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sack indicated in his Cisco PowerPoint people ultimately concluded that the value was going to migrate to other sections of the stack the application layer and as more and more money accured at the application layer of the internet less and less Revenue multiple and credit were given to Cisco and that's nothing against Cisco because their revenue continued to compound Carolyn Woods is at the New York Stock Exchange with some analyst notes some commentary this morning and ah it's a Monday and it's another week in the US markets Caroline so let's talk some Nvidia how about that yeah Nvidia is always in the headlines and getting another price Target boost uh on Wall Street but just taking a look and then you have Google and Facebook as well generating all that traffic and then you to of course who do you see as the winner here in terms of the application layer who are the billions of customers who will spend $20 $5 or any other amount each month now let me just begin with this crucial topic it is evident that large cloud service providers are the source of that Revenue per Chet's argument in order to enable other application developers to create AI tools and applications Google and other companies are constructing clouds therefore a large portion of the buildout is located in cloud data centers that are owned and run by these large technology corporations although Nvidia made $18 billion from its data center the businesses that are expanding do not consider it an operating expense thus this is a crucial factor in explaining why things are happening so quickly when a huge corporation buys these chips from Nvidia they don't have to from an accounting Viewpoint mark it as an expense in their income statement it actually gets classified as a capital expense in the cash flow statement it gets put on the balance sheet and they depreciate it over time and so they can spend $20 billion of cash hugall and others have $100 billion in cash sitting on the balance sheet and they've been struggling to find methods to build their business through Acquisitions one of the reasons is that there aren't enough businesses available for them to purchase at a reasonable multiple that will enable them to see a healthy rise in profits the other is that all of their Acquisitions are being blocked by antitrust authorities what do you do with all that money then the next generation of cloud infrastructure can be built out without NE atively impacting your profit and loss after it is recorded on the balance sheet it is depreciated over a period of 4 to 7 years thus over a 7-year period that money is distributed on these large companies income statements the big cloud data center providers are stepping in and saying now is a great time for us to build out the next generation of infrastructure that could generate profits for us in the future because we have all this cash sitting around due to the excellent accounting and M environment to be honest we won't be able to expand through m& at this time due to antitrust therefore we don't need to take a damage to our P andl or byy a cash burning company there are also more driving forces behind this short-term acceleration as they look for Reliable one if $100 billion get spent this year you split it by four $25 billion in Revenue would have to come from that or something in that neighborhood yeah and so sacks he guesses I believe that what you stated is accurate for gcp spending but not necessarily for Google spending so you just need to keep that in mind freeberg while it may not always be the case for Amazon spending it is true for AWS spending additionally it applies to adure spending but not to Microsoft spending furthermore since Facebook and Tesa lack clouds this is mostly untrue in my opinion the question is how much of that $21 billion went to those Cloud providers that they'll then expose to everybody else versus what was just absorbed video doesn't disclose it for obvious reasons that's all for Mark isn't it he had that video on Facebook about how many h100s my point is that it is still capitalized therefore they are not required to record that as an expense they can gradually earn it down and it is listed on the balance sheet since these large cloud service providers are extremely profitable and have nowhere else to put the money you're helping to explain why they're spending so much money thus it would appear that this Falls more into the category of one-time buildout than steady long-term Revenue the main query in my opinion is the one that CHF posed what is nvidia's terminal value a straightforward approach for considering that in my opinion is as follows what is the gpu's total addressable Market ta and what will be their market share their current market share is approximately 91% that will undoubtedly be defeated but their Moe seems to be sizable according to the Wall Street analysts I've been listening to their market share will still be in the 60s in 5 years they will therefore hold a sizable portion of this Market or TM then I believe what is the difference between steady state and one-time buildout in terms of TM now I think that clearly there's a lot of buildout happening now that's almost like a backfill of capacity that people are realizing they need but even the numbers you're seeing this quarter kind of understated because first of all Nvidia was Supply constrained it could not produce enough chips to satisfy all the demand their revenue would have been even higher if they had more capacity secondly you simply examine their prediction thus they generated about $60 billion in Revenue in the recently concluded fiscal year for the the recently begun fiscal year they are projecting $110 billion based on the demand which they can already clearly see they are already projecting to nearly double therefore it's very difficult to predict with Precision what this Market's terminal or steady state value will be it is likely that there will always be a need to stay current with the newest chip even after the cloud service providers complete this significant roll out if you require any additional clarification please let me know Josh what do you think about nvidia's next appearance in the report it's Wednesday I believe due to five consecutive quarters of triple digit earnings growth many people including Amy have clients with significant embedded tax liabilities it's a very difficult task we utilize custom indexing so that we can algorithmically tax loss Harvest against some of that position but to Amy's point the stock just continues to strengthen they gave guidance for this quarter they're about to report judge they said $32.5 billion the prior consensus was $31.7 billion on data center revenue from my perspective if they can do the $32.5 billion plus on data center revenue and not disappoint on Ray's guidance that they themselves just gave the last time they reported I think you're okay in the stock but I want to warn folks this stock even with excellent news has had a history of Fairly sharp draw Downs that can Shake people as recently as in August September the stock was in a 24% correction a bare Market it didn't last long if you blinked you missed it but if you're in this name just be mindful of that potential it doesn't mean Nvidia is a good or a bad investment
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