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

I do like some of the tech like some of the new uh newer Mag 7s if you want to call Micron in there. I recently bought that down 20% from its highs with a hundred billion dollars of bookings between now and the end of the year. I recently bought Nvidia for the first time. You know, I've been a big fan of Broadcom, but Nvidia is the cheapest it's been since 2019, and they're growing like gang busters. Like 85% revenue growth, margins are 75%. They're going to double free cash flow. And I also bought SpaceX and I have been buying SpaceX. I bought it in in during the IPO and uh it's pulled back about 30%. They had a great quarter. Um and I think given the capex numbers are going higher, but the company talked about seeing monetization within a year. So I'm all right with them spending 65% growth in capex. So, >> so I'd say at a fundamental level what we are doing and you can look at this across so many different verticals of the economy. You can look at we just talked about cyber security which I think is an absolutely critical application of AI and I think we're going to see lots of growth there. Um software engineering this year has been totally transformed. We're starting to see every aspect of knowledge work really change but also we're starting to see scientific discovery. We we announced a couple weeks ago that our AI for $2,000 worth of compute was able to solve 10 long-standing math problems uh that had eluded mathematicians for decades. And think about that level of capability applied to biology, applied to material science. It's all starting to happen. And so all of these applications that we're starting to see, they're all powered by one fundamental resource, which is compute. Compute is really becoming the new oil, the new limited resource of the AI age. And our belief, you need to believe one fundamental thing is that because AI is really about solving problems, the problems that humans want AI want want to be solved. You need to believe that the demand for problems to be solved is unlimited, right? And that is something I believe and that is something we have seen that we have a billion users on VT. We have 2 million enterprise customers as well. And uh you can just see that that the depth of usage as people have started to use agents is just going off the charts. Like every single company uh that that tries these things, you start to realize that you can move in more ambitious ways than you thought previously. And so I think that we're at a world where we see what's coming. We see the shape of the future because that model exponential, that capability curve, that's continuing. We really have a a roadmap lined up where the capabilities will continue to increase in significant ways that are hard to that are hard to kind of you know sort of explain uh in a in a succinct way because it is really about being able to add value across every aspect of human endeavor and be able to help empower people to do more. And so I think if you believe in human creativity, human ambition, then ultimately you you have to believe in the power of of what AI will provide. talking about the stack and chips. Uh one of the big questions is what is the depreciation schedule of these chips? Uh Jensen is now arguing that these chips themselves and the data centers are an asset class. Uh we were comparing this earlier to cars. So there's always been a market for new cars and there's also been a market often times for used cars. Uh when there's u you know pressure on or there's less supply of new cars, you know, older cars have more value. But there's a question long term what the value of those older chips will be. Some companies are depreciating them right now on a five or six year schedule. It seems to me that at least what Jensen and some of these others are talking about is you would have to be using these chips for a decade or two decades long. I I think that there is a shift happening because yeah, we classically did look at that at a five to six year and it's very evidence from this year is very interesting where just because there's such compute scarcity that it actually turns out that people continue to use older generation chips at an even higher market price than uh than than you'd expect because people just need that compute. And it fundamentally fl flows from the demand that people are seeing trickles down to well your supply limited right the compute really determines how how much you can serve and so at that point anything that gives you compute becomes very valuable very useful and so I think that that there is a shift undergoing and uh exactly where where it ends up I think it's too early to say but that what I can definitely say is that the way we looked at this