you don't, then, you know, you do whatever you want to do.
But that's the calculus the shareholders are making here. And yes, I agree. He did address
the China issue well. He basically said, look, we'll try to make another compliant product. And
once we have one, we'll go to the White House and we'll try to make another compliant product. And once we have one,
we'll go to the White House and we'll talk to them. And if we can get it to be sold and great,
if not, then we can't. I do think though, and this is less about Nvidia stock and more about
my personal opinion, but I don't necessarily agree with Jensen's characterization of AI chip restrictions.
As an American, I do agree that giving China access to the most cutting-edge chips is probably not a good idea.
Now, do I agree with every incremental policy choice that's been made in an effort to do that? No, there's a lot of ways to affect restrictions in industry categories without built on American infrastructure or do we want it to be built on their own infrastructure?
I just don't think that's a good point, because the Chinese have there for very long, for at least the last 20 years, piggybacked the work that American companies have put into developing infrastructure and then develop companies of their own.
You know, Huawei, as a as a analogy to Apple, is a great example of this, as are most of
the other Chinese smartphone brands, which really just piggybacked the discipline, the
tooling, training.
We trained millions of Chinese people how to tool and manufacture smartphones.
That's what Apple did. And now they
have a burgeoning smartphone industry where Apple's not even top five in market share anymore.
And so I don't think the idea that, you know, do we want Chinese AI systems to be built on
American hardware? I don't think it's a good argument. You know, because in effect, they're
just going to piggyback the architecture until they can do it themselves. And, you know, because in effect, they're just going to piggyback the architecture until they can do
it themselves. And, you know, that to me is just giving your competitor a stepping stool effectively.
So that's just my opinion. That has nothing to do with the company or the stock. I do not think we
should give China just unbridled access to our best chips. But there does have to be a middle
ground if companies like this want to
access the Chinese market. And then obviously, we do have to worry about potential retaliations,
etc. Because, you know, you look at companies like Visa, MasterCard, Tesla,
all of the American big tech companies, even Apple still has a ton of exposure.
You look at all of them. And you say, okay, you know, in an event where we really do take a hard line stance
on chip export controls, you know, how do the Chinese return the favor if they do at
all?
And, you know, then it becomes a game of tit for tad and there's probably consequences
to be had there.
But that's all speculation.
So, yeah, I think he gave a good answer.
You know, I think investors are happy with his answers based on the after hours reaction
here.
We'll see how the stock performs tomorrow after the bell rings.
But all in all, I thought it was a good quarter.
I thought the guidance was strong.
It was stronger than I thought it was going to be, frankly.
I think it's a reflection of strength in the core business.
And they're, for now, able to dodge the bullets that are being thrown at them.
So we'll see what it looks like next quarter.
But for now, you know, the music can keep can keep playing in my view based on what we saw this
quarter uh by the way the bloomberg schedule says that he will be on in 10 minutes 6 40 so we're
gonna listen to that on here um at least if he goes on at 6 40 so we're gonna listen to that
what were you saying up i was gonna say say that the YouTube feed for Bloomberg for this event
just went live, but I think it's supposed to be another few minutes.
What guy's introducing right now?
I want to throw this out there.
Appreciate everyone.
I've said it a couple times.
Make sure you're following all of the speakers.
We appreciate the Osteum team for coming in and supporting us and supporting the squad and and promoting this
one i know you used it a little bit and the tweet pinned up in the nest above you want to talk about
it i'll say i'll say this uh you know because evan i know you're not like a super active trader or
anything you're you like to invest a little bit more but for the traders out there if you're
looking for a spot where you can just trade everything in one spot, crypto like Bitcoin, Ethereum, all of that, you can trade futures,
you can trade currency, gold, copper, and you can trade the MAG-7. Now they just added that on there
and you can trade it all with leverage. You can trade it all in one account in one spot.
