tw0122
2 hours ago
Nvidia has all the pieces in place for a positive quarterly earnings surprise
Having taken the lead in AI chips, Nvidia is bleeding its competitors dry
By Louis Navellier
Last Updated: Aug. 27, 2024 at 2:13 p.m. ET
Nvidia is scheduled to report quarterly earnings Wednesday.
To effectively compete with Nvidia, its rivals would each have to spend several billion dollars over the next several years — and even that would likely prove to be futile.
Nvidia will announce its latest quarterly results on Wednesday, and the company’s much-anticipated report is expected to be the grand finale of the second-quarter earnings season.
Baked into this prediction is an earnings surprise from Nvidia
NVDA
on its finances as well its technological progress. There’s been uncertainty among Wall Street analysts, but the recently lowered expectations offer a good setup for a surprise.
In the past four quarters, Nvidia has posted operating earnings surprises of 31.6%, 19.4%, 11.9% and 9.8%, respectively. What is even more amazing is that Nvidia has posted better-than-expected sales, earnings and guidance with its older AI chip, the H100 GPU. Nvidia is now making the transition to its new AI chip, the Blackwell GB200 GPU.
There have been endless reports that Nvidia is delaying the Blackwell GB200 GPU by at least three months. Alphabet’s
GOOG
are betting billions on Nvidia’s GPUs as the AI arms race escalates. Alphabet, for example, has ordered more than 400,000 GB200 chips, which is an order worth more than $10 billion. Meta also has a $10 billion order, while Microsoft is expecting to have 55,000 to 65,000 GB200 GPUs ready for OpenAI by the first quarter of 2025.
This delay in the Blackwell GB200 GPU was reportedly due to a Taiwan Semiconductor Manufacturing Co.
TSM
0.49%
glitch attaching two GB200 chips together. As a result, Nvidia’s guidance on the delivery of its Blackwell GB200 GPUs and order backlog is shaping up to be even more important than its actual quarterly sales and earnings.
It is important to stress that Nvidia is effectively a monopoly that spent around $2 billion to develop the Blackwell GB200 GPU. Furthermore, Nvidia is expecting to upgrade its flagship AI chipset every year until the end of the decade. Several years from now, Nvidia may not be able to make its chips much faster, since its transistors will be so tiny and will be approaching the “atomic” level. Since splitting atoms is not a good idea, the next step to speed up the AI calculation will be quantum computing. Anticipating this change, Nvidia already has a Quantum Cloud Simulator up and running to prepare for the future acceleration of AI calculations.
It is important to mention that Nvidia’s competitors are making lower-grade AI chipsets. Regenerative AI, which is effectively machine learning, remains Nvidia’s domain. To effectively compete with Nvidia, its rivals would each have to spend several billion dollars over the next several years — and even that would likely prove to be futile.
But they are still trying — at enormous expense. At Advanced Micro Devices
AMD
-0.05%
, research and development expenses were 26.1% of revenues in 2023. At Intel
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-0.12%
, spending is even higher, or from a shareholder’s perspective, worse. Total research and development expenses at Intel were 29.6% of revenues for 2023. Meanwhile Nvidia’s R&D spend last year was a relatively “light” 14.2%. (As a reality check consider that Proctor & Gamble
PG
-0.51%
spent about $2 billion in its latest fiscal year, or about 2.4% of its $82 billion in revenues.)
Having taken the lead in AI chips, Nvidia is bleeding its competitors dry. Momentum and market share are important in the technology world. With regenerative AI moving so fast, it is hard for new competitors to emerge, let alone dedicate the capital and resources required to try to compete with Nvidia.
I am not anticipating any effective challenger to disrupt the regenerative AI monopoly that Nvidia dominates.
Full disclosure: Nvidia is the largest holding in my family office’s managed accounts. Historically, my biggest portfolio gains have come from investing in monopolies that emerged before competition emerged. Some of those include Conair (hair dryers in the 1980s), Tyson Foods (McNuggets and chicken tenders in the early 1990s), Hanson Natural (in the mid-2000s and later renamed Monster Beverage) and Nvidia (2016 through 2018).
I noted Nvidia again in my Growth Investor newsletter in May 2019, and that recommendation has gained more than 2,000% since then. Unlike my investment in past monopolies, where competition typically emerged in a few years, I am not anticipating any effective challenger to disrupt the regenerative AI monopoly that Nvidia dominates. So I am planning on holding Nvidia for several more years and enjoying the ride in this great company.
