CNBC, Bloomberg, Schwab On NVIDIA Stock, Micron Stock, SK Hynix Stock - NVDA Update

I mean ultimately the memory shift sector seems like it has the biggest mode of all which is people can't produce enough memory and it seems like those supply shortages are going to be uh in perpetuity. At the same time when margins get that fat people start creating competition. It's one beauty of capitalism. >> 85% is an invitation. >> It's saying to you you too could have this money >> without a doubt. Gil Laura of DA Davidson writing investors are worried about open-source models circular financing and increased competition. And we're cautious on semi trading evaluations that imply the cycle will continue. Gil joins us now for more. Gil, are you implying the cycle won't continue? >> I wish I knew. That would be really great, but I don't. It's our sense is that the demand for AI is going to continue to grow and therefore the investment cycle will continue. And what we heard for the last couple of weeks is the hyperscalers have at least one more year of higher capex in them. So we know that much. Whether it continues after that really depends on the continued progress on AI and its adoption which is something that we all would like to know but it's very hard to predict. So all we could do is focus on what are the situations where stocks are trading like the cycle is over. What are the situations where we're trading like the cycle has to continue to 2030 and beyond to justify the valuations. And you're talking about one sector where the market's already trading like the cycle is over which is memory. So in spite of the fact that we're not getting any new supply for at least another year, probably more, and that supply probably won't be nearly enough to meet demand, these memory stocks are trading now at mid singledigit PE uh ratios, right? And and and the market is is having this really tough challenge of saying, wait a second, SanDisk, which is trading in mids singledigit PE, is isn't going to grow more than 300%. it's going to grow only 300%. Meaning it's only going to quadruple next quarter and not knowing what to do with that. That's to us where the opportunity is. And then we just focus on the high end. We don't need to focus on SanDisk and Western Digital. We can focus on Micron. On the other hand, there's these group of stocks that is trading like the cycle will continue forever. your Intel, your Cerebrus, some of these optical stocks, semicap stock to justify the types of multiples those companies are trading at. You'd have to believe that the cycle still has a long way to go. So, we would rather just stay at the at the near end. We feel like there's another year of capex that's good for Nvidia, that's good for Micron, it's good for AMD. Extrapolating beyond that is where I think it it gets really tough. You really have to make assumptions that are very hard to make right now. >> It's one thing to analyze these companies fundamentally in the runway, which is difficult enough in its own right, but we were just talking about market structure issues and leverage being built up in different places, the idea of new trading systems that are getting deployed during a unique cycle. How much more are you focusing on those things in addition to just the fundamental questions that are complicated enough in their own right? Yeah, I think your conversation you just had earlier was was spoton. Um, I never imagined that I'd have to know so much about how many Koreans had their brokerage accounts shut down because of margin. And now this is this is what drives our market and and it's just it just happens. It's a it's a little bit of a coincidence of history that two of the biggest uh memory companies happen to be in Korea which is a nice big growing healthy market with a lot of other things to offer. But those two stocks are way too big for the Korean market, way too big for the liquidity and as it turns out way too big for the market structure that they have. And yet to your point they are very much linked to our market. SKH highinex is linked to our market through an ADR which makes it even worse but also because it's such a close comparable to micron and the rest of the memory complex and by definition when one of those moves the others are going to move. So yes, it's become a factor. I would expect that the ADR is going to actually help. You can see that the move in the ADR in the pre-market is less than the move in Korea. Those have not moved exactly as as you would think in line. The our our market is behaving is behaving a little bit like a like a cushion like a um like a dampener. And so I think this is going to work itself out. It's just highly unusual that we have two trillion dollar companies in a market that's just not well suited from a market structure perspective to absorb that. There's a bigger issue here though too, Gil, and it's something that we keep talking about following situational awareness and the blow up of that fund. Is that uh sort of the entirety of the problem or a big fish that really was causing a lot of volatility or is it a symptom of all the leverage that's been built up that could potentially royal stocks that have a great fundamental story but perhaps have been inflated at a time of uh bullance? >> I think it's all of that. But it's not again I'm I'm