It is super cool. And if you think about not not dealing with options, like they've essentially created a way to trade these Mag7 names like they were a future. So if you trade NQ or ES futures,
it's 50x leverage. That's just how it's designed. You can actually set your leverage all the way
up to 100x and trade NVIDIA, Apple, Tesla, Amazon. And I think it's a really, really
new, unique idea that I think we'll see a whole lot
more of in the future. And Austium is kind of leading the way on that. So big shout out to
them. Appreciate them coming in and co-hosting, sponsoring this space with us. There's a link up
top that Evan was talking about. If you go in there, you can see, open the app and look at all
And look at all the different products that they offer where you can just trade in one spot.
the different products that they offer where you can just trade in one spot. I think it's amazing.
I think it's amazing.
Yeah, you were definitely going to be able to say that better than I ever was.
I was not a trader, but I do find that very interesting.
I find that being able to control your leverage is an interesting thing.
I know people from the crypto world will be like, yeah, we have that, but it's a little bit less common.
That was the thing i always asked i was like you know this this trading leverage like if you're directionally
trading crypto with leverage like it's a huge advantage and now that that's available for
spx for for futures like nasdaq for the mag 7 i think it's huge
yeah and they're only expanding so check that tweet up in the next above follow the I think it's huge. Yeah.
And they're only expanding.
So check that tweet
pinned up in the comments above.
Follow the Osteam account.
We appreciate them.
And yeah,
it's cool to see
these new tools
being available to traders
and it's exciting.
Now, I mean,
never mind.
I was just going to make
a comment about hopefully
NVIDIA's green or something,
but we shall go from there.
We got about seven minutes until Jensen should be speaking on this call.
So I'm just looking through the numbers here.
Actually, they're also getting better at inventory management.
So they have a slightly larger inventory, but they're turning it in 20 fewer days.
So their day sales inventory, day sales of inventory is 59 days versus 86 days last quarter.
So they're basically selling it out faster.
So there's a lot that they've done here that's just outstanding.
There's a lot that they've done here that's just outstanding.
I don't know.
I think I'm boring everybody, so I'm just looking deeper at the numbers here.
But yeah, I mean, there's really nothing in the numbers that I see that concerns me particularly.
This is really good stuff.
What's the single thing that stands out the most to you monitor?
Is it data center?
Is it just everything outside of the chip cells?
What's some, the biggest standout?
To me, I was really looking at one thing, which was where those margins
are going to stabilize.
And I like that where, where I think it like that where where i think it's stopped
um i think it's just fine and the guidance uh of 75 percent or more for the year is is perfect i
think that's still that's still low-balling it a little bit i think we're gonna see uh we're gonna
see it up uh even higher especially because you're taking a low margin product out completely in one
shot. You just, you just cold turkey dropping that and saying, you know, we're moving on. So,
you know, suddenly a hundred percent of your product is going to be at a much higher margin
whereas before you had, you know, 10% or 12% of your data center revenue at 50% margin and the rest at 75% margin.
So I think that's a margin surprise that's coming.
I think they're getting more efficient.
Let's see what else I can think of off the top of my head.
Again, I'll repeat.
I think I like the fact that they just took all of this china problem
into one quarter and kitchen sinked it uh the only thing i can think of that you know
sort of contrary to the other opinions i heard here is i don't know if they will make a chinese
specific product and actually build it unless they have some sort of guarantee that
they don't have to write it off again and I'm not sure they'll get one so they might design it I'm
not sure they're going to build it it just makes no sense that that that they did the same thing
last time and they got the rug pulled under them so So, so I'm not sure that a new design will, will make much sense for them or design might,
right?
It's not that expensive relative to actually producing it and, you know, acquiring the
components, paying for all that, paying for the production line only to find out that
after you've built it all, you know, they changed the policy from you.
I think that's the, the,
the thoughts there about them not selling the NVIDIA,
the chips into China, which was their lowest margin area.
So that kind of giving the boost of the margins to overall is an
intriguing thing that I didn't think of.
So, yeah.
And then we saw that 61% number and we're like, Oh, well,
where are we now?