classically is is just not going to hold. Okay, Greg, uh, it's great to see you this morning. We appreciate you joining us. Thanks for having >> Thank you for having me. >> You bet. Um, and meantime, we should just, uh, bring you some additional AI news just [music] out. Nvidia said that has now secured land power and shell capacity in Pike country, Ohio to host Nvidia Compute through a partnership with Soft Bank's SB Energy. Open AAI, uh, Greg, of course, uh, the president of that company will be the customer. SB Energy is going to build, own, and operate that data center under a 20-year lease to OpenAI. As part of the deal, Nvidia will invest $1.5 billion in SB Energy. The the the news flow Friday night, Jim, wasn't all that good. Nvidia did downsize their guarantee for this Ohio data center, the Oracle, New Mexico, Jupiter, that's going to be about 6 months late due to friction from the state. >> But at the same time, Michael Entrader was here and he's saying a lot of things that are still good. Now you could say in traders talking his book. I think his book's a good book. I would talk about it, but I I know I look Nvidia I know that they're we're seeing them less in some companies. We didn't think they' do as much. Now when they were putting a lot of money in, we were told that what Jensen Wong was doing was lazy Susan. I give you money to give it back. Now that he's cut it back, it's bad. I mean, I thought that the lazy maybe the lazy Susan stops right here. We used to have one at Thanksgiving and my mom would spin it around and you would be able to get the turkey leg if you were lucky. I mean the turkey leg is Jensen's passing up on the turkey leg. >> Yeah. Uh yeah, but that's I mean is it not though an acknowledgement that Jensen sees some market resistance? >> Well, I think Jensen is getting I I think Jensen doesn't need to put any money to work at this moment. I think Jensen's got from Elon Musk more than he I think Elon Musk is going to be the biggest buyer. And I think that that seinal uh you know that interest in SpaceX is real. Now I know he's still not in the top 10 shareholder with that gig gigantic buy, but why do you need anyone if you have Musk? Musk is going to be the biggest buyer of these chips is my prediction. I mean I think Musk could take down the whole Vera Rubin if it wanted to. >> I mean Richard Fineman's next whose books I find impenetrable Jensen said you got to buy earlier and I'm like wow. I mean, what a tough read. >> Yeah. Uh, Nvidia did disclose about a $21 billion stake in SpaceX at the end of Q2. >> That mattered. >> Take the Mag 7. Where were we three weeks ago? The story was about Alphabet. It was about Apple. I was building a position there and Nvidia was kind of asleep. Now, Avidia Nvidia has awakened ahead of earnings and it's on positioning. It's getting in front of earnings. It's building the position on the expectation that this is going to be a remarkable quarter. positioning so incredibly important right now to understand >> Jimmy Nvidia is up 12 and a half% monthtodate to to Joe's point about awakening tech by the way is on a roll the the sector is leading uh this month 7 1/2% and it's no surprise I suppose that even on a relatively hoham market day that the NASDAQ is green that only seems to make sense Microsoft's been a nice winner this month as has Meta Joe said you know Nvidia reports its earnings in a in a little more than a week. They uh reportedly are downsizing their plans for the $250 billion guarantee of the OpenAI data center. That's just a news item that's there today. Uh but this stock's back and tech is having a nice little move again. >> Uh and today it's chips really within tech. Uh we can see what's happening with Micron with SanDisk. Um and I think it's very interesting in light of what we're just talking about how the narrative changes as the price changes. Our friend Scott uh Chris Veron, I know you have him on the 3:00 show quite often. He has a phrase that narrative follows price and I think it's very accurate cuz just go back about a month 5 weeks ago when the chips were down and the narrative was following the decline in chip prices uh that peak spending was here or at least peak spending was being anticipated by the market. Now that has dissipated as stocks like Nvidia and Micron recover. And that should be the case because if you get away from the narrative and just look at what the actual drivers are, there is a ton of spending going on in data center shows no letup. Roughly 800 billion for the top five hyperscalers this year going to 1.2 trillion next year. Wall Street Journal today has an interesting article about the offbalance sheet spending that's going on that adds about another 2.5 trillion to that. The point being is if you look at the fundamentals