저자: JensenHuang가장Tanner—주출연자미상 · 외국인
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엔비디아 2026 2분기 실적 프리뷰·라이브 방송. 출연자들은 매출 약 935억달러(전년비 100% 성장), non-GAAP EPS 2.16달러 이상, SpaceX 평가이익 반영 시 EPS 상향 가능성을 전망. 가이던스·마진(약 75%) 유지 기대, 메모리 가격 상승은 영향 제한적이라 봄. 공급 약정(1조 달러 가시성 상향 필요), 자사주 매입 확대 기대 등 언급. 방송 중 CEO 발언으로 보이는 인터뷰 인용도 포함. 단 자막 일부가 불명확함.
다듬은 글
[sighs] All right. Hello everybody. Welcome back to another Nvidia earnings for Q2 2026. Not only was the Nvidia guy Jose late, but apparently this other creature on the show had his camera turned off and I was like, "Dude, we got to go live. Turn your camera on." And he said, "No." And now I get why he had his camera turned off.
Ladies and gentlemen, we have Mr. bootleg Canadian Jensen Hang with us in the house. So, you're not talking to somebody who just woke up a loser. Okay, we're here to win. Nvidia's about to take over. I'm so excited to be here, ladies and gentlemen. Today, I'm representing Nvidia's digital twin, Jensen Wong.
Teimu Jensen. Yeah. The the the way this story played out just makes perfect sense. Last week we were here, Tanner was getting ready to sleep. this this this episode he didn't wake up a loser. Are you listening people? Are you guys This is the kind of creativity that he thinks of. Puns on puns. Yeah.
Yeah. There you go. There it is. There it is. No, this is going to be exciting. Thank you all for being here. Neil, Jose, Tanner, and myself. Um, get some drinks, get some food. We're going to be here for the next three and a half hours. We have a lot to analyze. We say this every single quarter, but this is going to most likely be the most important earnings that we've ever had for uh Nvidia.
We got about 20 minutes. Well, actually the the earnings are at um 420, so we have about an hour. We also have CrowdStrike and you guys are really having fun here today. Neil with the great background of Tanner's uh thumbnail there. I really thought about shaving the mustache. I really did. Is that Is that paint under you?
The green Oh yeah, baby. We got the the the football paint on. Yeah, I'm ready to go. The wig is good. The wig is actually really good. That's very good. [clears throat] Thank you. And the Nvidia the Nvidia badge. Yeah, it's everything. So, let's start off with you. Uh, Teimu Jensen, what are you thinking for this quarter for Nvidia?
High level thoughts and then we can go a little further into the numbers. Uh, well, high level, I think that they're going to do uh very well. Um, can I jump into the numbers because I believe that they're going to essentially do triple digits in terms of their growth rate top line. Um, my estimate was a little bit conservative even though they're higher than Wall Street's numbers, but 93 and a half billion.
I actually think that they could come in probably over a billion higher than that. Um, but that would be in a really good bull case. Uh, so my sort of base case is 93 and a half billion. That would be 100% growth rate. And then on a non-GAAP EPS base, and I already know the numbers because, you know, I created the company.
So, uh, we're going to see $2.16 of non-GAAP EPS, plus because of my amazing investments in SpaceX, we're also going to see an additional $10 billion worth of gains, which could end up seeing, you know, $257 worth of gap EPS due to the market marktomarket gains that uh, you know, Colette did for me.
So, so she's going to mark some of those SpaceX gains in this quarter. Very happy to see it. I forgot about the SpaceX gains. Do you think the street's going to care about that or it's like it's baked in? They know there's EPS growth from that. Uh well, I mean, there will be EPS growth. I believe $10 billion worth.
No, but if they beat EPS by like 10% and it's because of the SpaceX stake. Do you think the street's going No, no, no. I I think non-GAAP uh Wall Street's expecting $29. I expect $2.16. Even without the marktomarket gains, I think that they'll beat without it. Okay, makes sense. Uh, Farazar, thank you for the super chat admit.
Please make sure Nvidia goes up after earnings, otherwise I'm unsubscribing. I think all of us have been waiting for this stock to finally make a move. And you know, the implied volatility on the name is 5%. It's the lowest it's been in two years. Usually, it's 8 to 10%. So, the fact that there's not that much volatility going into the sprint means people have kind of given up on expecting a big move, which means maybe this is the quarter where we where we get the big move.
Neil, your thoughts on the quarter and can I just step in really quick? Uh, I just started talking I just started talking to Farzad on X and this is the first stream I think that he's seen of me in a while. So absolutely ridiculous. But uh All right. Sorry. Go ahead, Neil. I apologize. You can only go up from here.
Anyways, uh results wise, I think the market now is actually expecting 100% year-over-year growth. um a couple of weeks, maybe months from now. It was much lower than that, but the market is already expecting triple digits now. Maybe they're putting the bar higher, so they are not so far behind, but I think Nvidia delivers quite easily on on a double beat this quarter.
Then it's all about the guidance for next quarter. Tenra or Jose, the next quarter is what closer to 90% year-over-year growth or something close to it. I think they can deliver on that as well. the bigger story will be on all of the commitments, all of the deals. Uh how how are they thinking about it?
Maybe some questions on the whole financing agreements that and the announcement that we've seen, how are they choosing it, how is that structured, etc., etc. But all in all, I expect Jensen to have another call where he just tries to explain the what the heck's going on right now. There is no scenario in my mind where Nvidia shows weakness.
Nvidia has visibility into 90 plus% of all the the companies that are using AI and GPUs and whatever in the world which means they know what companies will be doing two years down the line or trying to do two years down the line and and so how how can they go and be behind it just it it doesn't happen.
It doesn't happen. So, I expect a full beat. It the stock itself has been underperforming this year. I think the last time we covered this, the stock was at the exact same price or or close to it. So, it's time for this one to get to get a move on. Jose, you have uh owned Nvidia for a long time. Your thoughts on on this quarter?
First, shout out to to chat. Two things that had me dying was they said it looks like Uncle Jesse from Full House. Hilarious. And then um Tanner was Granny Jensen. Hilarious. All right. So, thank you guys. I appreciate it. That's why I come to these live streams just to rehat um and hopefully hopefully provide youall with some value.
But um and and it sucks. You put me last. So now I have to say I I agree with Tanner and I agree with Neo, which is not what I do a lot. But you didn't even hear what Neil said. Yeah, exactly. You're last because you anyways don't listen. So you just get to repeat what we said. Um, so like Neil was mentioning, I do think one of the these are two topics that I think are going to be big discussions, right, in today's starting call.
It doesn't mean I think they're important, but I think it's what the market is going to be focusing on. First is kind of the uh jalapeno chip, right? We kind of saw that with OpenAI yesterday. Um, and it's it's become very popular. I think it's social exploded. I saw a lot of topics and discussions about this.
It just continues to add that sentiment that Nvidia, you can't hold your market share forever. Look, AI chips, AI is making AI chip development easier, which I think is true, but I think the the moat is changing a little bit. It's no longer about chip design. It's about the supply chain. Who who has the ability to be able to lock in 60% whatever x percentage of TSMC's manufacturing?
who can hold up x percentage of of the HBM market or the rest of the manufacturing space. Sure, you can design a chip, but can you go to all these kind of supply chain players and make them promise you that they're going to give you a piece of that supply chain for a chimp that they don't know is going to work while you have Papa Papa Jensen and Granny Jensen here kind of giving you plenty and plenty of money for for that for that allocation.
Um, so so that's the first thing. The second thing I really would want to hear about is just like Neil was talking about the um commitments, right? And see, I was listening Neil um I'm giving you your uh but it's last quarter I think we were closer to like 120 $130 billion in commitments and I don't even think that was including kind of uh cloud plays and it wasn't including investments either.
If we see that number kind of go to 200 billion, as um as an investor, I would want to know that visibility. You've given us $1 trillion of visibility between 2025 and 2027. But if now you're increasing your supply chain commitments dramatically, I think it's only fair you tell investors why. I already know you have it.
Just give me a number. Tell me a number till 2028. Tell me $1.7 trillion to 2028. I think that's what could wake up the stock and say, "Look, Nvidia definitely has this and this is why they're making the commitments because now you're telling me that you've increased your commitments dramatically and you're still sitting at that $1 trillion till 2027." It just doesn't make sense.
Um, so when say I think I think I think that's a big point, Jose, because when Jensen announced he has 1 trillion in visibility going into uh 2027 calendar year end at GTC, you and I were there together. the stock popped every and then like two minutes later the market was like wait a second we already knew because the whisper number was like 950 so it's only 50 billion more so you're right I don't know if they make that announcement here but they're going to have to say that Vera Rubin and everything they're seeing in terms of progress with the hypers scales and ROI is got to push that one trillion to like one and a half at least to get investors a bit more excited about the multiple expansion
so I I would say um that commitment news and hopefully any visibility that's what I'm really looking at um and then I go to Tanner for all the numbers because that guy's on point with the numbers here. I I I I don't know why I I stopped caring about the next quarter and like I really don't look at it.
It's just I know Nvidia is going to crush it, right? So, it's like uh just tell me what's what are the years I don't I don't see coming right now. Um but yeah, I mean the other thing that I think will be curious is they did break down their data center revenue segment to kind of the meta uh the hyperscalers and the um neocloud players or whatever they forget neoclouds.
um enterprise and so on. Last quarter that was almost a one-toone basis. How has that shifted this quarter? Right? They mentioned that the NeoCloud players were going to grow dramatically. We heard from SpaceX that they're going to do exclusive Nvidia. Are we going to see that shift? And does that eliminate that fear of ASIC players, right?
One of the fears is that your Googles, your Amazons, everybody's designing their own AI chips, but now Nvidia is giving you a clear number that says, "Sure, they're designing their own chips, but the ones that are really buying the chips are these guys right here. The ones that aren't really going out and building those chips right now." So, I want to just see that number as well.
Um, and I think that's it for me for now. Um, by the way, to people saying that this is a phase, it's not a phase for me, guys. Okay, this is me. This is who I want to be. To give you guys another fun number as J as uh Jose, not Jensen, sorry, that's me. I should just say me. Um, we are likely to be the most free cash flow generative company like in terms of a single quarter than any other business before.
So, Apple I think did 51.5 billion dollars of free cash flow on December of 2025. um [clears throat] that is likely to be beat by Nvidia if we end up keeping up the high free cash flow margin that we've end up seeing. I also want to know what they're doing in terms of the buybacks, how much they've actually purchased this quarter because we've not seen uh a large appreciation over the, you know, 3month period or at least there's been opportunities to to buy in at really cheap prices.
That is the same quarter where we ended up seeing extremely low prices in Nebus and Coreweave and we really saw a dip in a lot of stocks and uh Nvidia was down to I think like 170 or so. They have I think it was $39 billion plus an additional 80 billion on top of that of uh stock purch stock repurchase authorization.
So if they decided to buy back a lot of stock, that might also help the EPS as well if that comes in much much lower than Wall Street expects. So we have the poll right there. After hours, we do have three companies before Nvidia. Nvidia is at 420 4:30, I think. Uh so we'll have about half an hour, but we have CrowdStrike, big in the cyber security space, massive run this year.
Mythos, a lot of that stuff has exploded the demand for cyber security. We have Salesforce which continues to uh ask people the question you know is software dead is there real sustainable growth in the world of AI for companies that theoretically can be replaced again that's up to Salesforce service now all these companies to prove that narrative is wrong and then synopsis which is also in the software space when it comes to chip design um 68% of you say Nvidia is going to outperform so obviously there's a lot of excitement for Nvidia having the best numbers which I think they will once again it's going to be a question of if the street is willing to reward that do any of you feel their gross margins will be under pressure a little bit or should we expect it to be at 75?
The only reason would be you're starting that Vera Rubin um ramp and like we saw kind of like the the uh the hopper to Blackwell there was a bit of a hit. Um I actually don't remember what was the guidance tenant. Do you remember was the guidance that they gave us? Um I would just pretty much if they gave us that number I think we're we're pretty in line with there.
The only thing I would also want to look into is with the price increase that we saw or heard about um was that a pricing power move or was that a memory infle in in in um inflation cost move? I I think it's more the latter than anything. Um but how does that shift the um how does this shift gross margins going forward?
Um but um Tanner, what were the do you know the numbers of what they guided for this coder? They guided for 75% margins. Um, and operating expenses I think was like 8.3 billion. But um, so yeah, gross margins are expected to come in right where they were before and they didn't come out and give us any preliminary numbers or any changes.
So I expect them to be high. Some people talked about memory uh prices putting a lot of pressure on the chips and that their recent 15% bump up in Blackwell and Vera Rubin um prices being an indicator that they might end up coming in shy this quarter on gross margin. But this is not the first quarter where we ended up seeing memory prices increase and margins have only improved over the last, you know, 12 months or so where we've kind of gone from that 72 upwards of 75% climbing up.
Um, where were the pressures back then? So, I'm not sure what to expect because it's not like this was a one quarter hit. Memory has been a a little bit of a drag for a while for them. And and the other thing, Ter, is right. Do I have something on my head? People keep saying I have something on my head.
No, you look good. Okay, you look great. Um, go ahead, Jose. I would say for Nvidia too, I mean a lot of these manufactur for the memory, they've been locking in supply. So, it's it's if there is any memory changes, it's not going to affect this quarter or next quarter for them. Like, they already knew what they were going to be paying for and to make these servers, the memory was procure maybe a quarter ago or two quarters ago.
So, it's not like that's going to impact margins today. And I think that's why they if they are increasing the prices because of memory, they're proactively doing it because they've heard that, hey, look, whoever is selling me G uh memory, they're telling me that next year or a little bit further than that.
That's when we're going to see a higher increase in memory prices for us. So, for us to proactively keep that margins, we're also going to increase uh pricing. But I don't think we're going to see um they should know the pri if if you're building this type hundred billion dollars in revenue per quarter.
You know what you're paying for your memory many quarters ago. It's not going to be a surprise for you. So it's not going to be a surprise to margins. I think that's a fair point. Um couple of people saying Bur disclosed that he bought Nvidia calls. That is true. They are a hedge to his Nvidia short.
So uh that is why you're seeing that headline right there that he bought calls. Um if the stock goes up, he saw this stream. He knew what he was going up against and so he uh Do you think that he ends up adding to his shorts whenever he sees streams like this? These are the opposite purchasers of his shorts.
I I I just think he he once again he's looking for big short 2.0 and AI is if AI is the second biggest short in his career, Nvidia's got to be at the center of it, right? So, but if he's wrong and because Nvidia has been taking a bit of a dump over the past few days going into the print, which usually he doesn't do, and the stock goes up, he would need a hedge against his shorts.
So buying some short-term calls is something that would hedge it. Um I I I think the the the earnings call itself is going to be really important. So this came out today from Time magazine. You've got Sam Alman and Greg Brockman on the cover with the caption trust us. And I thought it was relatively interesting because I think a lot of the general investing public does not trust a Sam Alman or a Greg Bachman for a variety of reasons.
You've got Anthropic coming out saying uh allegedly in their S1 they see a $30 trillion revenue opportunity which is the entire town of the United States. Jose, do you think Jensen's going to have to calm people down again around circular financing, AI bubble, all of this hype, it's getting people too excited, so you know that skepticism has to be calmed down.
And then do you think he also also calm down investors around the political backlash that we're seeing from red and blue states to uh create the progress for more data centers? Um yes to both. first to the the first one of like the circular financing. Um I think the only way he can really calm investors is by giving that visibility further on or or the higher visibility.
It's like look we're doing this yes our obligations have increased by an extra 40 50 billion this quarter but that's because our visibility in revenue has increased by 500 billion or or or more right so I think that's the only way he can really calm that side. Unfortunately, on the political side, I don't think there's anything he can say outside that just AI needs to continue to innovate in the United States and it's for national security and it can it's going to be a huge growth in GDP.
But I I don't think it's it's enough. I there's nothing he can show that's enough that can eliminate the political fear. And I think that's going to be one of the biggest um I now every quarter or in every segments or sector or or every few quarters there's a new bearish thesis. I think this is the bearish thesis that unfortunately Jensen won't be able to give uh a good answer to to com investors.
Tanner, how do you think Jensen should uh navigate this earnings call? Yeah, I mean he's definitely going to talk about circular financing. Um, I think that there's been a couple things that I can almost guarantee, well, I'm not going to guarantee, but like I really think he's going to touch on SpaceX.
He's talked extremely positively about the companies that have backed him and have purchased his products. So, um, I think he's going to say a lot of good things about SpaceX this quarter because of that exclusivity comment that he made. I think they're definitely going to bring up what Coree said about the amp years lasting over 9 years.
Um, these are going to be some of the highlights. He talks about circular financing. Um, the Wall Street deal. This is one that they're going to talk about in terms of creating uh or or talking about Nvidia's chips being so reliable that they can become uh an investable asset that their performance um you know could be benchmarked probably taking on more risk.
Like I I think a lot of those comments there's nothing but concerns on Nvidia. I don't think you can talk to any real investor and say the um multiple for what you're paying on this company right now putting up 100% growth rates is expensive. It's just not true. But it could be expensive if you believe that things are going to go very wrong for them.
And that's all they're going to be doing today is just dodging those types of bullets. Um there was actually a recent upgrade from Raymond James to $352 from Nvidia. uh those estimates continue to climb higher. Um I think this is a good question right here. Uh Neil, I'll let you take this one. But do you think Neotron and Poolside acquisition will make a difference as Nvidia pushes into open weight models?