But obviously that had those impacts and we're still hanging out around that
71%.
I want to focus on that margin number.
Yeah. That's, that's what I did. I, that's what I was saying earlier, right?
If you take that $4.5 billion of revenue from China, which was before the ban for the quarter, right?
If you take that out of the picture, the margin is 74% or higher.
So already you're starting to see that without China, that margin will go up.
that margin will go up.
And if the demand is strong as they claim,
and they're selling out inventory faster,
obviously by a lot, 25%, almost quicker
that they're cycling through inventory.
That tells me that they still have the ability to dictate price,
maybe not as much as two years ago,
but they certainly have that strength.
So getting the margin to high 70s, Maybe not as much as two years ago, but they certainly have that strength.
Getting the margin to high 70s, I think is a done deal this year.
How long it stays there, I don't know, but I think we're still going to see it get closer
to that 80% before it gets to that 60%.
We should be having Jensen on here any second.
I definitely want to hear what he has to say on this one.
I wonder what you'd ask him in this scenario.
Yeah, he's coming on space.
We're waiting.
No, he's going to be on Bloomberg TV,
and we should be able to listen to it.
Have him scheduled for two minutes from now.
I think you'd want to ask him around that China,
his China comment is where my first question would probably go.
Yeah, Jensen Wong, two minutes.
We're going to listen to it on here.
Close the spaces out.
Talk about it again tomorrow.
What would you ask him, Evan?
Are you going to ask him to continue about China?
What would be one thing you would want to hear from Jensen?
I would
ask him, can I get
a GPU?
What would you even do with a GPU?
Step one,
get the GPU. Step two,
sell it.
Step three, profit.
Sell it on the black market
um but yeah no i i think i would want definitely want to sit down and kind of think a little bit
more about my questions here but um the one that i thought was really interesting is the comments
the era era of robotics are here billions of robots hundreds of millions of autonomous vehicles
are here, billions of robots, hundreds of millions
of autonomous vehicles,
and hundreds of thousands of robotic
factories.
My questions would be about
ramp-up and
which one of these ones are
two to three outs
versus decades out.
Hundreds of thousands of factories?
Hundreds of thousands of robotic factories
and warehouses.
That's a wild number to
conceive i'd want to hear his thoughts on uh you know time frame for that i'd also like we're to
we a lot of our conversations around here have been like okay what's the time where this changes
where's the the top of this so my question would be of like, what are the step changes here that people
aren't thinking about it? Like a billion billions of robots on the road? What is the GPU? And you
know, the computing capacity that goes behind that and like, hundreds of millions of autonomous
vehicles? What's the training for that? What's the real time for that? You know, what's the
ongoing maintenance, etc? What like, that is where my questions would go. It's not necessarily what Nvidia is gonna,
you know, they could get competitors,
they could get whatever, but it's where my mind
is going at right now for questions.
I'm listening to a Nibs background,
but I haven't heard him yet.
Let me get this off.
But yeah, that's where my questions would go.
Yeah, what kind of compute do you need for Golden Dome?
Yeah.
You know, they don't talk about defense a lot,
but, I mean, we're talking about precision munitions,
and we're talking about, like, connected weapon systems and stuff like that.
I mean, there's...
My money puts there's NVIDIA chips somewhere in there.
Oh, Heck yeah. I mean, look,
you think a part of
the sovereign cluster is not going to be
dedicated to defense?
The question is,
how much of it, or a lot?
He mentioned the stuff about Europe, too,
which I thought was interesting.
I don't know if that's where my questions would go, but
yeah,
I'm excited about the upsides for this.
Investments.
Okay, I'm still just kind of
waiting for this in the background. We won't give it too long.
I thought it was really interesting,
the industrial.
That's one of the areas of AI that I think I'm most interested in is the industrial.
We've seen the industrial names actually do pretty well in this market.
That's what I'm most interested in.
I mean, it kind of goes with the robotics side of things as well.
