CNBC & Fox Today On NVIDIA Stock, Micron Stock, Chip Sell-Off - NVDA Update

I think long-term agreements serve as some level of commitment but I don't think there are perfect guarantees for anything in uh in in semiconductors but the fact of the matter is that everyone is short of supply. Uh I mean if we uh step aside and take a look at you know Google's recent earnings I believe they word they use the word uh you know constraints I think like eight or nine times on on the call. So that tells you that this buildout is for real. This buildout is happening across multiple customers, you know, the top five in the US along with neo clouds, along with sovereign, along with enterprise. So there is a very broadbased infrastructure buildout and everyone wants to make sure that when they're spending these hundreds of billions of dollars of capex, there is actually a reliable supply to back it up. So I think whether it's Intel, whether it's Micron, I think everyone in the uh supply chain is benefiting from this uh longerterm uh agreement and alignment with their customers. And I know VC this was a moment in time but when Alphabet announced that it was raising its capbacks the next day we did see some of the sort of the spend beneficiaries go higher but not able to hold on to gains. Is there a concern that that that these stocks will stop rising even on the back of increased capex? >> Yeah I think the scrutiny around return on investment is very natural. I think it is very justified. um you know at the same time we are also going through this summer uh period uh you know after a quarter where the semiconductor stocks went up over 80%. So I think some give back is natural. You know, of course, we are seeing all the tensions in in the Middle East and what they are doing to interest rates and a lot more of this infrastructure is going to be funded by debt. Uh so we we understand a lot of those uh concerns. But I think it's important to realize that for the top uh hyperscalers um investing uh is critical uh for their ability to grow. Without these investments, it'll be harder for them to grow and more importantly they are going to be exposed to the disruption risk of somebody like an open AI or anthropic who are coming after a lot of those businesses along with a lot of the 60 other neoclouds who are coming after those businesses. So I think spending from the hyperscalers is both kind of offensive in nature, right? It's helping them grow faster, create new revenue. It's also defensive in nature and and we think that continues for the next uh two to three years. >> Before you move on uh on that point, uh Jensen Wong of Nvidia just posted uh a uh a letter on why in his view open models matter. He says they're going to transform every industry, every company, every country. goes on to write, "Sure, open weights carry real and distinct risks. Uh, once released, the weights are beyond the original developers. Control and modified versions are difficult to trace. But the right response, he says, is this risk is is not to prohibit open weights." And he's been pretty consistent on this front. >> Oh, they have a massive open source, you know, platform and and they they've been on this side of it for for a while now. Yeah. I guess the real question is whether you know um to what degree the Chinese models remain open to us you you know companies and things like that but and then again what it what it means for investment levels down the road and and how fast things get commoditized. I I know everybody literally is puzzling over this every day and you know there's hard it's hard to know like where you're going to basically come to a high conviction call on that but this is the chatter. I'd say fundamentally what we're seeing from the tech sector has generally been more of the over the last couple weeks as what we've seen to start the year that is very encouraging revenue trends for the model companies at the frontier like openai and anthropic it is everinccreasing hyperscaler capex budgets so that's there's been a trade of sort of uh the beneficiaries of that capex outperforming the spenders of that capex that has continued Um, and you know, I I still think this infrastructure buildout is in early stages. So, I haven't seen too much fundamentally to change the view. >> Are are you still a fan of the uh buy the spend, sell the spenders kind of thesis? >> Yeah, it kind of depends on your time horizon. I I think uh what we learned from Google this week, it seems very clear that Yeah. So, they again raised capex this year. Um I think the signal is that next year is going to be another massive year of capex. So doesn't seem likely that we're going to get any news flow from this earnings cycle to suggest that the capex cycle is cresting. Um so from that standpoint shorter term yes the beneficiaries of the capex the memory companies the storage companies the chip companies the data center infrastructure or the data center industrials the the near-term outlook for those earnings um still looks very favorable longer term I do think that the fears of ROIC on this capex for the hyperscalers are a bit misplaced and and overblown What do