I think the reason they're pushing into openweight models is because all of their biggest customers, Open Eye, Anthropic, Google, Amazon are building their own chips and pushing into Nvidia space, competing in the chip space, which is smart for them because they don't want to keep paying the NVIDIA tax, but obviously Jensen has to fight back.
So Neil, do you think there will be a heavy emphasis on the call around the the benefits of open source? Uh, you're muted. Amateur hour. I'm sorry, guys. I'm sorry. Go ahead, Neil. I I didn't mute this. I muted my microphone, so somebody muted me. Amit um% um 100% is going to talk about open way models, um open source, Neotron, the recent Aquire.
I don't think they'll talk that much about it. Maybe maybe he'll he'll name core loop side but yeah the drop in token prices he's going to say look drop in token prices it does not mean that these companies will generate less revenue just means that now we have GPUs that you can charge more per hour they'll just finish a job way quicker and so your GPU frees up quicker which means more customers can use that same GPU and you'll generate way more revenue it's it's all about how many the cost of what million tokens or something like that that uh the equation that he always uses um he will again say that we are the best when you look at total cost of ownership um nobody can can go against us and so it's going to be again the same story that that he've been saying time and time again whether the analysts and the market will listen this time is is up to them but from his standpoint I mean I've talked about this with Jose a couple of days ago with regards to closed models again going against the the open source, open weight models for Nvidia.
It's it's going to be a win-win regardless. So, he's just again positioning itself himself as okay, you know what, I'm going to win regardless of what happens. And it seems like we are going to see a move towards way more open way model than uh than the other direction. That doesn't mean that Anthrop Anthropic sorry and open AAI are going to go out of business, but it does mean that Nvidia make sure that they are going to win.
I I I also wonder how he's going to frame this open way. Is it more of a defensive move against the AI companies or is it more a defensive way, a defensive play against kind of China? Because right now the openweight models are being built uh are mainly in China. So Jensen is a very very he talks about a very paranoid person.
So I wonder if his paranoia is saying if if AI Chinese players keep developing Chinese AI players keep developing these models eventually aren't they going to go to Huawei or or or or whoever builds chips in in China and start getting their chips manufact um like made more efficient on Chinese infrastructure.
So Jensen is like I don't want that to happen. let's create a strong open AI model world here in the United States because then we can assure that the chips that we're going to be making are going to be used for this openweight solution. So I wonder if it's more of a uh regional issue opposed to a defensiveness against the frontier plays or maybe even a little bit of both.
I think that is a fair point. We got about 30 minutes until we get those earnings. We have a bunch of other companies uh before that but obviously Nvidia will be important. How many people in the chat you could just put what you think is is thinks that it's going to be flat. How many of us think it's it's going to be like a 23% move like it's not going to be that substantial?
I think there's there's a decent chance 209 to 212 and it's just there. The market's not happy. The market's not upset and it continues to do what it's been doing for the past couple of months at this point. You think it's just going to trade sideways forever? No, but I I wonder if like I wonder if the results are amazing but not enough but it's also not enough to to take it down because you know Nebia's core we have all these semis are going to be contingent on what Nvidia does today.
And if it does consolidate and go sideways it wouldn't surprise me. I don't expect it to happen but I don't think it would be surprising if it does. Yeah. But I think that's more based on um like the history of the stock is getting to you, you know, like uh similarly to Coreweave's earnings, it had dumped every single quarter before that everyone was residing to it dumping again.
Then it was up 19%. So, and I'm not saying that this is the breakout quarter, but at some point I I just read the report from Raymond James. They talked about by 2027 they're going to have a lower PE than um the S&P 500. How long can that go on for if the growth continues to stay up? How much of their outstanding shares will they be able to buy back?
What does that dividend growth get you? You know, they just 25x it. Are they going to end up uh able to 5x it again? I mean, they've got the money to do so. So I I like at some point I think that the valuation has to bottom out. Maybe it's a year from now, but if the growth is expected to stay high.
Um yeah, I don't know. I'm I'm not counting them out. To me, the only way this stock moves up today is if we get a strong visibility number. Not not just even a strong guy. Like even if guidance is crazy, I think of visibility to be on the number they given us that 1 trillion. I think that's really the only thing that can say, "Oh, you know what?
Maybe we aren't crazy in AI build right now." Neil, you think it can go flat or something? If it if it does drop by the expected what is it, 5% or so, we are I just checked with my crystal ball, we are going to go quite close to the 200 day moving average. So, I don't know if if that's already pre-planned by by the market, but whatever.
Um, it is crazy that an Apple is still trading at 36 times earnings trailing and 34 times forward while they're nowhere close. The even even a free cash flow profile of Nvidia is getting better and it's cheaper. I don't see Nvidia suddenly growing 10% two years down the line. That's not going to happen.
So I I just I I get that Apple is quite predictable and you might not have that whole stress around oh what happens with margins in the future, what happens when the AI bubble pops etc. But at what point does the the risk become the the whole thing for Nvidia and nobody talks about the reward like it it doesn't doesn't make any sense.
So, I don't know. I bought an extra share today as always. So, hopefully it goes up. So, I'm up on that extra share. I mean, if there's one thing to say, Neil, the more you buy, the more you make. All right. 4 p.m. The stock market is now closed. Thank everybody for being here. It's a big one today with Nvidia Q2 earnings.
All right. And now we wait for the next 30 minutes before we get these numbers. In the meantime, we should be getting Salesforce, Synopsis, Crowd Strike, uh, and a few others that are actually going to be pretty important. We have HPQ, which is more laptops and computers, not HPE, so not server racks, but that'll give us some insight into the consumer.
Octa. See, we got some more SAS in there. Uh, Viva Systems. So, we do have a bunch of these other companies that we will take a look at before we get to Nvidia. Okay, Salesforce already making the move 4%. The stock was at 150 at the lows this year. That is up four and a half% after hours. Octa also up 3%.
I'll try to get the numbers on Salesforce in a second, but that goes green. They're out. Okay, so Salesforce, here we go. We have um operating income 3.87 billion versus 3.81. That's a beat. Adjusted EPS 590 versus 291. There's got to be some unrealized gains that they've factored into that. They beat by 80% on EPS, 11.34 versus 11.32 on revenue.
Revenue is up 12% year-over-year. EPS is up 103% year-over-year. Maybe they had a SpaceX stake. Um I know they have an anthropic stake but until that one goes public I don't know if they well no technically I think they can uh mark to market their value on enthropic. So maybe it's anthropic that's creating that uh beat for them.
And then third quarter revenue the street wanted 11.4 they're guiding for 11.5. So that is a triple beat on the guide revenue and EPS that stock is up 5.6% after hours. Octa they beat by 9% 105 versus 96 cents on EPS. That stock's up 7%. So you got two SAS names running. Revenue 85 million versus 793 million.
That's a beat by 2%. EPS up 15% year-over-year. Revenue is up 11% year-over-year. Again, Nvidia's in about 20 minutes. But Octa and Salesforce going green. Nanics. We also have this one, a smaller SAS company that's up 4% after hours. They beat by 22% on EPS. 60 cents versus 49 cents expected. Revenue 757 versus 738.
That's beat by 3%. EPS up 62% year-over-year. Revenue up 16% year-over-year. So you got three software companies reporting. All three of them getting some love after hours. Octa up nine, Nutanix's up four, Salesforce up seven. It's been a while since Salesforce had a 7% move on earnings. And there you go.
As that's getting it, yeah, Service Now should be benefiting from that as well as that continues to go green. Look at that. Service Now 2.53%. I mean the software is dead narrative I think has been pretty disproven across a variety of earnings that we got but uh some of these bigger names it's taken a while for them to show their earnings to disprove and I think you might be seeing that to an extent after hours.
I also think it's good if the software names get some love because at the end of the day you know Nvidia a is you know trying to make sure that the the GPUs that they sell to train these models are helping the software companies. Ironically the software companies create a lot of demand for those um the Frontier Labs.
So, it would help Nvidia if AI is helping software, not destroying software. We also recently just saw a Oh, sorry. Um, and Open AI, two OpenAI executives leave OpenAI and go back to Salesforce. Pretty wild. That's correct. Yeah, that is Oh, there it is right there. Yeah, that that is kind of weird.
Tanner, do you have a take on this or it's just it is what it is? No, I mean there's there's a lot of speculation whether the IPO is not going to be as exciting. Um, you know, disbelief in their ability to replace SAS and that but but who knows? Maybe maybe Salesforce is poaching these guys back and putting up big numbers in order to sign back these executives.
I'm not sure. I think it's too early to tell. Right there a 12 $2.4 $4 impact from strategic investments from uh Salesforce. That's got to be entropic. I would imagine that's entropic. Um I think they invested a few billion years ago. So I mean that's why this anthropic and open IP are also really important.
You have a lot of companies including Google and Amazon that are invested in these guys. We don't have synopsis yet. That's a 1%. I don't have Viva Systems either, but that's flat as one. Octa is massive. There you go. 13. Octa is security if I'm not wrong. Um, correct. Yeah, cloud-based identity and security.
Yeah, I mean maybe that Oh, Crowd Strike. We got to wait for Yeah, that's going to be a big one, too. Crowd Strike up three. Yeah. Okay, Crowd Strike. Let's see what we got. The market cares about uh cyber security more than ever. It's just probably because Octai is up. So for now, Crowd Strike is up cuz I see no numbers as of right now.
Okay. Rubric is probably up. Crowdstrike Guide Street wanted 5. So they went from 5.96 to 6.01. So that's a pretty big increase on the guide. 6 billion is the guide. This is at 4%. It is down from the 200s over the past couple weeks. That's up 5% after hours. So you do have an increase on the guide.
I don't have EPS or revenue numbers yet. No, I do. EPS 31 cents versus 29 cents. They beat by 7%. Crowd strike revenues up 26% year-over-year. Not in the 30% range yet, but it was at like 22% last quarter. So, it is accelerating Q overQ. Uh revenue 1.47 versus 1.44. They beat by 2%. EPS up 35% year-over-year.
So, you have a double beat, actually a triple beat with the guide. Also beating third quarter revenue. Street wanted 1.52 billion. They're guiding to 1.53. Again, these are not massive massive beats, but they're also not misses. And I think as long as that narrative around cyber security being relevant uh matters, the the expectation that the trajectory for growth uh over the next decade being strong is why this stock will get its premium 8.7% right here on crowd.
It was at 227 on August 14th. It fell all the way to 180. It's now at 205, up 8.4% after hours. We got synopsis. This stock is basically flat. beat by 7% on EPS, 391 versus 367. Again, this is chip design 2.47 billion versus 2.4 on revenue. Beat by 2%. Revenues up 42% year-over-year. EPS is up 15% year-over-year.
I would expect this to be up a little bit more right here, but it's not. Crowd Strike up 9% after Crowdstrike did do a split recently. They did a four for one split. If it was a pre-slit, it would be $800 stock right now. Did you see the Salesforce and Entropic expanded their strategic partnership and unveiled cloud force?
Cloud Force reforce. Yes. This is like typical Benov to to do these types of things. Clawed force. Okay. It's real. I see it here. Yeah. Uh Jose, any thoughts on these software companies crushing it? Yeah, I mean I I think it's bullish AI because all these companies are implementing AI and one of the fears was that you are going to be losing out or or or or businesses were was going to be worse, margins were going to take a hit, you were going to lose revenue because of AI.
But if now you're showing that the end customer is still making money with AI, I think it just gives more legs for this AI story to run. So as a semiconductor AI investor, that's my first kind of thought process is I'm happy that other customers outside of Anthropic and Open AI are winning because if only Enthropic and Open AI are winning, that's the scary part.
But when you see other players and not even the hyperscalers like the the SAS companies winning, I think that gives you legs for the AI story. There you go. Beni off taking some shots saying they are the number one AI with Claude. Uh so basically saying you know they are winning against open AI and quite frankly the numbers are are proving that they're winning in the enterprise versus open AAI but I agree with you the software companies need to show this type of growth and get the right sentiment from the market if not you know what are we doing this whole AI experiment for in the first place so this makes sense Salesforce right they're up 11% after hours crowd strike up 10 synopsis actually down two nutanics down one service now up three and a half and then octa up a nice 15% here after hours
just generally good for the S&P 500 00 like the the amount of beats both on the top and bottom lines um this quarter round has been extremely strong. I think it was high 80% beats uh across the board. Many of these companies are raising guidance or or reaffirming guidance. Very very few companies in the S&P 500 have cut this quarter round.
Um so constantly adding to that story. These are sort of the last companies that are coming in to make sure that you know this quarter was a success is only proving that at probably even a higher success rate than uh than the average. So this is actually boosting up the total um and by really good amounts.
I mean Octa up 16, Salesforce up 12, Crowd Strike up another 9%. I'm super happy to see it. Now we just need to make sure that the biggest company in the world comes in with a bang. That should be at 420 I believe. Last time they were a little bit later. Oh, it's usually I thought it was 4:30. Okay, so we have 10 minutes then.
I I think they were uh they usually do 420 and then the last quarter or maybe it was the quarter before that they came in at 4:30. They were like 10 minutes late. Okay. Uh Everpure, they had a massive beat and raise beat by 21% on EPS, 70 cents versus 58 cents expected. I believe this used to be pure storage and this is now Everpure.
Um beat by 8% 1.8 1.18 billion versus 1.110 on revenue. Revenue is up 38% year-over-year. EPS is up 63% year-over-year. Massive uh beat on the guide as well. Adjusted operating margins 19.4%. GAP gross margins 68%. Subscription AR 2.1 billion. That's up 20% year-over-year. You're seeing some really decent growth out of these other companies.
You also had Viva Systems revenue 928 million. That's a beat up 18%. Viva's now up 3%. The software companies, dude, they're they're crushing it right here after hours. Subscription revenue up 16% guidance 935 million CEO said the Q2 results exceeded guidance across all metrics management said its fullear year outlook improved across the board as you're seeing more momentum Urban Outfitters this is a consumer brand are we up or down we are down 2% the consumer stocks have been taking a little bit of a hit EPS was 172 revenues up 10% year-over-year I'm not seeing any comments about the company complaining about inflation or the consumer like some of these other companies did over the past couple days but Urban Outfitters down 2% I I like this going into the print.
I like that the software stocks are running. I think it makes sense. Yeah. And and Octa on their press release um my apologies if someone said it, but they they one of the first things they mention is as AI agents transform every layer of technology. Every agent needs a trusted identity and clear controls of what it can access.
Um so when I read that, what I'm hearing is there's going to be a way to monetize these agents for all these players. Is it going to be an added subscription to them? Is it going to be a a consumption base? So for again it goes on to that story that AI is helping software and you're no longer getting um just the anthropics and open AI is winning.
Now you have now we're we're seeing those real results of other companies winning in this AI transition. Yeah, this is important, right? Being able to set up the framework for how these agents are actually going to be monetizing agents. We are all living in a world in which agents are a thing. You know this this really December 2025 you had clawed code come out and then the proliferation of agents open claw a couple months after that.
So the market Nvidia flipping green a little bit right here we got eight minutes to earnings figuring out how to interpret where agentic inference is going to go. How many more CPUs you need per GPU which ARM Intel AMD have all gapped up over the past couple months. It's a brand new world for the entire tech sector.
And so I think Jensen also explaining how they're going to monetize agents is going to be really important today. Everyone's calling me the Sofi grandma. Do I really look like uh I'm Jensen, guys? No, this was the funniest. Bav said, "I know Tanner's going for Jensen, but all I'm seeing is Edna from The Incredibles."
No, bro. My hair's white. I see some Elizabeth Warren as well, but I mean, that's fair. That's fair. For those asking how do you get access to the news? I have a news terminal. I'm putting that in the chat right here. It is free. If you have WhatsApp, you can join it. There's the link right there. It's called cactusjack.com.
This is an actual person who's part of the channel. It's not AI and he's curating all the information second by second. So, if you want to join that, I'll pin it right here in the chat. Free to join. Get the news. great WhatsApp channel as well. Yeah. Okay. So, the software companies crushed it. If Nvidia were to actually fall, I would be a bit skeptical on why given the software companies are growing because of AI.
Nvidia is supplying the GPUs to make AI a thing. So, I don't know. I think these software companies are giving us a pretty good read into what Nvidia should do. But in the next five minutes, we're going to have to see if that actually happens. Nvidia right there at 21038 now uh after hours. Does anyone here think they could actually miss on earnings by any chance?
And if you don't think they can miss, Tanner, do you think you know Streets Guiding for the Whisper number is 97%. Do you think Jensen just goes that extra mile and gets them the triple digit growth year-over-year? Yeah, I mean they're they're they're going to see 100%. Well, I mean, I can't say that.
We we don't know 100%. Um, but I believe that they would push that over to 100% if they were close. I mean, it's just a really good headline number. Um, that could get Wall Street or ALOS excited. But for real, I it honestly could be way above that. It might even be closer to about 106%. Um, seeing roughly about 94 95 billion, which many analysts have also reported on.
Isn't it crazy? We are living in a time where a $5 trillion company at 75% margins is about to grow 100%. Faster than they'll have a bigger rule of 40 than Palanteer once again. And and they them and SKHix and I think Micron are the only three companies in the world that have that bigger rule of 40 which is I mean it speaks to what Palanteer is doing but it's also because those are hardware companies.
Yeah. So for them to have that margin I mean it's pretty incredible. Yeah, I actually think Palunteers is is more exciting because the other ones are benefiting off large bottlenecks, but Palunteers may not even slow down. It's the craziest part. Uh, Crowd Strike up 10% after hours. Salesforce again up 10% as well.
