NVDA to Benefit from Mag 7 AI Spending, Will Later Help PLTR, NOW & Software Stocks

$95 right now, down 5%. Time to go deep on Nvidia. Nvidia is our tech spotlight. Joining me right now Ray Wong CEO of Constellation Research and author of Everybody Wants to Rule the World. Looking at Nvidia closely, we think about the fact that that p e ratio has come down. So many of the guests who come on say, look, it's better. It's cheaper now than it was back in January. What do you think about Nvidia's recent performance? What stands out to you? Nicole? Nvidia is firing on all cylinders, but it's not getting any of the benefits. And a lot of it is really because the market is not sure if there's any more capacity. What's actually happening after Vera Rubin Rubin Ultra getting into all the other chips after that. But the reality is the demand is there, and I think a lot of folks are just being cautious. They're waiting to see what the hyperscalers are going to be doing, what the maximum is going to be doing next week. Are they going to invest more? Are they going to pull back? Do they have the earnings to sustain that growth? But this has been the biggest wealth transfer between hyperscalers and software into hardware and chips that we've ever seen. And you have a price target here. You buy and a 280. Is that right. What's the catalyst to get us from 209 up to 280? I think what we're going to see is a harsh reality. As we get into the fall season, that only tech is growing. I know the rotation out of tech at the moment, but by the time we start thinking about who's growing at double digit, who's building up the ability to create the next set of innovations, you know, it's going to come back from the tech sector. And that's really what's driving, you know, the price target. The other piece is really we haven't hit sovereign AI. You talked about Agentic AI, you talked about physical AI. All those areas have not been evaluated yet. I mean, those are big markets that are coming, especially on the sovereign side, as every country is trying to figure out, can they deliver AI to their citizens, and can they do it within their own rules? That is going to be one of the bigger areas. And, you know, that extension is still going to continue. So we're just at inning three of a nine inning battle on AI, and we don't even know who the winners are going to be. We know who the players are, but we're not sure who's going to be the final winners. And it's a long way to go. Investors are punishing the heavy AI spenders, for example. Right. We saw alphabet Google this week talk about upping their CapEx spend to up to $205 billion on the upper end. And the hyperscalers now we're looking at 1.2 to 1.7 trillion. Do you think companies need to be more CapEx light in a different sort of business model. This is different right. When we thought about the internet and we thought about cloud, right? It was about decentralized, open. Lots of players prices were coming down. And, you know, brick and mortar stores were getting punished. This is the reverse. It's centralized. It costs more. You're going to require I mean, basically these are closed systems that are going out there. And so you need capital to play. You need scale to play. And there are only a few companies that are going to be able to compete in this market in the long run, to be able to say they're going to deliver general AI, they're going to deliver inference, they're going to deliver on the edge. With decentralized AI, there's only a few players, and that's why the hyperscalers are betting big on it. I was kind of expecting Google to stay flat at 190 on their forecast for CapEx when they announced, but what happened was they're like, no inflation hope. It's other things. We're going to continue down this path. We had a great quarter and we're going to go spend. And that threw the investors off. And I think about as we're looking forward to meta, Microsoft, Amazon next week. But you said what you saw with Google, you were expecting maybe something a little more stagnant, but you said that the CapEx growth by alphabet is a good signal as to durability. What does that mean? Well, why that's important is the fact that, you know, alphabet continues to think that they're going to invest in the out years. And so when we saw the forecast at the beginning of this year of 700 billion in infrastructure, AI spend by hyperscalers and everyone else, and then we see another forecast for 800, then 900, and then 1 trillion going forward. That's the momentum that's driving this trade. We're looking at the continued acceleration of growth, not the flattening of growth. And so once those numbers drop then yes you'll see a shift from the AI trade into memory storage. It's going to go back to software and back to services. And so the companies that can deliver outcomes and solutions are going to pick up the pick up the rest. And that's where the Palantir's come back in. That's where some of the stocks that have been hammered, like ServiceNow Salesforce workday they'll have a shot because by then they'll have systems in place that will take advantage of that infrastructure. How do you compare those names to the hyperscalers? Because we are waiting on more news, and maybe you don't give investment advice per se, but the way they're positioned for growth, the growth outlook for some of these names, like some of the Salesforce that you just mentioned versus the Amazon meta for next week. Look, I mean, at the service now is a great example of some of those numbers. I mean, ServiceNow was its rule of 56. That is like crazy, 24.5% growth, if I remember from the charts, that is like out of, you know, that's like performing an all cylinders. They just made an acquisition of a company that's going to help them get into India and into some of the financial services aspects. They're building an agent orchestration platform. Salesforce is doing the same thing. They're firing on all cylinders. They've got great numbers, and of course, they're building the pieces to make sure that they're not seen as legacy tech going forward. And so I think if you've got data, you've got distribution, you have a moat, and that's not something that's going to be easily displaced by software that's perceived to be free, or the cost of software being close to zero. And, you know, we're obviously going to be waiting for Nvidia's earnings after that. It's not among the first ones to report. We we heard a lot from AMD today. Did that mean something to you. Does because we know that the two compete. AMD has often been referred to as like the little sister or brother to Nvidia, because that's the behemoth and the leader. But is AMD with what you heard today from the advancing AI conference really making some headway? There was there was a lot of comments about Lisa Su saying the next phase of AI will span frontier models, AI agents, physical AI. The analysts talked about server leadership that it has expanding in the AI customer base. What does this mean for AMD and Nvidia? When I saw open AI and Anthropic and Meta give testimony that they are using Helios, they're using and they're using like chips that are counter to Nvidia. They're counting on AMD to deliver on that level of compute for inference. That was reassuring to me. That told me that despite Nvidia having the lead on GPUs, AMD is also providing capacity. And more importantly, if you look at what AMD is doing as well as Nvidia, they're driving down the cost per chip. The performance per chip is going up, the energy consumption is going down, and people are actually seeing like some of those advantages, right? It's going to be one of those things that we have Jevons Paradox, where things come down, we increase consumption. But it's, you know, AI demand is at this point, it looks infinite, even though it isn't. It's just rapid growth. Exponential growth. Yeah. Some of these things really do display that. There is demand. And Lisa Su noted they're willing to deliver and able to deliver the compute infrastructure that's needed in order to scale that