and forget about the narrative that's following price, you will be enthusiastic about Nvidia at roughly 20 times earnings going forward uh and an earnings growth rate of around 30 35%. I think you can put new money to work in Nvidia right now. Well, I think that's exactly what people are doing. people that were anchored to building the position in Amazon, in Apple, in Alphabet, which were the leading Mac 7 year to date, like Berkshire. Right now, you're looking at an upcoming earnings report where the revenue growth reacelerates back into the 90% level. You're looking at margins at 75%. They're going to guide to a hundred billion quarter in Q3. You have to build long position. You can't sit on the sidelines and not have that long position going into the yard. So, I think that's ultimately what happening. And it's interesting because there's the internal Mag 7 rotation. Okay, I said this. Nvidia is the leading Mag 7 year to date. The next three best performers are Alphabet, Amazon, and Apple. Each one of those three Mag 7 stocks are down in the month of August. It's an internal rotation. Money going out there going into Nvidia. I'm told you're looking at some ripping chips trade today. >> Hey Scott, we're watching big action in the semiconductor stocks today. First overall positioning in the SMH ETF is bullish again with call open interest the highest relative to put since April. But traders should be careful assuming this is a contrarian indicator. We saw very heavy put activity in early June right before the chips rolled over. Today, traders are piling back into the first half favorites. SanDisk up 40% in a week. Micron up 20%. Those two stocks have traded almost $2.5 billion in options premium so far today, way above their 30-day averages. Flows in the DRAM memory ETF are heavily lopsided towards calls. Again, 62,000 calls bought versus 24,000 puts. Now, here's the catch that goes against all of this. The single biggest trade on the entire tape today, so big I had to make sure it wasn't a misprint because it went so against this trend, was a purchase of more than 20,000 SMH puts in the money. 630 strike puts expiring November 20th. A synthetic short Scott on the chips worth about $130 million. >> Wow. Oliver Renick, thank you. We'll see him again at 3:00. Of course, Joe, Micron, Western Dig, Seagate. >> Here we go. >> Momentum. >> The love affair begins once again. Look, I think one of the catalysts was the capex for sure. And we talked about when the MAG 7 reported the derivative effect was going to be in memory and AI data center buildout names if the capex was there. And I think that's what you have. You also have a market where look, it's August. It's acquired a market. That doesn't mean that the HFTs and active traders are not participating. They are and they're gravitating towards where they could find the volatility and the volatility right now is very isolated and it's isolated in these names. >> Jimmy, >> well uh Joe and I own Micron and uh free cash flow at Micron next year is going to be about 130 billion. couple of years ago it was around 20 billion and that's what's moving the stock once you get past the deleveraging that happened in July into early August situational awareness the Cosby all of that stuff now we're focused on fundamentals tremendous cash flow they're going to be buying back shares six times earnings yeah >> yeah I mean Adam Parker's talked about this stock doubling from here twice >> yeah I it's finally above where I sold it Micron um and it does have legs I didn't think it would be the top where I sold it. Um, but I have no regrets. I put the money elsewhere and I'm doing well. So, that's how I look at it. >> Okay, maybe you should get back in. He did it his way. No regrets. >> Nothing's out of the question, Joe. Nothing's out of the question. >> Bank of America reiterated Micron as a top pick, keeping its buy rating and a $1,550 price target. firm says memory may be entering a structurally strong phase which would potentially lift Micron's earnings in fiscal 2030 to between [music] 200 and $250 a share. The stock is making a comeback. It's on a 5-day winning streak. It's up over 20% during that time. It's still down 18% from its all-time high, but has made a recent move back above $1,000 today. And that's notable. Our co-hosts are back. Tom White and Kevin Hanks. Let's see what the gentlemen have to say. Kevin, we'll start with you. Your thoughts on Micron today. >> This stock has been a roller coaster. In the last 12 months, I see price target prices of $113 a year ago to $1,255 to something around seven just below $800 between $8750 in the last couple of weeks and then right back up to 12 to $1,030 in the last few days. So, this stock is all over the board. And why? Because to put it