But I really think there's going to be a huge boost to these industrial, these big industrial names that are going to make.
going to be a huge boost to these industrial, these big industrial names that are going to make,
I think, have we even really seen them start to buy and invest in the NVIDIA side of things? I
mean, I know they're investing in AI and they're developing stuff, but I think that's kind of like
when I think about going where the, you know, skating to where the puck's going next,
I think industrial side of AI is a big opportunity.
And that's what I heard him speaking about.
And I need to go back and kind of dive into those comments deeper.
But he mentioned industrial AI for like a good, what, two to three minutes that he went on
talking about Omniverse, I heard him say, and a couple other things with robotics and
all that around it.
So I wonder if that's like even another stream that's going to be coming in soon.
So look, now that this big CEO, he's running on his own time.
Two minutes late for his interview, question mark?
I guess when you're the CEO, you can do that.
Yeah, maybe Trump called him in in between here.
I didn't like what you said.
Not nice.
Very not nice.
Did you change what you said?
Some of the server assemblies.
Server assemblies. Yeah, this guy's accents pretty solid we just got a little pop in the futures though by the way QQQ is almost back to where it was the hive day we got a what a little
bit before those after hours close oh interesting i don't know if you
guys saw it elon put out or it was earlier the telegram ceo put out hey we signed a deal with
with xai um for basically they were gonna get 300 million dollars xai was getting access to
put in their chat bot into telegram and then elon commented below no deal has been signed
and i thought that was really weird and then then the Telegram CEO just put out,
true, agreed in principle,
but formalities are pending.
I don't know.
I thought that was a really strange set of comments and events.
I know we were completely focused on NVIDIA,
as we should be.
I agree with it.
But CRM, Salesforce, they popped big. I know we were completely focused on NVIDIA, as we should be. I agree with it.
But CRM, Salesforce, they popped big.
They gave it pretty much all the way back,
and it's trying to turn back around a little bit here after their conference call,
but they're only up just over 1%, just a few dollars up.
The AI, thicker AI, the C3 AI, up 11, almost 12% here,
holding in pretty strong on that big pop that they got on their
earnings report as well.
I don't even remember.
Who else reported?
We didn't really pay attention to HPQ, I think.
Synopsis, they got smoked by that headline.
They put out a comment that said they hadn't received anything from the administration or the White House yet.
But they were part of that headline about the chip design thing being banned from China or something like that.
Restrictions.
That headline came out before the close.
When we were first starting this space, they did put out that statement.
But they're still down 12% here.
Or not 12%, I'm sorry.
HPQ is down 12%.
Synopsis.
Where did they end up?
They bounced back a little bit.
3% after hours,
but that's after falling 10% on the day.
Were you at Jensen?
Yeah.
We'll give it a couple more minutes.
I don't know.
But, yeah.
What else do we have coming up, though, the rest of the week?
I know we have Costco earnings.
We have Costco and Dell tomorrow.
Best Buy in the Morning.
But Costco and Dell are two very solid names.
Marvell as well.
Sounds like a lot of stuff heard here would be bullish for Dell.
I would think so.
First revision to GDP coming out tomorrow?
That's actually a little interesting.
Yes, and jobless claims.
Short break, and then they said this is coming up, so we'll see.
I don't know. These New York people, they just operate on their own time.
Well, clearly he's not New York.
Yeah, but Bloomberg says 6.30 New York time.
Yeah, okay. On their calendar, though, it did say 6.40, so I think that that's the time they were going off of.
That's just the hour as part of.
But, yeah, like we were saying earlier,
hey, you enjoy live free content, the host of this space.
We do this every single Monday through Thursday,
3 to 5 p.m. Eastern at least.
Obviously, it is now 6.50 p.m. Eastern,
which means, you know, we have a little bit of leeway for this type of content.
But I really did want to hear what Jensen had to say after this,
and I figured why not stay alive.
I feel like one of the last, like he's done this post-earnings interview with them
two or three times at this point, and one of them I remember,
he did drop a little nugget of something in there.
