CNBC Today On NVIDIA Stock, Micron Stock, SK Hynix Stock, Big Tech Earnings - NVDA Update

South Korean memory giant SKH Heinix out with earnings, posting a record high quarterly net profit that easily beats street estimates. Also announcing massive new shareholder rewards in the form of buybacks and dividends as AI infrastructure demand continues to drive up memory prices. The company saying that operating profits rose more than 630% compared to a year ago. And you can see shares of SKH Highix um popped almost 11% in Korea trading overnight and pre-market here in the US. The ADRs are up about 7 and a half%. Let's check the rest of the chip trade in the wake of this as well. You can see right there the green on the screen continues. Nvidia up about 610 of 1%. You've got AMD up one and a half% ASML holdings up 1%. uh in general that semi relief rally here continues. >> I think last night's um overnight uh reports from High Nix SK Highix and their earnings um not really unexpected. We continue to they continue to report that they're selling out for 2027 2020 part of 2028. Um so these are all really positive signs for our kind of 10-year time horizon um for AI. And I think if you look at it from like a common sense perspect perspective, there's no world where I think we're using less AI in 10 years than we are today. So compute demand continues to be there. And I think a lot of these macro themes will affect us in the short term. But we're very constructive on the technology over the long term and as it becomes more entrenched in enterprise adoption and and uh consumer adoption that just means more chips and more compute, right? Um so that's our perspective and and we were really constructive on semiconductors over the long term. Um because you know there's such a supply and demand imbalance. >> You think that that whatever we've seen recently in terms of angst and and uh the nashing of teeth and chips. Are we past that now? Has that sector weathered the storm in your view? >> Well, we'll we'll see if the stocks have weathered the storm, but from a fundamental standpoint, the the reason why we're bullish is is really twofold. One is there's a fundamental shortage of semiconductors and what is uh what what takes a long time to build is not necessarily the process equipment but the clean room space into which you put that equipment and uh the the industry has underinvested in that didn't see what was happening with AI and that's why we're in a significant shortage that we're pretty comfortable happen you know continues through 27 and 28 and the other part of that obviously is continuation of AI demand And and it's interesting because a lot of the semi the stocks we cover Broadcom and Nvidia they're trading at you know 10 11 12 multiples now. Uh SKH highinex reported last night is a 4 and a half multiple. So what the market is telling you is we don't believe that the orders these companies have already received through 2028 are going to happen. And so that's why the anthropic IPO is important because it it's providing you know some some degree of indication that yes you know this this big buildout is able to be financed. Uh and again we get some detail about the the return on investment of of the equipment that gets put in. And so you know those those three factors are what keep us bullish. I mean, Chris, there there have been people that have come on here and called chips the barometer or the canary in the coal mine for the whole way I I trade. And I'm just wondering whether whether that's fair. Can if if the chips are doing okay, does that mean financing is going okay? Does that mean that that that banks are going to continue to lend? uh if interest rates uh continue to go up, can you watch the chip stocks performance and say everything's going to be fine or is that where you because I think if there's if there's a short shortage, you know, that that doesn't really show revenue growth as much as as you would would like to see. It shows great margins, but it could still be masking some underlying uh trouble in in the AI trade in terms of of the buildout. You see what I'm saying? >> Yeah. And you're right. Semis always lead, right? semis always always lead the market uh and and they lead the fundamentals because of the lead times that you need. But I I I I think it's a good point that the the financing has to be in place to be able to to to for this to go forward and it's massive amounts of of capital that that's required. So it's a legitimate concern. It's a legitimate question of the market. As a semiconductor analyst, you know, I can tell you what orders the chip companies have have on the books, but are are the customers going to have the money to be able to do it? But but there's actually another event that happened around the anthropic IPO which is also important and Broadcom uh raised uh is is you know getting banks and and private equity lenders together to raise money uh for 2728 anthropics build and you know they closed the second trunch of that uh earlier this week and so that's a >> I just wondered did broadcom is it fouian I mean they had to make a lot of you know they had to talk the banks into it. They had to make certain guarantees. It's it's you know and the loans that that they talk the banks into are going to be used to to to lease their chips. It's more the it really raises eyebrows in terms of being the latest, you know, sort of circular financing deal. Is it okay >> or and I'll tell you I I I agree. I I wish so so what you're referring to is the backs stop that Broadcom provided on that. So for you know about 70% of the financing uh what Broadcomm does is a is provides what they call a residual value guarantee. So if in the event you know one day Anthropic were to default on this and it's it's over the next 5 years that Broadcom would you know guarantee the value of those chips. So so the the premise would be if something happens to Anthropic you would just redirect that compute capacity to somebody else open AI or Google or whomever. And so and and the uh the backs stop declines in a linear linear fashion over 5 years which