Uh, we are still waiting for Nvidia. We should get it in about four minutes. Let me pull up a little bit of the coverage right here after pull up something the the press release from from Crowd Strike. Um they mentioned something that was pretty cool. They mentioned the the mythos moment translated into mass market acceptance that AI adoption needs security and that and that's Crowdstrike.
Every enterprise will run on AI and securing it is the largest market opportunity in our history. Uh so again, kind of just going back is like it seems like uh yep, it it seems like now we're getting that enterprise AI wave which we've been hearing about from from Nvidia that it's going to happen, but it does seem like this or maybe I haven't even been focusing, but it seems like we're getting some clear answers that it's really happening right now.
Rubric back above $100, up 4% on these results. They report tomorrow. I expect also a triple beat yet again. I mean this is exciting. Salesforce good numbers. Crouch right good numbers. Uh octa good numbers. Up after hours. HP is down 7%. Do you know why Tanner? No. Just looking at the stock price. If this has to be inflation on consumer products.
They beat by 20% on EPS. 83 cents versus 69 cents. Revenue 15.6 versus 14.3. It's pretty good top and bottom line beat. Guidance beat too. Next quarter and full year looks better than expected. Pounder right there up 1% after hours as well as the software names are going higher. Um yeah, I mean pretty much every company outside of HP so far showing relatively strong numbers.
As long as this continues, then I think Nvidia should be able to show some strong growth as well. Here's the coverage on Salesforce. It was 11.34 billion in revenue for the quarter versus about 11.32 on the estimate. Bottom line, we've got an adjusted EPS number, $5.95.90, I should say. That is the adjusted number.
We're not going to compare this one. There is from what we're seeing a massive investment gain. About $2.6 billion does appear to be from an investment in All good. The guy muted itself. This idea, sorry, I was muted, but Dario and Dario and Benny off are live right now. That you can use Cloud Force to not only query your systems, but build applications dynamically.
It's really a first in the industry, Jim. We've never seen anything like it. It's completely exciting. I think that this is the way all enterprise systems are going to run in the future. All right. So Dario, I think that the combination is terrific. But I also know when I go to my Asian Force page, I I see
we've never seen Daario do this on an earnings. So this partnership must mean something to them if he's actually willing to talk to the media with Ben off here. The open AI is there. I I don't know how exclusive this is. I don't know what you get out of it. Tell me how this distinguishes you from other LLM models and why this is so exciting for you.
Well, look, our our view is that is that Claude is the best model for integrating uh complex amounts of information. We've been we've been using uh uh Salesforce and Claude within Enthropic. We're huge Salesforce customers and you know, as you can imagine, uh the pace of things at Enthropic is is is is is incredible.
Uh, and we have to both manage individual accounts and we have to answer all these incredible strategic questions that change every time a new model and a new product comes out and and we've found that this this combination product that we've built together is is the most useful thing in accelerating it.
You know, within Enthropic for a long time, we've been accelerating the research teams within Claude. Okay, Nvidia numbers should be out. We are down 1% on the immediate reaction. 20760. I don't have the numbers yet. Let's see if that reverses at all. 211. Go ahead, Tanner. 96.2 billion in revenue. Cleared my number.
Absolutely cleared it. Adjusted gross margin 75%. Net income 59 billion. I don't know why it's down. There must be some reason. Guidance destroyed. Revenue's up. Net income big, big beat. What is the street not lagging? How is this not 220 right now? 96.2 billion in revenue. Nvidia grew 106% year-over-year.
Do it. EPS is up 111%. 222 versus 209 for EPS. 96.2 billion. That's a $4 billion beat versus 92. Stocks down 2%. That is, of course, kind of incredible. Of course. Why wouldn't it be down? I'm starting to get really pissed off, guys. This call I'm about to blow some minds. The growth here is going to be fantastic.
Even the guides way higher. Like what do what does that guy rep guide represent year-over-year growth on? Let me do the math on that real quick. Data center revenue was 89 billion versus 85 billion. I'm trying to find the guide right now and get the press release. Uh stocks at 205. Cactus uh put Okay, got it.
I got it. All right. So, here we go. Here's all the numbers. Okay. So, revenue up 106% year-over-year. Adjusted EPS up 120% year-over-year. Data center up 117% year-over-year. adjusted gross margins actually are up 250 basis points year-over-year at 75%. Q3 revenue guide the street thought they would do 104 billion.
They are guiding for 108 billion which you know that means they're probably going to do 110 to 112 billion which means we're going to get two quarters in a row I believe of around that triple digit growth. Adjusted gross margin that's down next quarter 74 versus 75 adjusted opex at 9 billion. Um operating income for this quarter was 64 billion.
That's up 124% year-over-year. They I believe bought back with the dividends 26 billion in Q2. They have 99 billion left on their buyback plan. Jensen says AI has reached its inflection point. It's doing useful work. Its tokens are productive and profitable. Now compute is revenue. The AI infrastructure buildout is at full steam.
Bar Rubin now in full production was built to power exactly this moment. They've also broken down the revenue for the first time or for the second time because they started this last quarter between hyperscalers and everybody else. So out of that uh revenue that they got 96 billion 48 billion of it was hyperscalers, Amazon, Meta, Google etc.
The street thought it would be 43. Uh the second version is called edge computing. This is basically your Neil clouds 7.2 billion versus 6.7 that the street thought it would do. So they beat on hyperscaler and edge computing. Obviously the majority of the revenue still concentrated within the hyperscalers.
So it's 90% growth for next quarter approximately. Okay. So not 100% and and it's likely to be closer to 95 if they end up putting up or maybe even a little bit higher. That's pretty wild. This is uh quite incredible in terms of the stock not really getting the move. Let's get a little bit more. Yeah, let's get a little bit more coverage here and then Jose, we'll get to you on your thoughts on this.
But you can see shares are dropping uh roughly 2%. Could be because of two reasons. First, the Q3 revenue guidance coming in at 108 billion, which is higher than what the street anticipated, but lower than what the buy side numbers were around $ 109 billion. This revenue guide again does not include anything from China despite all the back and forth headlines for data center revenue.
In the quarter that just passed in Q2, data center revenue came in at $89 billion, slightly higher than the 86 the street anticipated. And then a growing concern was gross margins. For the quarter, gross margins came in at 75% exactly in line with what the street wanted, but it's the Q3 gross margin guide that is light at 74%.
Uh again, we know that they had promised mid70s and that there was going to be some tapering off because of memory costs. And so now we're starting to see that right now. If it's actually getting sold off on a 1% gross margin miss, I don't think that's the reason for the selloff. Um their commitment numbers are out.
um commitments were increased from 119 billion last quarter to 279 billion this quarter. So I mean Jose hold on hold Jose can explain commitment. This is Nvidia committing money or what? Yes. Nvidia making commitments to like its supply chain players to its neocloud players to whatever to allocate whatever type of resource right either being land power the land power that it's doing uh the supply from memory the supply from TSMC so last quarter that was 120 billion this quarter is 279 billion a bear I think anybody can say hey that's getting crazy numbers right 279 billion like maybe when you were at 100 billion your free cash flow and all this would be able to cover you just fine, but now you're going beyond that in your in what you typically have in your balance sheet.
I think it's extremely bullish because if they're doing this, it means that they have so much visibility. And this is why I go back to where if you're giving me this type of growth, if you're telling me in the in the quarter you grew your your commitments by $150 billion, you have to show me proof as an investor.
I think it's it's right to to for investors to ask to tell me what visibility that you see that is making you do these types of commitments. But 280 billion I mean you're talking about the sizes of certain semiconductor companies in just their commitments right now. Yeah. But the commitments are for 27 28 29 2030 2031 2032 and thereafter like the the 120 is of course for the remainder of 27.
Then we have 100 for 28 and then the number does come down from there. It makes sense, right? Because they they've made some huge announcement with with memory players with some supply chain players. So I'm not that surprised that the number is up quite a lot. It's just them securing the upcoming years.
Um it's a big jump, but I'm I'm not that surprised. like pri say primarily related to the procurement of memory. Yeah. Well, there there's there's a reason why Micron and the Neil clouds are up after hours, right? That's a it's a good find, Jose. It's that where it's like and I agree with Neil. It's not bearish in my opinion.
Similar to Neil, I'm pretty sure Tanner, everybody. It's like this is what you need to make sure you don't lose that supply to somebody else. If everything is a is a bottleneck right now, you don't want to lose that supply. you need to make these promises to those players. But then the street wants to know, hey, if you're doing this, and I'm happy that this is the first time they actually broke down that commitment in this press release.
I think usually they share it only in the 10Q report and not even to this extent. Um, but we we now see kind of 2026, 2027 as Neil was just mentioning. It's in the CFO commentary, not in this one. Yeah. Page three. Um, okay. Hey Tanner, your thoughts on that? I mean, if they're committing this much money, even if it's over 10 years, the bull case is that they have so much vis visibility into demand.
The bare case is they're going to be spending more money, their margins are going to go down a little bit. Like, is that a reasonable enough bear case? Yeah. I mean, I feel like we knew this with the Wall Street deal with the Ohio data centers that they were increasing their overall commitments. Um, I mean, for me, it's business as usual.
They also returned a record. So, so Free Cash Flow didn't end up beating um Apple's 51 billion because they returned a record $26 billion to shareholders uh which pretty wild. A lot of that in share repurchases, some of that obviously in dividends. Um the EPS came in so much higher than I would have expected.
The gross margin came in exactly where we thought it was going to be. maybe not for for next quarter, but there's always um potential inflections in margins whenever we have uh whenever we're going into new architectures like that lady said uh on CNBC as well that none of this is inclusive of China revenue at all.
And we also are seeing China loosening their stance and are allowing tens of thousands of GPUs to be sold. Not a lot. These are not big, but the fact that they're not being included at all and there's likely to be hundreds of millions, if not billions of dollars worth of GPUs uh sold to China is really important.
Um I'll have to listen to the whole call. Like I'm not going to say whether that's bullish or bearish, but this is beyond my expectations so far and the stock is down on this news based on commitments that we already knew was going to be a part of their game at least for the time being. Yeah, I I think Tener the only thing is more like the size of the commitments and I think most bulls understand it, right, Tener?
I think we we we understand that we know this is needed to continue to see this growth rate. Uh but I I also don't think it's it's impo it's it's bad for market to be questioning because I'm looking at the numbers some more in that press release and it was it was for from here to 20329 billion on supply commitment 29 on cloud service agreement a total of actually 366 billion um from now till 20 uh till 2032 and thereafter just on supply commitments but then they also have other types of commitments they have the AI I cloud back stops which is different from the AI the cloud service agreements that they had in the previous one but in forms of AI cloud agreements um and data center leases that's an extra 56 billion to that 366 billion that they have and then then they have guarantees on those kind of land power and shells and on that already they have about 108 billion.
So you're talking about in all these commitments and if you scroll down a bit uh on it there's like the 366 here then if you scroll down a little bit they have the the next page they have 56 billion here on other commitments and then be you just passed it the one on the top then they have 108 billion here um one under there yeah 108 so you're you're talking about commitments now being close to $500 billion right so it's I I agree that and Diddian needs to do this.
I I I truly do. But it's I think the market is right to question, do you have the funds to be able to do this? Is this AI cycle going to last two years for you to be able um to to make it? Um again, I think so. It has to it, but it has to there's no way Nvidia can say we're committing upwards of $300 billion if they don't.
To your point, Jose, you said I think this is the most important thing you you said in the show out of all of us today. The visibility on that revenue number has to exceed a trillion at this point if they're already commit. It's kind of funny. The hyperscalers sold off this year initially because the capex was going from them to the capex beneficiaries, Micron, Nebius, Cory, etc.
Now it's like Nvidia is getting sold off potentially right now because they have all these commitments to those same companies, but they were the ones that were getting all the the capex from the hyperscaler. So I would imagine you believe Jose they have to give you that visibility of revenue number otherwise this is just too much of a commitment for a trillion dollars over the next couple years that the street's not going to be happy about.
Yeah I mean I I agree they need to give me that if we see I I'm actually debating right now if I should buy some stocks right now because if they're seeing this type of if they're making these types of commitments even if they don't tell me the number I already I it's it's going to be some crazy number that they have in visibility like it's
Yeah. But what are you buying? Memory? No. No. Nvidia. Oh, like it's making me so bullish in this company that the type of com like if the street is punishing you because you're preparing yourself for the type of of visibility that you have. I I think it's I mean I like it. I I'm trying to stink why the market hates it, but I I like it right now.
They did say here when under the guarantees that the the commitments like the each generation of Nvidia infrastructure deployed at port spike could represent approximately 1.5 million Nvidia GPUs or approximately 150 to 200 billion in Nvidia revenue and the sites over the next 20 years can support multiple infrastructure upgrade cycle.
So they they give us some clear numbers here. this earnings call just got a lot more interesting. Yeah. Because now that these commitments are in the pushing three $400 billion range, it's, you know, and this is the obvious bare case that someone's going to say, why is Nvidia willing to spend a couple hundred billion dollars on all their suppliers?
Because they're financing the buildout of their own chips, right? like for for for them to sell these chips. Everyone in the ecosystem, Micron, SKH Highix, the Neoclouds, packaging companies, they have to also be able to support because there's all these other, you know, nuts and bolts, photonics, memory, etc.
that go into the chips. So, if if if some of these companies are insolvent and they don't have the demand from Nvidia, which for many of them is their biggest customer, Nvidia can't sell any chips. I I think that's going to be the bare case here. I think there's an easy answer to that. As Jose said, that means they have a lot of visibility into demand.
But Jensen's going to have to really explain that on the call today. Nvidia right there still down 2% after hours. At the end of the day, he will just say, "Look, our new chips, if you have the same megawatt, you will be able to generate more revenue. You won't need, not everyone needs a gigawatt scale data center.
If you have 100 megawatt, you previously made X dollars, with our new chips, you will be able to make X at the power of I don't know what's the the jump here between Blackwell and and Vera Rubin, but it's quite it's quite big and and he's just going to repeat it again and again and again. Um I honestly if I were looking to to expose myself to even more, I I I wouldn't mind buying it more now.
Yeah, this is uh CrowdStrike up 12%. The software names not budging. This is a this is a very specific Nvidia reason for why we're down right now. Yeah, it's surprising that the memory names aren't up more considering how long-term a lot of those deals are that they signed and at the size that they're signing them for specifically in this quarter separately from last quarter.
like that's a lot of visibility just purely into Micron's potential earnings or SK highex. Um and they are up slightly quarter quarter point but you know not as much as maybe you would think after Nvidia raised their commitment so much primarily due to memory costs and what's interesting is all of the new clouds are green as well.
So something doesn't make any sense. It doesn't make sense. Like if Nvidia is down, I would have assumed the memor the neo cloud names would be down as well, but they're not. The semis are either flat or greenish. Well, well, I don't think No, I think that goes to point to Jose's point being right is that the AI demand is definitely there.
Chips are, you know, selling faster than ever. Um and actually you can see them break down hyperscaler versus their other AI cloud. So so there's more growth headed towards the neocloud names than the hyperscalers. And then on top of that Nvidia is willing to take on a lot of the risk. So just individually this is not a statement about the AI trade.
This is an this is a statement about what's the risk level for Nvidia. But I think the risk level has always been higher from the purchasers of the chips, the ones with the, you know, mega capex bills. Um, but yeah, they're just starting their their bill, I guess. To to be fair, the stock is down 2%.
I mean, it's 1.2%. Like, it's not it's not about the stock reaction that that's that that that's that compelling to be upset or excited about. It's more so about this commitment number that now creates a new category of concern which again I don't think it's an actual concern but it creates a hurdle that the company will have to be able to articulate well enough to explain um for investors to deal with.
I mean it's already the biggest company in the world already majority of the S&P 500. This is just a new thing that they're going to have to break down. I would imagine once again it means they have a lot of visibility into demand. They've already hinted at that in the CFO commentary. So on the call they would have to continue hinting at I mean, if the stock was up 5% after hours, I think the interpretation would be like, "Oh, they're spending all this money because they're going to make all this money." Well, because the stock's down a little bit, it might be seen as a negative.
People are saying, "When is Jensen talking? I'm talking right now." That being said, um the call is at 5. Jensen doesn't talk for a while. He joins during Q&A. So, people always put up a bunch of comments during that. He uh does not do the initial numbers or the CFO commentary. He'll come in for Q&A.
So you'll see his actual words around 5:30. So stick around for that. Nvidia CFO says we partner with an extensive network of suppliers to secure critical components needed to meet demand for next several years maximum exposure under land power shell guaranteed 3.5 billion. Yeah, I think that the entire call is going to be about them saying the reason we're doing this $500 billion financing thing, the reason we have all these commitments is because I think Jensen's going to be like what are you guys talking about this AI This is going to the moon and we have all the money in the world.
We have the best margins. We have to spend this money and we just bought back 20 billion of stock. Like you guys can't really be mad at us. Uh but we're going to keep proliferating the buildout of AI. I think he's going to have a very optimistic tone here and you might see the stock potentially flip on that narrative.
Here is Gene Moners's take based on these earnings. That's a win. It didn't hit that magic uh similar growth rates quarteron quarter adjusting for China. But it is I think that is a win as far as the guidance. You know, that was 3% upside last quarter. They guided 4.4% upside. So that magic number of 109, we did miss that.
The stock initi that initial trade-off was related to the gross margins. That one surprised me. Uh I was expecting more of a gradual decline over the next year. Not seeing that step down in the October quarter. But at the end of the day, we're splitting hairs here. I mean this is we have the the the metrics they miss fractionally.
