CNBC, Yahoo & Schwab On NVIDIA Stock, Micron Stock, Tech Sell-Off - NVDA Update

All right, then let's talk about Micron. Uh because Micron is one of uh the big drags today. I think Alex Coffee said it was contributing about 16 uh basis points here to the move and we're down close to 16% for Micron just in today's move alone. So Andrew, take me through Micron. Is it a bargain right now, especially now given that you had set this up before we saw this move down? >> Right. Exactly. I mean, I obviously I think it's a bargain here. Um, and obviously when things are falling, it's very scary to step in a lot of the time for the average investor, but you know, uh, when when you see a big sale going on, uh, you got to step in. And, uh, companies like Micron are going to be here the future uh, for chips. And chips aren't going away. And things haven't changed that dramatically, uh, over the last few days. I mean obviously we have the midterms and we have you know different things going to happen in the future but these companies are not going away and there there's massive profits down the road here and you know as much as Micron's up tremendous amount so far this year and it's pulled back here obviously but um I think when you look at you know where we are at the end of the year uh you're going to look at this trading day as maybe the best bargain day of the year. Um, you know, because there's a lot of emotion going on right now. Uh, there's a lot of emotion going on and, you know, the markets tend to overreact and we're seeing that with a lot of leverage on Wall Street nowadays. And, um, this is what's happening today. And, you know, in my opinion, I wouldn't be surprised if we saw, you know, a pretty big bounce back by the end of today. from bespoke today. Only other periods since 1994 when semiconductors fell at least 17.5% in 5 days, the Asian financial crisis, the Russian debt default, the dotcom bust, the GFC, and the COVID crash. But Josh, that's where we are and I think people are trying to make sense of what happens now. >> Look, I just think it's a function of that's where a lot of hot money was and that's more importantly where the leverage has been. We're not launching uh 2x Bergkshire Haway products, right? Like if if we understand market structure, we understand what retail is doing and what some of these pod shops that are a little bit more levered than than normal are doing. They're chasing the AI hardware bets. They've been for a while. Um the situation has been deteriorating for a while. Most of these stocks peaked uh in July, which is already 4 months ago. And uh a day like today, the pe the the people that held on held on held on or worse doubled down more leverage more leverage. Now it's not up to them anymore. Now it's up to somebody else who calls them or uh executes the trade on their behalf whether they like it or not. This is the reality of uh trading and the types of high uh stakes activity that we've seen in the market for three years. So it's not the first time, definitely won't be the last time. I think it's instructive um where the pain actually is. All the worst performers are AI hardware. >> Yeah. Infrastructure plays >> and then like I [clears throat] have Bergkshire Hathaway making a record high. I have staples flat. I have energy stocks that are green. Like it's not a marketwide event, although it can feel that way when you see the Dow move uh a fourdigit move. >> Every every sector obviously uh is red. So there's a lot of red on the board. Of course there's going to be >> not equal. >> I I I get that. But, you know, I I'm not necessarily sure that that that that's the the headline or the subheader or anything like that at the moment. I mean, look at the AI power names, Rob. Uh they're down substantially from their highs. Places like Vistra, 42.5% which you own. We talked about it yesterday. U there was a lot of chatter going into the election. Oh, don't worry about all this negativity on data centers. Once the election's over, that'll be over. Well, not so fast. And the market clearly doesn't think that's the truth. Uh nor do people who are on the front lines, if you will, of the industry itself. Dina Powell McCormack of Meta President said at a Wall Street Journal tech conference, midterm results will make building data centers harder. Catrini Research says the uh infrastructure trade quote as we know it is ending. Uh they argue that it's peak capex growth and that the risk is now to the downside there. Even Dan Ies, we mentioned yesterday has tempered his own bullishness. says 10% of the data cent's plan will not happen now. They'll be in his words wiped off the road map. He also thinks that capex growth is going to peak much earlier than he expected initially in 27 versus his prior view that we're talking 28 to 29. That maybe shortens you, you know, people who say, "Well, we're just in the third inning or the first inning or whatever inning." Uh that would imply that you're in later innings perhaps. of the the story than people had wanted to believe. >> What do you make of all that? >> I'm not going to tell you it's not a big deal because it is. The AI