is why broadcast management uh felt comfortable with it. Uh I'm personally less comfortable with it. I wish somebody else would provide the backs stop but you know I I I do look at this as a tomorrow problem and you know through the end of 28 uh the the demand is good. I I'll I'll throw in another another comment in the last two weeks which which you know also to consider what SpaceX said was the return on investment on these compute assets is less than one year and so if you think about it if that's the case you want to put in as much capacity as as as you can and if I could pay back the c the capital in a year you know something that's happening five years out I'm I'm less concerned with but but your point on the backs stop is is a very good one and it's And it's it's it could be one of the reasons why the the multiples are are as low as they are, >> right? What' you say? Four and a half for uh >> SKH Highix is about four and a half times our uh are our are 28 numbers now. >> And SKH for what they said last night, they they believe that the supply demand and balance in in in DRM in particular uh will last all the way through 2030. Uh and we're not quite ready to go all the way out to 2030. It's a long time from now. A lot of things can happen. But at the very least through 2028, I think they're correct. And the reason is because there's not enough of this fundamental clean room space available. >> Okay. >> And so you have to build it. >> Let's begin with the AI trade continuing to rebound. SK Hinx and Gnova getting a boost from their respective quarterly results. Uh Cosby up six almost seven overnight. Jim is constructive for some. >> Yeah. So the way this is playing out is that there's initial level of of of skepticism that is just so deep that you can be watching as I was the SKH news come out and people just not buying it, people selling it down, people selling it down and then they just say, "Listen, we're going to buy as many shares as we can. We think that things uh very undervalued and frankly you just come back and you say, "Well, why am I selling it?" Then the stock goes up. Uh G Vernova stock has the same pattern then goes up as people study the release and then goes back down again. Now I will argue viciferously that that's the wrong pattern for G Vernova and the right pattern is SKH highix which just continued to go up up up >> is the most important ticker to watch at the open here SKH >> I think absolutely because that is the one that has the most predictive value to our market. uh when SKH Highix has been up uh you'll find that uh were far more there's only two cases where the market did not rally off of SKHX which is why I keep saying that is the most important stock and that one was like I said it was halt it was it was haltingly going up it was not just exploding higher no matter what they said on the call um but obviously the conclusion was the stock is incredibly undervalued we're going to buy back a lot of stock and it's for real which is why I don't want I want to buy GE granola I know that there's some number that somebody found this is very typical right now. We want to find the We want to find the cheek. You want to explain we overlook >> well I mean G Vernova in the pre-market was looking higher and it has moved lower. We mentioned this of course >> you know by association uh of which by the way you don't get that if you pick um >> Micro I mean the good news out of SKH Heinix was these long-term agreements for customers that are going to make up more than half of the capacity next year the following year we do want that stability in pricing don't we? Yes, but I would tell you uh Micron when I spent a lot of time with Sandre Morotra, his long-term agreements are far better, far superior than SK Hines. And he's actually trying to keep some back cuz he genuinely believes he doesn't want to lock in what look like low prices when it can be even higher. And he's going to have a lot more capacity. He's building a huge he's building the biggest plant in America in Clay, New York. So SK, if you like SKH, you should love Micron. Okay, there it is. I'm giving you Mic Grime. I'm calling it a blue plate special for you, David. >> Really? >> It's blue plate special. >> Okay. >> I also think all of these MAG 7 companies, they're benefiting from the mood of the market very quickly reversing from being incredibly pessimistic last Thursday and Friday to now being more optimistic. And a lot of that is rooted in two earnings reports today. I think there's two two companies that are driving the continued appreciation we've seen this week. Number one, SKH. Yep. >> SKH Highix. It is lifting all of the memory stocks. Western Digital reported last Thursday had great earnings. What was the price action? It was negative. We heard from Seagate, great earnings. The price action this morning was negative. If you pull up uh Seagate, it's now higher on the day. And I think that's attributable to SKH High. In addition to that, look at Verda. It's up 13% today. that is giving confidence to the industrial sector as it relates to the relationship between AI the spend and the ability to drive revenue growth verdive that is a blowout quarter it's giving confidence it's restoring optimism >> so given given what you've just shown there and what you talked about with regard to sentiment then this earnings season for the the broader AI trade is it less about what we're seeing from the numbers and more about the the market reaction and the trend >> I think it's always about reaction action and I think it is about sentiment and I like the fact that over the last several days in particular today I think those two reports are incredibly powerful catalysts for extending the optimism through the end of October into the month of November and I think it lends itself well as we begin to hear more and more from the mag seven companies and some of other semi-equipment names. Lamb Research they reported on October 21st bad price action after a good earnings report. Guess what? That happened to be an earnings bottom. That's now moving higher. We'll hear from Kla