That's what we do. But I mean the the aggregate of this this story is still very much intact. They're beating at a similar rate that they have over the past year. They're raising at a similar rate despite higher and higher numbers. And you have some of these big drivers still. Let's just look at SpaceX for example.
They want to do eight gawatt hours next year with the data center. I mean, just that alone, just SpaceX alone can become a 3% customer last year to a 10%. That will take the hyperscaler growth rate from the streets looking for 38% next year to the low 60%. There's still some meaningful drivers. So Mike, I think that yes, we didn't check all the boxes perfectly, but the kind of the story is very much intact.
So, so Cody, I look at, you know, the kind of the setup here. Obviously, investors, the buy side has a little bit of skepticism or they haven't felt motivated to really rush and and urgently pay up for Nvidia shares for a little while now. On the sell side, 63 out of 67 analysts have buy ratings. The consensus price target is for a 50% gain from here.
The consensus price target implies a $7.5 trillion valuation for Nvidia. So there's enough optimism as people who are looking at projecting the fundamentals. What do you think clients need to understand if in fact this stock is going to get unlocked to the upside? Well, I think you've just got to factor in the continued growth of the name and I think the stock will eventually follow.
uh when you've got this kind of of growth rate even on the hundred billion dollars of revenue uh continuing to double their hyperscaler in their customer base uh year-over-year and as Jean mentioned uh there continues to be a lot of new opportunities out there uh in the future and so I think if you put up the numbers the stock will eventually follow uh
we have two new disclosures from the press releases number one is one direct customer represented 16% almost a fifth of the revenue% new last quarter they told us there are their top three direct customers 21% of total revenue 17 and 16% let him know Neil thank you so from the best I guess the trend of continued concentration is an issue does anyone want to guess who this is
it's Microsoft How do you know? There's been multiple claims before that Microsoft's been their largest customer and I think Google's number two. Okay. And then the other thing Oh, go ahead, Neil. No, I mean the Jean just said that if let's say SpaceX magically go from 2 GW to 8 gawatt next year, they will become a a what 10% customer.
So So clearly customers with a lot of capital can become much much bigger. And then you have less concentration because suddenly you have another gigantic customer that pops out of nowhere which is SpaceX AI. Yeah. Who claim to be saying that it could be SpaceX. Yeah. Definitely could be an like exclusive to Nvidia as well.
That's the important part. There there's very big names but they buy from AMD, they buy from invid like they either have their own custom TPUs. Um Microsoft's a really big customer. They don't make their own silicon. Uh, well, I mean, they've tried, but they're not as large as TP Retranium and and not big customers of AMD.
Neil, did they disclose their China revenue last quarter? Do you know? Yeah, it was zero. Oh, really? Close close. I don't think this is true, by the way, that that I just read a report saying it was less than 1%. Yeah, I think China I [snorts] think China revenue is a bit different. Sometimes they still include consumer products which can still be sold on Nvidia uh on China.
I think the big news here was that there was a 1% of data center less than 1% data center of hoppers that did go to China. So that's the first time in a while that we actually have seen hoppers go make it to China. It wasn't it wasn't anything crazy but that was kind of the big uh one of the new things here.
Yeah, there was a report halfway through July. So it was only two weeks where they were able to sell into China. Q3 I think will be a very uh different story. And if you get an entire quarter of of sales into China, including a step up or an easing from China halfway through in August that we just saw a report 10 days ago.
Um that could be really good for uh China or for Nvidia considering they're not guiding for any revenue, zero. Okay. So you have uh one customer doing about 16% of the revenue kind of similar to the concentration last quarter. Uh 44% of the first half total revenue was from three direct customers. Nvidia put in the press release.
They also incurred a $400 million charge in the first half of the year from excess H200 inventory. So there's that's interesting. Any thoughts on that, Jose? Sorry, I was responding to chat. I missed the question. Going to China. In Nvidia a 400 million charge in excess H200 inventory in the first half of the year.
Yeah, that was probably inventory that was supposed to go to China that didn't make it right. Most likely. Okay. So, it doesn't seem like that's the biggest deal. Wasn't there also like a big H20 charge last last quarter? Yeah. like five billion or 5.4 billion, something like that. Yeah, I think a lot of people were upset about it wasn't accounts receivable last quarter, but it was uh a different accounting metric that kind of exploded.
I think commitments is the big one that people are talking about this time, but that's something Jensen will probably talk about. Nvidia says it will be shipping both Blackwell and Ruben systems in the future and is currently experiencing certain supply constraints in their SEC filing. Nvidia said that in August it entered intous with large capital providers.
This is the big $500 billion deal to create independent financing platforms to mobilize thirdparty capital and video flat. Gene monster said it really well like we're splitting hairs on gross margin next quarter coming down 1%. Like most of this stuff we are looking at every minute detail. The two biggest details here is this is a company growing at 106% year-over-year.
Guidance is is honestly very similar to that level of growth at if you know if you include what they're likely to actually come in at. And then you also have their increased commitments. Those are the two stories. Extremely fast growing and potentially taking on a little bit more risk or believing that this buildout is going to continue for a while.
You could honestly look at that as a bullish sign thinking that they believe that they have visibility into multiple years of customers of holding up 100 plus billion dollar revenue quarters. Like I I think the market's being crazy right now. Not only like the 2% being down or you know right now8% being down is fine, but it's off of the back of almost like an 8day streak of being red.
That's the part that's like frustrating me is like we are already down. Um, I think as as this person says in the chat, nobody cares if the stock doesn't go up. I mean, they're right. Like all these little things, we're going into the nitty-gritty. No one cares. Everyone's like, "The stock should go up." But you have to analyze this stuff as Tanner says to try to get a little bit more deeper into why it's not going up.
And, you know, at the end of the day, it's been in a downtrend for the past week, as you said, and it might continue that downtrend until Jensen kind of gives more clarity here. Marll is up after hours. It's quite interesting how the market's interpreting this earnings immediately, but the concentration risk is obviously still there.
the the whether it's Microsoft, Google, Amazon, Meta, they keep paying I mean 44% of the what is it 200 billion no like 180 something billion they've done this year in revenue um was from the hyperscalers and so at the end of the day that concentration risk is there but they continue to spend for a reason they need the chips you're seeing the AWS GCP Azure growth rates so I don't know if that is the biggest bare case anymore and then you have the commitments to make the entire our supply chain makes sense.
Uh let's go back to Daario as he was talking with Benny off a couple minutes ago. But but this is the first time that we've really been able to incredibly accelerate our go to market efforts within Claude and we want that for all the other enterprises and we want to we want to me and Mark want to bring it together to everyone.
[snorts] Oh, look, look, we see the numbers. We also see the tape underneath you, Salesforce. Fantastic numbers. But I do want to ask you, I know I normally should ask Mark this, but I want to do, Dario. You know, there's this whole SAS apocalypse thing, of which we thought that you were going to destroy Mark.
I I know Mark has a big investment in you, but I was waiting for you to put him out of business. What do you think about the SAS apocalypse thesis? We're we're not interested in destroying destroying anyone. uh you know we think of this as a very positive sum thing right that's the way that's the way markets work creating new value here and and the question is just you know h it's not about destroying anyone it's about how much of these enormous gains go to various various people and various companies and our philosophy always has been that we want to work with our customers we want to empower empower our customers to share these gains with us and so we've already worked with Salesforce in a number of ways.
We're big users of Salesforce. Salesforce is big users of Claude Code, of Co-work, of other tools. We've put products like Claude Tag in Slack already, um, which is which is a part of Salesforce. And now this combination is a way to to gain something that's, you know, it's 1 plus 1 equals three, something that's bigger than the sum of its parts.
And and I think that's the right way to think about things. Jim, I think another point you have, you really have to add to that, which is that number one, this isn't our first product. You know, with Enthropic, we've got a several products with them that we're so excited that we've built, including Slack code.
But Jim, you have to think of it like this. Salesforce is very much a deterministic system. It's a system that is all about security and rules and governance and workflows and if this happens, that happens. It's about determinism. And you now you have this incredible probabilistic system, these large language models, you know, this incredible technology that Daario has built.
It's non-deterministic. But when you put these two things together, the idea that you could have a probabilistic LM and AI that's working now perfectly with a deterministic system like Salesforce, the result is incredible. We would never have seen this kind of power. and our customers are going to be able to build these amazing new applications dynamically.
That is Jose or Tanner, any thoughts on what you're I was just going to make it I was going to say Jim Kramer can borrow my hair when I'm done. Um but I I I'm curious on the thoughts of um like from Alex Karp's perspective like what does this say about sovereignty of AI? Is there is there going to be more comments about that?
And also, what does that say about OpenAI's employees getting poached by Salesforce? You know, they're not poaching employees from Enthropic. I'm curious if uh this has been part of the plan as well. So, uh those were just some of my uh comments there. Not not about the actual deal. It's a good deal.
Neil, you trust what Dario is saying here that they're not trying to kill software companies? Um, if you go back to his very long post on X and you read what he wrote there, I'm really not surprised that suddenly he's popping up on on TV trying to explain all of this, especially not when you're trying to go public in a month or two.
So, I'm not surprised. I mean, last year Salesforce announc announced something a collaboration with Open AIS and now they have something with Antropic. Okay, cool. But at the end of the day, Salesforce better watch their back because I'm pretty sure that uh Entropic and Dario are not going to think twice about ruining their business.
I mean, that that would be kind of crazy, right? If Anthropic comes out with a competing CRM, maybe Benny Off did this to kind of create a relationship that would uh legitimize Anthropic because there's a go to market in the enterprise and also make sure Anthropic doesn't stab them in the back. But then again, you know, business is kind of ruthless.
If they were to do that, it would be quite surprising. And that's why Karp Karp repeats it time and time again. You have to have all the control. Stop giving everything to to these LLM companies. Otherwise, again, these LM companies, we do whatever it takes to survive because they've been making a insane amount of commitments.
Like OpenAI and Tropic, they need to generate hundreds of billions of dollars in revenue. And if they have to burn your business to the ground, they will do it. You don't trust them, Neil? It's not that I don't trust them. It's just I if if they don't want to go bankrupt, I guess they have to find ways to make money.
So, I I I hear what they're have to say, but I see something else. They Enthropic did a deal with Figure and then like the next model update, they ended up showing off this Figma Figma, sorry, Figma. And then the next uh model upgrade, they ended up showing off a UXUI product that looked a lot like Figma.
So, who knows what's going to come of this. It's a good point. It is a good point. We have about seven minutes until the call. Uh Jensen's not going to be speaking probably for another 25 to 30 minutes. They're going to have to get through CFO commentary. Um, if you were an analyst on the call, anyone in the chat and uh, my three fellow panelists here, let's start with you, Jose.
What question would you ask Jensen? Just give me visibility. That's it. That's all I care about because I think that ends a lot of the qu a lot of the other questions. Yeah. No, I I just copy Jose here. because it any other thing I'll say it just ties back to this. So yeah and then on on on top of that I don't even know how I would phrase this question but based on all the commitments it's surprising I'm sure you guys have all seen the reports the Vera Rubin Ultra is actually expected to have less HBM than the Vera Rubin.
So, like, how does that tie in with some of their commitments? And um I I don't even know how I'd phrase that question, but like they are downsizing or or or lowering the specs on their future products, but also putting up unbelievable commitments to memory. So, it would be a memory focused question basically.
Yeah. Yeah. Of course. Is it a power play? Because if all of the customers slash competitors are also trying to catch up, they need memory. But if Nvidia picks everything up, they don't have the memory to move fast enough. And so it's like 4D chess from Jensen. Everything I do is a power play. Okay, that's just what Jensen does.
[snorts] I hate silence. The fact that you guys smile on mute drives me nuts. What? You want us to like burst out laughing? I want you to unmute to laugh. There we go. I was laughing at the awkwardness. I wasn't laughing at your joke. But anyway, um what was I about to say? I would ask the most obvious question.
What's going on with this open source thing? Right? Like I mean I would try to ask the question without being so direct, but I mean are you legit competing with open AI and anthropic? Do you want more enterprises to adopt Neimotron over the frontier models? And if they do that, is that bad for those companies?
Will they adopt or is there going to be a sliding scale where some stuff is frontier, some stuff is open source? Um do is the open like look if if Nvidia, you know, is selling a decent chunk of open source tokens, is that another line of revenue for the business that is kind of uh latching on to the data center bit?
I mean, I think the open source thing along with this commitment stuff that Jose talked about is a relatively big question. And I think the customer concentration risk, we've heard that question at least once every time over the past couple years. Um, I don't think that's going to be the biggest question anymore because these customers, Amazon, Google, Microsoft, are showing massive cloud growth.
So, they have to keep buying the GPUs. But that question might come out in the context of not customer concentration, but customer concentration and competition from those concentrated customers that are now seeing a lot of growth with tranium and with uh TPUs. Um, which again I don't think is the the most important question here, but I think we're going to probably hear some commentary around that.
The stock is barely down though, so we saved it. You're welcome. Uh, Broadcom's been taking a hit over the past couple days. Crowd Strike still up 11. Salesforce still up. I mean, you're still seeing the software name Salesforce up 13%. Last time Salesforce was at $232, uh January of this year. Actually, you got to go back to December of last year.
So, it's been a while since Salesforce hit these levels. It's just Nvidia right here. That's the one going down. I mean, granted, if Jensen says the right stuff and the street likes it, seeing this thing pop after hours, even though liquidity is not that strong, Marbell's up after hours as well, it would not be crazy to see it.
Um, Marll's up 2% and then Neb's right there up 2.3% as well. Someone in your chat said, "Amit, is that a wig?" Like, you're the guy with the hair that people are like, "Wait a second." It really looks like I have the wig. Like, that's crazy. Well, I I have had my hair out for three days in a row for the first time, so I can understand people being confused.
I actually like the hairstyle on you, Tanner. It's actually Not that bad. I forgot how Tanner looks without it. If that was legit, if that was legit your hair, if it wasn't gray and it was black, I feel like it'd look good, to be honest. No, dude. All the comments are uh saying I look like Karen or Jensen's grandmother or something like this.
I should have dyed the mustache as well. I wasn't going to shave it. I wasn't that committed to the bit. Rachel, thank you for the super chat. We love you, Mitten team. Thanks for always working so hard. Thank you all for being here. Deeply, deeply appreciate uh you all being part of our collective channel.
Sipping, thank you for the super chat. Jensen Tander doesn't wake up a loser. That is correct. Appreciate that as well. Farzod, thank you for the super chat as well. Really appreciate you. I mean, it is cool for all of us across the world to come together. Oh, put in So, we got a minute until the call starts.
Put in the chat where you're watching from. Where across the world are you watching the stream? This call should be starting in about a minute. Again, Jensen's not going to be talking for about 20 minutes. But we will be live after the call as Nvidia almost flips green right here to analyze everything that was said.
And um there you go. It does flip green. We'll break down what happens. 210 on Mr. Invita. Now all the comments are going to be super happy whenever it opens green tomorrow. See, Dubai, Denmark, Slovakia, Poland, New Mexico, Israel, Portugal, Germany. Why is my sister calling me right now? I I swear my sister doesn't think I do a market close stream every day.
She wants to know why Nvidia is down. Or actually, it's up now. Maybe. I can guarantee that's not what she would ask me if I picked up her phone call, but she usually calls it. Pick it up. Pick it up. Yeah, put her on the stream. Netherlands, Germany, Houston, Romania, Afghanistan, Texas, Austria. I got everyone across the entire world watching this.
Nvidia 21040. All right, you know, this happened last time. It pumped just a little bit going into the call. So, now we just got to see if the call is good enough to keep it going. All right, having said that, the call is starting and we'll be back in an hour to discuss what's going on. Good luck everyone.
If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. Hiari, you may begin your conference. Thank you. Good afternoon and welcome to Nvidia's conference call for the second quarter of fiscal 2027.
With me today from Nvidia are Jensen Wong, president and chief executive officer, and Colette Crest, executive vice president and chief financial officer. 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 third quarter of fiscal 2027.
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 may differ materially.
For a discussion of factors that could affect our future financial results and 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 AK with the Securities and Exchange Commission. All our statements are made as of today, August 26th, 2026, 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 GAP financial measures in our CFO commentary which is posted on our website. With that, let me turn the call over to Colette.
Thanks, Tia. We delivered another outstanding quarter with record revenue, operating income, and EPS. total revenue of 96 billion more than doubled year-over-year as growth accelerated for the fourth consecutive quarter. The surge in AI demand is driving a global infrastructure buildout supported by an expanding and diverse set of growth opportunities spanning hyperscalers, AI labs, AI natives, enterprises, and sovereign customers.
We expect to grow revenue by approximately 70% in fiscal 2028. This is a supply constrained outlook. Q2 data center revenue increased 18% quarter-over-arter to 89 billion with strong contributions from both sub segments hypers scale and ACI which includes our Neocloud industrial and enterprise customers.
Hypers scale revenue of 49 billion grew 13% sequentially driven by sustained strength in Blackwell reinforcing that more compute drives more revenue as new GPU capacity comes online. Our hypers scale customers delivered strong financial results in the quarter with accelerating revenue growth and expanding margins with cloud industry backlog now greater than two trillion.
