Nvidia Earnings just SHOCKED EVERYONE

Nvidia is its own worst enemy. Nvidia today posted revenue that honestly I'm impressed with. And I'm not a super big fan of the AI hardware trade. Ladies and gentlemen, what does this mean for the hardware trade going forward? Could it be ignited a bit? We will discuss that in today's video. Give you all the numbers that you need to know. We also had Salesforce and CrowdStrike and Okta and others that reported earnings today as well that also moved big. In fact, you can see IGV, the software ETF, is actually up over 3% in after hours following these results. So ladies and gentlemen, we got a lot to get into. We're going to break down what all of this means for the markets and more. Do me a quick favor and hit that like button for the YouTube algorithm to help push this video out to more people that need to see it so they can also make money from it. But again, starting off this video with Nvidia, Nvidia's down almost 2% following these results. And look, Nvidia is just Nvidia's worst enemy. Like they are a victim of being so successful. So Nvidia posted Q2 revenue of 96.2 billion. The estimate was 92.3 billion. A lot of other estimates heading into the quarter were above 93 billion. So if there's anything you want to say, "Oh my gosh, that's not super great." You beat the estimate by about 3 billion. It's the guidance for Q3 that's insane and we'll get to that in just a moment. Q2 adjusted EPS of $2.22, Q2 adjusted gross margin of 75%, Q2 data center revenue 89 billion, the estimate 85.86 billion. Sees Q3 revenue 108 billion. Holy schmoley. Okay, so heading into this quarter Nvidia had set guidance for 91 billion. So, the estimates, the analysts, they were pushing that to 92, 93 billion. Great. They smashed that by five bill more than five billion dollars. They smashed their own guidance by five billion dollars. Pretty insane. Well, going from 96 billion to 108 billion, the beats are getting bigger, guys. But yet, it's still not good enough to give the stock upside. Here's the problem. Everyone's waiting for the inflection point. What does that mean? Well, Wall Street's pretty stupid. Wall Street, they care about these inflection points on growth. So, if you go from growing 20% a year, then you grow at 50% a year, then you grow at 70% a year, and then you grow at 90% a year. That's kind of been the Nvidia trajectory. People are waiting for that, "Oh my gosh, they're going to grow at 70% next year." They're going from 90 to 70% even though the numbers just massive at this point and the EPS and everything else is great, people are waiting for that inflection lower in the growth rate, which I don't make the rules, we just play the game here, and that's why the stock can't get out of its own way. Even on a blowout earnings report like this one was. The stock is down 2% because of that. Nvidia says supply commitments more than double to 279 billion, mostly memory. The CFO commentary carries several items the headline numbers left out. Supply and capacity commitments rose from 119 billion last year to 279 billion primarily from memory procurement. Total future commitments across supply cloud agreements, data center leases, equity investments, and capex capex reached 366 billion with 120 billion falling in the remainder of fiscal 2027. Nvidia also disclosed 105 billion in guarantees tied to SB Energy um ports, the Pike campus in Ohio securing roughly 4.25 gigawatts that will exclusively host Nvidia infrastructure under 20-year leases to open AI. The company says each generation deployed there could represent about 1.5 million GPUs or 150 billion to 250 billion in Nvidia revenue and an option to support roughly 3.8 additional gigawatts. Total guarantee exposure is 108.5 billion. And if there's anything to kind of turn your head at a little bit, it is Q3 gross margin was guided to 74% plus or minus 50 basis points down from 75% in the quarter that was just reported. Days to sales outstanding rose to 60 from 45 on extended payment terms with certain investment-grade customers. Inventory up to 31.6 billion from 25.8 billion ahead of the Vera Rubin production in Q3. Free cash flow 21.3 billion down from 48.6 billion last quarter, so I guess you could complain on that as well. The company brought in net income of about $60 billion, which is insane. But less of that is actually hitting free cash flow because of some of these commitments, some of the capex, memory cost, and other variables. So, let's be honest, there's nothing really to be negative about here. If you want to nitpick a little bit of a margin decline whatever. But the the problem with Nvidia is its own self and the success that they have already had. Now, funny enough, in the same sentence that I say that, I actually think Nvidia is going to rally based on these earnings even though the stock is down about 1% sitting at $207 per share. I do think this causes a move higher. You can see other stocks related to the to the AI ecosystem are up in after hours following these results. CoreWeave up about 1% and we can take a look at a couple of others as well. Some of your Neo clouds like a Nebius also up 1% Marvell they report tomorrow in after hours up around a half of 1% today and Intel up actually down a little bit in after hours following these results. AMD down a little bit but kind of again marginal. Now the real question is do these Nvidia numbers spark a larger move higher