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well it looks like the peak is still not in for NVIDIA in fact my expectation was that Nvidia was going to beat today but I didn't think their guide would be as delicious and scrumptious as it actually was Wall Street was looking for 20.4 billion Nvidia guided 20 billion they usually beat I was looking for up to about 205 billion we actually got 22.1 billion of Revenue with a guide of 24 4 billion now that's exciting because it shows us about maybe an 88.6% growth quarter over quarter and if we adjust that by how much they usually beat by Nvidia is actually telling us that they haven't hit Peak yet now how we do that is really important and we're going to go through notes from the earnings call and from the earnings report and everything but most importantly I want you to look right here this right here this little script dribbling of notes in this segment right here shows you that Revenue has gone from 34% growth from Q2 to Q3 to 22% growth from Q3 uh uh to uh to to Q4 uh and now we're looking forward probably to about 19% growth in the next quarter that is still really good I was worried and that's adjusted by how much they're probably going to beat by in the next quarter and what they hinted in their earnings call I'll explain the earnings call hint in just just a moment but that's good it suggests we're still seeing that quarter over quarter growth the AI excitement isn't gone yet and margin is actually increasing increasing to 76.7% on a gross margin basis on a gross profit basis that's incredible now guess what they hinted at when the peak might hit Q4 and q1 are expected to retain these sort of margins that we've seen but Q2 and the rest of 2024 is expected to see margin return to the mid 70s that would be your 74 to 75ish maybe 76 range down from about that 77% where we are now that's a sign that they're expecting margins to finally start coming down when they guide for Q2 which wean means if we're looking for a peak we might still be a quarter to early now keep in mind we know that AI has been transformative but we know at some point the growth rate will slow it looks like it's not this Q4 maybe it'll be q1 why because Supply is finally catching up and we expect to be balanced with supply and demand in 2025 so that does mean you're still Supply constrained for 2024 and you probably have Tailwinds and probably not really any kind of earnings misses for much of 2024 as you are still Supply constraint maybe you start getting that weaker growth forecasting though quarter over quarter starting in Q2 and maybe you start looking at misses in 2025 but that does mean you've probably got some real insulation investing in Nvidia stocks still longer than expected this is better than expected uh now some of the things that we heard about on their earnings call they talked about how 40% of their data center Revenue was driven by AI this is phenomenal now we have seen data center Revenue double so it kind of makes sense that half of the data center revenue is the old and approximately half is the new so maybe not that big of a deal of course we got a lot of excitement from Jensen about how this is the next Industrial Revolution for biotech for cloud service providers for automotive for uh vehicle in fact there was even a hint that nvidia's Thor platform which might be released next year would actually help other vehicle platforms introduce self-driving Technologies somewhat maybe the likes of which Tesla has for other manufacturers that expected to be released next year and probably a competitor to Tesla to some extent of course the extent that that Nvidia Thor product will be competitive to Tesla we'll have to see DVD the point is video is very very excited about the future not just from uh bio and uh pre basically making uh drug Discovery AI models giving those to Pharmaceuticals and going here here's an AI model you could use for your Pharma uh to come up with new drugs here's an AI model you can use in your robotics here are AI models you can use in your uh self-driving Endeavors Nvidia is basically trying to build out the models for companies so they basically have a ready to use artificial intelligence product and what they're doing is they're saying look you don't even need to buy the chip yourself you could rent it for $4,500 a year if you want but why don't you just partner with Google or Microsoft or meta and use their or Amazon for that matter and use their built out data centers to utilize our chips our technology our code our Cuda Network through those cloud service providers this is where Jensen was really suggesting the customers of Nvidia are not just getting the product but they're also getting customers because Nvidia is kind of like okay well we sold all these chips to Google oh okay you're you're a pharmaceutical you want to use AI here let's hook you up with Google so kind of interesting and they're prioritizing their supply based on how quickly these data centers can actually deploy the chips which is fantastic because what you don't want are well is basically Nvidia supplying a bunch of these expensive chips and then these 35,000 piece h100s that weigh 70 lb sitting in a corner somewhere collecting dust you don't want that I did think there was one underwhelming reference they gave they said American Express improved fraud detection by 6% using Ai and I'm like that's not that huge I I mean maybe you know in the grand scheme things when it comes to in like American Express's actual like losses or prevented losses that's great I mean it's money right it makes sense for the investment but you know I'm looking for a little bit more than 6% I've always kind of thought AI sort of helped me be maybe 10 to 15% more productive of a whole course on how how how I do that well it's in the productivity course it's just a small segment of that but I personally think that 6% reference I mean unless I misheard it and was 60% I don't think I did but 6% seemed like a little bit of a low reference uh there's also this talk about uh uh Spectrum X and this is basically in video's way of saying look we think if you're going to build out a data center you should use infiniband that's our technology