Papex by the top five hyperscalers is expected to reach nearly 800 billion in 2026 and 1.3 trillion in 2027. Today we are delighted to announce an expansion of our partnership with AWS. Building on its already vast installed base of NVIDIA compute. AWS is deploying an additional 2 million GPUs starting this quarter through the second quarter of fiscal 29.
along with Vera CPUs, some integrated with Ruben, others standalone. AWS will serve Nvidia Neatron family of open models on Amazon Bedrock and Sage Maker. Amazon will also adopt our full physical AI stack, Omniverse, Cosmos, Isaac, and Jetson to power its fleet of warehouse robots. ACINE revenue of 40 billion increased 25% sequentially and 138% year-over-year.
Growth was driven by Neocloud capacity additions to meet the rising demand from enterprises, AI startups and sovereigns as well as hyperscalers purchasing capacity to supplement their own buildouts using NVIDIA DSX reference designs. Our NeoCloud partners are bringing capacity online faster and at lower token cost.
They are expected to exit the year with 8 gawatt in total installed capacity, up from approximately 3 gawatt at the end of 2025. Incredibly, we are seeing demand acceleration even at our scale. Customers forecasts point to our growth doubling next year. However, as I mentioned earlier, we expect to grow approximately 70% as we are supply constrained.
NVIDIA compute is fully utilized across every cloud we serve. The economic value it generates for our hypers scale neocloud and AI lab partners keeps rising. Besides building the best AI computing technologies and the most capable supply chain, NVIDIA has three unique capabilities that are engines powering our growth.
First, Nvidia's architecture runs every model and we're growing share as closed and open model adoption grow. Closed and open models alike, adoption is skyrocketing. NVIDIA runs the leading closed models, OpenAI, Anthropic, Grock, Meta, Gemini, and the leading open models, TML, Mistral, Quinn, Kimmy, GLM, Deepseek, Miniaax, and Neatron.
We're great at small models and giant ones, large or video, auto, regressive or diffusion, in the cloud or in the edge. NVIDIA is great at training, great at inference, great at agentic workloads. One platform fungeible for every model and workload, durable for the entire life cycle of AI. That combination of performance, fungeibility, and durability is what makes Nvidia the productive and financable compute infrastructure.
Our second unique capability is our full stack AI factory platform that is expanding our share of the data center town. Since Hopper, our revenue opportunity has grown from roughly 18 billion per gigawatt to 25 billion with Blackwell to 40 billion with Ver Rubin, which now spans Vera CPU, Ruben GPU, Envy Link, Infinibanner Ethernet, and Grock LPU announced earlier this week.
Our ability to extreme code design across GPU, CPU, NVLink scaleup networking, scale out networking systems, algorithms and software enables us to deliver X factor performance gain every generation. Vera Rubin exemplifies this, delivering 30x higher throughput per megawatt and 35x lower token costs relative to Grace Blackwell Ultra.
We commenced production shipments of Vera Rubin earlier this month. Having already received purchase orders from every major hyperscaler AI cloud and system OEM, we expect Beer Rubin to mark the fastest product ramp in NVIDIA's history. Our networking business had another record quarter with revenue growing 18% on a sequential basis.
Spectrum X Ethernet, which grew 2.6x 6x on a year-over-year basis is already helping us become the largest and fastest growing network company in the world. Rising adoption of Agentic AI is driving an acceleration in demand for data center CPUs. Our Grace CPU introduced in 2021 has been a great success with revenue on a trailing 12-month basis exceeding 5 billion.
Today we are in full production of our next generation Vera CPU. As a standalone product, Vera expands our TAM even further. Vera completes a genic task 1.8x faster on the spec benchmark and provides five times the bandwidth per watt than any other data center CPU. [clears throat] We expect Verera to be deployed by every major hyperscaler, Neocloud, AI lab, and system OEM with shipments already underway to our lead partners including OCI, SpaceX AI, and starting this quarter, AWS.
We continue to see demand for approximately 20 billion in total server CPUs. And based on our customer demand and improving supply outlook, our preliminary expectation is for CPU revenue to more than double in fiscal 28, positioning us as one of the world's leading server CPU suppliers. Since the announcement of our Grock partnership last year, we've been working to unite Nvidia's high throughput and Grock's high interactivity architectures.
At Hot Chips earlier this week, we announced that Gro 3 LPX, our first rack scale LPU system, is in full production and already setting records, demonstrating nearly 4x the number of tokens per second against the next best alternative on our artificial analysis benchmark. We expect to ship Gro 3 LPX in volume later this quarter to early adopters.
Nebius will be the first. Today, we're not just selling the best chips. We're selling a full stack AI factory platform offering superior economics for customers and capturing a bigger share of the data center town. Our third unique capability is the combination of our full stack AI factory and rich CUDA ecosystem allowing us to extend AI into markets a single chip alone can never reach.
Beyond the hyperscalers lies a massive market anxious to adopt AI. Customers with no interest in designing their own custom silicon. NVIDIA's fully proven full stack platform is uniquely suited to help sovereigns, neoclouds, and enterprises build their AI infrastructure, bring it to full operation, continuously optimize it through CUDA software and connect it to offtake demand from our vast developer ecosystem.
Hyperscalers will remain a major growth driver but non-hyperscaler growth our AIC and E segment spanning sovereign regional Neoclouds enterprise edge and air gap data centers will represent roughly half of our data center business. Our AI native startup ecosystem developed and running primarily on the NVIDIA compute platform is scaling at a rapid pace.
Global VC funding in AI roughly 70% of which is spent on compute exceeded 400 billion in the first half of 2026 surpassing the 265 billion raised in all of 2025. Nearly 20 companies, including Cursor, owned by SpaceX, Figma, and Together AI, now exceed 1 billion in annualized run rate revenue, up from 13 companies in Q4 of last year, with vertical enterprise software logging the fastest growth.
In enterprise, on a trailing 12-month basis, on-prem revenue in the automotive vertical reached 8 billion, while financial services, manufacturing, and healthcare combined contributed 7 billion in revenue. Hudson River Trading and Jane Street are leveraging Nvidia's powered AI factories to accelerate accelerate quantitative trading.
Samsung Electronics is using Nvidia Kitho to achieve up to 20x greater performance in computational lithography. While Bristol Myers Squid is investing in Vera Reuben AI factory, a fast follow to the Ro and Lily buildouts as drug R&D timelines compress from years to months. In sovereign AI, our business primarily through the regional NeoClouds grew 35% sequentially and more than tripled year-over-year in Q2.
A country or region can allocate land and power directly to a regional cloud partner in ways it never would to a foreign hyperscaler. We don't own a cloud ourselves. We are neutral partner to every sovereign and neo cloud. And because Nvidia compute is productive, fungeible, rentable and durable, regional cloud interest is surging around the world.
We helped Quarweave, Nebius and Nscale build entire infrastructure businesses and NeoClouds are emerging everywhere. Firebird in in Armenia, Kasaba Technologies across Africa, GMI cloud in Taiwan, Yoda and NASA in India, Hermis in Australia, YTLAI cloud in Malaysia, pairing local land power and operating expertise with our platform.
Last month, we announced a partnership with Noatra, Japan's national AI company, to build an NVIDIA DSX AI factory that will create open models to power AI agents, digital twins, robotics, and physical AI applications. South Korea's LG and Hyundai Motor Group are partnering with Nvidia to build and scale AI.
And in Europe, a record 35 new NVIDIA powered AI supercomputers were unveiled to advance industry and scientific breakthroughs. Neoclouds are seeing strong demand pipelines from many diverse offtakers. Rather than allocating their entire capacity to a single long-term offtake guarantee that lenders typically require to finance a data center independently, we have introduced a revenue sharing structure.
NVIDIA provides a take or pay commitment on a portion of the facility's capacity, a minimum revenue guarantee that gives lenders the confidence to underwrite the project, and in exchange, we share in a portion of the Neocloud's revenue earned above that floor. Independent Capital still underwrites every deal on its own merits.
We're not making loans. In this model, we get paid twice. once on the hardware sale and again through the share of rental revenue. A highly reoccurring stream layered on top of a one-time equipment purchase. Over time, this model can expand our addressable market and create reoccurring usage linked revenue stream alongside our core platform revenue with the potential to drive billions in revenue over the medium to long term.
Together, Nvidia's three unique capabilities. A platform that runs every model, a full stack AI factory platform capturing more of the data center TAM, and a CUDA ecosystem that extends AI into markets no single chip could reach alone reinforce one another and are the engines of our growth. Let me update you on our progress with our Frontier AI labs.
The Frontier AI labs have extraordinary demand for training and inference compute, but they are growing faster than what their balance sheets and credit profiles can support. They have rapidly growing customer demand, yet still lack the decadesl long infrastructure contracts and investment grade financing capacity needed to secure the AI factory infrastructure independently.
In other words, their growth isn't limited by their technology or customer demand. It's limited by compute. For these companies, more compute means more more intelligence, more users, and more revenue. NVIDIA is needed to help power this flywheel. First, we've invested nearly 50 billion in the Frontier AI labs.
This was a meaningful commitment, but it represented a small fraction of our expected free cash flow over the same period. Further, to support the Frontier Labs infrastructure buildouts, we recently announced partnerships with six of the world's leading infrastructure capital providers, Apollo, Black Rockck, Blackstone, Brookfield, Goldman Sachs, and KKR to establish financing platforms that will raise over 500 billion of thirdparty capital.
With these partnerships, building on our unique, fungeible, and durable computing platform, the AI labs will be able to build and assess AI infrastructure funded by long-term institutional capital at relatively attractive rates. [clears throat] Last week, we announced that we secured land power shell capacity through our partnership with SoftBank Energy to exclusively host NVIDIA compute at their Portsmith campus.
The initial deployment expected to support 4.25 gawatts of AI factory capacity will be utilized by OpenAI. Each generation of NVIDIA AI factory systems deployed at Portspike could represent approximately 1.5 million NVIDIA GPUs and over 20 years the site could support multiple upgrade cycles. Here's the essential economic point.
The LPS commitment secures a long lived AI factory site while the NVIDIA compute within the data center can be upgraded repeatedly. This project deepens our long-standing partnership with OpenAI. OpenAI has committed to substantially deployments of NVIDIA AIR infrastructure through 2030. OpenAI's existing and planned commitments represent approximately 12 gawatt of NVIDIA compute.
for another Frontier AI lab. We will provide selective credit enhancement for nearly two gigawatts of compute. This complements the substantial NVIDIA compute capacity they've secured independently without Nvidia's credit support. We recognize the scale of this support and we know some will call this circular financing.
We see it differently. We're going through a major computing platform shift, the creation of one of the most important technologies in human history, and these are once- in a generation companies. Their technology leadership is proven, and their customer traction and usage are skyrocketing. We expect them to become the largest technology companies in history.
We believe these investments measured against the strength of their demand, the business they create for us, the ecosystem they build on NVIDIA's platform, and the equity returns on our invested capital will be excellent and our risk is limited. The NVIDIA compute platform is fungeible and durable and can be redeployed to support other customers.
For context, we expect demand from the AI labs for which we expect to leverage our balance sheet to contribute toward roughly a quarter of our business next year. This remains compute we ship will be consumed by investment grade customers or those that are backed by one. In Q2, we ship less than 1% of our total data center revenue in Hopper 200 products to customers based in China in accordance with the US government licenses.
Current Hopper shipments are dilutive to corporate gross margins and given ongoing geopolitical in uncertainty, there is no China data center compute revenue in our forward outlook. Moving to the rest of the P&L, GAP and non-GAAP gross margins were both 75% largely unchanged from last quarter due to a similar product mix.
GAAP and non-GAAP operating expenses were up 10% and 11% sequentially primarily due to high compute infrastructure costs and compensation and benefits costs. Our non-GAAP effective tax rate of 16% increased from a year ago primarily due to higher revenue. On our balance sheet, inventory increased to 32 billion as we prepared for the Vera Rubin launch.
Days of sales outstanding increased to 60 days, reflecting extended payment terms for large purchases by certain investment grade customers to be shipped over multiple quarters. In Q2, we returned a record 26 billion to shareholders, 20 billion through share repurchases, and six billion through our quarterly dividend of 25 cents per share.
Relative to our plan to return 50% or more of free cash flow, we have returned 60% on a year-to-ate basis. And going forward, we intend to increase and return excess free cash flow net of strategic uses. Let me turn to the outlook for the third quarter. Total revenue is expected to be 108 billion plus and minus 2%.
We expect sequential growth to be driven primarily by ACINE with data center while growth in hyperscale is expected to reacelerate in Q4 and into fiscal year 28 as supply of Vera Rubin grows over time. We see Vera Rubin accounting for about 20% of data center revenue in Q3. Looking ahead, our preliminary expectation is for fiscal year 28 revenue to grow approximately 70% year-over-year.
Although we will work to close the supply demand gap, we expect supply to remain a bottleneck at least through the end of fiscal year 28. Many of you have expressed concerns regarding our gross margins as component costs have risen significantly. As you are already aware, we are experiencing extreme pricing conditions in memory.
The magnitude of the price increase has exceeded our prior expectations and are headed even higher into next year. As a result, we are resetting expectations today. For Q3, we expect GAP and non-GAAP gross margins to be 74% plus or minus 50 basis points. We expect margins to bottom in Q4 in the 71 to 72% range before settling at 72 to 73% in fiscal year 28 as executed price increases take effect in Q1.
We want to be direct about this rather than let it linger as an open question. Memory scarcity today is being driven in large part by the AI buildout itself. And unlike a component that simply raises our cost with no offset benefit, tighter memory supply is a symptom of the same demand surge that's driving our own growth.
We have a longstanding deep relationships with all three major memory suppliers, and we're working closely with them to further increase the capacity our roadmap requires. GAP and non-GAAP operating expenses are expected to be approximately 9.2 billion and 9.0 billion respectively for the full year.
We now expect OPEX to grow in the low 50s driven by a broadening of our product portfolio and further increase in the usage of AI tools which is already and will continue to enhance engineering productivity for full year fiscal year 27. We continue to expect GAP and non-GAAP tax raises to be between 16 and 18%.
Excluding any discrete items and material changes to our tax environment. With that, we will now transition to Q&A. Operator, please poll for questions. 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.
While that happens, crazy earnings. I think this was amazing. The line of Joseph Moore with Morgan Stanley. Your line is open. Great. Thank you. Um I wonder if you could give us color on the 70% and what gives you the confidence to guide a full year out if you haven't been doing that and then what's the gap between that amount of growth and the 100% demand growth you know what is the kind of key constraint that that separates those numbers and could you close those gaps over time
yeah thanks Joe um as as you probably are aware [clears throat] AI has become useful and the the AI agents that are being adopted everywhere use an enormous amount of compute. First of all, the large language models are are larger than ever because they're smarter than ever and and these agents uh go through uh reasoning and planning, multi multiple terms of tool use.
Uh the amount of compute necessary for an agent versus a human using it is probably 15 to 100 times depending on on the type of problem you're trying to solve. And so the amount of compute necessary is just extraordinary. That's that's a factor that almost everybody sees. The part that people don't see about our growth because we're practically singular because the the nature of how we deliver products.
I mean we're the only company in the world that creates and builds offers an an entire AI factory platform a full stack system. And you know customers can still mix and match. However, uh most most companies just don't have the skills to do that or desire to do that. And so there's an entire part of the market that we experience growth.
Uh their sovereign AI, the original AIS, their neoclouds, their AI startups, their enterprises where where we're seeing um which is represents about half of our business and that's growing 100% a year. that part of the the world's computing is likely to to be larger over time uh than even what we're currently experiencing in the cloud.
And so [clears throat] so I think the the demand that we see is driven by all of those factors. Uh it is also [clears throat] the case that that you can no longer procure uh technology per se and stand up these infrastructure. you've got to go secure the land power and shell which you know often times is a couple two three years out um all of the rest of the supply chain necessary to uh align the construction the power the cooling um you know all of the labor that's necessary and we're AI infrastructure is creating so many jobs all over the United States and all around the world uh it just takes a lot more planning and so we're involved in in securing infrastructure now uh further they're down the pipeline.
You know, just as a long time ago, people ask me, why is it that we're working with memory suppliers uh when we're a chip company? And today, people understand it's it's really quite genius that we were working on our supply chain so far upstream. We work with power generator companies. We uh downstream we work with um uh work with land power and shell companies um all around the world.
And that helps prepare all of this computing that's going to be built uh that will ultimately deploy for our ecosystem and our customers. And so we just have a lot greater visibility now upstream and downstream. Um it is the case [clears throat] that we've never forecasted or never guided to uh a year in advance and and um even though our demand is much greater than 70%.
Um, our supply allows us to confidently deliver 70%. And we're going to continue to work with our supply chain to increase on on that. Uh, but what we wanted to do is to be consistent with everybody from our customers, our shareholders, our supply chain. Everybody sees the same view. And the reason why that's important is because, you know, everybody's putting a lot of resources at play.
And so we wanted to make sure that everybody has the same set of information. And um we've got a huge year coming up next year. Uh and and uh it's going to be pretty extraordinary. Your next question comes from the line of CJ Muse with Cancer Fitzgerald. Your line is open. Yeah, good afternoon. Thank you for taking the question.
There's tremendous investor focus on your inference market share. Can you speak to the evolving workloads you're seeing with the Gentic AI and how you see your share evolving here over time? Particularly when you reflect on the growing value of the TAM you're seeing with each new full stack generation, your expectation for greater growth from ACIE and then also including Gro 3 LPX.
We'd love to hear your thoughts. Yeah, thanks CJ. um the AI life cycle is getting way more complex than it used to be and and it's playing um you know into Nvidia's architecture much much more greatly than it used to be and and so you could kind of see it as four phases you know there's the first phase which is preparing all of the the data that you need some of it is synthetic some of it is real some of it is human labor human labeled and generated u pre-train the models and then there's post training the third phase and then there's the agentic inference and agentic inference is extremely complicated and so every one of those phases are complicated.