arguing that these valuations aren't inflated. When when a company that still has growth is trading at six times earnings, it's hard to say that the valuations inflated. The moves have been extreme. Stocks that are up 10 and more time or more times in a very short time frame have created a lot of gains. a lot of investors that that um that are uh day-to-day traders and want to get out of positions quickly and and this is all getting amplified again by Korea by the volatility here by the extreme moves by a very very high expectations and it's creating this very very unusual volatility again companies growing 300% trading at six times earnings isn't something the market is used to so it's it's very hard and and that have already gained a,000 or 10,000% in a short period of time. Those are not things the market is used to handling uh discussion between 22 times and 24 times earnings. It's not used to to dealing with this type of volatility, this type of fundamental changes. And so we just have these extreme moves in fundamentals, extreme moves in stocks and that's creating volatility. That doesn't mean that there these valuations are inflated. Again, I'm arguing there are parts of the market, parts of semis that valuations are inflated. It's actually not memory. The volatility is just because of those extreme moves. >> Gil, it's got good to see it. >> Nvidia, it's lower on the session today, but has been on a tear of late. The stock is higher over the last five trading days. In fact, it's up nearly 15% over that time period. Earlier this week, SpaceX [music] CEO Elon Musk said that his company will exclusively use Nvidia's chip architecture for SpaceX technology. Nvidia is down 8% from its all-time high. Let's welcome back in the co-hosts here, Tom White and Kevin Hanks, and your thoughts on Nvidia. He touted Nvidia, talked about their architecture and processors being the very best. Kevin, and that gave a boost to Nvidia, left AMD out and some of the others. Kevin, some of your thoughts here on Nvidia, which is at 218 and has been on an upswing recently, though it's down slightly today. Yeah, it feels silly to say this about a stock like Nvidia, but it's actually turning into almost a valuation play. It has gotten because it's made so much money and the stock has struggled on the upside. Now, it's had a nice rally this week, but overall the stock is relatively cheap. If you look at some of it, you know, a lot of times we talk on the show about the PEG ratio, which is the price versus earnings growth. It's got an extremely low PEG ratio. The forward PEG ratio is 0.53. Anything lower than a one is good. The expectations for earnings is 91.8 billion in revenue. That's 96% higher year-over-year. Earnings per share, $28. That's 98% higher than a year ago. Yes, it got a nice bump off the Elon Mus news that they're going to use it, but they have earnings coming out August 26th and now we're kind of in that zone where the attention now that we're through large cap tech, the attention's going to start turning to Nvidia and the news cycles and the heightened awareness is going to be interesting for this stock. But it's had a nice jump this week on that Elon Musk news for sure. >> Yeah, really gaining some momentum. And Tom, some of your thoughts here on Nvidia. A few years ago was less than 40 bucks. Now the recent high is 236. And I know the gentlemen are going to be showing us some example trades, but what's the big picture here as it's seeking its sixth straight winning session, which being down just oneird of 1% is certainly possible here between now and the end of the day? >> Uh I think the theme is uh price action. Uh you look at it uh this stock over the past couple of months have capped out around 213 bucks a share. uh you know hovering around continued to hover around its 50-day simple moving average. Well, it's broken through there the last couple of sessions. We're up basically about 9% so far this week. So, the breakouts finally taking place in this stock. It wasn't getting credit for 85% revenue growth last quarter. As Kevin mentioned, they're expected to grow 95% or more this quarter when they report in a few weeks. So, that that's the been the story. the Ford PE low compared to where Intel and AMD competitors in this space are by a lot too. I mean the the Ford PE you know below the 23 times level uh at this point. So it's a valuation uh call here. Everybody continues to expect these growth rates for Nvidia and margins to kind of decrease but margins are actually increasing uh at this point. competition's coming in, right? AMD's got their new uh, you know, high-end chip that's their MI 450 Ver uh, you know, um, their rack system Helios that's supposed to compete more with the Vera Rubin rack system and will that take market share? Well, they're getting into CPUs, so they're going to go into what Intel and AMD have kind of been dominating as far as that goes. So, yeah, you know, I think it's been discounted. Uh, it's finally broken out. But I think price action's telling you that maybe investors are starting to get more excited as we head into uh earnings in a couple weeks. >> And Kevin, some of your thoughts here because uh we're going to be also doing some example trades. >> I I think uh everything that Tom said talking about the valuation of this name and all the