that's the best wiring system we can give you but if you're really stuck on using ethernet which is where you have competition coming in AMD is partnering with Cisco and broadcom to really build out what they call the ultimate in ether ethereum ethernet system okay ultimate ethernet tongue twisted on the all these words here ultimate ethernet is supposed to be a competitor to infin band okay that's again the Consortium between Cisco AMD and broadcom they're doing ultimate ethernet Nvidia is like we do infin band but now Nvidia is also like but if you really want to stick to using ethernet well then you could use Spectrum X that's our ethernet version for you and and the best product we can give you via Nvidia I think that's very interesting they're really trying to make sure they can sell you a chip no matter what system you're on or wiring infrastructure on remember once the data Center's built uh which is very expensive to build you want to keep using those products speaking of building data center super microcomputer announced a $ 1.9 billion convertible offering that did leave uh lead their stock to drop a little bit there in the post Market it is still up about 7% following Nvidia is about 7% rise we'll see how robust this is it's been very very stuck and uh uh at that 731 level it keeps getting rejected by 731 did briefly try to break out couldn't hold it we'll see what happens tomorrow maybe tomorrow we'll actually get a full breakout here who knows but I have to say I don't think there was anything massively exciting in this earnings report other than the fact that the growth rate is continuing and they expect to be Supply constrained throughout the rest of the year Supply is improving now this is where things get really problematic long term for some of these AI stock valuations and I want to be crystal clear here I have a lot allocation to Nvidia TSM these these AI companies I did trim a little bit before earning so I have to say you know okay maybe I could have trimmed after but oh well right a little fluctuation here there there's nothing you can do about that I just want to be transparent about my positioning my positioning is that over time as this year progresses and as we get to 2025 it's probably going to make sense to continue to trim a little bit more and start thinking about where's that next segment obviously I've of this mindset that the next segment is where interest rates give you Tailwinds and so I want to trim from chips and move into where interest rates give me Tailwinds which are going to be A6 for solar and pH Tesla you know those interest rate sensitives uh that is that is sort of a play that I'm looking at because I I think that's the next move mostly because when that growth cycle does slow we're not going to see those EPS beats anymore and those Peg ratios are going to start looking a little expensive especially for something like super micro computer they're setting very very strong comps for the end of 2023 and the beginning of 20124 those are going to be very tough comps to beat and remember the big thing to keep in mind for NVIDIA build outs or server build outs is you might have gone from no buildout to buildout but the question is what happens once you're built out well are you upgrading to the h200 or the b00 maybe maybe not we did get asked about cycle r refresh but Jensen punted on that that's why I'm specifically mentioning this kind of punted on this I was looking at you know we did also hear a little bit about uh a a new product reset for China uh which so in addition to this sort of Punt on hey are people going to actually keep upgrading yes we know they are sold out basically for their h20s they say that demand exceeds supply for those of course if you're buying if you're still building a new infrastructure set of course you're going to get the latest stuff the question is for somebody who already built out to h100 are they going to upgrade to the next cycle probably not because the margins are so high that's why Nvidia themselves warn that margins are probably going to Peak q1 they said that not me they said margins will probably Peak a q1 uh and these q1 Q4 margins uh that we've had will probably be uh their top uh now uh regarding China I was going to say they uh are creating a new product offering for China and they're testing that out they don't seem very confident in China they're kind of guiding the same single digits increase for uh uh product revenue from China obviously most revenues here are coming directly from AI in America through the cloud service providers and of course abroad for any cloud service providers building out infrastructure in other countries your Google your Amazon your meta they don't necessarily have to build the factories the infrastructure here they can build that in other areas uh throughout the world as well so I uh those are probably my biggest takeaways and I really want to hone in where I think they matter the most Peak q1 margin I think that matters a lot and that growth rate they impressed me I will give you that I know this is chicken scratch right here but I was expecting 34 to go to 22 to go to 10 and my adjusted forecast based on how much I think they're going to beat in the next quarter about 15 to 18 % so I take their 88.6% and then I adjust it and then I divide this this quarter over quarter squential growth it's still going to be strong between Q4 to q1 but the guide from q1 to Q2 is probably going to be really interesting maybe that's when we get to the 10% so we're still in a really good place for NVIDIA I don't know if this is enough to get us to break out over 7:30 it is entirely possible that this stock could trade sideways I personally I I've said it I said it uh you know last year about 10 months ago I've said it 5 days ago I think this is a $600 to $700 stock I personally did not see anything in these earnings that say this is a $1,000 stock I I'm not I I don't want to poooo anybody's holding on Nvidia I again I hold a lot of Nvidia too okay like I'm I'm a big Nvidia shareholder I'm just after this earnings call I'm kind of I'm thinking to myself okay this is impressive this is good this is is great we love this this is all the same stuff