I can't remember exactly what it was, but I just remember there being a reaction
because everybody kind of like listened to the earnings call and then
tuned out for the evening and then all of a sudden like headlines started coming out and I remember
him dropping some kind of nugget.
Yeah, so we'll maybe expect that. You never know.
But if he doesn't come on after this, then we'll close it out.
But if he doesn't come on after this, then we'll close it out.
Do you watch Bloomberg often?
I've never...
I only watch it when I know somebody's on there.
No, I don't, actually.
Even then, most of the times, I don't.
CNBC, like, you know, it's very rare,
It's very rare, but sometimes
but sometimes they will be thrown on in the background.
there will be thrown out in the background.
Still pushing higher here on the futures, by the way.
There you go. Boom.
That's basically our high of day right here.
Interestingly, NVIDIA is not really...
He's live now.
Let's bring in NVIDIAo jensen wong following the
company's earnings and analyst call um jensen thank you for your time here on bloomberg technology
you went into great detail about what's happening particularly in china i just wanted to go over
something that i felt wasn't asked which is fiscal second quarter sales, $45 billion plus or minus 2%.
$8 billion of lost revenue opportunity, specifically relating to China in H20.
It seems as if you made up somewhere some demand for a different product
or from a different geography or from a different corner of the market.
What was that?
Well, we got a whole bunch of engines firing right now.
The biggest one, of course, is the reasoning AI inference.
The demand is just off the charts.
You see the popularity of all these AI services now,
ChatGPT, Gemini, so on and so forth, Grok.
I mean, they're just doing incredibly well across the board.
And all of the APIs that they serve out and all the agentic AI services that are built
on top of them, they're all doing incredibly well.
I think that there's just a giant breakthrough in AI's capability and inferencing has just
become a giant workload.
Second, people realize that Blackwell is just a home run.
NVLink 72 is a home run architecture.
We designed it to be a thinking machine, a reasoning AI system.
And I think people now, the confluence of the breakthrough in reasoning AI and the availability,
now the emergence of Grace Blackwell, MVLink 72, perfect timing.
I think that's at the core a big part of it.
And the second part of it is that our supply chain is growing,
and we're really ramping it up, and they're doing fantastically for us.
And so all of these things are all coming together.
And so it is fair to say that some of that additional supply on Blackwell
and the demand for Blackwell kind of made up for the opportunity lost in China,
at least in the outlook for this
current period? Yeah, I guess so. But you know, you just can't you can't underestimate the
importance of the China market. This is the second largest AI market. This is the home of
the world's largest population of AI researchers. And we want all of the world's AI researchers
and all of the world's developers
to be building on the American stacks.
And so, irrespective of the near term revenue success
that we have, we can't ignore the fact
that the Chinese market is very important.
You explained again, in some detail
that at least in the Hopper architecture, you have engineered down to the lowest spec possible.
It's not possible to do anything different with Hopper for the Chinese market.
But in your consideration for a different architecture or a chip for the Chinese market, is that what we're talking about?
for the Chinese market.
Is that what we're talking about, a new design or new class?
A new design or new class?
And have you made that proposal to the administration,
just designing from the ground up a new chip?
We're still thinking through that.
The limitations are quite stringent, quite limited, if you will.
H20 is as far down as we could take a hopper.
We don't know how to make it even less.
And so that's really the limit.
But the limitations are quite stringent.
So we have to really think through it.
Whatever we make ultimately has to add value to the market. And so it's a really tight road because the Chinese
competitors have evolved and advanced greatly over the last year. Like everybody else, they're
doubling, quadrupling their capabilities every year, and the volume is increasing substantially.
And remember, these are data center chips. They don't have to be small. They could be quite large. And, you know, without
American technology, the availability of Chinese technology will fail the market. And so, you know,
whatever we offer has to at least be competitive and has to add value to the market.
Jensen, does Huawei have an AI accelerator or a GPU that is performant as H20 or is performant of other classes of GPU that you make?