in AI hardware and that's the part that's going to be a little disappointing for you guys. I don't think you are going to get a massive massive AI hardware rally for a long time. I think I think we have problems here, okay? And and if you look at last quarter or the guidance that we just got, a lot of that revenue is already committed right now. Like if a company is buying you know, billions of dollars worth of chips, they've already built the data center for those chips to go into. What are they going to do? Not buy the chips? Of course not. The problem is investors are waiting for the ultimate slowdown. The data centers that are being talked about right now that may not come or the cancellation in lease obligations that are a year or two away from now. It's kind of like if you, you know, or order order something, right? If you order a cake from a bakery the you're you're probably going to buy the cake if it's for a birthday and that's the only bakery in town. But if you give somebody a couple of months, if it's not their birthday yet, you might go with another option or cancel it or something. Whatever. Maybe that's not the best analogy, but hopefully you guys understand the point here. These are already data centers that have been built that need GPUs to go into them. Wall Street, they're looking for how long can this go? Right? And to that, there's not a whole lot of answers you're going to you're going to get from that. You're going to hear the typical positive things from Jensen Huang on the the conference call and all of that. But, the math is not mathing on the hardware trade at this point, right? Even Nvidia themselves, they're talking about, you know, like $10 billion of revenue per gigawatt and some of these things. Where's that revenue supposed to come from? Open AI. What was Open AI's revenue last quarter? 6.7 billion. I mean, Anthropic's projecting about 200 billion in revenue by 2029. Some of these contracts will just not be fulfilled on. And Wall Street's trying to figure out who are the winners, who are the losers, and that's why like a chorus, right? This was a stock I made a lot of money in. It's $17 per share today. It was 30 back in June. You know, this is why Coreweave is down so much. And this is why Nebius is down so much. People are saying, "Hey, some of these are going to be winners, some are going to be losers." So, even though I think Nvidia is probably going to move higher following these results, I don't think broader hype is coming to the AI hardware trade for a long time. If you were someone looking for Nvidia earnings to save the day on your hardware stocks, well, that's kind of what just happened. I don't think you're going to get a sell-off or a crash because of Nvidia earnings. It's going to look more like stabilization from here. And a lot less of, "Oh my gosh, Nvidia posted great earnings. My hardware stocks are going to rip now. Could that be the case? Absolutely. But 2 weeks from now, I don't think we're going to be looking at Nvidia as the catalyst that re-reignited the hardware trade. I think too many institutional investors got burned in the month of July in the latest downturn because there was so much leverage in that trade that they're just not going to be rushing back into that anytime soon. Do these earnings from Nvidia provide some stabilization that the AI trade is still alive for now? Absolutely, and nobody can take that away from Nvidia at this point. But if we look at other stocks that reported earnings today and after hours that had lower expectations like a Salesforce. Salesforce up 14% here in after hours following their results. Which the earnings were actually quite impressive. Adjusted EPS of $5.90, the estimate $3.27, GAAP EPS $4.29, adjusted operating margin 34.1%, operating margin 20.5%, Q3 guidance of revenue at 11.42 billion to 11.50 billion. The estimate was 11.407 billion. So, they even on the low end of their guidance range, they beat the estimate by what? Like 20 million? Something like that. Adjusted EPS $3.42 to $3.44, the estimate $3.38. So, both roughly um in line, but that was a guidance raise for the full year. Um they came in with 46.1 to 46.4 billion. The estimate was 46.1 billion. So, that's a beat as well at the midpoint. Adjusted EPS $16.67 versus $16.71. The estimate $14.10. That was a big beat to uh consensus. So, across the board, Salesforce earnings quite impressive for a beaten-down software stock. Salesforce and Anthropic announced Claude Force. Salesforce and Claude is available to pilot customers now with open beta expected in September. Anthropic is privately held. So, yeah, this is uh partnership. Again, I think we've heard from OpenAI and Anthropic and some of these companies recently that they're actually looking to partner with existing software companies, not replace them. And this is another example of that and probably part of the reason why Salesforce is moving higher. We also had earnings from CrowdStrike today. Revenue at 1.47 billion, the estimate was 1.44 billion, so that was a beat. Adjusted EPS 31 cents, free cash flow 377 million. Gross profit 1.096 billion and GAAP net income of 5.3 million. The company raised full year 2027, which is this year, they have the the backwards um calendar. Uh new ARR growth guidance to 34% at the midpoint. Q3 guidance 1.52 billion to 1.529 billion. The estimate 1.515 billion. So, I mean, beat and raise across the board. Not that big