Corp. So, I like the fact that we are reversing some of that pessimism that we carried into this weekend and we've done it very quickly so far this week. Hopefully, the Fed doesn't take it away tonight. >> Bren, do you agree with that? That uh memory is kind of this key read for semis and tech and just the overall trade. >> I mean, absolutely. And especially South Korean memory. You know, I I bought DRAM before SK had their their IPO in the US because Samsung and Samsung and SKH Highix are like 45% of the DRAM ETF. And I mean the the numbers from SKH Highix were insane. So quarter over quarter their revenue was up 32%. Quarter over quarter operating profits up what 38%. So that's quarter over quarter. I mean they are booked out. Half of their bookings are already contracted out through 2028. They're booked also with long-term contracts to 2030. And I think when you look at the the price action of SK or DRAM or or Samsung, there's just peak skepticism. And if you think about when we hear from Microsoft or Google, there's the spenders still. They're still the spenders. the recipients are all of those companies that Joe just mentioned and that this to me this skepticism is actually quite healthy because it's really dampening animal spirits because you have to you know kind of like just like hold your nose and buy some of these names just because the trading action has been so terrible but at the same time the numbers totally contradict the price action. So it's nice to see the price action and the numbers finally coming together for at least today. Hey Mike. So it looks like a beat at least on the top and bottom line and that allimportant cloud growth number for Microsoft. We'll start on that EPS number. This is the adjusted number $4.89. Street was expecting $473 there. So a sizable beat. You've also got a beat on revenue here. 92.28 billion compared to the roughly 90 billion that analysts had estimated. And then cloud growth. This is the Azure number. 48% Street was looking for 45%. So easily beating there. We're still digging through uh for the rest of these numbers, guys. But you can see stock reacting up more than 4% now after hours. Back over to you. >> All right, Kate. Thanks, Kate Rooney. We'll await some more details here. The market's going into these big tech earnings with a big bout of momentum as the tech trade tries to steady. But will that all change in the next hour as we start to digest Microsoft and we get those numbers from Alphabet? We want to get to the 7% decline in Alphabet shares after hours. Earnings are out. Mackenzie Sagalas has the numbers. Mac, >> hey, Mel. Yeah, those shares down almost 8% now. Q3 EPS coming in at $212, but because of likely significant investment gains tied to those investments in SpaceX and Anthropic, at this point, we're not going to compare EPS to estimates. On revenue, it's a miss. 127.58 billion versus the 128.2 billion that was expected. Now, cloud revenue, this was a segment that we were looking at going into the print, really whether they're getting a payoff for all that capex spend. It's coming in at $30.71 billion. sets up 103% year-over-year. It is a beat against the street, which was anticipating $28.7 billion. So, this is right in line with what we were seeing with estimates that we'd see something in the range of 90 to potentially up to 120%. That's 103% gain. The other number I have for you here is Q3 capex. This is actually light of what the street was expecting. So, 51.36 billion of capex spending in the in the quarter. Uh, but at this point, sharers actually pairing those losses down around 6 and a half%. Let's get back to Mackenzie Zagala. She's got more on Alphabet's quarter. McKenzie. Smell. Alphabet shares down more than 8%. Now, I want to clarify on that gap EPS number. Part of what's dragging it down is an $ 8.7 billion investment loss. And that's something that we haven't seen in a while because of the significant investment gains from Alphabet stake in SpaceX and Anthropic on Q3 search and other revenue. That's a miss. 63.35 billion dollars versus the 64.96 billion the street wanted to see. This is a key read both on the ad market at large but also on the part of Google's business that's most profitable. This is really how they're able to make up the difference in terms of spending on capex. So it lost momentum last quarter. It was missed last quarter uh and this quarter. And that's why cloud coming in at 103% year-over-year growth is so key. Uh in terms of Q3 YouTube revenue, it's a miss 11.21 21 billion versus the 11.44 billion that was expected. Uh we also have a read on free cash flow. Remember that flipped negative for the first time in Alphabet's history as a public company last quarter. It came in at 9.1 billion. That's uh versus the loss of 2.7 billion that the street was looking for. And then that other bets revenue that is where Whimo lives its self-driving unit. That's a miss. Four straight quarterly miss there. 372 million versus the 382.4 4 million that was expected. Whimo raised 16 billion in equity earlier this year and then just had a debt raise of 5 billion as it looks to scale internationally and across the country. And those shares still hovering around 8% lower. Guys, >> Mac, thank you. Let's dig in more on this big move lower in Google shares. As Mac mentioned, uh stock shedding over $300 billion in market cap if it were to open at these levels. Joining us now is Evercore head of internet research Mark Mahaney. has an outperformer and a $400 $450 price target on Alphabet. Mark, uh, it's good to see you. I It seems like perhaps the the search revenue shortfall, uh, is maybe the thing that stands out. It it grew 12% year-over-year versus like 14% plus forecast. >> Yeah. Advertising kind of for Google across the board decelerated. Now, it's the second quarter in a row that it's decelerated. Search, YouTube ads as a whole decelerated. Even on a two-year stack basis, it's decelerating. That's a little bit um it's a little surprising. You had the opposite from Meta where the two-year stack actually accelerated. So um there may be a little bit of a share shift uh going on here. There's something that Google was going to need to address in their earnings call. Cloud business came in. I mean there were big bogeies out there. 