The thing that's really great about the NVIDIA architecture and we created this uh with MVLink 72. It was a big surprise on the world when we first created the first the world's first rack scale architecture. It was it was it was hardly easy. Um and it was very challenging building the first generation.
We're now in our third generation of MVLink 72 rack scale systems. We had to reinvent the entire supply chain, reinvent systems, reinvent the technology, redistribute our software, refactor our software. Everything, every aspect of was hard. But what it allowed us to do was to create one fungeible system that allows us to transition from data creation, data preparation, the pre-training, the post- trainining to agentic inference.
The the benefits to customers is incredible. And the reason for that is because you've just spent, you know, and we just mentioned um each gigawatt of technology and Nvidia's revenue exposure in the hopper time frame with hopper plus infiniband and now vera rubin and CPU and three types of different networking because it takes that many types of networking to address the entire world's data center.
Not to mention the scalein security networking and the scale across multiacus networking. So you could you could argue five different types of networking systems. And then of course Grock and all of that increased our revenue contribution or revenue opportunity per gigawatt to $40 billion. So each gigawatt of data center um increased from say $30 billion about five years ago to now $60 billion uh today.
Of course, the productivity is tremendous. The the performance is incredible uh in comparison, but you're talking about a 60 billion dollar investment. And to the extent that you could you could use it across multiple phases of the AI life cycle run every single type of model you can imagine running on it where there's diffusion or auto reggressive or state space or some hybrid version of that every version of attention mechanism you can think of small or large models um the light the the the s the the the investment that you make um will be preserved and useful and productive for a lot longer time.
And so so I think our our advantage in this new world is really quite extraordinary and it it could explain you know why it is that our growth is actually accelerating. It was already large um but now it's accelerating. Uh let's see you as you asked about Grock. I super excited about uh Grock 3. uh we achieved a uh record token interactivi interactive interactivity rate extremely low latency performance generation.
The team is doing fantastically. uh we spent the last several months fusing uh the MVLink architecture uh which will be the the core and it'll be the core engine and then for for uh services that would like to have super high interactivity uh super high speed token generation done um you know the the throughput is going to be a lot lower uh the cost per token will be higher uh but you could you could associate it with you know high ASP P uh services and so for those companies you could bolt on one of our Grock accelerators.
I'm super excited about that. But the vast majority of the world's data centers will just be Vera Rubin MVLink72. Your next question comes from the line of Stacy Rasg with Bernstein Research. Your line is open. Hi guys. Uh thanks for taking my question. So the 70% growth in fiscal 28 which I guess is sort of calendar 27.
Um so that's something like uh I don't know a $200 billion uptick versus the prior outlook if I back it out. The prior outlook was a trillion dollars over the three years. So this is probably 200 billion more. I was just wondering if you could talk us through the contributors to that increase across the different products of Vera and CPUs and and Grock and everything else.
Also, you you talked about your price increase that takes effect in Q1. So, I assume some of this is is pricing. And I guess I'm also curious, maybe I'm squeezing too many questions in here, but I'm also curious just it's a constrained number. What would it be if it wasn't constrained? Um, the unconstrained would be a lot higher.
It's um we grew 100% year-over-year. this year. Um the unconstrained, you know, is is significant. And so we're just going to have to go work hard to get more capacity. Uh and and you know, we have we have a large supply chain. We have a really gigantic supply chain. And and so we have incredible partners.
Um and we've secured a lot of supply, but we just need a lot more. uh to break it down [clears throat] the the way to think about that is most people see just hyperscalers and that's half of the that's half of the picture the other half of the picture is what we call AC and that's all the enterprise the neoclouds the sovereign AIS you know that part of the world is invisible to everybody and the reason for that is because they they don't buy custom chips they don't buy chips one at a they really need an entire factory platform built for them.
Um and and so that's that's a space that we add just a tremendous amount of value. Now of course back in this hypers scale space that's growing incredibly too right you know that they they now have backlogs of$2 trillion dollars you know that uh when they stand up Nvidia compute when that happens their revenues go up their earnings contribution go up uh compute is profitable very profitable today and compute directly translates into increased revenues and so there's a there's a just a a race to want to bring more Nvidia compute online um both at the hyperscalers but what you don't see is just really tremendous opportunities outside the hyperscalers um but the the other the other part of it is and the reason why you know we mapped it out for you uh in the case of Hopper we were at about 18 billion per gigawatt uh for Grace Blackwell we're about 25 billion per gigawatt and for Vera Rubin it's about 40 billion per per gawatt and and um the productivity is you know X factors uh increase in each generation and so customers want to race to the next generation as fast as they can.
Meanwhile, because Nvidia's compute is so productive, they're the tokens they're generating, the GPU hours they're renting out is insanely profitable. As you know, their margins are fantastic. And so so all of that is just simultaneously happen happening. I think the big picture is is that we're going through this platform shift and it affects every computer company and every comp every industry in the world uses computers.
So therefore every industry is affected, every company is affected and this new way of doing computing um is intelligent. It's not based on retrieval of files, but it's now generative generating intelligence and that requires compute, but the results you get is phenomenal. The results you get is tremendously better.
And so, you know, you we're just seeing that across the world. Everybody wants to be part of the AI revolution. Everybody want everybody will have to be part of this computing shift and everybody has to build infrastructure. Your next question comes from the line of Vivic Arya with Bank of America Securities.
Your line is open. Uh thanks for taking my question. Um and thanks for providing all the transparency and all the commitments and guarantees that you have for a number of years. When I just, you know, add up uh everything that's in the CFO commentary, I get to a number of about 500 billion or so obviously over the next several years.
But I had a few questions related to that. uh first is is that the takeaway that that the sum of all your ecosystem investments over the next several years is in that ballpark or are there other uh equity or other investments that could still be ahead? That's one. Secondly, if there is a specific cash uh you know part of that uh that we should think about in fiscal 28 and then Jensen a lot of these investments are uh you know designed to help uh the frontier labs especially open AAI and Anthropic but both of them are designing their own custom chips.
In fact OpenAI just you know in the last few days spoke about Alpino and and their claims about being better than Blackwell and so forth. How are you balancing this dynamic where you want to invest a lot in the ecosystem but part of that ecosystem wants to develop competitive uh solutions? Thank you.
Well, we're building something very different, you know, whereas whereas uh many of these these XPUs are inference specific chips um for one cloud or one service, NVIDIA is a a platform, an an entire AI factory platform that spans the entire AI life cycle that you can use in any cloud. It's in every cloud.
You can run anywhere. We'll help you set it up anywhere. And um I and so we built something very different. Um [clears throat] these all of the AI services at some point are going to want to go around the world and those data centers won't necessarily be just built by them. and and um and also you know I fully expect and so they're they're going to run and I think they're going to run on Nvidia u all around the world and and of course I think our technology I have 100% confidence that our technology will continue to be extraordinary for them and that the economics of using our technology you know whether it's from data processing to to uh training to post training to agentic processing um our technology is going to be extraordinary for them.
They're going to use it and so I have every confident that they're going to be customers and partners of ours for a very long time. Now, having said that, taking a step backwards, investing in these two companies or there are several AI labs that we've invested in. Investing in these companies are once in a generation opportunity.
I think the only regret that I have is that I didn't invest more and sooner and both of the two of the companies will likely go public soon and others will follow. Um, and these will be some of the most consequential technology companies in history. And so I'm delighted to be friend to be their friend.
I'm delighted to partner with them. I'm delighted that they're building an ecosystem on top of the NVIDIA architecture. Uh, I'm delighted that that they're they're counting on us to scale up. And I I I have a 100% confidence um that you know through through quite a long period of time uh they're going to be utilizing Nvidia compute uh for a lot of their computing and so I feel great about it.
So VC let me add a little bit more regarding uh the commitments and uh the portion within those commitments which is our supply commitments. This is essential. This is essential for um the raising of Vera Rubin today as well as all next year. You can see that those commitments uh the biggest parts of them are in the first three years and we will use that to build the products that we need.
This what also gives us the confidence in terms of our growth in revenue given how much we have already aligned in commitment in terms of our supply as well as capacity that we would need. Your next question comes from the line of Timothy Aruri with UBS. Your line is open. Hi, thanks a lot. Um, Jensen, I want to ask about open source.
Um, there's a lot of talk about that these models could gain share for workload in the US. You're obviously well positioned with Neimotron, but on the other hand, a lot of the end demand is being driven by these big frontier model um um companies. So there's a lot of investors that equate open models as being negative for the growth of those companies.
So how do you sort of put and take that? Do you see the rise of open models as being good for Nvidia or ultimately negative? Thanks. Um the world will need both closed models and open models and both closed models and open models are skyrocketing in use. um near most I would say nearly all open models run on Nvidia and the reason for that is because Nvidia's footprint around the world um is the highest and and um our our architecture is the most funible.
It's everywhere. It's in PCs and edge devices like DGx Spark which is doing great all the way to robots and workstations and your on-prem data centers. Um open models are doing incredibly well. You know closed models we we know are doing incredibly well. Uh the frontier labs their scales their sales are skyrocketing.
Their margins are fantastic. They're they're generating profitable tokens. They're only limited by the amount of compute. That is equally true for open models and our position in open models is very good you know because the CUDA ecosystem is literally everywhere. The open model open models are also foundational to just about every AI startup and every enterprise company around the world is vital to them.
And the reason for that is because you should rent intelligence, strong intelligence, smart intelligence wherever you can, which is the reason why, you know, we rent it and I encourage my employees to use the cloud services as much as as they can. But every every major company and every surely every country and every startup needs to build their domain specific their proprietary proprietary AI their proprietary alpha and and the open models reaching frontier levels has made it possible has enabled them to all do that.
One of the areas where frontier models is vital is cyber security. You see the number of cyber security companies that are enabled by frontier models so that they could have distributed massively distributed continuously running autonomous cyber security systems to defend. Um it those companies are emerging.
There's some amazing companies. They couldn't do it without open models. And so open models is is both incredibly successful and has has finally reached the frontier, but it's also vital to the American economy. It's vital to the world economy. It's vital to companies to build their own proprietary AI.
You can't do it without one or the other. Both are going to be extraordinarily successful. And and lastly, uh, as you know, our market footprint of of all AI models, we're the only I think we're the only platform, I'm fairly certain, we're the only platform that runs every Frontier model and whether it's closed or open.
um most of them were built on Nvidia and so they run they run great on Nvidia and and so we're delighted um by by uh any model succeeding so long as models succeed. I'm very happy and and both closed and open models are going to succeed and they're they're both simultaneously driving our sales. Your next question comes from the line of Benus with Meas Research.
Your line is open. Yeah. Hey, thanks. Um, I wanted to ask you a question, Jensen, about demand in a different way. Uh, you know, you talked about demand growing 100% next year and and I wanted to kind of get a sense for a couple things driving that and even beyond that. And there's two concepts here.
There's recursive self-improvement which apparently at Anthropic and OpenAI is is going very well with you know AI that improves itself and even OpenAI said they could hit AGI by the end of this year and you know with the developments in RSI as well as AGI what happens to industry demand does you know does it inlect further and what does it mean for Nvidia when that when those things take place and and how are you looking at that as a demand catalyst.
Thanks. I appreciate that. It's going to inflect further. Um, today the vast majority of AI is prompted by people. I believe that this last month it has crossed. Um, most AI are now agentic. But in the future, in the future, every company will have a whole bunch of agents. You know, we have we have 40,000 employees roughly.
In the future, we'll have 400,000 agents, four million agents, and those agents are running continuously. They're running in the background. Um, if you have anybody who builds, if you know anybody who builds edge, you know, personal AI agents and they run it on their like a DGX Spark and you know, I I know a lot of people who who uh run it on DGX stations, this incredible workstation that that we've built, and you can buy it from Dell and and they're they're they're incredible.
And these AI agents running on a a DGX station runs 247 because you got stuff for that to do for it to do all the time. And so the when when the world goes to agentic fully agentic agentic systems, you're going to have agents running all the time, working with other agents running all the time, and they'll just be working in the background improving your company, you know, improving your lives.
Um, in a lot of ways, we're we're kind of recursive at this point at this point. And you could argue it's it's coarse grained. Um, but every time you run through an agent, it it reflects on how it could do a better job next time. And it updates the skill file. And so the skills document, the markdown is updated at the end of every single one of them.
And so next time you run it, it's going to get better. It's a it's a clo it's a, you know, kind of a loosely coarse grain self-improvement. And so you see that all all over all all always. and and so in a lot of ways and for many for many tasks um we could say that we've already achieved AGI. I think all of that those milestones and all those you know they're kind of senseless at this point.
I think the most important thing that that that matters for the industry is that one AI is now doing productive and useful work. Two, AI is generating profitable tokens. And three, if we had more compute, we could generate more profitable tokens, which results in more profit for all of the services.
This is the exact phase where we're at, which is the reason why everybody's leaning in. Your next question comes from the line of Jim Schneider with Goldman Sachs. Your line is open. Good afternoon. Thank you for taking my question. If you think about the 100% growth you talked about in terms of the uncon plus unconstrained uh demand growth you're expecting the 70% you expect to fulfill in terms of supply.
Can you maybe talk about some of the or rank order some of the most uh acute constraints whether that be things like uh data center power and shell availability uh DRAM wafer foundry uh availability etc. if you can maybe help us understand, you know, which are the biggest among those, that would be very helpful.
Thank you. There's fun something funny I could say, but I'm going to just not um the the uh you know, last year, one of the funnest things to do is just to go figure out where I go for dinner and and who I have dinner with and um their their stock price doubles the next day. Um I I I think the the answer is is um our entire supply chain is challenged and it's everybody everybody is really running flat out.
Um and more capacity is coming online all the time which is one of the advantages what's going to happen this year. It's not going to come online in just you know an instance in time but it's going to come online every every day. Yields are going to get improved. uh we're going to be doing yield improvement.
Uh we're going to work hard on on um working with every one of our suppliers, you know, and so we're just we have a it's not even next year yet. And so we've got lots and lots of time work hard every day and so um at this moment uh we have supply for 70%. We have we have more supply than 70% but about 70%.
our demand is much higher than that and we've got to go work hard or you know we're we're going to be uh disappointing customers and and um we we would like not to disappoint our customers and we like to work hard for them and so I've got I'm going to need the help of the entire supply chain to help me out here.
But they all know that um uh what what I'm telling you about about our needs for next year uh is exactly consistent with what I've told them. Um everybody's on the exact same song sheet song sheet and I'm trying to be as as transparent as we can because we're talking about big numbers. Your final question comes from the line of Aaron Rakers with Wells Fargo.
Your line is open. Yeah, thanks uh for taking the question. I want to go back to the the gigawatts the 25 to 40 uh and maybe try and understand like you know I think Jensen you said at some recent conferences that you know that's going to further scale so you know as we think about the path even beyond ver rubin we think about ver rubin ultra and so on so forth like should we really conceptualize like 40 billion goes to 60 billion 80 billion and then you know I guess you know underneath of that question is how do we kind of think about your ability the the scale, the capacity deployments, you know, is it is it a linear function or is there something that, you know, kind of unlocks your ability to supply more demand as we look through fiscal 27?
Great question. 28, sorry. Yeah, great question. Great question. Um, and very simple. Is our goal to put as much compute on a plot of land? Is our goal to put more compute into one gigawatt or less? And so obviously we would like the you know the speed of light answer the perfect answer is actually infinity per gigawatt and and so if we could literally get a trillion dollars of compute into one gigawatt and one piece of land power shell it would be a fantastic outcome and so the answer is directionally in that direction.
Uh we started we started in the world of general purpose computing during Moors law. Uh we were probably you know pick your favorite number but I'm going to go with something like five billion3 billion per gigawatt of compute uh with with general purpose computing and and then eventually with hopper it was 18.
Uh now Grace Blackwell is 25. Next Vera Rubin is 40 and after that it's going to be higher and that's excellent. That's fantastic for the industry. It's fantastic for customers. So long as the productivity of it continues to grow, the durability and the fungeability continues to grow, then people are happy to invest uh in in assets that generates revenues, generates profits and helps them re recoup their return so incredibly fast.
I mean, I heard the other day that return on investment capital is now less than a year, and we're talking about $50 billion data centers. And so, that tells you something about about the the uh uh the productivity of MBS technology and the rentability of it. I want to thank all of you for joining us today.
Slam dunk. questions at this time. Sashiaari, I turn the call back over to you. Thank you. Uh before we close, please note that Jensen will be participating in a keynote fireside chat at the Goldman Sachs Communicopia and Technology Conference in San Francisco on September 10th. He'll also be giving a keynote at GTC Berlin on October 21st.
our earnings call to discuss the Okay, that was the call. Obviously, when we got the numbers, the probably craziest numbers we've ever seen from a company. Uh stock fell 2%, it has reversed. We got above 220 for a little bit, but we've been getting rejected at 219, up 4% after hours. There's a lot to break down and discuss.
I thought it was one of the best calls and videos ever had. I thought the questions were answered uh in a way that really I think instilled confidence in the investor base. But obviously uh we're going to see how the market reacts to it. I think let's start with uh let's start with you Jose. What was your reaction overall to the call?
Um I agree. I think I I was mentioning Chad that this is probably my favorite earnings call since kind of this whole AI cycle started and kind of when we started uh the call and kind of saw the commitment numbers the thing I wanted to hear more about was um visibility and Jensen I I think that was kind of the first line Colette started with uh she mentioned that for fiscal 2028 which is calendar year 2027 they expect at least 70% year-over-year growth.