good news going forward, I think remember they've got an August 26th earnings event coming up. I think it's going to be nothing short of spectacular. I think the you have to as an options trader, you have to prepare yourself for that. That's what this uh paper money trade that we're looking at is doing. It's going to prepare yourself for that for that earnings event. So, we're going to do a paper money trade here that does one of two things. Number one, it goes past the earnings event. I'm buying long calls in the September 4th expiration and then I'm using time. I'm selling this week and so I'm turning it into a calendar butterfly kind of a hybrid unbalanced butterfly. So I'm buying one of the 220 calls. I'm that's in September 4th. I'm selling two of next week's 230 calls. They expect to move out till August 14th. 10 days. So lining up that 220 230 uh call vertical or it's actually a diagonal. Then just to add more theta and lower our cost even more we are selling another vertical call spread the 230 235 and the August 14th Tom. So this is Tom. THIS IS KIND OF A hybrid calendar spread slash unbalanced butterfly, but it's using uh the the shortterm trades to chip away at the price of that long-term trade. And eventually, Tom, we'll be extending duration right into that earnings event. >> Uh yeah, let's break down Kevin's uh custom uh three-legged spread here. Uh kind of an altered butterfly here. Uh we went out to he Kevin went out to the September 4th weekly options uh on this trade. Uh so you're giving he's giving himself some duration on this one. You're going to capture the earnings event with this one. 29 days to expiration buying one of the 220 strike calls. Then in the near-term options, the August 14th weekly options that expire in about eight days, he's going to sell a short call vertical, but it's a ratioed one where he's going to sell two of the 230 calls and buy one of the 235 calls as a package. Going to pay roughly about an 840 debit. That's where it's currently trading uh on this one. So, you take that into consideration. What's the risk on this? You're buying a power effect is about $842, right? uh on this one. Your longer term option 29 days to expiration is the bullish portion of this trade. So take that into consideration. That'll last throughout the duration of this trade. Pay that 840 debit. You break evens on this where you want the stock to go is above maybe 218 on the downside and below or below about 238 on the upside. So there's the range that the stock can trade in over the next 29 days are going to be profitable. Now remember the short 2x one call vertical in this one that ratioed short call vertical expires in just 8 days and Kevin mentioned you can maybe extend duration on something like this where hey you want that to kind of go out worthless, right? And then as the stock grinds higher maybe you sell another call vertical or another ratio call vertical against this this type of position. apex of profitability at or near that 230 strike over the next eight days where that where you're short two options on this one. So, it's kind of a hybrid type of trade that gives you upside exposure. What you don't want to happen is a stock to fall from current levels, right? You don't want it to go below 218 or you don't want the stock to explode over the next eight days to go above that 235 level uh on the upside here. So, it gives you that upside exposure uh on this one, but I think the key is you got the longer duration bullish portion of this trade in that September 4th weekly option that expires in 29 days where you're going to actually capture that earnings event uh on this bullish trade. Kevin, I went uh a little bit more directionally biased here to the downside where if you think the stock's going to fail going into maybe uh the next couple of weeks, this takes advantage of that. I think this gives you a little bit more flexibility, too, as far as when you might be able to get out of it if you see pullbacks. Remember, this stock's about $5 off of its session highs today. So, we've seen some weakness after a strong uh last five sessions uh for this stock. Uh went out to the August 21st weekly uh monthly options that expire in 15 days. Bought that 220 strike put. That's in the money by about a buck and a half, right? There's the bearish portion of this. and then against it to offset some of the costs on this bearish trade. Sell the 205 strike put. That's where you want it to go. That's where you get max profitability below 205. You're going to pay roughly about a 530 debit on it. Might be trading a dime lower than that right now. But if you pay that 530 debit, that's going to be your risk. $530 per spread uh on this trade. Where does it take your break even down to where you want the stock to go? Well, it's about 21470 to the downside. So, on a percentage basis, Kev, you don't need a big move to the downside to get below that break even. And this is one of those trades that could be speculative. Maybe you own the shares. You could use it as a a hedging type of trade also. But you definitely need a move to the downside. You just don't need a big of as big of a move as what the option market's pricing in for that option series. Kev, >> yeah, you gave yourself some duration here, but you also stayed ahead of the earnings event. And so if you