buildout just got harder whether you hear it from Meta's president Dan Ives who's a perennial bull saying that things are peaking. I think you have to respect that. But nobody voted to make uh compute less scarce. Microsoft's Azour is growing at 48%. they're capacity constrained, not demand constrained. And when new capacity gets harder to build, existing capacity becomes more valuable. So I I think this is a a a a timing issue, not a final demand issue. >> That's why one of the reasons why, by the way, you're making a good point that the mega caps were up yesterday. >> Yesterday big. I mean, you had record highs for for some of the names there. Yes. because they're incumbents, the so-called incumbents. They already have a lot of compute. Maybe their spend slows, they get back to free cash flow positive faster, and the value of the compute and a point you just made, and I think it's the right one, it goes up >> 100%. And those that don't have the same political connectivity, they don't have the access to capital markets are going to suffer more. Think about coreweave and what it's been hit the last [clears throat] few days, new low. those that are the suppliers uh into this ecosystem given that there's going to be much greater a greater climb for them and their trajectories on earnings have changed slightly those are going to be more impacted. >> Are you guys all like rethinking your positioning in your portfolios right now? I mean cuz we talk endlessly about the mega caps, the hyperscalers and the AI trade. It has dominated for the last 3 years. We've talked to almost every show leading off on a day where there wasn't some other breaking news or other news that demanded our attention more substantially on this very >> Rob and I just speaking for Rob and I both of us said the same thing in October. This is a time to take allocations back to where they belong. A lot of people had been free riding a NASDAQ that was compounding at 25% a year and they had 60% go to 80%. We said it like on five different shows. I don't know how many different ways to say it. You have a risk-free rate north of 4 1.5%. You have this opportunity with volatility coming back to the SanDisks of the world. You don't need to be at 80% uh uh US stocks and have 60% of that exposure be tech makes no sense. >> And and look at what happened. We were talking about fixed income and the rewriting there. We were talking about hedging. All those things today from a portfolio construction standpoint are working wonderfully. >> I want to get these guys in. Go ahead, Malcolm. >> Yeah, I I'm listening to this. I've been reading since the the midterm election results became obvious and people are cheering this basically saying here comes the rotation. And I understand the impulse to be excited about the rotation. It means that all of the other 493 that haven't done so much, here's your chance to participate. But I think it's very important to point out the the thing that should be obvious, which is that 40% of the S&P is related to these mega cap tech companies. So it's impossible for anything else to do well. Those do not so well and we all get out of this alive. What I mean by that is you look at GDP growth for the year about 75% is estimated to be attributable to the spending of the hyperscalers. When you look at all of the growth that's come from two companies, OpenAI and Anthropic, the the compute uh promises, the spending promises from those companies that has given these folks the uh confidence to do the spending. If that suddenly deteriorates, well, then so does the earnings growth that we were so excited about this year and going into next year because it's all been tied to three companies. Nvidia, Broadcom, and uh I'm blanking on the Micron, right? So without those companies doing that spending, there goes the entire S&P 500. >> Isn't that the the the the conversation that needs to be had? I mean, Brad Gersonner was on the All-In podcast and he was talking about the very thing. 75% of GDP growth, just like Malcolm said, comes from AI infrastructure spend this year. And if you pull that back, he thinks you could have at least a 50 basis point hit to growth next year. If growth is going to get hit, earnings are going to get hit. If this trade unravels in a more substantial way, how can these stocks be valued at current levels? How >> you can't? And you're seeing the rerating going on. And you saw it in October as well when when you look at the equal weighted S&P in October, it outperformed the market cap. And the rotation that you're talking about kind of started four to 6 weeks ago. And really if you were invested to Josh's point in healthcare and staples and had a diversification strategy, you know, those are the stocks that even yesterday, look at healthcare, it was a three-standard deviation uh compared to kind of the rest of the market. So, you know, to the point of semis, if you look back, they peaked at 20% of the S&P. They were 16% really as of last week. They're probably down to 12 or 14 now, but the largest that it ever became was 2008 when there was 8% of the S&P. You had a lot of money following really fast and growth