$500B More for AI Infrastructure? Nvidia Partners with Firms & NVDA Options Trade

Welcome back to Fast Market right here on Schwab Network. Nvidia announcing a $500 billion AI infrastructure investment plan with six of the world's largest asset managers. The partnership includes Apollo, Black Rockck, Blackstone, Brookfield, Goldman Sachs, and KKR. This plan will give tech companies the ability to finance data centers and Nvidia hardware through institutional credit instead of relying on their own balance sheet. Let's welcome back here Kevin [music] Hanks. So big news on Nvidia in the last 24 hours with this consortium of institutional investors. It's a certainly an impressive bunch. The stock is up about a half a percent. What say you? I think that, you know, we we we we started hearing about this yesterday afternoon and you saw the big large executives and so investors are probably asking what did they do exactly? Well, in my opinion, what they did was >> Jensen Wong was able to take some of the risk of financing these AI centers, which frankly are going to use Nvidia chips, and spread out some of the risk among six very large brokerage houses. Now, here's the names. Apollo Global Management BlackRock Blackstone Brookfield Asset Management, Goldman Sachs, and KKR. And so, it's up to 500 billion. Nvidia can still take as much as 125 billion or 25%. But all this means is they are creating pools of capital, understanding that they need massive amounts of money, and they started bringing in more investors. And now these clearing houses are going to go out and raise money to finance all these all all the data centers. So I think this is a really good thing for overall AI [snorts] and it's very good for Jensen Wong because all these places Jensen Wong's getting involved in the nuts and bolts of building the the the data centers that are going to use AI Nvidia chips. So I think yesterday was a real good day for Nvidia. Their earnings are coming up remember at the end of the month but there's kind of a muted response here but yeah this is really good news for Nvidia and good news for you know the AI sector Cole >> look of course getting the financing they need to continue to grow also the fact that the company is launching the uh Nemoon 4 and that's in the open source and so with that that's another area where they can get more demand and drive more business to GPUs and help drive their whole next wave of demand. And Morgan Stanley noted that this deal that we're talking about at this moment of the six um institutional investors is much more of a positive than a negative. >> Sure, I agree with that completely because all this means is remember we were so worried about capex spending. We're so worried about these firms raising capital to to uh be involved in AI and build out the the these data centers. This brings a b a a boatload of capital for them to use and and access. So yeah, I think it's all it did was really solidify up a AI and let the street know, let the trading community know that there's plenty of money ready to be invested by by these firms in AI and in data centers. >> Yeah. Well, Fargo said they're playing a much bigger game. Morgan Stanley talked about being positive and reiterated it as a top pick and Bank of America just much of the same. Um, I know you have a trade for us when it comes to Nvidia and we were just talking about the valuation and a lot of folks think it's much more attractive than it's been in a long time. So, let's talk about your example trade please Kevin. So they have earnings coming up at the end of the month and it's during it's August 26th during the August 28th uh cycle you know that and so what I wanted to do is look at the expected move out till August 28th and right now it's looking at about $17 stock trading about 28 somewhere between $218 and 220. I got it closer to 21850 right now only up less than a dollar. So my the the trade that I looked at here was something in the unbalanced butterfly measuring that expected move se to $17. I bought the August 28th. This is in the earnings event the 220 call. I sold the two two of the 235 calls and then I bought one of the 240 calls. So, an unbalanced call butterfly, which is buying the 220 strike, selling two of the 235s in line with that expected move and then buying the uh 240. If it goes to 235, you have a chance to basically triple your money on there. Uh if it goes past there, which can often happen in a regular butterfly, you could lose all your profits. This one holds on to profits because you're long a $15 call vertical, short a $5 call vertical. So even if uh invidi were to run to $250, you stay profitable on this trade. Now it is a bullish trade. So the risk you have I put that trade in about $4.50. It's trading about $410 now. So it's trading e even cheaper as the stock was right around 220. Now it's around 218 and a half. So it's lost a little bit. So you can get in it right now for something right around $410, $4.15. That would be the risk. Whatever debit paid is the risk on this trade. And like I said, you're looking for a move towards that 235 strike, which by the way is about a dollar lower than the all-time high, Nicole. >> All right. Even better. Okay. Well, thank you Kevin Hanks. A good look there at Nvidia on that example trade.