100% plus revenue growth for cloud and they met those and they and there was no sacrifice in the margins. Operating margins at cloud stayed at 36%. So that's the good news. But the advertising business kind of decelerated across the board. That's the overwhelming bad news. We know that the what we're now going to be listening for is whether we're going to get metal like comments about the need to raise capital. I don't think they're going to need I don't think Google needs to raise capital from here. But if they were definitive about that, I think that would, you know, give uh investors some comfort. Is there concern Mark that because search is going to let's say even Gemini as opposed to another you know search provider or another agent that because of that that's what's causing search to be down across the board for for Alphabet. >> You know Melissa I I think that fear is going to rise. I'm not sure it's warranted, but you know, when you get the seller a surprising deceleration in the growth rates, revenue shortfall, then yeah, that uh you know, we're going to I hope we don't go back to where we were two years ago when chatbt was going to undermine search. But it's possible that we'll get that fear in the market again that agentic commerce uh agentic search uh is going to now be the the challenge that Google needs to overcome. By the way, Melissa, I'd love to hear them talk about their own muse. Uh I think this is a a rich uh opportunity for Google to to jump into this consumer AI market in on a with a premium model like Muse has. They should do it. I don't think we're going to hear that on earnings call, but somebody's going to ask them about it and if they don't, I will. >> You mentioned that, you know, you don't really expect Google to say that they have, you know, ever higher capital needs right now, but they obviously dipped to negative free cash flow. Maybe not not unexpected. Uh but how do you think the market is going to view that? In other words, we just saw today Oracle rips on the idea they're not going to raise as much capital. Meta has come under pressure since it said it did need more. It seems like the market's winnowing along these lines. >> I think you're right, Mike. It is. Um but uh but Google raised 160 billion over the last 12 months. I mean, good for them. They they thought ahead of their capital needs. I think Meta can you can you can and the market is correctly dinging them for being a little late to realize how much capital they needed to raise. I think Amazon has raised over 100 billion too. So I I just you know looking at free cash flow forecast. Yeah, I know they're going to be next year. This is a huge investment cycle. They've been telling you this for a while. They've been telling you that and telling us that capex is going to rise significantly next year. Maybe we'll get a quantification of that on the earnings call. That would be very helpful. But I think they've got enough uh capital to get through this investment cycle. the biggest one they've ever faced. I think they've raised enough in order to get through it without having to go back to the markets. >> You just said we don't really know what the peak in part of the investment cycle is. I mean, it's going to be a huge investment cycle and you think they have enough money and and their core search business, their core search ad uh revenues are going down and yet you still think that there's no need to raise money. I mean, how how are you so sure of this when we don't really have that sort of road map that Oracle is presenting? I mean, maybe they'll give it um on this conference call, but we don't have that road map as to what they consider peak in this investment cycle and what their offramp is in terms of spending. >> No, Melissa, you make a good point. I I can't be sure. Um I can come up with a range of scenarios. It's just, you know, this is a company that's going into this with close to 200 billion in cash. And yes, this this company is going to be losing this year, I don't know, something on the order of 20 billion in uh in free cash flow. I mean that's huge for most companies. This is the company that generates 200 billion a year roughly in operating cash flow. So, you know, you just get a few tweaks here or there and as long as the margins stay high and at Google Cloud Business, you know, my guess is that they didn't spend all of this time the last 12 months doing a bunch of different raises, equity and debt, uh, you know, and and didn't plan ahead for how much capex they thought they would need. But, you know, surprises can happen. So, I can't be 100% sure. Hopefully, we'll get some clarity on the earnings call. easy opportunity for the company to win some favors back from investors by by you know putting a line in the sand and said that we've raised all the capital we need to get through this cycle. >> Alphabet and Microsoft both with market caps of just under $4 trillion as of tonight's close have tentacles that do not confine themselves to their own lanes. They skate in multiple lanes. Alphabet and search, YouTube, Chrome, Whimo, Google cloud services, Microsoft and enterprise consumer uh software, Azure, LinkedIn, video games, copilot. They have all developed well uh really good artificial intelligence capabilities. Alphabet was the big story tonight though and it was not a positive one. Alpha posted disappointing double miss on both the top and bottom lines sending shares down sharply after hours. Revenue grew nearly 25%. We should be happy that right? But search which accounts for about half of sales came in about a billion and a half dollars below expectations. That's likely to reignite the debate about whether AI is eating into Google's core business. The bright spot was cloud where revenue was more than double and beat expectations by 103%. Gemini now has more than a billion monthly active users. Capital spending also came in below expectations. Though the company signaled a