you make of today's t uh tape where you've got the semiconductor complex really lagging, the rest of tech and the market as a whole? >> It's kind of been emblematic of what we've been seeing in the market the last couple weeks. Quite frankly, I think there's been a bit of a reversion trade in the market, the names that have been outperforming the most year-to- date giving a little bit back. I think that's just riskoff attitude. Again, I don't see that much fundamentally to to kind of support today's trade. In fact, we had really good earnings from Intel overnight. That should have been a positive read through for kind of the semicap names in particular. But, um, you know, I think it's just a reversal of of some of what we saw yesterday, too, where hyperscalers drew down significantly and and the capex beneficiaries had a strong day. >> How about uh Kimmy and this moonshot moment? Is this going to be a development that we're going to remember in 6 months or will it fade? >> I don't think we're going to remember this development specifically. I think what this represents is, you know, it shows that there's going to be competition at the frontier among the model developers. So, it probably is an incremental negative for the open AI and anthropics of the world probably. But at the same time, this is good for AI adoption. This is going to drive lower costs of inferencing models and and using models. Um and this is this is broadly good for that capex beneficiary group. This is good for anyone selling chips, anyone selling uh data center infrastructure. Um and I think this is good for the hyperscalers as well because these hyperscalers have built these businesses around model orchestration. So on behalf of their customers, optimally matching a workload with a model to deliver the best price adjusted performance. And so I think more model options and more kind of options across different types of workloads and different cost profiles should be good for those model orchestration businesses that the hyperscalers have built. So I think we're going to see very strong um cloud numbers in this set of hyperscaler earnings coming up. >> Right. Let's talk a little bit about whether or not that short-term to medium-term story plays out for the chip stocks. And and I I I want to do this because this is one of those opportunities that could be a very profitable one if you bought the dip. I don't pretend to know where this chip trade is going, but it's fallen by enough where people are getting some attention from it. Stephanie, the chip trade, is it one where you feel as though this is one that's fundamentally okay for you to start nibbling at right now? And do you have to be a stock picker like yourself to do it? Or can we just feel comfortable saying maybe the SMH, the socks, some other ETF, maybe even DRAM can be enough for us to kind of get that exposure? Or do we have to be picky about picking bottoms in these stocks? >> I mean, I I always want to be picky. I always want to find a a good company on sale. And so, in the last couple of weeks, I've actually bought Nvidia. I bought Nvidia the for the first time. You know, I've been I've been an owner of Broadcom for many, many years, and it's been an absolute home run. Never owned Nvidia. The stock has lagged the group by 53% year to date. It's trading at 18 times forward estimates. It's the number one C GPU company in the world. And yeah, they're going to lose some share, but it's going to be dominant for years to come. They've got a new product cycle, great free cash flow. So, I started adding to that. I bought a little piece of Micron. How can you not own something in memory when you're hearing from someone like IBM say their customers are deferring their purchase plans because they're buying memory and they're buying servers and storage. That's the area where you want to buy. But by the way, I do think IBM is a buy. We can talk about that later. But I do think you want to be particular. I recently sold Marll because I made over a 100% in like a month and a half, which is crazy to me. So, I think you want to pick your spots, Dom, but I think that there are spots to be had. >> All right. So, the AI story, right, particularly on the investment side, and that's really sparked this big-time rally, really been one about bottlenecks and the opportunities they create. My next guest in his firm, they seem to sniff these things out long before anyone else. I want to bring in now president of semi analyst, Doug Olaflin. And and Doug, uh, I'll start with the thing that caught my eye this morning was CMXT. Uh, the a Chinese company. They make memory. It's hot. They're gonna listen to Hong Kong. I think I read 200 times oversubscribed. Yep. >> And it's interesting because China uh I mean not China, although maybe it's a Freudian slip. Apple >> sort of been has been alluding to using their chips because Micron either doesn't have them or they're charging too much. Now CMXT is saying, "Hey, we're going to charge just as much as everybody else." >> What does that say for their memory trade? That sounds amazing to me. >> Yeah, I think that's correct. Uh the reality is memory between one