bluntly, supply still drags or still uh follows demand. Demand is outstripping supply across the board. I think the Apple news about not buying chips from China helps Micron. I thought that was part of the fuel today. Bank of America made them the their top pick and everything, all the estimates are surging higher. sales plus 23%, IBIDA plus 24%, free cash flow plus 41%. So all the numbers are good, but but and this is a big butt. What's the proper valuation for this name? That's what everyone's trying to figure out. The stock is all over the board, Nicole and Tom. >> Oh yeah, and I know you're going to be showing us a trade here talking about exactly that. Tom, what are your thoughts on Micron please today? Yeah, the buildout uh AI infrastructure buildout continues to ramp up. I think one of the keys is, you know, the amount of memory that's needed uh for this uh tech buildout is is pretty massive. And it was mostly on the GPU side, the data center side, but now the CPU side started to ramp up. Also, uh Kevin mentioned that supply demand divergence that's happening has allowed Micron and others in this space to raise prices astronomically. um you know uh whether it's DRAMM, whether it's ND, whether it's what Micron's trying to focus the most on high bandwidth memory, um their pricing is just through the roof because demand's outstripping supply at this point. And I think one of the keys, if you listen to their last couple of earnings, is that they're giving guidance out two, three, four years now. Um they're sold out through this year. They're sold out through half of 2027. uh they don't report until late uh in September, but we'll get some clarity on that uh also. But uh yeah, I think uh if you just look at the price action, Kevin mentioned the valuation, that's going to be key because on a forward PE basis, this is trading at about seven times. That's single digits. So they've grown into their valuation because their earnings, the E part of the PE has been exploding so much uh at this point. So yeah, it's hard to kind of fault these stocks. I mean, you you can try to chase them, but are you chasing them really? I mean, that pullback that we saw in July maybe was warranted a little bit, but now we're seeing another resurgence uh and then SanDisk's earnings uh in this space uh kind of reconfirm the fact that hey, growth is here and it's going to last more longer than maybe a lot of investors had anticipated initially. Yeah, the growth is here and it's really moving the stock around. We said how it's up even 25% just this month. So, let's get to the example trades. Kevin, you start us off, please. >> You know, the the e the easiest thing for me to say is I have no idea where where Micron stock is going. From the end of June to the end of July, it sold off about $500. It's rallied back some of that up until now. But what I did, it [snorts] doesn't have earnings till late. It's one of the last September 23rd it it puts out earnings. So we have lots of time. So what I looked at is something around movement. So I went out to the September 11th expiration and I looked at the expected move out till September 11th which gives me 25 days and it's about somewhere around $170 between $150 and $170 is the expected move there. And so what I looked at going out till September 11th, I bought the I I'm trading in iron condor, which means I'm buying the uh an out- of the money call vertical. I'm buying an out of the money put vertical. It the each spread is $20 wide. So I'm buying the 1180, 1200 call vertical. That's currently around $150 $160 above where the stock is trading right now. Then I went in and bought the 980960 put vertical. That's about 160 $170 below where it's trading right now in line with that expected move. So one of these spreads I would like to go to $20. I what did I pay for that? Something around $11. It was trading around 10. jumped up to around 11. Remember, whatever [snorts] you buy it for, that's the risk on this trade. And if one of these spreads were to go to $20, that would be the profit you can make at or near $20 at expiration. But you're playing for a big move when this stock makes big moves. But the risk on this trade is that it stays in that range and doesn't make a big move. Tom, I don't know where it's going. I'm playing for something big in terms of movement. >> Yeah, it's a high price stock. It's got a beta of over two. So, it trades on a percentage basis, double what the S&P 500 does on a daily basis uh on those percentage moves. So, it does have that ability to move and it's a $1,30 stock. So, keep that in mind. But let's look at Kevin's uh need a move type of strategy. Long iron condor where you're buying out of the money verticals. Let's set this up. September 11th, weekly options, 25 days to