Now, Wall Street expect is expecting about 400 billion this this year in revenue. And if you put that 70% year-over-year growth baseline, you're closer to $680 billion in revenue. Analysts were expecting about $580 billion consent uh on average. So, you're you're talking about an extra $100 billion.
Um so, I I think the visibility question was answered there. So, to me that was the biggest talking point. And after that, I was just smiling and happy and it was the greatest earnings call ever because we got that visibility. There's another point I want to bring and I don't want to take them all because uh obviously we have another a lot of smart people here.
Uh but the second thing that really grabbed my attention was um the 70% growth was mainly because of constraints in the supply chain. So then if you trickle down, you guys know I'm extremely bullish in the Neocloud market. If you are constrained in the supply chain, that means there's going to continue to be a supply demand imbalance in GPUs.
And if there's the continued demand uh imbalance in GPUs, uh that means that these NeoCloud players are going to continue to have strong pricing power on their end. Uh so if there's two points obviously we can come back to to me later but if two points is the visibility question was answered right off the bat and the second thing is I expect the revenue per megawatt to continue to increase if we continue to see this uh supply constraints there.
Uh so pass uh that's what I have and I'll pass it for now. Neil your take on the quarter. Excellent. Excellent. I mean even even when they talked about the memory right the fact that memory is the the the reason why margins are going to come down a little bit stock didn't really move that much they explained everything quite well they even mentioned circular financing they explained that quite well um the Amazon deal based on what we saw in the CFO commentary with regards to the guarantees if it's 2 million GPUs that's that's also So $200 billion plus in revenue for uh for Nvidia up to when was it 27 28 I think all the way to 29.
So that's a number another nice number there that we can add and so yeah it was yeah it was an an excellent quarter great call stock is up so everybody's happy but the yeah they are doing exactly what they should be doing they also explained it quite well open source open way frontier model how they benefit from whoever wins Nvidia wins so it was a good one
Tanner your thoughts on the call. Yeah, I mean they they covered a you know the main parts. Obviously Jose highlighting the guidance is by far the biggest point and that's why the uh stock completely turned around. Um I think that there could be for real real possibility for Q4 of calendar year 2027 um of them potentially putting up a quarter of $200 billion because this is their own guidance.
every single quarter they've had uh higher beats quite large beats versus their own expectation beating by four, five, 6% a quarter. Um so if you couple that up, this could be you know a fiscal year 2028 could be somewhere closer to about 700 maybe 750 if they end up putting up really really good numbers.
So um they said they're completely con supply constrained right now still. uh they said to to Stacy Raskin if they were unconstrained the numbers would be much higher. So as supply comes on hopefully um they can find out new solutions, new breakthroughs to end up uh shipping more than they would have in the past.
One of the things that Jensen highlighted at the end there which I don't think people give nearly enough credit to is the payback period on these gigawatt data centers can be as low as under a year. And now the companies that have been able to put up those types of numbers are really signing deals for extremely short-term commitments.
So um SpaceX with their um deals with Enthropic and Reflection and Google, those are less than one-year paybacks. The you know megawatt um rate on an on an annualized basis would make a gigawatt payback in less than one year. or Nebius, they talked about their Q3 deals and the pricing per GPUs has constantly gone up.
Now, um I think a part that people should be highlighting here too is if Nvidia is going to be putting up these numbers, who else is here to benefit? The the Neoclouds that Well, Jose for sure. Jose for sure. But you know, you don't think Dell or SMCI or um a lot of the memory names that are continuously being a lot of the constraint here are not going to benefit.
That's why we're seeing a lot of green candles across the board is the commitments that Nvidia just talked about is to the benefit of SKINEX to Micron to to many of these names. So, um, while Nvidia is by far my biggest position, it's not the only way that I'm playing this boom, but there [clears throat] was not a single piece of commentary there from Jensen that spelled that this is even slowing down.
So, look out tomorrow for a flurry of midterm upgrades for Nvidia's revenue in EPS. That's going to be wild. I if you thought some of the reports of them putting out $350, $300 price targets was exciting, wait till, you know, you get the revisions from 40% growth up to 70% growth. That I think is going to be quite exciting.
That's why it's a disco in this room now. And um yeah, couldn't be happier. This is a $300 stock trading at $200. I was just about to say I if we do not have any major macro concerns towards the end of the year. Uh I've been in the camp that it's hard for me to see the stock hitting 250 by end of year simply based on the nature of uh the size of the company with this type of growth and not just this type of growth but the guidance for how it's going to continue.
Notice when the stock took off and one of my friends text me that he wasn't watching the call what you know what it what did it take to get the stock to moon. When Jensen said I think this was the fourth question he like kind of laughed about it. He was like, I think we will have demand grow more than 100%.
He said the exact quote was, I think demand is just inlecting. Uh, and he sees visibility into more than 100% growth, which is kind of the the answer to that question of how would you grow if you weren't supply constrainted. He was like a lot. He's like, right now, you know, we can only supply 70% of it.
That extra 30% would be potentially hundreds of billions of dollars of revenue as Tanner was mentioning on a yearly basis. They also gave annual revenue guidance for the first time this quarter. I mean, every level of transparency you wanted is there. I don't know how the street holds it under 250 going into the end of the year unless I ron more macro bond yields etc uh holds it down.
I mean because when you really think about what this trajectory looks like this is not a peak for earnings growth or revenue growth. This is almost just like the beginning. Now they're not going to grow triple digits for the next five years but it looks like you've got another year of this like 90 to 100% growth or at least 80 to 100% and then it starts tapering off by then.
I mean, Nvidia would be trading at 12 times if it is it's flat and it's still growing at that level. So, yeah, I think this was one of the best calls we've ever heard from Nvidia. And if the stock sells off on this, I think there's going to be a lot of buyers that get ready to come in. It's true. Once you took off your jacket and I took off my wig, it literally
I did notice that. I noticed that. I did notice that, too. It was unbelievable timing. I took it off because it was just getting too hot. I would imagine you were probably hot under under the outfit as well. My my head was itchy. Yes. The guy turned his room into a strip club. Undressed, lights out, disc I mean this.
It's uh it's all business, you know, from the top up. What's on stream, it's all party on the the waist down. Once again, you guys leaving me hanging. It's absolutely disgusting what you guys do to me here. Okay. It's truly rude. I I come here trying to bring jokes. You do it to You do it to yourself.
To be fair, you do it to yourself. You do it to yourself, brother. Like, we we just We're here to support you. That's I'm putting in effort. I'm buying wigs. This thing's a itchy $50 wig. I did this for you guys. You paid $50 for that wig? Yeah. With the hair nets and everything that I had to put on.
It was ridiculous. Okay. I shouldn't go to Turkey now because you got it all figured out. Yeah. Jose, what did you think about this quote when Jensen was talking about the supply chain and uh how much more they have to invest in their ecosystem? The the this quote of going to dinner. Yeah. I just thought it was funny.
I mean, I it's um but they continue to say it's they they go dinner with everybody. I mean they have such a there's so many players in the supply chain industry in the supply chain lined for them that um they're going to continue to do these big investments. Um so I don't think I have much here to say I'm just yabbling here.
It's a contrast of the steak dinner from uh Karp. There was something I thought was pretty interesting. Um at the beginning I think Jensen did talk about how capex for the five hyperscalers is expected to be 800 billion this year in 2026 but for next year is expected to be $1.3 trillion. Jensen already kind of telling us what the capex of these companies are going to go and I do think Amazon's going to be a big player.
I mean we saw that announcement. There's also another big announcement that Amazon and Nvidia announced. that the Amazon is working with Nvidia on NVLink Fusion to kind of connect their A6 with Nvidia solutions, but it seems like Nvidia is also kind of leasing out or licensing out or renting out however their memory storage solution and Amazon is actually going to be a big port uh a big customer of that.
So, I'm going to do a little bit more learning on that, but I thought that was interesting from the Amazon side. Yeah. One one thing I'll highlight about the um capex numbers, there were some Goldman Sachs reports that said it would be 1.4 trillion next year and I think many many people brush that off and maybe they were slightly high.
Um but the visibility that Nvidia has way more than a single analyst that's talking to, you know, their connects, they're literally putting in orders with Nvidia. So I would put on high like high regard that that 1.3 trillion is really what's going to come in. And and by the way, it could actually be much higher than that distributed across TPU, tranium, Cerebrus, like they're not the only player.
That's the visibility that Nvidia sees. So it there's a wild amount of spend that's expected to come in. Yeah. And and I wonder sorry, go ahead, I've done too much. A quick one here on actually if I check on fiscal the expectations for capex if I includes Google, Microsoft, Amazon, SpaceX, Meta, Oracle, Nebus and Cororeweave, I am at 1.26 trillion for 2027 and 1.4 for 2028.
So lower even though you included other names that aren't even hyperscalers. Correct. Yeah, that's crazy. And I I was going to say I wonder if that 1.3 trillion is taking into account only a 70% growth due to supply chain. Like I what happens if that supply chain if Jensen goes, "Oh, I actually have extra supply that we ended up building something a lot faster." Is that capex actually closer to that $1.4 trillion?
Yeah, I I think that's a great point, Tanner, on on the visibility. I mean, we know that Google said 190, Amazon said 220. Meta is probably gonna be that 200 range. So will Microsoft, but it's probably going to be a bit more just like it was this year. Uh because, you know, Jensen's probably collecting the orders already and so are all the other stocks in the supply chain.
I also thought addressing the circular financing stuff head-on was really important. Colette, like I think this was in the first five minutes. She was like, "Some of you may call this circular financing. We see it differently." Now you will have people that say you can call it whatever the hell you want to call it.
It's still circular. But the fact that they are addressing this stuff headon and saying look this is what we're doing. She made it very explicit that these are not loans that Nvidia is giving. It's protecting their balance sheet but this is in this is important to proliferate the advance of AI. By the way Jensen's going to be on CNBC in a bit.
So as soon as he's on uh I'll pull him up. You know I thought that was important and I thought that gave the street a little bit of clarity as well. Also the open source question I thought was important. Jensen gave you the same answer he's been given for a couple months now which is that you need both open source and Frontier Labs.
um and Frontier Labs, he seemed relatively excited about the IPO for openthropic. At the end of the day, it's important that those companies win uh for GPU demand to continue to be strong at least in the short term for Nvidia. But obviously, if open source proliferates beyond those companies, they still will have the demand.
But, you know, he he said both are needed. And so, I think every question from every angle like did anyone put in the chat, did anyone find a red flag in the answers? Did anyone feel a little weird when they because there's always something like that on these Nvidia earnings calls and I don't even think we're trying to hype it up right here.
It's like the stock, you know, is lower than where it was last Tuesday. It really just felt like a good call with transparent and explicit answers that that we needed. Yeah. I think the amount of glazing I'm doing would be the same if the stock price was down. Yeah. Yeah. I agree. And I think if the NASDAQ was up a lot more after hours, Nvidia would be, you know, crushing 225 right here.
But the fact that it's still being held down a little bit tomorrow will be really interesting if it dumps at the open and they once again take it down and I really want if they take it down I wonder if they take Micron and Nebius and Bloom all these are up four to 5% after hours and I think for good reason if Nvidia is ready to have these many commitments explicitly they are saying the trajectory of earnings growth for the entire supply chain not just them is going to go on for at least another year if not two years and if that's the case these earnings you know make the multiples look DRAM up after hours as well with memory.
Um Neil any I mean you've been one of the earliest investors here to Micron. I I think well here's the broader question on Micron and everything else. Do you think this was the earnings that can get memory back to all-time highs and as a result take semis in general back to alltime highs? Probably we have to wait until Micron reports which what is it couple of weeks from now.
I mean, logically speaking, it should be above $1,000 per share micron just based on everything every other company has told us over the last couple of weeks. It purely benefits a micron, SK Hindings and things like that. And yet the stock is still around $900 per share. So I think the big move we will have to wait until Micron reports and even then I think if we go back to what was it SanDisks I think you and Tanner uh covered that the questions were about okay cool you're growing now you see insane amount of growth but what about 27 28 29 it's always about what comes next what comes next and okay that's fine if if the market is skeptical I guess they'll keep they'll keep asking the question but I I go back to my previous point that I made You can be skeptical about every other company's growth as well.
If you talk about 3 years down the line, there is no single company that can really predict what happens 3 years down the line. And yet right now with the memory players, we're talking here about names that are what low double digits pees, super profitable, generating tens of billions of dollars in free cash flow.
By the way, Micron is not allowed to buy any shares until December. after December, I am very very sure that they'll announce a huge buyback program that will help the name. And so again, it's just a matter of when the pop happens, not not if, because every time you hear this executive talk, they they say time and time again, you might not believe them, which is fine, but this cycle is is a bit different than than the previous ones.
Yeah, that's a really important point, Neil. Um there there's a I think there was a report out talking about through 2028 they can buy something like 8 40% of their shares back by 2028 micron based on uh their projected free cash flow or operating cash flow I should say. Um yeah, I think the memory names probably I mean if this doesn't take the memory names higher then I mean now Nvidia did say like because of the memory shortage that you know that's what's causing the pricing inflation but at the end of the day that's not bearish the memory names maybe it's bearish the trajectory of how much those margins can go higher but at the pees they're trading at it's not necessarily bearish.
Um, Jensen will be on in a second and then we'll see what he continues to further say. The Neoclouds are ripping as Nvidia explicitly mentioned that the Neoclouds will be a big beneficiary of uh this new product that allows them to kind of split the revenue with them. Jose, we got a question for you in a super chat.
How does this call make you feel about AMD? Um, I'm still good. I mean, compute constraint, right? Compute constraint. So, you're going to be able to we're it's not always like this, but we're currently in the market where um you're going to buy all the chips you can get. Um now, for me, my bullish thesis has never been AMD was going to destroy Nvidia.
And for that reason, I still believe this is strong for for AMD. Uh Neil, any comment on AMD based on this quarter? No. No. AMD's growth is coming no matter what because the market is is growing AMD with the Helios rack is is coming out. So the growth is there that does like this does not change anything just like with an Nvidia they see a couple of years out the demand for AMD's MI400 series there is MI500 series that I already talked about that didn't change after today's report and coal and so I don't expect anything to change with regards to the growth we will see in a AMD's growth accelerate from from here on out what's the chances that we get to 250 and I win this bet to Steve this quarter.
[sighs] Look, I think off the back of those earnings, I think 250 gets hit soon. The problem is we could have said that for the last two quarters. I know this one was even more exceptional. But there is something about this name, whether it's 8% of the S&P 500 or 5 trillion, that the street is not letting it.
M maybe you're maybe this is the one that breaks it. Well, the reason why I say that the I think the real difference is not just another quarter worth of earnings, but it's because of that additional next year guidance that really like the the upgrades I think are going to be really significant this time around.
Um either way, you know, I'll have the uh disco ball going as long as we stay above 250. And I also got this for 250 just in case, but haven't quite uh we haven't got there yet. But if I have to blow the horn, I will. Okay. I don't have a bell. Not here to steal any valor, but I will siren this whole house.
Okay. My wife's gonna be freaking out. But if we have 250, I can get a new house if she burns it down. I will be very excited to turn into the live stream the day we hit 250. There you go. Cyber. Um I I also think if we hit 250, dude, S&P has got to be pushing 8,000. Like it's just too big of a company for the S&P to be flat.
So, I think that's also part of the the reason that if we get 250, it's got to be a market moving thing, which what what would really get us there more than Nvidia earnings is Trump announcing a ceasefire, like a legit one or a deal, full-on deal. Yeah, I think that gets us there as well. Okay. Are people happy?
I mean, I know the stock's up a little bit more now, so people are probably happy, but it does feel like this company, I think Jensen will be on in about two minutes, is getting what it deserves here, at least to an extent after hours. T, I really like your lights and your jokes have been really great.
I'm sorry for muting myself when I laugh. I'll try to do better. Jose, brother, you're you've always been the biggest uh the biggest supporter and I know that you're on my side. You're you're welcome on the channel any day. Tanner, you know he's being sarcastic, right? No, he's not. Dude, he's absolutely being Did you not hear the way he just said that?
Like he spoke like an AI. It's like an AI response after you asked something and the response was completely wrong. It's like, I'm sorry. You are correct. I was mistaken. Amit's trying to yuck my yum, dude. Let me have this. Okay. What are you What is this? The Kate yuck your yum. What? You're You're poo pooing all over my happy days.
Is that me or has anyone heard that? That was good. I like that. I don't know if that is a Canadian thing or not, but I've definitely heard yucker or yum. I've never heard that before, but okay. Um, what else happened in this call? I mean, I think we covered most of the stuff. Open source memory. They didn't mention SpaceX.
I was kind of surprised he didn't give a nod to Elon on anything. I thought he would given how much Elon is exclusively working with them. When he mentioned Grock, I thought he was talking about Grock and then I realized he was talking about the other Grock. Um, that was kind of I don't know, a little weird, but not that big of a deal.
They did mention Nebus. Did they mention Cororeweave? They didn't mention Irene. I think they explicitly did mention Nebus which got that thing moving a little bit. Yeah, a few times. It was nice. Nebius. Yeah, I ran reports tomorrow. I mean, Nvidia gave them the perfect layup to actually move the stock tomorrow after their report.