player or another is often you can you can use either or and even though they're a new player in the party and historically China loves to dump technology on on the west right um the reality is demand is strong even with that new player it it tells you that the demand is still far in excess of supply and that's what we continue to see. Um a lot of the troubles I think in the memory market is just the fact or memory market stocks rather is just the fact that they're volatile. They are some of the most volatile stocks in existence, but CXMT having long-term agreements, solid pricing, and um their capacity, uh a lot of people are worried about adding too much supply and flipping the whole market. They're adding a lot of supply, but we still don't think they can flip the whole thing. >> Right. It was interesting. They even told Wallway a pound sand uh recently, which is like a huge thing to do. Uh, but I I guess the the big thing with that volatility is I still think there's a lot of people who don't believe that this time is different. That maybe it's a blip, but that 50-year trend of memory, you know, pricing going down, down, down, down, that this is not a new paradigm. It's just a temporary quote unquote bottleneck, and now these stocks are difficult to price. >> So, I'm I'm not going to say this time is different, but I am very supportive in the long run, right? Because one of the reasons why people are are frankly pretty um pretty kind of scared is because historically when the price uh raises start to top out then the price falls and then often you're looking at a brutal memory market cycle. We don't think that's going to happen. We think price is going to continue to increase but not at the rate that it has. It's not sustainable to say hey next year memory is going to cost five as five times as much as last year. Right? We still think a 50 to 100% price increase is pro is is possible. Um >> but that's huge for a stock trading with 6 PE. >> Exactly. 4. But these cyclicals, they get to the very low PE. And so what I think changes at some point in time, you have to look out and say, hey, these companies are so cheap and and often times if they're making enough cash, they'll start to buy back uh buy back shares. And so I think that that's what happens. The share uh the multiples tend to compress when the rate of growth and especially in pricing goes down. And so we're in that part of the cycle. And so how long and the duration is what's going to now uh dictate the future performance because if they can grow EPS at 100 200% um the socks will work. >> Yeah. I mean it's just it's mindboggling. I want I want to switch gears to another major story. Of course this is uh the open source or o you know open source um debate if you will. Uh you know a lot of people have come down taken sides on that. Uh this morning, Jensen posted his first tweet, his first tweet, and uh he's supporting it. Elon Musk retweeted it. He's supporting it. >> Uh but you know, before that, a lot of people have been pushing back against this for a number of reasons. Where do you come in on it? By the way, what do you think about Jensen stepping in? >> So, uh you know, it's pretty interesting. If we're talking about bottlenecks, one of the biggest bottlenecks in the world is making a really good model. So, for Jensen, I think he's a strategic genius. One of the things that he loves to do is effectively where he sees there's no differentiation or a place that Nvidia is not going to be able to crush their competition. He tries to commoditize the compliment. And so an open- source ecosystem means that he has a lot more power over over his biggest customers. Today there really is only two or three main customers. Uh let's say Anthropic, OpenAI, Gemini. Gemini obviously has the TPU. But um if everything is an open- source model, what you're going to see is hundreds of potential customers. And in that world, Jensen is going to be uh making bank >> on Wall Street. We call that talking your book. >> Yep. >> Or promoting your book in >> and I do I do empathize with many of the desires for open source models. If everything becomes closed, uh you know, these are very very technologically advanced techn uh it's a big deal and having a small group of people control that historically just doesn't vibe with uh a lot of the American spirit, right? And so I I think um there's a push and a shove. I don't know if there's a right way. We are always a believer in best of breed wins and you know the same time actually and maybe this is unfair to do like Opus 5 just dropped like within the last I saw that before I came like like last 20 minutes and you know what it's a closed source it's a closed source model but it looks really good on a price to performance basis and so it's going to be this race of open source behind uh closed source ahead and how how uh much of a gap they can have is going to be the competitive advantage. >> At some point you think it'll be much to do about nothing. Yeah, maybe we'll see. >> Uh before I let you go, last time you were here, we talked about Intel. Yep. >> Uh uh they reported phenomenal pop under a lot of pressure now. Same