Strong earnings reports haven't been too

kind to Nvidia's stock of late.

>> I don't envy Jensen's position right

now.

>> 14 consecutive quarters of earnings

beats. What does the company need to say

on a Wednesday to keep that going? If

they beat, that's great. But is that

enough for the street to say things are

great, we're doing well here?

>> It may not be enough depending on what

the tone is like from Jensen Wong, what

the guidance looks like. I think a lot

of investors are rightfully worried

about the massive amounts of money that

has been spent and will continue to be

spent by their hyperscaler customers on

AI and what the inevitable payoff will

be because even now some of the mag

seven companies that are cashri are

going free cash flow negative to fund

the spending. It's not just Oracle

anymore. or was for a time where it's

like, oh that's just an Oracle problem.

>> It's just Larry Ellison.

>> Yeah, exactly. But now there are many

other companies in big tech that are

also spending in a somewhat proflegate

manner and there are still questions

about what the ultimate AI payoff will

be. So I think Nvidia probably it's

going to be more less about the numbers

maybe because we know they're going to

beat I'm setting myself up watch they

miss.

>> Right. Setting yourself up for

disappointment.

>> Yes. Exactly. But Nvidia historically

beats I think we just need to see how

the guidance looks like and just how

confident Jensen Wong sounds about the

future. Nvidia shares a fall in response

to earnings in six of the past eight

quarters including the last four per

Yahoo Finance Alpha Space analysis. Love

Alphaspace. The reality is that the

market is positioned for the company to

post something great and for CEO Jensen

Wong to sound super bullish on the

earnings call. Should the average

investor out there just ignore the

market reaction to these Nvidia

earnings? And I bring this up because

this company is still crushing on the

top and bottom line. We're going to have

this discussion three, six, uh, I don't

know, 12 months from now, and it's still

going to be the same discussion. They're

crushing it on the top and bottom lines.

>> Yeah, it's such a great point. And the

reaction function may be a bit easier

this go around because it's about 10%

below its all-time high. It's trading at

20 times 21 times next 12 months, which

will likely go down to 18 times after

they raise their guidance. They'll

likely do way more than the 92 billion

that's expected in revenues. And

clearly, they'll continue to have 75%

margin. So, if you're going to play this

stock as a long-term investor, because

of the, you know, its earnings report,

it's probably a mistake. It's it's it's

a great stock to have in your portfolio

trading at a very reasonable multiple

and growing its earnings and its

revenues and its gross margins at a

tremendous pace. So I think the reaction

to you as a long-term investor is to

ignore the noise around this and just

understand it's one of the greatest

companies and sits at the center of the

artificial intelligence revolution.

>> Why does Nvidia ch trade uh at these

types of lower valuations compared to

others in tech? It almost doesn't make

any sense.

>> Well, it doesn't make any sense. I think

there is some concern about what they're

using their balance sheet for and how

much vendor financing they're doing with

some of the largest clients. Then there

also is some concern that perhaps one of

the large language model builders will

eventually drop out of this race and

instead of having five or six we'll have

three or four large language model

builders and there will be less demand

for invid Nvidia products. So I think

it's that the concern that perhaps AMD

comes out with something that's good

enough in its next generation. So

there's always been that concern but you

know I think in real time looking at a

company the magnitude of Nvidia trading

at a S&P multiple is probably one of the

the most ridiculous things you can think

of. I don't envy Jensen's position right

now because I think right now you're

clearly seeing the market tell everyone

that the capex is peaking this year and

it's going to essentially go lower and

lower as year as open model gains

momentum and as time goes on. But all

Nvidia and Jensen can do is show up

every single quarter and prove that

they're physically shipping more and

more of their product and that's going

to result in a lot more revenue. I think

right now we're anticipating $95 billion

this quarter. They're probably going to

guide somewhere around 110 billion for

the following quarter. If they can do

that while maintaining margins at 75%.

That tells me that they can put up this

kind of growth while keeping margin at

this level that their customers are

still willing to pay the premium that

Nvidia has to offer, which shows that

there is no easing supply constraints at

all. But I will say though, the next

thing I'm watching specifically for

Nvidia is demand needs to widen out a

bit. I think you're seeing Nvidia start

communicating to everyone the

differences between their hyperscaler

demand and their um ACIE is what they

call it the companies outside the

hyperscalers because that is where the

next leg of this rerating on the stock

is going to come from because everyone's

just kind of poking holes in the Nvidia

story that the hyperscalers are going to

slow down their capex. They're creating

their own custom silicon chips. AMD is

becoming a competitor. But if this

separate group, the ACIE can actually

maintain triple digit growth and

continue showing a lot of momentum over

time that has a lot of momentum to where

Jensen can kind of pass a baton off to

this brand new group of demand pool,

then the market finally can maybe stop

arguing uh against why they deserve an

undermarket multiple. And also don't

don't uh call out SpaceX as well. Like

that's a large part of where the

demand's going to go in next year or

two. I mean, right now SpaceX is around

4% of the revenue for uh Nvidia. I

wouldn't be surprised seeing that over

10% next year, especially when you heard

Elon talk about that planned compute

buildout that he's anticipating by 2027.