significant increase in capex for next year. Free cash flow is also negative 9.1 billion. Something you hate to see from a company that used to spew cash and had a pristine balance sheet. Part of the challenge now is deciding how much computing power and how many and many of its custom AI chips go to paying cloud customers versus its own products, including Gemini. cloud is delivering, but that wasn't enough to offset a disappointing quarter for the core business that pays for these ambitions. Microsoft, on the other hand, wow, great story. Beat on every single line. Total revenue grew 19% easily beating expectations while the company's earnings per share surged 32%, trouncing consensus estimate by 19 cents. Highlight Azure business grew 48% year-over-year. We were only looking for 45% growth. That's pretty stunning. I remember we were hoping to get back to 40% for Azure, which is their cloud business. But the AI tailwind keeps getting better and better and better. Aside from that, Microsoft showed a degree of spending discipline that makes this unique among these so-called hyperscalers, which is why I think it's going to leap out and be the best of them. Capex result much lower than we thought. Now, remember with Microsoft, you're never out of the woods until the conference calls over. That's happening now. So, we'll see what they have to say, especially about their capital spendings plans and their guidance for the current quarter. But assuming no major surprises, this was the winner from tonight's two big magnificent seven reports. Don't worry, there's a lot more coming. And remember, I'm calling it the Mac 10. We own both of these for the Charitable Trust. Not because of the size of this quarter's performance. We own them for their body of work. Their market capitalization is simply a function of their greatness. Although a company can be the size of an aircraft carrier and also be overvalued. I am concerned that that could be the case with Alphabet after Google's poor showing tonight. SK Heinix put on a clinic last night about how you can get your stock to move higher. Something a bunch of tech companies this evening sure need to return to form for. If you don't know SKH Highix is the world's second largest supplier of DRAM, the basic memory semiconductor that's crucial to the data cent's information retrieval process sitting behind Samsung and ahead of Micron. More importantly though, SKH High is the number one supplier of high bandwidth memory, HBM. That's the type of memory that's most in demand for AI data centers. They have a dom position HPM. They got a market share north of 50%. Highness is probably the the most important company you've never heard of. It is a South Korean giant and it is beating heart of the data center perhaps even more so than Nvidia because if you are using any number of Nvidia's rivals now, you still need DRAMs. You still need stuff from these guys. If the stock of Hinx is up overnight, there's a really good chance the whole American chip complex is up. And that's what happened today after the company's overnight report. Right now there is tremendous skepticism about the data center. They are viciously unpopular. We know that they cost a ridiculous amount. There are companies that have been created just to build them that might not be around in a couple years. These flaws have coales to make it so that when a complex a company that complex supports no matter how good the numbers are, there's still a chance that the stock might go down. Witness Gernova today which couldn't rally despite a very good quarter this morning. Although I found the market judgment rather capriccious if not downright wrong. Although Oracle, a builder of data centers, told a good story today at his meeting and they're talking about capping costs and becoming more profit profitable than people thought. But the king of reporting is now in SK Highness, which is why I want to take you through their clinic to show you what it takes to rally in this market big time. First, the stock of Hinx is ridiculously low PE multiple with the South Korea listed shares trading for just three times next year's earnings estimate. Now, I teach how the market arrives at PE multiples and how to make money in any market. And highex has a multiple that shows you people don't believe the good times can continue. So far they're wrong. So a low multiple is a great place to start. I make a mental note of that because we own for the charitable trust micron which trades for less than five times next year's earnings. Not as low as the unnatural three but plenty low enough. That makes me think that maybe Mike Grunk could have a realistic pin action move off of highness. Very positive. Second you need a big beer revenues margins. highest succeed in revenue projections by roughly 6%. That's a real trouncy. Gross margins were an outstanding 85.7%. She was only looking for 84%. Uh that's and that was a high bar. So counted as a cherry on top. Honey's also guided for accelerating shipment growth expecting mid 20% growth for this quarter up from 10% in the third quarter. Accelerating growth is like catnip to growth investors. It lets their imagination run wild about how good things could get. Heading said that demand was so strong that the company's effectively sold out through 2029. It has long-term arrangements with a growing number of customers. That's something that Micron has too, only more bigger deals with lots of room to make even more if the spot market stays hot, which Micron thinks it will. Highex paired that outlook with approximately $75 billion in shareholder returns this year, including over 20 billion in dividends and more than 45 billion in buybacks. That's something I am concerned about with Micron. They have a deal with the federal government not to do a big buyback until after December 9. If Mike Garner is going to roar, it should indicate an even bigger buyback plan well before its next report, which will be after that that date of December 9. And Heinus wants to buy a ton of semiconductor capital equipment. Now, in the old days, it was a sin for these