have, you know, stock to protect, this would do that up until the earnings event. Remember, you would still have to do something for the earnings event because this would be done before there. But the market, the overall market could sell off. Nvidia itself could sell off. There could be a lot of reasons. But the risk is the debit paid and it's a $15 uh put vertical. So at $5.30 you almost get paid a triple. Tom. >> Yep. Uh risk is uh the amount you paid on both of those positions. So there you go. Nicole bullbear debate there in uh Nvidia. and the information reporting that Nvidia is weighing a design change to its nextG Reuben Ultra chip that would reduce memory capacity aimed at keeping production on schedule as the industry grapples with a severe shortage of high bandwidth memory. Interesting finding an engineering solution to get around these shortages. >> Well, they kind of have to. I mean, we've heard so much about the allocations and how difficult they are to get, let's say, Blackville or Via R Vera Rubin and really what the bottleneck is is the high bandwidth memory, right? and that has to go on these chips and it's not that Taiwan semi can't make them it's just they don't have allocations to them and then the pricing is really expensive and when you think about it though you know retooling data centers like hypers scale data centers this is the the GCP or the AWS or um Azure I mean they might have 15 20,000 racks in these things and when you are upgrading from hopper to blackwell or blackwell to ver rubin that could cost you $8 million per rack okay and and this is like these are big big numbers. So to make these sorts of shifts, there's a lot of decisions that are going into these and make no mistake about it, I think the bottleneck again with high memory, this is one of the biggest issues right now. So the idea that we have all these plans to build out all of these data centers and we know it takes a couple years. You might have to wait a couple years to put the chips with a high bandwidth memory into the servers that go into the racks that go into the data centers that train the models, right? I mean like this is not like you know I just think it's interesting that the market is so quick to give these guys um a pass right now. Now granted these guys sold off a lot all the major hyperscalers but they came back most of them in a big big way and I just think that might be something where you know we're going to be paying a lot more attention to over the next few months. So you you flagged that article as so are you your thinking was that okay this could maybe cool the heat cool the intense growth of memory right and who's the beneficiary of that >> so I mean to me it's the the >> the hyperscalers >> yeah the hyperscalers but this the memory stocks to me it's like it's right now the second derivative the rate of appreciation is so fast and then if that cools that's one level of cooling maybe we've seen that we get to another where you know the rate of growth not just the rate of acceleration but the rate of growth that starts to slow. So I'd rather be I didn't you didn't would you rather but I would rather be in the hyperscalers and that's where I am. >> Yeah. >> And Nvidia. >> Mhm. >> Some of the volatility is seem like Micron had a 1% move today which is not a big move by their standards. So maybe you taking some of the vow out of some of these memory names which would be a good thing. But I continue to say I mean today notwithstanding 8 to 10% moves up and down over the last two months in a handful of these names does not make a healthy market. If that can abate somehow we can sort of find some equilibrium then maybe things make sense. I don't think we're there yet. All right. I hope you're all doing well today and staying calm in this market. Today was a slight red day in the market as the situation in the Middle East unfolds. We saw both oil and treasury yields move higher on Thursday. the information published a story claiming that Nvidia is testing at least three variants of Ruben Ultra and considering versions of Ruben Ultra with less memory capacity than Nvidia had originally planned. I want to provide a disclaimer and mention that this has been an unreliable source in the past when it comes to Nvidia rumors and I have no idea if this story is true or not. I'm just bringing it to your attention so that you're aware of it that said a couple days prior Trendforce published a piece saying that DRAMM supply will remain tight in 2027 and uncertainty persists over memory suppliers HBM4 evalidation timelines. In that same piece, they say that Nvidia has begun expanding its evaluation of Ruben Ultra's HBM configuration beyond its original 12 high HBM 4E design to include 8 high HBM 4E, 12 high HBM4, and 8 high HBM4 alternatives. Going back to the information story for a moment, it's also worth mentioning that on July 29 Semi analysis reportedly claimed that Nvidia was showing customers a Reuben Ultra configuration with 192 GB of 8 highb. Again, I don't know whether these rumors are true or not. I'm just bringing it to your attention so that you're aware of it. Now, let's briefly consider the implications. First, if the rumors are true, it speaks to the severity of the memory shortage and the strong negotiating leverage that the memory makers have right now. It's