So, they better not screw it up. Yeah, I think I has a good framework to uh to crush earnings. Now, uh cyber security you mentioned a ton. Now, Crowd Strike, look, they beat earnings by 1%. This stock is on its way to trading at almost like 70 80 times sales. So, I still think the multiple is intense, but when you got Jensen talking about cyber security, when you got uh uh George Curts basically talking about how Mythos made this their moment, I think that revenue growth has to accelerate and it probably will, which is why investors are giving it a 10% move right here.
Same thing with PaloAlto Network. So, you got all parts of the stack. Salesforce obviously getting a big move here that Jensen has been saying for for months now that these companies are not going to be dead. The semis are going to benefit. The software name is going to benefit. You had Dario finally come out and say we're not trying to kill the software companies.
I mean he hasn't explicitly said that. It would be nice if he said that in February when everything was collapsing but he didn't. So now that it's kind of obvious that's not going to happen. I think to an extent Anthropic liked the marketing that I mean they were raising money at the time. It's really easy to get money from VCs when you're raising a couple hundred billion dollars uh when the VCs think that you're going to take over every existing software as a service business.
So now months later that that's not going to be the case. It makes sense that he's on the software train. It feels like a lot of stuff is coming together in this broader AI ecosystem. Real quick, Jose, did you see I don't know if the Jensen thing is happening soon, so just cut me off. Um but did you see the Nscale Enthropic deal?
Yeah. Insane. But did you do a little bit of math on that? It seems like uh not that good of pricing for Ncale. It was like low high teens, right? High teens millions per I I didn't I saw it online, but I million or something. Yeah. I wanted to see like what it included. Was it just pure like bare metal or was there anything else included into that?
So, um I I I think that's one important thing. Um and also with the longer timelines, I do think you expect a little bit cheaper than it, but um it's more what they're offering with. All right, Jensen is live. Frankly, blowout you expect to grow about 70% in fiscal 2028. The street was looking for roughly 45%.
What gives you that confidence? And how the heck could you do it? Well, it's not easy, but uh let's say first of all, demand is super strong and incredibly it's accelerating. You know, obviously we're already a very large company, but to be able to grow continuously and now to accelerate our growth is pretty extraordinary.
Now, what's happening underneath the the things that are going on number one is that AI is now useful. It's doing productive work and the tokens that are being generated by these AI labs are now profitable. People are paying good money to use it because it's really productive. It's helping them, you know, do things and be more productive and and so the amount of tokens they want to generate is increasing because of use.
The amount of tokens they're generating is increasing because the AI models are more complicated. And then now because it's profitable, they have so many more customers want to use it. The thing that's holding them back is compute. And so that's literally one pillar of what's happening in our business.
And then after that, uh, we're seeing AI being adopted all over the world. Every single country wants to get involved. Every country needs to, every company wants to get involved. And so half of our business is in the hyperscalers. And the other half of our business is everything else. It's neoclouds and sovereign clouds and enterprise companies.
And all of this is all growing at the same time. And this is all happening, of course, at a time when we're rolling out Vera Rubin, our next generation product. It's going to be the fastest ramping product in our history. It's really exciting. I want to go back to what you said about an asset we call compute.
When I was at Goldman Sachs in the 80s, someone said, you know what, we ought to bundle out of auto loans, make them into an asset. Everyone laughed, thought it was really stupid. It's now the second biggest market. I think compute, what you're talking about with the 500 billion that people are getting together on Wall Street, compute should be much bigger than auto one day, don't you think?
Oh, no question about it. Uh, first of all, this is not compute as in your cell phone or your your PCs um that are that the moment that you buy them, you know, it's it's becoming obsolete. Uh, this is part of your infrastructure and it's productive infrastructure. It's making money for you. One of the things that's really different about NVIDIA is that we are fungeible, meaning that you can use NVIDIA across the entire life cycle of AI from data processing, pre-training, post-training, all the way to deploying the AI agents.
That's number one. Number two, we literally run every single model. We're the only company that I know that runs every single frontier model, every closed model, every open model. It's built on Nvidia. It runs on Nvidia. And because of that, we're fungeable. You could use this across all these different use cases.
And because we have so many developers, our ecosystem is so large and we're used all over the world. The asset is durable. It's long life. It's fungeable. And therefore, you know, it's rentable. People are renting it for great money these days. And so that's that's the reason why it's an investable asset.
Did you even know at one point that your say 2023 edition might be worth more uh now than they were when they came out? like some sort of fine wine. It is true. In fact, uh this it's some of the CSPs have already been talking about that that the the infrastructure that they paid for um paying Nvidia's uh prices that they built is now worth more than when they first paid for it.
Um and and the reason for that, of course, is that Nvidia's architecture is softwaredefined. Because of CUDA, our software is getting better all the time. We ship the hardware in the beginning. We we sell you the hardware, but we continuously improve the algorithms underneath so that the machinery gets better and better and better over time.
So over over the history, I think um Corweave, Mike over at Cororeweave recently said that A100 is going to be sold for nine years of its life. And the thing that's really incredible is during that nine years time, even though the hardware didn't change, we improved and introduced all kinds of new algorithms and software that we continuously enhance that infrastructure completely for free over over its entire life.
And so that's the reason why the hardware what the infrastructure just seems to get better and better and better over time, just like just like fine wine. All right. Now, that cures one misperception, which is that you're supposed to be written off in three or four years. That let's take that off the table.
The other thing that bothers me, it kind of wrangles me is that I read in the journal Nvidia's become a banker of the AI boom, putting in putting it on dangerous ground. If dangerous ground is investing in on the ground floor of some incredible companies, well, I I want to be dangerous, but is it possible that maybe the we should distinguish between the investments and the backs stops and help me to try to figure out where this kind of story is just plain wrong, frankly.
Yeah, I think they're missing a very big point. First of all, um, this is the first generation of startups that needed tens of billions of dollars to get funded. When was the last time anybody heard of a startup that needed billions of dollars to get off the ground and needed tens of billions of dollars to become profitable?
That just never happened. But that's really the nature of AI. The cost of building AI, the cost of deploying AI, just it's very capital intensive. And there are several companies, these frontier AI labs that are once in a generation companies and we want to be investors in them. We want to support them.
We want to be a partner to them. We would love for them to build their ecosystem on top of us, of course, and then scale up their business along with us. And so the opportunity to invest in them in the beginning was a great opportunity. Frankly, I just wish I invested more. And now that they're scaling up, the tokens they're generating are profitable, their services are profitable, the number of customers is growing incredibly.
The only thing holding them back out now is compute. But even during this time, they're not investment grade. They just don't they don't have the track record, the the capital track record, the financial track record to be able to capture or secure uh capital at a low cost. And this is where Nvidia could be helpful.
we could be supportive of them to help them grow at a time when everything they make, their tokens generated are so profitable. This is really the time when we can help them with their flywheel. And so, as far as I'm concerned, this is one of the best investments ever. It's a once in a generation, once in a technology generation opportunity.
And then this lastly the risk for us because of the nature of Nvidia's architecture because it's fungeable and it's durable the risk to us is still in the worst case scenario we'll just use it for another customer in another use case. And so, um, I think the backs stop is is, um, uh, we're thoughtful about it.
We're disciplined about it. And we're supporting extraordinary companies as they're becoming profitable. And as we know, uh, you know, there's hopefully they'll be soon there'll be there'll be public companies and people will all get the opportunity to see, you know, what we see and why we're so excited about them.
Uh, and but anyways, this this is a really great investment and I think the risk is is low. Okay. Let me ask you something. It's a kind of a personal question. If if you gave me let's say you invested $30 billion in me and then I called you and I said you know what I the whole time I've been working on on something a chip that I think could really hurt you it's called jalapeno I don't know let's call it I don't know tomatillaa and you said to me well that's fine would you really say that's fine because I personally would be hurt if open AI did to what they do to Nvidia if they did to me
you know I'm okay with it Jim there's so many XPUs that are being announced and as we know it's not easy doing what we do. We've been doing this for 33 years and so lots of projects get started. A lots of projects get gets canceled. Um we're we're here we're here to support our partners and and um we're going to build the world's best technology.
I have every confidence in that. Uh we're going to be the most productive infrastructure that they have. I have every confidence in that. Um, we have the supply chain and the technology scale to be their largest supplier. I have every confidence in that. And so, you know, I I don't I don't have to take anything personally because I've got so much confidence in what we we're able to deliver.
And look at look at all of the XPU announcements and all the startups that have been announced. And yet today, Nvidia is increasing our market share of the AI market. We're our growth is accelerating. Our technology leadership is extending. And so I'm very comfortable with all the competition. Okay.
And I also thought it was interesting. You know, Andy Jassie loves you, okay? But he's all building his own chips and good for him. But when they wanted to expand Amazon Web Services, they they bought 2 million more Nvidia GPUs. That's quite a commitment from someone who uh in some places is considered to be a competitor.
They're going to buy two million GPUs. They're going to buy millions of CPUs. and they're going to uh build their robotics fleet on NVIDIA's physical AI systems. They're going to host NVIDIA's Neotron open models on Bedrock and Sage Maker. Yeah. So, this is going to be a great partnership. Um, you know, I I think it's just really important that people realize that Nvidia is the only computing platform that is a full stack AI factory.
We're the only computing platform that is in every single cloud on prem at the edge and sovereign sovereign AI clouds and neo clouds. We're the only platform that's in that way that's everywhere. And because of that, we attract all of the world's AI startups. In this last six months, $400 billion dollars of venture capital went into startups because of AI.
This is a once in a generation technology platform shift. Everybody wants to be part of it. 400 billion dollars of investment into AI AI startups and all of them are probably using Nvidia and so if any of the clouds would like to attract any of those AI startups having Nvidia in their cloud is going to make make that their clouds much more attractive.
And so I and however you think about it whether we have the best technology the most productive technology the most rentable technology you know in every single case Nvidia is a great partner of yours. Hey, let me ask you something. Uh because I think that you are a leader of all those different companies you mentioned, whether it be the 50% that is not hypers scale or 50% that are.
You're the leader. Would you offer us a code of conduct for your customers so that they don't do crazy things? They worry about water more. They worry about air more. They worry about electricity more. So that we could say, "Listen, we're good citizens. You should want us. We we" Because I think you're the only person that has the gravitas to do that.
We have to do a better job the technology industry um the builders and have to do a much better job working with the communities to get prepared for this AI infrastructure buildout. Taking a step back, this is America's great opportunity. This is an extraordinary opportunity. AI data centers, AI factories are generating so many jobs all across America.
Hundreds of thousands of jobs. They're improving communities because they're bringing a lot of tax dollars. They're bringing a lot of economy into communities. It is also the case, this is the first time in probably the last century that we're able to invest in sustainable energy, invest in improving our energy grid, securing our energy supply, reducing the cost of energy across the country.
This is the first time in history that we're able to do that because of the enormous market dynamics, the market forces that are able to invest in the energy ecosystem. It is the reason why all the energy company stock prices are up and all the power generator stock prices are up. I mean, everybody is doing well because we are helping United States, helping America enhance its energy position.
And so, I I hope that people take a step back and realize that this is creating jobs. is going to re-industrialize the United States. The manufacturing sector that we've lost over the last 50 years has an opportunity to come back. And then lastly, a great opportunity for us to invest in America's energy sector, our energy grid like we've never been.
It does sound like it's gotten too political, right? I mean, it's too political. We should just be take the moral high ground. Another big country that's our competitor is not, I think, when it comes to the environment. This is our chance, right? This is our chance to do it. It's also our chance if we do open source to go against that other in a competitive way that that again that I think environmental destroyer that is China.
This is our opportunity for world leadership, isn't it? There's no question this is a great opportunity. Hey, listen. This is a technology that was invented here. This is a technology that has been advanced here. We have to make sure that our communities, our society, all of our companies, all of our people in the United States embrace this technology so that we can take advantage of what this technology could do for all of our ecosystems, all of our economy, and all of our societies.
And so, this is one extraordinary opportunity. We can't we can't allow AI to not diffuse across all of the industries, right? We must we must make sure we embrace this technology, adopt it, and take advantage of it. Okay? Otherwise, we're going to get left behind. I know. Now, Apple, a company I know you have tremendous respect for it.
Uh they felt like you that their stock was very undervalued. Yours is selling arguably at 16 times 28 earnings. That seems ridiculous to me. Is it time to make that buyback much bigger than the roughly $98.5 billion left to buy? Why not double that? Why not do what Luca Mistri did? He's such a great CFO.
You have such a great CFO, Colette Chris. huddle with her, you know, just huddle with her and come up with a number more befitting of how of how cheap your stock is. Best investment of all these things you're talking about. We we are going to I appreciate that. Um we are going to uh uh return cash to our shareholders.
We're going to buy back stock um and buy back stock uh all the excess cash net of what we need for strategy and operations and we are going to generate a lot more free cash flow next year than this year. Oh, good. Furthermore, furthermore, um this year we have several very large investments and those large investments in the AI labs are not going to repeat.
You know, the opportunity for me to invest in these frontier AI labs is not going to happen again. And the reason for that is because I expect them to go public. And so our the money we've invested is going to get is going to generate tremendous returns. Um but I doubt that I'll have the opportunity to invest more.
And so next year we're going to have tremendous amount of free cash flow. Uh we this last quarter bought back 60%. And we're going to increase that uh going forward. So so I I think uh I think we're we're we feel the same way. Um buying back Nvidia stock is a tremendous opportunity. Cheapest asset out there.
Well, look, Jen, I wanted to thank you. Just a remarkable quarter. And thank you for explaining all that stuff about you being the finance year. I mean, to me, you've been one unbelievable investor in all the years I've known you. You've got the best record of all of everyone I've ever talked to. So, why shouldn't you do investing?
Thank you so much for coming on the show. I really appreciate it. It's great to see you, sir. Great to see you, Joe. Excellent. Okay, that's Jensen Wong, CEO and founder of Nvidia. After a quarter that only takes a I mean, I thought the answers to every single one of those questions was in line with the earnings call.
Just really, really good communication from Jensen here. Yeah. Was the for for real the question around um water use and and power and the more environmental questions. How much is that an Nvidia question versus like a verdive question? like you you know what I mean? Obviously the GPU and the actual chip side does play a part, but they're not playing the the major part here.
I just think maybe you know Jim obviously wanted to ask that question that might be on people's mind. Yeah, he's probably using because if Jensen speaks it's it's Jensen. I I can't even name the co Vertive. So yeah, it's that's like if Jensen says something then I assume the whole industry will just say okay you know yeah you're right we should do it which I think they all do anyways like the it's in their benefit to make sure that that all of this noise goes away which will it go away will it not I don't know in the US you guys have a midterm election later this year in two months or so expect the noise to increase significantly I think I think the opening eye question was also really good.
I mean essentially Jensen basically said everyone's trying to do custom AS6. Uh they're not going to compete at the size and scale that we are due to our supply chain CUDA library all this stuff. I don't think he's saying they're not going to have usable chips but it's not really going to impact Nvidia's growth trajectory.
Yeah. He said, uh, you know, some of them show up with good results, some of them get cancelled. He's like, we don't even know if this is going to come to production. Right. Right. Jose, any additional thoughts from that interview. No. Yeah, I think it was very consistent with what we heard on the on the earnings call as well.
Whenever a company has this high of a margin of safety, I mean, just the the ease of holding this stock, I'm sure this goes for all of you guys, but this is not really the speculative position that causes you to not sleep well at night. I mean, whenever you start to put this up against other names that people get very excited about, and I'm not I'm not here to bash this name.
Cerebras on an adjusted net revenue basis, exact same sector, put up 103% growth. 103% Nvidia just topped that doing $96 billion worth of pro highly profitable revenue. Cerebras doesn't even have a PE because they can't turn a profit just yet. So um I mean the size and scale versus other companies at much much higher valuations in terms of how much it is versus their revenue and versus their profit, it's just wild.
This company is very cheap. Like uh Jim Kramer said, Nvidia up 4.3%, After Hours, Bloom's up 4%, Dell's up 1%, Nebius up 6%, Crowd Strike up almost 10, PaloAlto up five, Cerebras up three, SMCI up two, Coravee up five. The entire sector benefiting from Nvidia earnings. And seems like Jensen executed communicationwise and with the numbers that were just some of the, you know, most monumental numbers we've ever seen.
And tomorrow in the market open, we're going to see how much the street actually respects these numbers. All right, thank you all for joining another Nvidia quarter in the books. Deeply, deeply appreciate it. Means the world. Thank you everyone for all the super chats on all the channels. Cheryl, thank you for the super chat.
Uh, Mamba says, "After crushing last week, Tanner showed up like LeBron in his first finals today." I think the [snorts] outfit people enjoyed it. I think this was on your channel, Tanner. This $100 super chat. Yeah. Um, so thank you everybody for the love and support. Means the world. And yeah, we'll keep covering the markets.
We'll keep covering Nvidia. But it means a lot for all of us to come together. You know, thousands of people across the world uh tuning in to our analysis and coverage. It it really is special. And you know, we deeply appreciate the opportunity to do this every every quarter for Nvidia. Say the name of our podcast that you decided on.
Emitt, I didn't decide any name. You texted in chat. I'll show the DMs. That name was a chat name that people that was not endorsed by me. We still need to figure out a name for this uh podcast stream. I don't know what's going to be the name, but eventually we'll figure it out. Thanks everyone. Thank everybody.
Appreciate it. We will see you guys on the next earnings and we will see you guys every Wednesday and come up with a name eventually for this podcast. We'll be live every Wednesday and uh I'll be live tomorrow with the market open. The Yuck Yum podcast. Maybe that's it. Maybe that's the one. Don't yuck my Yum. Thank you everybody. We'll see you guys next time. Bye everyone.
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