we've been hearing and they're doing great their cash flow generation is phenomenal they've got twice the cash on hand that they had last year uh I mean the 5x their infin band deployments I mean this is this company is not going anywhere I I could not I can't bet against Nvidia but do you know do what where where am I going to get my next Double right am I going to get my next Double on Nvidia or or something else I think it's more likely to be something else yeah you know is there maybe a like do I think we can get from 7:31 to 930 or the 969 I don't think with these earnings we're going to get that it's but 969 on the FIB retracement here divided by 731 a 32% move I don't think so this year I could be wrong and I wouldn't be surprised if we get some bobing around here but I personally think it's actually more likely you end up back you know potentially No Man's Land here uh then then then you end up getting up to a 969 and that's why I think sideways teetering is probably most likely here no guarantees now uh where I do think there will be some really interesting OPP well and then of course I'm afraid of smci uh but where I do think there is an interesting opportunity and and this is a little special bonus for the people who made it this far in the video okay there's this company that was mentioned and I had this is just a secret between you and me okay uh they mentioned a company that I had not even freaking paid attention to uh at all at all uh this is a company that is trading for 12 times earnings it is a company that is forecasting a growth rate of about uh let's see here I'll tell you for the next year 6.4 + 956 89 29.9 divid 4 company forecasting a 7.5 growth rate uh over the next year each year 7.5 that's a PEG ratio of six so I got a company here and Nvidia mentioned them as a partner uh uh it is a company that uh everybody's heard of before I'm going to one of their last filings here because I want to pull this up I'm doing it live baby uh and I don't invest in them but I'm telling you it's it's it's something that I wasn't even expecting to be interested in but if I go to segments on this next company I'm expecting to see something interesting reportable segments here we go uh infrastructure solutions group okay so they've got an infrastructure solutions group they're actually negative year-over-year in infrastructure Solutions uh so I don't know if the world realizes that they do this infrastructure yet so I can't make a bet at this point without further research that this is where to go and so I will say there's servers in networking to be clear their servers and networking segment is negative year-over-year November 3rd 4656 that's uh 4.6 billion 4656 divided by 5200 they're negative about 10.5% on servers but Nvidia shouted out Dell they shouted out Dell uh as a networking partner and I just think to myself hm one six Peg are we blind to potentially what Dell is partnering with Nvidia on here I don't know I don't know enough about it Nvidia has not mentioned once in their last 10 Q not a single time uh I can go jump to their annual report just to see if they've ever been mentioned over there the last annual report though was March 30th for Dell uh so and Nvidia is not mentioned once you can do a quick Nvidia Dell Google here and you know there's there's talk about project Helix and some generative AI Partnerships from back in May but not a lot of recent information there but I think there's something there to pay attention to uh and maybe there's a value play there I would certainly let me just put it this way be more enthused at at this juncture in I hate to say it but Dell then Super Micro computer because they both Supply uh server infrastructure that's an initial reaction it's just a thought it's something I heard that I don't think anybody else is really paying attention to so it's just something that uh I I think is worth uh highlighting this this shout out they mentioned them in the same vein as their Partners when they were mentioning super micro computers so something to pay attention to so again uh do I think there are going to be better opportunities going forward in terms of growth out there absolutely am I going to you know do do I really think it's necessary to dump all my Nvidia because it's going to come crashing and burning attention soon no peak q1 on margin growth rates will continue decline on the month-over-month basis the supply will meet demand more clearly in 2025 now that's where we're going to probably see massive chip deflation and you're going to have to be a little careful because in 2025 I want you to think about what's going to happen in 2025 that's where I get a little more nervous okay in 2020 and the stock market can sometimes try to price this stuff in but what do you get in 2025 you're going to get this triangle of slower uh uh growth so slower growth right and then High comps right slower growth High comps those are about the same uh then you're going to get uh you're going to be past Peak uh margin so I guess I should call that uh Supply balance you know so we'll call this an increase of Supply uh and then you're going to get competition now I know when people hear competition with Nvidia they're like there is no competition Kevin I what do you think in like companies like AMD Sam mman trying to create a chip designing company every chip designing company out there or startup is trying to do they're trying to build the next h100 I I know it might seem farfetched but competition will come so in 2025 you're going to have this Trifecta of a problem for NVIDIA and so I think that's going to put a damper on how much this sucker can continue to Rally because the stock market will need to start considering the trifecta of more Supply Peak margin competition slower growth and high comps going into 20125 my take on Nvidia great job they did a fantastic job I love what they did I just don't think it's breakout worthy if you like this you could see a full summary over at eack Full House hack update on the house hack homes uh YouTube channel for my real estate startup it's not a chip startup I know but anyway thank you so much for watching I really b
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