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Okay, let's talk more about Nvidia earnings with our next guest. Joining me now here on the floor of the New York Stock Exchange is Josh Schaffer, who's the newsletter editor over at Barron's. Josh, so hot off the press, obviously we're seeing Nvidia shares after hours just kind of flip-flopping here.
It was a beat and raise. Obviously the street with Nvidia likes to see the magnitude of that beat and raise. A couple of little announcements here, obviously on the dividends. But I mean, look, healthy gross margin, 75%. Data center revenue up in what, like 75%? Revenue up 85%? I mean, these are all sorts of the numbers that we were looking for.
You speak to a lot of market pundits, you speak to a lot of analysts. What were they looking out for in this report? I think you hit on the big ones there, Sam, in terms of what they were also going to do with capital, right? Would they boost their dividend? Would there be share buybacks? You did get both of those, so I do think that's a positive in terms of what you're looking for from Nvidia.
And then I also think some of the questions really won't be answered until the call. Of course, we're waiting to hear from Jensen Huang on that earnings call. I think key questions are are competitors taking any market share? Where does Nvidia see themselves within the marketplace a couple years down the line from now?
Is Alphabet, some of the other hyperscalers, are starting to build out in some of this chip space? Yeah. Are they going to be competing with Nvidia to a meaningful amount? The earnings release isn't going to tell you the answers to that question. Or and it's not going to tell you what's going on in China.
That's not coming in this earnings release. I think those are two big questions that maybe you get more color on on the call and then you start to see the stock move a little bit. Yeah, it seems to be more about the narrative than the numbers right now, particularly with regards to the AI supercycle narrative that Jensen Huang has going to kind of put up here.
I mean, obviously we've got a little bit of an indication as to the Rubin ramp and some of those timelines as well. But you mentioned a really interesting point and I'm just wondering in some of your coverage more recently, how are you thinking about the competition? I mean, what are analysts saying to you right now about that market share being eroded, particularly because we're talking so much about Google's TPU's right now?
And we just got that endorsement from Blackstone this week. Yeah, I I think when you think about market share, you also have to think about the pie getting bigger. Yeah. And that's what you're hearing analysts talk about a lot as well. So, yes, there'll be more players within the chip space, but demand continues to surge.
So, does that actually mean trouble for Nvidia? Maybe not. And I think that's sort of where the market sits on this issue right now. I mean, the interesting thing with Nvidia to me, it's become more and more of a growth story once again. If you look at those revenue numbers you were talking about, 85% year-over-year revenue growth.
You go back a couple quarters, it was in the mid-50s. It's been expanding year-over-year revenue growth and year-over-year earnings growth once again over the last couple quarters. It's becoming more of an attractive growth story than it was a year ago. That's because of the surging chip demand. When we talk about all these other chip makers that have gone crazy to start the year and all the demand they're seeing, Nvidia is still in at the forefront of that demand story.
And so, I think you can continue to see more and more growth from the best player and the biggest player in the market. Sure. And it's like the pie piper, isn't it? Because as goes Nvidia, so does the market. So, how have you been thinking going into this? What have you been hearing as to, depending on what happens on that call later on, what the Nvidia effect will be on this market come tomorrow?
I don't know how much Nvidia can fully move the market at this point in sort of the AI story cuz to what I was just sort of talking about, and I'm sure you've covered plenty over the last month, the semiconductor rally and the AI demand story has been what's driving us. That's really the only question Nvidia can answer for you is how much are hyperscalers pounding the table trying to get more chips.
Where is demand? Demand has not been a question for this market really at all. So, I don't know how much of a boost Nvidia really gives you from that perspective. And then from just a general stock perspective, Nvidia hasn't moved more than 3% positively post earnings in 2 years. And the stock has not had big large moves.
It's actually fallen a couple times by more than that, but it hasn't moved double digits in more than 2 years. So, I don't think you're going to see, no matter what happens on the call, a large rally where you get Okay, the largest stock in the stock in the market is up 10%. That's leading your S&P 500 rally.
That narrative hasn't quite played out as Nvidia has gotten so much larger. Talking about a $5 trillion stock, it's going to take a lot to move it significantly. So, I don't think it will be able to push the market in the same way it used to. Yeah, and as we mentioned earlier, I mean, it doesn't necessarily rally on earnings.
