Marlee Caden previews NVIDIA's earnings next Wednesday, with the company expected to deliver about $91.8 billion in revenue, essentially double year over year, and asks whether a beat still matters.
Adam Kuhn of Winthrop Capital Management says a slight beat is no longer enough and focus will be on how NVIDIA continues growth amid angst over the circular nature of AI funding.
Joseph DeJonker of PurePlay ETFs says investors want third-quarter guidance around $105 billion or more, notes a mid-20s forward P/E, and calls any post-earnings sell-off a buying opportunity.
Kuhn argues demand remains strong, citing doubling revenue, NVIDIA locking in supply for Vera Rubin, and Google's latest phone lacking upgrades because chips were diverted to AI.
DeJonker says the overlooked story is the Vera Rubin ramp and expansion into a $200 billion plus processor market, with management targeting nearly $20 billion in standalone CPU revenue this fiscal year.
Brief overview
A simple NVIDIA earnings beat is priced in; guidance, Vera Rubin and CPU expansion will drive the story.
A beat alone won't move the stockKuhn and DeJonker agree a simple beat is already priced in.
Forward guidance is the key numberInvestors want Q3 guidance of around $105 billion or more.
CPUs are NVIDIA's new growth vectorManagement targets nearly $20 billion in standalone Grace and Vera CPU revenue.
Questions this recording answers
7 questions, each answered where it is said
What revenue is NVIDIA expected to report?
Marlee Caden says NVIDIA, the world's most valuable company reporting next Wednesday after the closing bell, is expected to deliver about $91.8 billion in revenue, essentially double year over year. The panel's question is how high the bar has moved for a beat to lift the stock.
What guidance number are investors looking for from NVIDIA?
Joseph DeJonker says a simple beat is already priced in. The market is hunting for third-quarter forward guidance, with investors wanting management to target around $105 billion or more to prove sequential quarter-over-quarter momentum is not stalling out.
Is NVIDIA stock expensive at its current valuation?
DeJonker says that despite a multi-trillion dollar market cap, NVIDIA's forward multiple trades at a reasonable mid-20s P/E relative to its growth, so on paper it looks cheap. Short-term price action is unpredictable, and he views any post-earnings sell-off as a buying opportunity.
Is demand for NVIDIA's AI chips slowing?
Adam Kuhn says no: revenue is doubling and NVIDIA is moving into new chipsets and CPUs because of demand. He cites Google's latest phone lacking upgrades because chipsets were diverted to AI, and NVIDIA locking in supply for its new Vera Rubin chips.
Should investors favor AI chipmakers or AI software companies?
Kuhn says to keep paying attention to chip manufacturers and AI chip designers rather than companies building software that uses AI, because software still faces questions about return on investment, while NVIDIA clearly benefits since it is behind it all.
How is NVIDIA expanding beyond GPUs?
DeJonker says NVIDIA is moving into a $200 billion plus broader processor market, with management targeting nearly $20 billion in standalone Grace and Vera CPU revenue this fiscal year. Pairing its CPUs with GPU accelerators captures higher dollar content per data center rack.
What concern did Adam Kuhn raise about AI spending?
Kuhn says a slight beat is no longer good enough and the focus will be on how NVIDIA continues growth, noting a lot of stress and angst around the circular nature of funding for the AI build-out and how NVIDIA will evolve with that.
Key Quote
“Obviously, the AI story is looking for”
— Adam Kuhn
Key Quote
“Yeah, I mean, let's be honest, you know, a simple beat on the current quarters”
— Joseph DeJonker
Key Quote
“Our view is pretty straightforward. I mean, any immediate post-earnings sell-off is”