also important to remember that more capable models generally require more memory capacity, not less. Now, initially, this story appears to be a negative from memory makers because if it's true, then we're talking about less memory per GPU than what was originally expected. But it's actually not that simple. Think about this. The memory makers recent surge in earnings has been primarily driven by higher pricing, not by higher volumes. If the rumors are true, then Nvidia is considering a reduction of HBM bits per GPU. Think about what that means for the memory makers. Less HBM content per GPU would not automatically result in a higher average selling price per bit. Nvidia generally negotiates HBM pricing and volumes many months in advance. That said, if the overall HBM market remains extremely under supplied, memory makers could still maintain or potentially strengthen their pricing power per bit despite Nvidia using less memory per GPU. If HBM is the limiting factor, then reducing the amount of HBM per GPU could allow Nvidia to ship more GPUs without reducing memory makers total HBM bit shipments. Memory suppliers could therefore retain strong pricing power despite lower content per GPU. Total HBM revenue and profit could still increase if more GPU shipments and higher memory pricing were to offset the reduction in content per GPU. It's also important to consider that if the rumors are true, it's a signal of a lack of supply, not a lack of demand. Again, I don't know if these rumors are true or not. Even if they are true, I would be careful about assuming that it poses a significant risk to the memory makers pricing power because that's not guaranteed. Also, on Thursday, we learned that Alphabet was seeking to raise 20 to$25 billion in a bond sale. And then later in the day, we learned that Alphabet raised a full $25 billion after the offering drew roughly $15 billion of peak demand. In July, Alphabet raised their 2026 capex guidance to the range of 195 to $25 billion. and leadership said they expect capex to increase significantly in 2027. Also on Wednesday, I accidentally missed this piece of news. Meta announced the release of Muse code beta, which is a terminal coding agent powered by Meta's new model, Muse Spark 1.2. Meta is not dropping out of the AI race anytime soon. As a reminder, Meta clarified on their recent earnings call that they do not have excess compute. They intend to use the majority of their capacity for their own uses at Meta. That said, they're also preparing to rent out a portion of their compute capacity because they can charge a very attractive premium for it due to the shortages that exist throughout the industry. As I've said before, while Meta is a hypers scale company, they're technically not a hyperscaler. They do not have a cloud business like Amazon, Microsoft, and Alphabet do. Because of that, Meta's buildout is inherently riskier than the others. I think it would be a good strategic decision for Meta to start renting out a portion of their capacity because that would help calm investors nerves and also help derisk Meta's buildout. That said, it's notable that Meta is diving into the agentic coding market with the release of Musecode beta. We've seen rapid growth in that market from the likes of OpenAI and Anthropic. Zuckerberg did say on the recent earnings call that Meta believes there will be a significantly greater margin on selling intelligence rather than selling compute directly. Looking ahead, we have Nvidia earnings later this month on Wednesday, August 26th. Now, in case you're new to the channel, I want to make sure that you have at least a basic understanding of the underlying long-term thesis. So, let's cover that. Now, I don't know what's going to happen in the short term, but from a long-term perspective, I am very confident that Nvidia will be worth much more in future years than it is today. When Jensen was on the Lex Freedman podcast not that long ago, he was very seriously raising the possibility of Nvidia becoming a $3 trillion revenue company in the near future. If that happens in the coming years, then it is very plausible that Nvidia could one day be worth tens of trillions of dollars in market cap. That might sound crazy, but that's what Jensen is implying when he raises the possibility of Nvidia becoming a $3 trillion revenue company. I guess the question at that point is what multiple the street will be willing to give Nvidia. I don't know the answer to that question, but I truly do think that Nvidia will be worth much more in future years than it is today based purely on the fundamental growth of the business. Based on everything I'm seeing, the world is still computed and I expect that to continue at least through the first half of calendar 2028. In a computed environment, developers will use whatever viable compute they can get their hands on. Today, there are no GPUs that are sitting dark due to a lack of demand. like there was fiber sitting dark due to a lack of demand at the height of the dotcom bubble. Back then, companies were laying fiber in the hopes that use cases and demand would eventually show up. Today, we are seeing the complete opposite. As I've said many times, when market participants compare this AI revolution to the dotcom bubble, they ignore the fact that the internet is already here