That was what we've seen. I mean, in previous quarters, I mean, it's up nearly 10% in the month, but the way that it was put to me was basically this rally is on other customers' earnings. And we've seen that in recent weeks, but it's interesting because as I mentioned earlier, it's not about Nvidia, it's about the whole semiconductor trade.
And obviously, we wanted to see if the results are going to fuel this chip trade further because as you say, I mean, Nvidia has outperformed the Nasdaq, but it's underperformed the rest of the semiconductor index. And and and what we've seen in recent sessions with that pullback has been really interesting.
Somebody put it really well today. It's like you've had eight beers and you're like, I got to stop. I've got to have a glass of water. And it's whether you go back to the beer or you call a cab and you go home. market went back to the beer just today, right? Right, exactly. So, what are you saying? I mean, is it partying?
Is it continuing to party or is it or is it calling that cab and going home? I I think it will be a continued to party. Maybe you get a little bit of some digestion at this point. I think you were seeing that maybe with people talking a lot about bond yields to start the week. Maybe that took a little bit of risk sentiment out of the air, but I and I think that's going to continue with discussion about the new Fed chair, discussion about the overall path of inflation, overall path of rates.
At this point, maybe you get some digestion in the market. I mean, the SOX index had its best 25-day stretch since the dot-com bubble, second best ever. So, for it to take a little bit of a break is probably a good thing. I would look for maybe some of that rotation trade to come back into play, too.
Okay, all of this AI semis, AI semis, maybe I have too much AI semis. Where else is working in the market? Maybe you get a rotation and then you get more of a slog higher rather than the giant push we just saw. There an expectation that we needed a boost from this report because it is basically the last catalyst as we head into June.
And obviously it's the biggest company in the world by market cap and we don't get any other big earnings until Micron at the end of next month. So I'm wondering as you speak to a lot of Wall Street people down here, what they're thinking about that sort of old adage of you know, sell in May and go away once we've heard from Nvidia.
I I I think you again, maybe with no catalyst you do sort of struggle for maybe the next month or two. I think getting an understanding of what Kevin Warsh is going to be like as the Fed chair is going to be probably your biggest catalyst starting to look out toward June. I also think the labor market story is starting to become very interesting.
There hasn't been a lot of noise about the fact that maybe the US economy is actually doing better than we thought. Several solid labor reports in a row now, you still have your unemployment rate hanging out at 4.3%. Yes, we're talking about is the Fed's next move a hike, but left out of that conversation is the fact that they don't need to cut it all right now and no one is arguing that the economy is weakening.
I think that can be a continued strong story if the economy hangs in cuz you still have oil prices hanging high. Does that weigh on consumer spending or does consumer spending push through higher and higher? I'm watching some of those econ data prints over the next couple months cuz again, we're not going to get much from corporates.
Right. And obviously the AI story and Nvidia being really at the top of that being such a huge catalyst and you know, very stimulative for the market as far as the economic barometer because you know, one man's revenue is well, one man's capex is another man's revenue I should say. Is there anything that you'll be looking out for on the call specifically?
Any questions that you would love to have answered? I would love to know what the discussion was like in China. What did he say? Exactly, right. What did Jensen go for? What was the real discussion in the room? Are they going to sell any of these H200 chips in China cuz I'd argue at this point when you look at Nvidia's stock, China's pretty much priced out of it.
There's There's no expectation for them to grow revenue in China, come back to having revenue in China. So, when I'm looking for positive surprises, what can make Nvidia move higher, maybe that's a key positive surprise. Do I think we get that answer tonight? I don't really know, but thinking about that story over the next 6 months could be a big potential catalyst.
For sure. For sure. I mean, it feels like it's the first time we're going to be hearing from Jensen fresh off the plane from Beijing, which I hope he managed to catch back cuz he almost didn't make it on the way there, but yes, obviously China would be the cherry on top of the icing of the cake. That's as far as many analysts are characterizing as.
Josh, always nice to have you on the program. Thanks for stopping by and reacting to all of that today. That is Josh Schafer there, newsletter editor over at Barron's.
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