expiration, as Kevin mentioned, buying the 980 put, selling the 960 put. There's the long put vertical. On the upside, buying the 1180 call, selling the 1,200 call. So, it's a $20 wide um need to move type of long iron condor. You're paying roughly about $11 debit for it. Uh that's your risk, 1,100 bucks with the potential to make about 900 bucks. Now, what are your break evens on this one? Well, if you're paying that $11 $191 uh to the upside, you want it to go above there or you want it to go below 969 to the downside. Now, Kevin mentioned that 1180 strike that you're long on the call side, that's of $150 out of the money to the uh to the upside. That's about what the option market's pricing in on a plus or minus basis over the next 25 days. The downside, the 980 put, that's only about 50 bucks below the current share price. So, you don't need that big of a move to get below that uh break even of 969 to the downside on this one. So, it's skewed just a little bit uh on this, but this is the type of strategy if it gets outside of these break evens and starts to expand in price, that's when you want to maybe manage uh this position. If the market's open, maybe close all or a portion of it or half of it. Uh if you start getting that move and it starts to expand uh in price, you can sell it for a higher level. That's the idea here on this strategy. Kev, I went a little bit more directional. Yours is a bull bear debate in itself because you can have it's a bullish and a bearish trade. I went a little bit more bullish. If you think the stock's going to move to the upside, but I wanted to offset some my some of my cost. So, instead of doing a vertical or just buying a call out, right, we did an unbalanced call butterfly in the August 21st weekly cycle or monthly cycle expires in four days. This is really short-term positioning. Uh, we're going to buy one of the 1030 strike calls. That's right at the money basically. Um, and then you're going to sell two of the 1100 strike calls at $70 above the current share price and then buy one of the 1120 strike calls. As a package, you're going to pay roughly about a $20.50 debit. Well, it's trading about 19 bucks right now because the stock is pulled back. Uh, so the debit you pay is going to be risk. So, if you pay uh two uh $20.50 two just over $2,000 in risk. If you pay 19 bucks, $1,900 in risk. It apexes out at or near that 1100 strike, which sets up about with the one standard deviation move on just this option series, uh which is plus or - $63. But Kevin, even if this stock explodes above 1120, it's still more than a double in profitability. >> Yeah, exactly right. the the numbers are big in Micron, right? It's a $2,50 debit on this spread, but the numbers that that you can make are big as well. There is risk. Everything we do here is risk defined. And [snorts] so, you're looking for an upside move targeting that $1,100 strike. And so, you're long a $70 call vertical, short a $20 call vertical. And so you're looking for a move towards $1,100. The like I said, the risk is the debit paid on this spread Tom. >> Yep. Uh Kevin's uh with the bull bear himself. Uh Nicole, but then uh bullish call butterfly here uh for my example. >> All right. I hope you're all doing well today and staying calm in this market. Monday was a red day throughout much of the market as hopes for a compromise in the Middle East faded and tensions showed no signs of abating. Oil and yields both moved higher as fears about inflation and a potential Fed rate hike increased. That said, when looking at a heat map of the NASDAQ 100, we can see that there was some positive action in some AI hardware stocks, especially in memory stock for reasons that I'm going to address in a moment. On Monday, Nvidia announced they are partnering with SoftBanks SB Energy to secure land power and shell capacity at the Portspike Technology Campus in Portsouth, Ohio to host Nvidia compute. Open AAI will be the tenant. In a blog post, Nvidia points out that cloud service providers have balance sheets, infrastructure expertise, and long-term contracts to secure land power and shell independently. However, Frontier AI labs are different. These labs have extraordinary demand for training and inference compute, but many of them are growing faster than their balance sheets, and long-term credit profiles can support. They may have strong customer demand and rapidly growing revenue, yet still lack the decadesl long infrastructure contracts and investment grade financing capacity needed to secure the AI factory infrastructure independently. Their growth is constrained by the availability of compute. If they had more compute, they would have greater revenues. And that brings us to the ports PI campus in Ohio. The initial deployment is expected to provide 