of a beat and raise, but a beat and raise nonetheless. You can see uh CrowdStrike is up 11% on these results, which honestly, I think that's kind of an overreaction to the upside, but hey, I I mean, the stock has sold off a little bit heading into this report. Okta came out with earnings as well, another uh cybersecurity kind of company, identity, you know, verification. Revenue 805 million, the estimate 795 million, so that was a beat. Adjusted EPS $1.05 versus 97 cents, that was the estimate. GAAP EPS of 65 cents and net income of 116 million. For uh Q3 guidance, revenue 813 to 817 million, adjusted EPS 92 to 94 cents. Full year guidance of revenue 3.216 billion to 3.226 billion, adjusted EPS of $3.90 to $3.94. So, again, another example of a beat and raise from a cyber company. And boom, stock's up 21% here in after hours. So, yeah, lots of good earnings. Now, tomorrow you are going to get the goods trade balance for July. Um typically, the bigger the deficit, the more pressure on GDP. You're actually expecting the deficit to fall a little bit, so that'll feed into your Q2 uh GDP numbers. Uh you also have initial jobless claims for August 22nd, wholesale inventories, and some other data sets. But, the bigger story for tomorrow is going to be again earnings. Best Buy, Billy Buy, Dollar General, Dollar Tree, RBC, and TD Bank, Hormel Foods, and Burlington report tomorrow morning. Tomorrow in after hours, you have Marvell and Iren. You also have Autodesk, Affirm, Ulta Beauty, Workday, Centennial One, Rubric, Elastic, and Gap that will also be reporting earnings. So, not as big of an economic data day, but definitely a big earnings day in after hours tomorrow. Also, some interesting uh commentary from Nvidia here. It says, "Nvidia took 400 million in H200 charges in the first half on diminishing demand. The charge covers excess inventory and purchase obligations as demand for H200 products fell." So yeah you know, Vera Rubin, that's coming out right now, but very interesting H200 demand fell. Something I don't think markets are going to love. Now, looking out past tomorrow, we obviously have your big catalyst Friday morning, which is the Jackson Hole speech from Kevin Warsh. As I've said on this channel many times now, I think people way overestimate how hawkish Kevin Warsh is. I think he's a dove in wolf's skin, right? He's he has to sound hawkish because he's the new Fed chair, he's the new guy on the block, right? You you can't look weak, okay? Um but I don't think we're going to hear anything different from Kevin Warsh on Friday. In fact, it might be an annoyingly ambiguity. Like it's probably you're probably not going to get anything new whatsoever. And that's going to be a good thing because right now Wall Street is nervous around that event. And there's a lot of hedging taking place for any surprise. And if we don't get a surprise, well, a lot of those hedges are going to come off. And Friday could actually turn up to be a pretty good day. We also have the annual payroll revision number. As long as there's no big surprise there, I don't expect that to move the markets all too much. We also have some news here as well that came out towards the end of the day today. It says the Qatari Prime Minister is going to meet in Tehran with a number of Iranian officials to discuss ways to de-escalate tensions. So, obviously, if we get any news on that as well going ahead from here, that is going to be a big market moving catalyst or announcement or I don't know exactly what's going to happen or when it's going to happen, but I do think de-escalation is coming semi-soon, at least before the midterms. So, ladies and gentlemen, with all that we've discussed here, it definitely looks like software is a bright spot right now. I mean, some of these earnings coming out are quite spectacular. I also think cybersecurity continues to be a winning area of this market. In fact, the new AI trade is robotics, automation, AI software, and cybersecurity themes I've talked about on this channel now for the last month or two. And while Nvidia earnings are great, I don't think you're going to get a broader AI hardware like FOMO rally like we seen before. It's going to be very exclusive to one company's doing really well, and other one's falling behind, or like a normal environment per se. I think the FOMO wave is gone, and you want to be very selective with the hardware companies that you are owning. With that said, I do think Nvidia will move higher on these results, even though there are some questions about H200 demand and supply bottlenecks for Vera Rubin, and what that could look like down the line for Nvidia's revenue. So, ladies and gentlemen, let me know your thoughts on all of this down below in the comment section. Depending on how hyperscalers respond to these earnings, kind of a toss-up at this point. Um you may see the markets move higher here again for tomorrow. There's going to be some nervousness, some hedging heading into Friday's Jackson Hole event, but I do think decisively Friday's going to be a really good day for the markets outside of any other bad news that we may or may not receive. So, ladies and gentlemen, let me know your thoughts on this down below in the comment section. If you guys want to come trade and invest alongside of us, that link is down below in the description of today's episode. Have a fantastic rest of your day, and I will see you in the next one.