thing happened to Google. I thought that cloud number 82% Street was looking for 63%. Uh you know getting uh getting hit pretty hard. Is there is there is there a message to this market on about the fundamentals or is this really just sort of par for the course in terms of how far these companies have come? Yeah, I think it's uh a little bit I think earlier saying like you know lazy summer times, right? Um you got to remember that this is the second best start to the year for semiconductors in the history of time. 1995 is the only time that it was was better. So you have to really appreciate how far we've come. And the reality is I think it's TSMC, GEV, um you know, ASML, uh all these guys had great prints and they've all been sold. And I think on Google maybe some of the concern is that they've been selling TPUs. So that isn't a like to like on GCP or not, but if you zoom out over, you know, a week, 1 month, 3 months, you look at a phenomenal print. We're talking a business that is uh, you know, hundred billion dollars plus like this is one of the biggest, most scaled businesses in the history of time growing at that rate. That's really impressive. And in the long term, I think that'll that'll weigh out. >> There is a real correction happening. I mean, the the the real exhibit A for that would be the semiconductor group. you know, even in the cap weighted Nvidia dominated group that's down like 13%. If you look at SMH or socks, it's down way more than that. >> And so, I think we have corrected a lot of that. And then we're going into earnings season. And the big stat to me is like, yes, correlations are low. It's we're vulnerable to a macro risk because of that. But on the other hand, this really important semiconductor group enters this earning season with the highest um implied volatility that we've seen for any earning season outside of the GFC. To me, that's a really high hurdle for the Bears to push this significantly lower. So, I like playing those odds. I think Sims can get back into gear during earning season and uh reverse really this momentum rotation we've been playing uh since really like mid June. >> All right, I hope you're all doing well today and staying calm in this market. Friday was a mixed day in a market, but it was a notable red day for many AI hardware stocks and especially for memory stocks like Micron. Let's start there. So overnight in Korea, the Cosby had another rough session and I'm going to explain why in a moment. It's important to remember that memory makers Samsung and SK Heinix alone represent more than half of Cosby's market value and margin debt in South Korea is near record levels. So it's a highly concentrated market with a lot of leverage which exacerbates any moves to the downside. Now let's talk about what caused the sell-off. Stick with me here because this is a very strange situation and I'm going to cover a lot of details. So apparently two notes from Morgan Stanley analyst Shan Kim began circulating in Korea overnight in which Shawn turned bearish on memory stocks claiming the demand had evaporated in NAND and that it made sense to sell DRAM as well. But here's the crazy part. One of the notes was actually published in 2022 and it appears that someone edited the note to make it look as if it was a newly published note. Additionally, many media outlets began publishing stories claiming that Shaun Kim published a note on July 21st in which he said that the memory frenzy is nearing an inflection point and that prices may peak in Q4 of this year. Again, they claim that note was published on July 21st. But according to take him on X, Shan Kim's views on memory have not changed and his last analyst note on memory was published on July 6th, not July 21st, as many media outlets claim. Also, Satrini analyst Jukon posted on X about the note that was supposedly published on July 21st, but they ended up deleting that post because they could not vouch for the notes accuracy. Now, before I share more details about what happened on Friday, let me point out a few things from Shaun Kim's most recent analyst note on memory that he published on July 6th. To be clear, the note that I'm talking about right now is the official note, and as far as we know, it was the last note he published about memory. In that note that was published on July 6th, Kim was cautious on memory and momentum stocks in a short term, but he was not bearish on the overall memory cycle. Again, that was from his official note published on July 6th. Now, I want to address some claims from one of the notes that began circulating in Korea overnight. Again, we cannot verify that Shaun Kim actually published this note, but I'm going to address some of the claims in the note. It claimed that nan module inventories have risen to about 13 weeks. demand has cooled and that fourth quarter nan price gains are expected to cool. It also claimed that China's CXMT is rapidly expanding capacity and that supply and demand are moving into balance. The note also made the case for taking a bearish view on DRAM as well. It also claimed that 10 cent in China has already secured 90% of its required inventory. So, those are some