4.25 gawatt of AI factory capacity. The AI factory will use Nvidia's DSX AI factory platform, including GPU, CPUs, networking, and software. Each generation of Nvidia systems deployed at ports PI could represent approximately 1.5 million NVIDIA GPUs or approximately 150 to$200 billion in Nvidia revenue. Over 20 years, the site can support multiple upgrade cycles. It's important to note that the land power and shell commitment secures a longived AI factory site. While the NVIDIA compute inside can be upgraded repeatedly, each new generation can deliver greater production and better economics. NVIDIA may also choose to extend the arrangement at Portspike beyond the initial 4.25 gawatt to secure the site's remaining 3.75 gawatts of capacity. More broadly, OpenAI has committed to substantial deployments of NVIDIA AI infrastructure through 2030. OpenAI's existing and planned commitments represent approximately 12 gawatts of NVIDIA compute with an opportunity to expand to approximately 16 gawatt if Nvidia extends the portsike arrangement beyond the initial 4.25 gawatt. At these levels, the opportunity represents roughly $600 billion of Nvidia compute through 2030. Put simply, Nvidia is supporting the land power and shell infrastructure at Portspike for about 4 gawatt over a 20-year term. The site is exclusive to Nvidia Compute. NVIDIA support is limited to defined portions of lease and power payments along with a specified residual value commitment, not the full cost of the site or all of the tenants obligations. The guarantee will become effective in phases as data centers are placed in service between 2028 and 2030 as OpenAI makes lease payments and capacity comes online. Nvidia's remaining exposure declines. Nvidia answered a few questions in the press release. First, Nvidia points out that they're guaranteeing land power and shell at Portspike because land power and shell has become a critical bottleneck. That's one of the main reasons why I'm bullish on Iron, by the way. On the question of circular financing, Nvidia says this is not circular financing and that Open AI will pay the lease. What Nvidia is doing here with Open AI is similar to what Nvidia does with their supply chain management when there are known bottlenecks and clear visibility into customer demand. And on the question of what happens if Open AI is not the site's tenant in the future, Nvidia points out that Nvidia Compute is versatile, fungeible, and broadly adopted. Nvidia has the largest install base globally. Therefore, if something were to happen to Open AI, the capacity can be resold to another qualified tenant across Nvidia's global ecosystem. I think it's worth mentioning something I've said in the past. AI demand is not solely coming from OpenAI and Anthropic. They're a big part of it, don't get me wrong, but there are many, many other companies in the ecosystem in addition to those two. And on the question of how much land power and shell Nvidia will secure, Nvidia says it will be strategic and disciplined. Nvidia will focus selectively on exceptional sites where visible, durable demand can support multiple generations of Nvidia compute. As a reminder, this is the same Ohio site that the Wall Street Journal reported about back in July when they said Nvidia was in talks to provide a roughly $250 billion back stop to help OpenAI lease a 10 gawatt site in Ohio. Then this past Friday night, the Wall Street Journal reported in another piece that Nvidia's guarantee had been revised from $250 billion down to less than $120 billion. The Wall Street Journal says the change was made to address investors concerns about Nvidia's risk exposure. And then we got the official announcement from Nvidia on Monday. I checked Nvidia's AK filing and it says, quote, Nvidia's aggregate payment obligation is cumulatively capped at $ 105 billion for its initial commitment under the agreements. That is a credit back stop that would be triggered if Open AI were to default. That is not money that Nvidia has to hand over today. It's also worth mentioning that Nvidia will invest $1.5 billion in SB Energy. The FT says that it will take until 2032 for the campus to be fully completed. That said, as is the case with most data center buildouts, I expect the campus will gradually come online in multiple phases rather than all at once. Based on the text of Nvidius AK, it appears that the first phase is likely to be operational in 2028. That said, the FT is saying that it will take until 2032 for the entire campus to be fully built out. Also, the Wall Street Journal initially reported that the site is 10 gawatt, while Nvidia said the deployment will be up to 8 gawatt of AI capacity. I think that likely has to do with the site's pee. I don't know the pew of the site, but I assume that the site is 10 gawatt in total, which will power 8 gawatt of IT load. Based on Nvidia's comments, that would appear to indicate that the side has a pee of 1.25. So that's probably the reason for the discrepancy. 