companies to buy more equipment because prices would then top as production reach equilibrium with demand. This time, demand is so strong, so powerful that Heinix knows that more supply won't save the market. That shows a level of confidence that I find extraordinary. If you get through that gauntlet, then this market says you got a winner. SKH Highix's US listed shares rallied more than 13% today. And I bet that signals that Micron will be more of the same, making it a buy despite its already terrific track record. Something to think about as the whole tech complex, save Microsoft, looks mighty ugly going into tomorrow's session. >> All right, I hope you're all doing well today and staying calm in this market. Wednesday was a mixed day in a market with the Fed, leaving rates unchanged as investors nervously awaited hyperscaler earnings after market close. I'll cover some important highlights from Alphabet and Microsoft earnings in a moment, but first, let me cover some of Wednesday's news and market action. Many tech stocks initially open higher Wednesday morning following SKH Heinik's impressive earnings overnight in South Korea. I'll briefly recap some of the highlights in case you missed last night's video. Revenue and operating profit both beat consensus expectations with revenue up 32% quarter-over-arter and up 328% year-over-year. Operating profit was up 38% quarter-over- quarter and up 632% year-over-year. One negative from the report was that net income was down 58% sequentially. Q3 net income was significantly lower primarily because of large non-operating losses from investment valuations and foreign exchange movements rather than deterioration in SKH semiconductor business. SKH also said that approximately 100 trillion Juan in shareholder returns are to be executed this year. That's about $75 billion. So for this specific quarter, we're looking at additional share repurchases of about $15 billion and a Q3 dividend of roughly $11 billion. SKH says HBM4 is to overtake HBM3e in volume and revenue in Q4, which is very positive both for SKH Heinix and Nvidia since HBM4 is used in Nvidia's Ruben platform. SKH Heinix said memory demand is to exceed supply through 2030 and long-term customer agreements now cover over 50% of SKH 2027 and 2028 capacity. I will say it was very encouraging to see SKH stock react positively to good earnings. For a while now we've been in a lose-lose situation regarding market sentiment when it comes to memory makers earnings due to the multi-deade cyclicality of the memory business which has led to a very high level of skepticism. In recent months, when memory makers reported very strong results, we had many market participants who assumed the cycle was peaking because the results were so strong. And when memory makers reported results that slightly missed lofty expectations, memory stocks sold off because some market participants assumed that the peak was behind us and that the cycle was starting to roll over. That was unfortunate, but going into SKH Heinix's earnings, many AI stocks, including SKH Heinix, were down notably this month, which provided a much better setup going into earnings. We'll see what happens in the days ahead, but it was very encouraging to see positive price action in response to strong earnings. Samsung earnings are scheduled to be released Thursday morning in South Korea. For those of us in the US, that is Wednesday at 9:00 p.m. Eastern, 6:00 p.m. Pacific. By the time you see this video, those results will most likely already be released. I doubt I will have time to cover those results in this video, given everything else going on with today's news and hyperscaler earnings. Recently, some videos have taken over 10 hours to make, and so I doubt I will be able to cover those results in this video. I apologize for that. That said, we got Samsung's preliminary earnings guidance earlier this month, so the results shouldn't be much of a surprise. Now, let's carry on with Wednesday's news. Wednesday afternoon, Nvidia began trading lower after Reuters published a story saying that the DOJ is inquiring about Nvidia's acquisition of Hugging Face, as well as inquiring about Nvidia sales practices, investments, acquisitions, and whether the company has pressured customers. Reuters reports that regulators have examined Nvidia's transactions involving Grock SKMD and RunAI. The Hugging Face acquisition is expected to close in the first half of 2027. Wednesday afternoon, many of the Neocloud stocks traded decently higher starting around 2:25 p.m. Eastern. I noticed this notification from Financial Juice around that time, saying that Oracle reaffirmed its fiscal 2027 outlook targeting $225 billion in revenue by fiscal 2030. That is likely what sent Neocloud stocks higher Wednesday afternoon. Also on Wednesday, Iron and Wingspire Equipment announced $363 million in financing. Wingspire Capital is a portfolio company of Blue L. The equipment finance agreement refinanced recently acquired revenue generating AI compute infrastructure including GPUbased servers and networking systems. Wingspire completed the transaction with the six lender group. Importantly, we did not get details in this announcement regarding the interest rate, maturity date, repayment schedule, or the specific GPU being financed. Perhaps we will get those details on November 5th when iron reports earnings. That said, given the recent concerns about availability of capital and given that this is financing for revenue generating equipment supported by multi-year customer contracts, I would say this is likely an overall positive for Iron. Hopefully, we'll get more details from Iron's earnings on November 5th. For this specific earnings report, I'm expecting AI cloud revenue to be somewhere in the range of 160 to $185 million. That's much better than the previous quarter's $7.5 million in AI cloud revenue, but I doubt that it will be enough to satisfy market participants and cause the stock to move notably higher. That's something to potentially look forward to in calendar 2027. For this particular earnings report, I'll be looking for updates