Louis Navellier is founder, chairman, chief investment officer and chief compliance officer at Reno, Nev.-based money management firm Navellier & Associates. The firm owns shares of Nvidia in managed accounts. Navellier and his family own Nvidia shares via a Navellier-managed account and in a personal account
DiscoverGold
1 day ago
Options Traders Blast Nvidia Stock Before Earnings
By: Schaeffer's Investment Research | August 26, 2024
• Nvidia reports earnings after the close on Wednesday
• Nvidia has remained the most popular amongst options traders
Chip darling Nvidia Corp (NASDAQ:NVDA) is a regular on Senior Quantitative Analyst Rocky White's list of stocks that attracted the most options volume during the last two weeks, and this most recent period is no different. NVDA topped the list ahead of the company's latest earnings report, due out after the close Wednesday, Aug. 28.
Over the last 10 days, Nvidia stock has seen 41,164,331 calls and 24,868,867 puts cross the tape. The weekly 8/23 130-strike call was the most popular contract by far over this timeframe, followed by the 128-strike call in the same series.
Though it's not unusual for calls to heavily outweigh puts for the tech giant, traders could also be eyeing Nvidia's upcoming earnings report as a potential bullish catalyst. The stock finished the session higher following six of its last eight reports, including a 9.3% pop this past May and 16.4% rise in February. This time around, the options pits are pricing in a next-day swing of 17%, which is larger than the 9% move the stock has averaged over these last two years.
Today, NVDA was last seen down 2.6% to trade at $126.02, as investors rotate away from tech. The stock bounced off its early-August lows that came amid the global selloff, though pressure appears to have emerged at $130. Year to date, the equity is up 154%.
Read Full Story »»»
DiscoverGold
tw0122
1 day ago
Sanctions Fail Again and Again
The Wall Street Journal reports China’s AI Engineers Are Secretly Accessing Banned Nvidia Chips
Chinese artificial-intelligence developers have found a way to use the most advanced American chips without bringing them to China.
One entrepreneur helping Chinese companies overcome the hurdles is Derek Aw, a former bitcoin miner. He persuaded investors in Dubai and the U.S. to fund the purchase of AI servers housing Nvidia’s powerful H100 chips.
In June, Aw’s company loaded more than 300 servers with the chips into a data center in Brisbane, Australia. Three weeks later, the servers began processing AI algorithms for a company in Beijing.
“There is demand. There is profit. Naturally someone will provide the supply,” Aw said.
Renting far away computing power is nothing new, and many global companies shuffle data around the world using U.S. companies’ services such as Google Cloud, Microsoft Azure and Amazon Web Services. However, those companies, like banks, have “Know Your Customer” policies that may make it difficult for some Chinese customers to obtain the most advanced computing power.
The buyers and sellers of computing power and the middlemen connecting them aren’t breaking any laws, lawyers familiar with U.S. sanctions say. Washington has targeted exports of advanced chips, equipment and technology, but cloud companies say the export rules don’t restrict Chinese companies or their foreign affiliates from accessing U.S. cloud services using Nvidia chips.
Buyers and sellers of computing power use a “smart contract” in which the terms are set in a publicly accessible digital record book. The parties to the contract are identified only by a series of letters and numbers and the buyer pays with cryptocurrency.
The process extends the anonymity of cryptocurrency to the contract itself, with both using the digital record-keeping technology known as blockchain. Aw said even he might not know the real identity of the buyer. As a further mask, he and others said Chinese AI companies often make transactions through subsidiaries in Singapore or elsewhere.
One decentralized GPU provider with more than 40,000 chips in its network, io.net, advertises in its user guide that it doesn’t impose know-your-customer restrictions. This “allows users to access GPU supply and deploy clusters in less than 90 seconds,” it says.
Meanwhile, Aw is raising more money from a group of investors in Saudi Arabia and South Korea. They plan to build a cluster of Nvidia’s latest Blackwell chips for another Singapore company with a Chinese parent.
“No one is breaking the export controls,” Aw said. “Legally speaking, they are Singapore companies.”
doc2016
1 day ago
nvidia isn't just the gpu/but the dpu,cpu, quantum, etc computing platform as a service. the nvidia hierarchy says, there is no pull back/redo o nvidia blackwell. they do emphasize blackwell is the platform as a service.......all devices and apps can be advantaged by the smart platform. and therefore the users see benefit of better, new, fast, reliable, economical, energy conserving, perhaps energy creating, etc. platform as a service.