this time. This means that mass adoption of the technology and new use case development at scale are immediately possible. We don't have to wait years for it to show up. It's already here. The world is compute constrained, which means there is not enough supply to satisfy demand. New capacity is utilized as soon as it comes online. The hyperscalers are monetizing capacity as soon as it comes online. Each of the hyperscalers spoke about being supply constrained on their most recent earnings calls. Additionally, many of the clouds are building out into contracted demand. They're not blindly building in the hopes that demand will eventually show up. No, they're building out because they have signed contracts and in some cases significant prepayments from their paying customers. This AI revolution is fundamentally different from the dotcom bubble and 2026 will be a pivotal year for the AI industry thanks to the rapid adoption of agentic AI and the proliferation of agentic systems in the world's leading enterprises. The leading AI labs revenues are surging right now. Aentic coding and the implementation of agentic systems in large enterprises are new use cases that are increasing inference demand significantly that subsequently is increasing compute demand. The rapid adoption of agentic AI is why we're seeing an inflection in inference demand. It's why we're seeing the leading AI labs revenue surge. I wish both Anthropic and Open AI were public so the public could see the ramp in their revenues. Anthropic ARR has surpassed 47 billion up from $9 billion just at the end of 2025. Open AI is growing rapidly as well. I think the leading labs surging revenues may be the initial proof point that grabs market participants attention and causes them to realize that there will be a clear ROI on AI infrastructure. I think the leading labs surging revenues will also help assure investors of the longevity of Nvidia's growth since these labs revenues are directly tied to compute. If they had more compute, they would have greater revenues. It really is that simple. Demand is not the problem. The problem is a lack of supply to meet the demand. As I've said previously, I expect the world to be compute constrained at least through the first half of 2028, possibly longer. And so regardless of what happens in the short term, it's important for long-term investors to remain focused on the fundamentals, maintain a long-term perspective, and remember that we are only in the early stages of aic systems being adopted at scale. This will increase compute demand significantly. And after that, the next surge in compute demand will likely be fueled by physical AI. We're no longer talking about digital agents performing digital tasks. With physical AI, we're talking about physical AI agents performing physical tasks in the real world. NVIDIA CFO has called physical AI quote a multi- trillion dollar opportunity and the next leg of growth for NVIDIA. This industry will fundamentally transform society and NVIDIA has positioned themselves to benefit massively. NVIDIA sells the hardware for the data centers where the models are trained. They offer omniverse where the models are taught and tested. And NVIDIA also sells the hardware that allows ondevice real-time inference through NVIDIA AGX allowing robots to have intelligent interactions with the real world even when they are not connected to a data center. Notice that Nvidia is taking a holistic platform approach to physical AI and they're embedding themselves as the underlying foundation supporting all of it. Over 2 million developers are already building on the Nvidia robotic stack and this is not getting enough attention. As for production ramps, Blackwell Ultra has ramped quickly and remains in high demand. Reuben is on track to launch in 2026. Then we're expecting Nvidia Gro 3 LPX in the second half of 2026. Later on, we're expecting the launch of Reuben Ultra in 2027 and Fineman after that in 2028. We have a clear data center product roadmap stretching into 2028. And Jensen believes that AI infrastructure spinning will reach 3 to4 trillion annually by the end of the decade. That means Jensen is expecting growing AI demand and an expanding total addressable market underpinning all of this. I don't think we are anywhere near any type of bubble bursting type of event. With all of this in mind, I seriously think that Nvidia still has plenty of runway ahead of it and I think this company will be worth substantially more in future years than it is today. At least that's my view of the situation. Quick note before I wrap up. All of the compilations on this channel are edited by Finn Vid with original structure and commentary. Occasionally, the same edits appear elsewhere on YouTube. If you're looking for the original version, it's always here on this channel. Thanks for watching, Finn Vid. I appreciate your support. Remember to stay calm in this market. Remember to maintain a long-term perspective and do not make any hasty or irrational decisions. With all of that being said, I hope you all have a great rest of the day. And I'm curious to hear your thoughts about Nvidia in the comments below. Please leave a like on this video so more people will see it. And while you're down there, please consider subscribing. It's free and you can always change your mind.