on Iron's buildout. There have recently been rumors about a cabling change requested by Microsoft that push back the delivery date of Horizon 2 by 45 days. I don't know if the rumors are true or not, so I want an update on that. I also want an update on Horizon 3 and Horizon 4. I also want an update on the additional 40,000 GPUs Iron was targeting to have operational by year end. So, while I'm not expecting the stock to move notably higher on this earnings report, I continue to be bullish on Iron and I expect that I will likely be bullish at least through the first half of calendar 2028, depending on what happens. In other news, Bloomberg is reporting that SKH Heinix, NAN subsidiary, Solidime, is negotiating with the US Commerce Department over a potential $45 billion NAN manufacturing facility in the US. Total investment could eventually approach $100 billion. Solidime also wants US approval to ship semiconductor manufacturing equipment to upgrade an existing man facility in China before committing to the US investment. Solidime says it is evaluating manufacturing sites globally and has not made a final decision. In other news, Reuters is reporting that China's CXM plans to begin HBM 3 production within about 2 months. CXMT's yields are reportedly in the range of 20 to 30% versus SKH 70%. Since we're talking about yields, as I said recently when multiple media outlets incorrectly frame CXMT's 4F squed announcement as if CXMT had leaprogged incumbent memory makers. A product announcement is not the same thing as announcing competitive yields, high volume manufacturing, or substantial near-term capacity coming online. Also, while many market participants in the US are worried about a potential dumping situation from China, CXMT and YMTC. The reality is that CXMT cannot fully satisfy the demand in China, let alone the rest of the globe, because the demand is so strong. CXMT was recently reported as being unwilling to undercut competitors on price. It was recently reported that Chinese tech giants have approached Samsung and SKH for long-term supply agreements with some of those extending to 2035 and reports over the summer indicated that CXMT was even charging some customers more than Samsung and SKH. They would not charge higher prices if there were a surplus of supply. Now, let's cover hyperscaler earnings. I'll just rapidfire important points from both companies earnings with a primary focus on the details that are relevant to AI infrastructure companies. Let's start with Alphabet earnings. Alphabet reported Q3 revenue of $127.6 billion versus $127.9 billion expected. Alphabet missed consensus expectations on Google services revenue, Google search revenue, YouTube advertising, and operating income. Alphabet also reported quarterly negative free cash flow of roughly $9.1 billion. With everything that I just mentioned, the initial reaction to the earnings report is understandable given recent market sentiment. A key bright spot on the Alphabet earnings report was Google Cloud revenue, which came in at $30.71 billion versus $ 29.57 billion expected. Google Cloud revenue was up 103% year-over-year. That bodess well for the entire AI infrastructure supply chain. Cloud operating income more than tripled year-over-year to 11.1 billion. And cloud operating margin expanded quarter- to 36.2% versus 35.6% in Q2. Capex during the third quarter was $51.4 4 billion versus $55.78 billion expected. Alphabet maintained their 2026 capex guide of 195 to $25 billion and leadership said they expect capex to increase significantly in 2027. Leadership also spoke to the supply constraint environment saying that they started utilizing thirdparty compute capacity at the end of Q3 and will ramp usage in Q4. That comment is positive for the Neoclouds because it speaks to compute demand continuing to far exceed supply. It's also positive for Nvidia, Micron, SKH, Heinix, and the rest of the AI infrastructure supply chain. Also, the fact that Alphabet began utilizing thirdparty capacity may be partially responsible for capex during the quarter being lighter than expected because depending on how those deals were structured, that expense may be recorded as OPEX rather than capex. Additionally, given Alphabet's 2026 capex guide of 195 to $25 billion. And considering what they've already spent in capex in the first three quarters, Q4 capex should be somewhere in the range of 63 to 73 billion, which would be decently higher than the 51.4 billion of quarterly capex that Alphabet just reported. So, put simply, I would say the negative reaction in Alphabet shares is due to missed expectations in some of the company's core business segments and expectations of higher capex next year without knowing the specific amount yet. And while that is the case, Google Cloud is putting up very impressive results with revenue up 103% year-over-year and expanding cloud operating margin. Now, let's cover Microsoft earnings. Microsoft reported revenue up 19% year-over-year at $92.3 billion versus roughly $90.7 billion expected. Adjusted EPS was $489 versus $4.71 expected. And that represents a year-over-year increase of 18.4%. Azure revenue was up 48% year-over-year versus 47.7% expected. Azure revenue for the quarter was 33.17 billion versus roughly $ 32.84 billion expected. And Microsoft Cloud revenue grew 30% year-over-year to $63.9 billion. As a reminder, Azure revenue is a subset of Microsoft Cloud revenue. So, Azure revenue was up 48% year-over-year, and that is a subset of Microsoft cloud revenue, which was up 30% year-over-year. Microsoft's backlog was essentially flat quarter-over-arter at $677 billion. Microsoft's capex during the fiscal first quarter was $45.2 billion, which is notably less than what Microsoft leadership guided to on the last earnings call. On the last earnings call, Microsoft CFO said they expected capex in the quarter to be over $50 billion, but it came in at $45.2 billion instead. That put some pressure on AI infrastructure stocks when the earnings report was released. On the earnings call, Microsoft CFO said the reason for the lower capex number during the