8 gawatt of AI factory capacity, while the other 2 gawatt power the infrastructure necessary to support that capacity. Now, since we're talking about open AI, I want to address a story we got last week. Last week, Bloomberg reported that Open AI is on track to generate more than $40 billion in annualized revenue based on its current performance. I mentioned that story last week. After that, I noticed take him, author of the Nvidia way and founder of the key context Substack, said that Bloomberg's report way underestimates OpenAI's current ARR according to three sources familiar with the matter. As I've said before, I wish both open AAI and Anthropic Republic so we could see the ramps in their revenues. Also, last week, the Financial Times published a piece saying that Anthropics ARR is expected to reach about 100 to$120 billion by the end of 2026. That range reportedly came from Anthropic investors. As a reminder, Anthropics ARR was roughly $9 billion at the end of 2025. Then they announced in May that their ARR surpassed $47 billion. And since then, Nick Dorsey, formerly of Apple Global Sourcing, posted online saying that Anthropics ARR was $80 billion in mid July, according to a trusted source. Separately, Reuters published a piece on Friday claiming that according to two people familiar with Anthropics Financials, the company is projecting 2028 revenue of roughly 190 to$200 billion. And then Monday afternoon, Bloomberg published a piece saying that according to an update Anthropic shared with investors, the company's ARR surpassed $65 billion as of the end of July. If correct, that is more than 7x Anthropics ARR at the end of 2025. Of course, we need to wait for official confirmation on all of these numbers from the companies themselves. Hopefully, we will get more clarity soon as both OpenAI and Anthropic prepare to go public. I'm just trying to keep you updated on what media outlets and certain industry professionals are saying, but ultimately, we need to hear from the companies themselves to know for sure what's going on. We also have some important memory news. On Friday night, the Wall Street Journal reported that Commerce Secretary Lutnik urged Apple not to purchase Chinese memory as the administration does not want Apple to source memory from Chinese manufacturers. According to the Wall Street Journal, Apple may do so. Anyway, as a reminder, the Wall Street Journal previously reported that Apple was seeking approval from the administration to purchase memory from China, but executives from Micron were also lobbying the White House to prevent Apple from purchasing Chinese memory, arguing that it would hurt domestic memory production in the US. I think the Wall Street Journal story Friday night about the administration urging Apple not to purchase Chinese memory is a big reason why memory stocks traded higher on Monday. Regardless of what happens with this situation, it's important to consider that CXMT cannot fully satisfy memory demand in China, let alone the rest of the globe, as demand far outpaces supply. Not that long ago, Reuters reported that CXMT is even charging some customers more than Samsung and SKHix. CXMT would not be charging higher prices if there was a surplus of supply. In other news, Trend Force published a market bulletin on Monday in which they point out that memory makers are pushing substantial 2027 HBM price increases. The bulletin mentions that 2027 HBM supply negotiations have remained unresolved since Q2 and SK Highix negotiations point to a higher 2027 HBM for price target while Samsung and Micron are negotiating even steeper price increases. Trendforce mentions that attempts to reduce or spec adjust memory requirements provide only limited relief to supply tightness and that HBM demand will continue crowding conventional DRAM supply in 2027. I also noticed that Bank of America published a new long-term bullish piece on Micron earnings and free cash flow. In that piece, analyst VC Arya applies some of the structural assumptions highlighted at SanDisk's recent investor day to Micron. Bank of America sees a scenario in which Micron earns roughly $200 to $250 per share in fiscal 2030 versus street expectations that earnings will peak earlier and then decline. Bank of America also estimates more than $640 billion of cumulative free cash flow through fiscal 2030 under the scenario. The piece argues that AI customer agreements and better supply discipline could make memory much less cyclical than investors assume. Looking ahead, we have Nvidia earnings on Wednesday, August 26th. Last