Huawei's technology, based on our best understanding at the moment, and we have a lot of ground truth there, is probably comparable to an H200.
is probably comparable to an H200.
And so they've been moving quite fast.
And they've also offered this new system called Cloud Matrix.
That scales up to even a larger system
than our latest generation, Grace Blackwell.
And so Huawei, as you know, is a formidable technology company, and they're not
sitting still. And they look for ways to compete. And they're quite formidable.
With that in mind, you've kind of explained the landscape now, NVIDIA's abilities operate in
China. I mean, you and I this year alone have already discussed the idea that there are 50%
of the world's AI researchers
in or from China,
but are you having a sense of the vacuum created
that those big names,
I think about Tencent or Alibaba or Baidu
that were buyers of age 20,
that they've already pivoted and turned to the offering
from Huawei because of the policy that is in place.
Yeah, they have no choice but to, you know,
one of the challenges of the changing regulations
is the ability for markets to trust the NVIDIA
and ultimately American platforms.
And so it's prudent, I think, for the Chinese customers
to make sure that they develop their stack on Huawei.
And because it's hard to rely on American technology at this point.
And so that's one of the unfortunate parts of changing policies.
But anyhow, I have every confidence that if able to compete, American companies will compete.
This is to write off American technology companies is not smart.
This is the home of some of the brightest computer scientists in the world.
American companies are incredibly competitive.
We just have to have the confidence to go compete.
And if we have the confidence to compete, we will win.
You said during the earnings call that you trust President Trump
and that the president has a vision and a plan.
Could I ask if you've talked to him about that plan
and if it includes coordinating with NVIDIA on
policy adjustment that relates to changes in technology export controls.
Well, obviously I don't know all of his ideas, but let me tell you about two that are incredible.
The first one is utterly visionary.
The idea of tariffs being a pillar of a bold vision to re-industrialize onshore manufacturing
and motivate the world to invest in the United States. And it's just an incredible vision. I
think this is going to be a transformative idea for the next century for us. We're all in on the
idea. We're setting up plans and encouraging our partners from around the world to invest in the United States.
And we have a lot of stuff going on.
And so I'm very excited about that.
The second major idea is to rescind the AI diffusion rule, recognizing that this isn't about limiting American technology,
but this is about accelerating American stacks around the world to make sure that before it's too late,
that the world builds on American stacks during this extraordinary time, the AI era.
And so these two initiatives are completely visionary and it's going to be transformative for America.
Jensen, in the time that you and I have been on air having this conversation,
some news has broken from U. from US Secretary of State Rubio, who has said that the US will begin revoking some Chinese
student visas. What I wanted to ask you is that with US government limits on foreign student visas,
how does that impact a company like Nvidia? I think about the size, but also composition of
your engineering talent here in California and elsewhere in the United States.
I believe the administration still feels very strongly about about the incredible importance of immigration.
Look, I'm an immigrant. I know many immigrants that came to United States to to build a great life.
And many of us, many of us have contributed
greatly to the technology industry and the United States. I believe that's going to have to continue.
Remember, people from all over the world want to come to United States. This is such an
extraordinary country with such incredible opportunities.
We want the brightest to come here. We don't want we don't want others to, you know, we don't want everybody to be able to come here. And there should be there should be rules. And and but
nonetheless, for the ones that really can make a contribution, want to make a difference. We want
to make it possible for them to come here and bring their great ideas, bring their great intellect
and help us build a great America.
So I think the administration is all in on that and I don't think anything that they've said changes that.
Jensen, I surveyed our Bloomberg Technology audience around the world for questions for you.
And I think the most common question is understanding who NVIDIA's customers are away from the hyperscalers. But actually, many questions about Elon, Inc.,
and whether Tesla and XAI in aggregate
might actually be one of the biggest customers you have.
You think about not just the data center chips,
but the chip specific for Optimus or in the cars,
the omniverse component.
Could you speak a little about that?