quarter was because quote, "Some party capacity deliveries we expected in Q1 were delayed." So that's bittersweet for AI infrastructure stocks. Microsoft is not pulling back on capex, but there are some delays which are of course not ideal. Roughly 3/4 of capex during the quarter was spent on short-lived assets such as GPUs and CPUs, while the remaining capex went toward long-ived assets. Microsoft remained free cash flow positive during the quarter and reiterated that they expect to remain free cash flow positive throughout the fiscal year. Microsoft CFO indicated that Microsoft may obtain additional funding when attractive in order to preserve financial flexibility. In fiscal Q2, Microsoft expects year-over-year Azure revenue growth of 49 to 50% in constant currency. Microsoft CFO said, quote, "Customer demand continues to exceed available supply." She also said Microsoft expects Q2 capex to be over $50 billion. She continued by saying that calendar year 2026 capex should be approximately $170 billion. That is less than the $175 billion Microsoft guided to on their last earnings call. Microsoft CFO said that is due to the third party capacity delays that she mentioned on the earnings call. And Microsoft expects capex to accelerate in the second half of the fiscal year primarily from CPUs inclusive of higher memory and storage costs and GPUs as well as the thirdparty capacity deliveries that shifted to the second half of the fiscal year due to delays. Those are some of the key highlights from both Alphabet and Microsoft earnings. I would say that the overall trend remains intact, but I understand why many tech stocks were lower following these two reports. Heading into these two earnings, market participants were expecting higher capex in the reported quarter as well as more explicit increases in capex guidance. We didn't necessarily get that. Again, Microsoft's capex during the quarter was lower than what they guided due to thirdparty capacity delays and Alphabet's capex during the quarter was less than expected, which may be partially due to utilization of thirdparty capacity that could be recorded as OPEX rather than capex. And that is in combination with Alphabet missing on key metrics in its core business despite very strong growth in its cloud business. So, I can understand why many AI stocks were down in after hours following these reports. Still, both companies spoke about demand continuing to exceed supply. They're still supply constrained. Alphabet told us they expect significantly higher capex in 2027 and Microsoft's capex during the quarter would have been higher if not for thirdparty delays. And again, Microsoft expects capex to accelerate in the second half of the fiscal year, which is basically the first two quarters of calendar 2027. So, while there were some unexpected speed bumps during the quarter that led to capex numbers falling short of expectations, the overall trend still remains intact. Put simply, the long-term thesis remains intact despite the short-term negative reaction in AI infrastructure stocks Wednesday evening during after hours trading. Now, let's see what Amazon has to say Thursday after market close. Last earning season, Amazon CEO Andy Jasse laid out a great case for how Amazon is monetizing new capacity as soon as it comes online. They have clear line of sight to strong financial returns on their investments, and there is far more demand than what they can supply. AWS is the largest cloud, by the way. Last quarter, AWS hosted accelerating revenue growth and expanding operating margin, which is very impressive given AWS large size. Amazon said last quarter that they expect to spend $220 billion on capex in 2026. And CEO Andy Jasse said, quote, "Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026. And I believe this dynamic will also be true in 2027, too. In fact, the demand we already have for 2028 is striking." And more recently, Ben Horowitz joined the All-In podcast in an episode published on October 16th in which he said he just recently spoke to Amazon CEO Andy Jasse. Listen to what Ben said about that. >> And this this this shortage is so bad. You know, I was speaking with Andy Jasse who runs Amazon yesterday and I said, "Yeah, like we're out of everything, you know, till 2028." He's like, "Oh, it's beyond 2028 bit. Like I don't think we get stuff back like end of 2028 maybe." Uh so everything else is sold out. So he he has the advantage of that he's got supply in a great shortage which is extremely different than the internet bubble. The internet bubble we didn't have enough demand because we had to build the internet. People had to get broadband you know you needed uh all this stuff. People had to buy you know originally they had to get their browser app fries all this kind of thing. There weren't enough consumers on the internet to absorb all the bandwidth that had gotten built out. and they had a massive amount of debt, not unlike uh we're building today, although not as big. Um, but but the lack of demand killed it. We don't really have a lack of demand in AI. So, I think the dynamics will be different. >> All things considered, I expect Amazon to have very positive things to say about capex on the Amazon earnings call. 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 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 do-com 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. Agentic 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 revenues surge. I wish both Anthropic and Open AI were public so the public could see the ramp in their revenues. 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 calendar 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 3 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 and remains in high demand. Vera Rubin is rolling out to customers. Nvidia Gro 3 LPX is in full production. 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 spending will reach three to 4 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 Finnvid. 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. Thanks for watching and hopefully I'll see you in the next