I checked, consensus expectation for the quarter were revenue of roughly $91.1 billion, EPS of $28, and gross margins of 75%. As for next quarter revenue guidance, it appears that the consensus is $14 billion, but I've noticed that multiple analysts are expecting Q3 revenue guidance closer to the range of 107 to 108 billion. Q3 gross margin guidance is expected to be in the mid70% range. Keep in mind that those were the expectations the last time I checked, so things could have changed since then. Now, I'll be completely honest with you. I expect results and guidance to be strong, but I don't know for certain how the stock will react. It's very common for Nvidia to trade higher ahead of earnings in anticipation and then to trade lower after earnings. So, that's definitely a possibility and we've seen it happen many times before and the stock has been trading higher ahead of earnings, which raises the bar even higher. That said, the stock is arguably cheap versus the company's future growth. Regardless of how market participants react in the short term, I expect this earnings report and earnings call to reaffirm that the long-term thesis is intact. I'll be very interested to hear what leadership have to say on the earnings call regarding rumors about reduced memory content per GPU Frontier model company's profitability, China sales, and the rollout of Vera Rubin among other topics. I'll try to provide a recap of the highlights from Nvidia's earnings and earnings call on this channel on the night of Wednesday, August 26th. So, be on the lookout for that. That video will probably be posted either late Wednesday night or early Thursday morning, depending on how long it takes to make the video. I'm expecting that video will probably take 8 hours or more to make, so please bear with me on that. Now, in case you're new to the channel, I want to make sure that you have at least a basic understanding of the underlying long-term thesis. So, let's cover that. Now, I don't know what's going to happen in the short term, but from a long-term perspective, I am very confident that Nvidia will be worth much more in future years than it is today. When Jensen was on the Lex Freedman podcast not that long ago, he was very seriously raising the possibility of Nvidia becoming a $3 trillion revenue company in the near future. If that happens in the coming years, then it is very plausible that Nvidia could one day be worth tens of trillions of dollars in market cap. That might sound crazy, but that's what Jensen is implying when he raises the possibility of Nvidia becoming a $3 trillion revenue company. I guess the question at that point is what multiple the street will be willing to give Nvidia. I don't know the answer to that question, but I truly do think that Nvidia will be worth much more in future years than it is today based purely on the fundamental growth of the business. Based on everything I'm seeing, the world is still computed and I expect that to continue at least through the first half of calendar 2028. In a computed environment, developers will use whatever viable compute they can get their hands on. Today, there are no GPUs that are sitting dark due to a lack of demand like there was fiber sitting dark due to a lack of demand at the height of the dotcom bubble. Back then, companies were laying fiber in the hopes that use cases and demand would eventually show up. Today, we are seeing the complete opposite. As I've said many times, when market participants compare this AI revolution to the 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 AAI 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 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-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 2 million developers are already building on the Nvidia robotic stack and this is not getting enough attention. As for production ramps, Blackwell Ultra has ramped quickly and remains in high demand. Reuben is on track to launch in 2026. Then we're expecting Nvidia Gro 3 LPX in the second half of 2026. Later on, we're expecting the launch of Reuben Ultra in 2027 and Fineman after that in 2028. We have a clear data center product roadmap stretching into 2028. And Jensen believes that AI infrastructure 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, Finn Vid. I appreciate your support. Remember to stay calm in this market. Remember to maintain a long-term perspective and do not make any hasty or irrational decisions. With all of that being said, I hope you all have a great rest of the day, and I'm curious to hear your thoughts about Nvidia in the comments below. Please leave a like on this video so more people will see it. And while you're down there, please consider subscribing. It's free and you can always change your mind.