We do a lot of business with Tesla and XAI. Elon, as you know, is just an extraordinary
engineer, and I love working with him. We've built some amazing computers together. We're
going to build many more computers together. And the work that he's doing in Grok, his self-driving car, his Optimus,
these are all, every single one of them, world-class, every single one of them,
revolutionary. Every single one of them are going to be gigantic opportunities. And we're delighted,
I'm delighted to be working with him on that. And so I think the optimist opportunity is just right around the corner.
It's very likely that human robots are going to be robots that we can deploy into the world relatively easily.
And this is the first robot that really has a chance to achieve the high volume and technology scale necessary to advance technology.
And so I think this is likely to be the next multi-trillion dollar industry.
I'm very excited for him.
Jensen, let's end by talking about Europe.
You alluded to a trip you're taking next week.
It sounds as if the infrastructure build out in Europe is coming.
Where will you be visiting and who will you be speaking with?
Well, I'm going to leave the WHO as a surprise for all of you,
but I'll be seeing lots of heads of states,
and I'll be in France and UK and Germany and Belgium. And I think that it's very clear now that every country recognizes that artificial
intelligence, like electricity, like internet, like communications, is part of a national
infrastructure. No society could do without intelligence, as you know. And there's an
awakening that every country has to take some initiative
to ensure that their country and their society has access to artificial intelligence.
And so we're really delighted to be able to work with the European countries to bring
AI infrastructure to them and work with them to build AI factories.
There's an umpteen number of AI factory projects in discussion and development,
and so I'm really excited to make this trip.
We're going to be all over Europe.
NVIDIA CEO Jensen Wang, thank you.
Thank you. Great to see you.
All right.
We just ripped faces, by the way.
Everything? Or...
Ooh.
Really, NVIDIA's not even moving.
It's like everything else.
Everything else just ripped.
We took out today's high on Spy.
We continued pushing up on all the futures, QQQ.
Big move, actually.
A lot of headlines around, actually,
what he mentioned in the call around student visas.
I'm also seeing stuff around US Paws' exports
of jet engine technology and chip software to China.
I'm waiting to see the bullish headline that just came out
that would have sent us higher.
Yeah, I saw those other headlines that came out were
basically US to update visa requirements for all China and Hong Kong applicants.
There was another one around that same stuff.
Rubio's making a lot of comments.
I think that's where these are coming from.
All right.
We've been going for a good long time here.
Follow the speakers.
I don't know if you want to give a shout-out to Ostium, too.
We got that tweet pinned up in the nest above.
Maybe we'll talk through there a little bit.
But, yeah, follow the speakers.
Shout-out to Stock Talk, hanging out with the squad.
Monitiv adding so much,
we appreciate Monotiv a bunch,
everyone else who came through,
of course Ostium for supporting the squad.
Stock Talk, if you're around,
you got any final words to leave
today? No,
I think we talked a good amount about the video.
Thunder tonight, losing it out. Yeah, I mean, I think we talked a good amount about NVIDIA. Thunder tonight, closing it out.
Yeah, I mean, I guess so. I've been so wrong on these Western Conference
and Eastern Conference finals that at this point I just... You're not the only one on this panel that was
very wrong. Yeah, I mean, Evan was too, but Evan's usually
wrong, so. Well, when you took his side, that wasn't a side for you?
No, no, no. I wasn't taking evan's side i
just also thought the nicks were going to win the series but uh you know it turns out you can't
count on new york so uh we'll see you guys tomorrow so all right stock talk appreciate
you shout out to osium crew that link is still pinned up top if you haven't checked them out
you should especially if you're a trader if you like trading uh directional moves with leverage not dealing with all the extra stuff having it one spot really really cool product
up there appreciate them appreciate having running these spaces monitors hanging out with us here to
the end and uh we'll be back tomorrow we've got uh live spaces all day long on the wolf family of
channels and then we'll be here our hour same time same place costco and dell reporting
tomorrow marvell a couple other names that a lot of people watching so appreciate everyone
and uh with that i'm gonna close it out take care all
nixon seven Thank you.