of the claims the note made. Let me address some of those claims. First, it's important to remember that inference demand in China is substantially less than in the US. We also have to remember that there are restrictions on the export of advanced semiconductors to China. Considering those factors, it makes sense that AIdriven memory demand in China is going to be substantially less than it is in the US where such restrictions do not exist and inference demand is skyrocketing. It's also important to remember that CXMT can't even satisfy all of the demand in China, let alone the rest of the world, because the demand is so great. In fact, on Friday, the same day that this messy situation was unfolding in the market, Reuters published a report saying that CXMT has been raising prices for months. And in some cases, they even charging their customers higher prices than Samsung and SKH. Reuters made that claim according to multiple sources. Listen to me. CXMT would not be raising prices if demand was cooling and there was a surplus of supply. Now, regarding the notes that began circulating in Korea overnight, one of the notes is from 2022 and appears to have been altered to make it appear as though it was a new note. And as for the other note, we cannot verify its authenticity. One of the notes was supposedly published on July 21st, but Shawn Kim's last analyst note on memory was published on July 6th, not on July 21st. I'm not here to accuse anyone of anything, but I honestly think that there may be foul play involved in the situation. Additionally, while it's claimed that Morgan Stanley Shaun Kim has turned bearish on memory, that stance is the complete opposite of Morgan Stanley's North America team. Just this week, they spoke about the durability of memory demand and said they think this is an attractive entry point for memory stocks. I even posted a clip of Morgan Stanley's Joseph Moore on CNBC this past week in which he spoke about his bullish stance on memory stocks. Again, we cannot verify that Morgan Stanley Shan Kim published a new note on July 21st in which he turned bearish on memory stocks. Additionally, the bearish stance in the note that is circulating right now is based on what's going on with memory demand in China. Additionally, Morgan Stanley's North America team, the team that speaks with major US hyperscalers and suppliers like Nvidia, they think that memory demand is durable and this is an attractive entry point in memory stocks. That stance is the complete opposite of what Morgan Stanley's Kim supposedly said in the notes that began circulating in Korea overnight. One note is from 2022 and appears to have been altered. And we cannot verify that Shawn Kim published the other note. This whole situation is what caused the selloff in memory stocks on Friday. Again, I think there may be foul play involved in this messy situation. I'm not accusing anyone of anything, but something appears to be very wrong with this situation. Now, with that out of the way, let's cover some news. On Friday, Jensen Hong made his first post on X by sharing a letter that Nvidia and other leading tech companies signed. The letter argues that openweight AI models are essential to maintaining US leadership in AI. The letter argues that open weights expand access to AI. Open models strengthen competition and they give customers greater control while reducing vendor lock in. As I've said repeatedly in recent videos following the launch of Kimmy K3. Open source models are positive for Nvidia and positive for almost every other company in the AI ecosystem. Lower token costs drive greater consumption throughout the ecosystem which ultimately leads to greater compute demand. Additionally, open weights allow organizations to match the right model to the right job at the right cost. And so, open weights are very important to both the economic sustainability and proliferation of AI throughout the economy. The letter Jensen shared also advocates expanding access to computing resources, investing in shared AI infrastructure, avoiding premature restrictions on open models, and supporting strong application ecosystems so AI can be deployed broadly throughout American industry and public institutions. And so the main takeaway from this letter is that it's an industry advocacy letter against broad restrictions on openweight AI. Also on Friday, Anthropic released Claude Opus 5. As I said, after Kim K3 was launched by China's Moonshot AI. You better believe the competitive Chinese open source models are going to drive open AI and Anthropic to innovate even faster. It is in the United States strategic best interest to not slow down the release of new frontier models from leading US labs because Chinese labs are not bound by those restrictions. And as a brief reminder regarding Anthropic, Morgan Stanley spoke with Nvidia executives earlier this month and said that Nvidia is gaining comput share with Anthropic rapidly. Morgan Stanley didn't identify Anthropic by name, but it was obvious that they were talking about Anthropic. For years, Anthropic relied heavily on custom AS6 from Amazon and Google. Jensen has said previously that the hyperscalers invested in Anthropic early on in return for Anthropic using their custom AS6 instead of Nvidia's GPUs. Anthropic really needed the money back then and Nvidia wasn't in the position to make an investment at the time. But more recently, Anthropic has started using Nvidia systems in addition to custom AS6. And Nvidia has gained comput share rapidly with Anthropic. And so news about another Frontier model release from Anthropic is good news for Nvidia. In other news, South Korea's president and South Korean tech executives arrived in San Francisco to meet with tech leaders. Executives from Samsung, Hyundai, and Neighbor joined Jensen Hong on a tour of Nvidia's headquarters. Jensen and SK Group's chairman along with teams from both companies met for dinner to welcome SK Group to Silicon Valley. Nvidia and SK Group announced a more than $500 billion initiative spanning large-scale data centers and next generation memory. The initiative includes a long-term partnership with SKH Highix to secure next generation memory supply for Nvidia and jointly develop HBM for training agents and physical AI. SK Telecom plans to build a 2 gawatt data center powered by Nvidia's Vera Rubin with the first facility coming online in 2027. Nvidia's relationships with memory makers are very important given the constraints throughout the industry and that includes Nvidia's relationships with both Samsung and SKH. When Morgan Stanley spoke with Nvidia executives earlier this month, Nvidia said they expect the memory shortage to persist for several years. I don't think Nvidia gets enough credit for their supply chain management and locking in supply well in advance. Nvidia also announced they are launching a joint AI research lab in Seoul with the Korea Advanced Institute of Science and Technology, which is one of Asia's premier research universities. Despite the uneasiness in hardware stocks on Friday, the fundamentals remained firmly in place and we got multiple reminders of that just this week. Alphabet and Tesla both spoke about higher capex moving forward. On the Tesla earnings call, leadership specifically thanked Micron and spoke about the memory shortage. Alphabet leadership spoke about their commitment to remaining at the frontier and the need for larger base models in order to stay at the frontier. That is positive from memory makers. Additionally, South Korea export data indicated that memory prices moved notably higher in the first 20 days of July. Reports indicate that China's CXMT is charging premium prices for memory, which should help ease some investors fears of a potential dumping situation. As I've said for a while, CXMT cannot fulfill all the demand in China, much less the rest of the globe. Demand far outpaces supply, and I don't think investors have to worry about a dumping situation that would challenge the memory makers pricing power for multiple years. Also, this week, GM spoke on their earnings call about their partnerships with Micron and Samsung, speaking about them as multi-year partnerships, not only for supply, but also to jointly develop next generation technologies. In other words, we're not just talking about generic off-the-shelf commodities. We're now talking about new technologies that are tailored to customers unique needs and use cases. Also, this week, we got Intel earnings. On Intel's earnings call, leadership spoke about the memory shortage at length. Intel expects higher ASPs from rising memory prices to lead to some demand destruction among consumers later this year. That's not great, but it speaks to both the severity of the memory shortage and the strong pricing power that the memory makers have. Everything that I just mentioned about Alphabet Tesla GM Intel CXMT and South Korea export data. All of that is bullish from memory makers and all of it happened just this week. And so don't let the short-term volatility cause you to lose sight of the fundamentals because the fundamentals remain firmly in place. I expect the world to be compute constrained at least through the first half of 2028, possibly longer. I also think it's reasonable to be bullish on memory makers like Micron and SKH for at least the next 1 to two years, possibly longer depending on what happens. At the same time, we need to understand that these stocks are going to be very volatile. Therefore, these stocks are not suitable for everyone to own, and that's fine. 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 dot 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. 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 revenue surge. I wish both Anthropic and Open AI were public so the public could see the ramp in their revenues. Anthropics 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 Agenic systems being adopted at scale. This will increase compute demand significantly. And after that, the next surge in comput 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-t 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 two 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 spending 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. 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