that is probably not going to be there, but the opportunities there and we've talked about it at length. You can be in other areas that can't have organic growth. >> No, I understand that. But I mean, this has been the the the story. Yeah. I I I I caught your eye as as we were having this discussion here and I I got the feeling that you disagree on on part of this. >> I don't know that I completely disagree. I may disagree on the timing. To me, it's all about what happens to earnings going forward. Microsoft told you about the demand side. It's insatiable. You're going to hear about the supply side of this from Nvidia on November on November 17th. I think right now what's being threatened is the future build. As I said, compute is going to become more expensive for those who are able to provide it. I also think this whole notion that the financing of this is built on pillars of salt and sand is true maybe for some companies, but it certainly isn't true for others. Look at Meta's financing. They went out to raise $9 billion and had $53 billion of demand. They're sitting on cash. You know, you look at a private equity company, it's five times leverage. They're trading at one times free cash flow. It's ridiculous that we're worried about financing for the best companies. >> The way the NASDAQ looks right now, it's as though everyone were about to take off their hard hat and say, "Oh, Democrats won. No more internet, I guess." >> Yeah. And we're all going to stuff >> and and and walk off the job site like Fred Flintstone, slide down [laughter] the back of a dinosaur. Like, that's literally not >> happen. You got there's no Democrat saying that that's going to happen. What what is more likely what is more likely and Mal Malcolm's point on where are the earnings going to come from? >> The market never believed in them anyway. Yes. >> And that's why Nvidia is selling at 14 times forward. If anybody thought that their 28 and 29 estimates were anything other than like a best best case scenario, that stock would at a minimum sell at a market multiple. SanDisk is three and a half times earnings. Yeah. >> Does that tell you that anyone believed that this was going to go on at the same pace that it was? So you you already have been rerating and readjusting those expectations. The last 18 months we've had multiple >> the point you were going to make is what >> you were making my point when you mentioned Microsoft. They're the perfect perfect example of what I'm saying. So now we're in this moment where they might seize this opportunity to reduce guidance on capex going forward where they were the company that came out and made it very clear we're not going to go free cash flow positive. We've had the reporting for several months about how Amy Hood was not a fan of how aggressive they had been with spending on the AI buildout. And now's the opportunity for those hyperscalers to say, you know what, we see what's happening out there with the political climate and we think maybe we ought to walk back what those commitments are, what those expectations are. This is the window to do it is my whole point. If they're going to be this is their window to be if they're going to do it, then they won't need the levels of debt financing that you're talking about. >> We agree. We agree on that. But if they if I see a business that is far outstripping my ability to sell, >> then why are they cancelling projects with Inscale and others? >> Maybe they don't feel like a Neocloud is the right bet. I do not know. >> They don't themselves and keep that debt in the they've been outsourcing it for years. Here's the good news. >> Malcolm's right. Wait, wait. Here's the good news. If Malcolm is right, you probably agree with this. >> Yeah. All of a sudden, now we have less of that reverse crowding out effect, less less AI related bonds coming to market, [snorts] pushing up treasuries, pushing up interest rates. >> You get a virtuous outcome. >> Then we get then then uh Tim Cook's 100red-year flood in memory chips. We don't have to hear about that for a while. And maybe the price of Apple products doesn't have to become as extreme in 27. A lot of these are paliotative. A lot of these are good things. They may come from a lot of carnage in certain areas of the stock market, but if we're reducing inflation and reducing interest rates and the need for further interest rate hikes because the pace of this buildout can be stalled or slowed. >> Yeah, you might be pissed if you run I rent. >> You're probably not pissed if you're a regular executive working in the in the in the corporation. If if you're saying in spite of many of the headwinds that have come in our faces as we've been driving down this seemingly smooth for the most part road, some bumps here and there, you had to veer around some potholes that earnings were the thing that were going to keep you at the end of the day getting to your destination. Tech was going to grow 30 what? 30% at least right 65% grow. I'm telling you that >> if if you're Dan Ies for example and you tell me >> Mhm. >> that capex is going to peak sooner than than we thought by a year a year. Okay. So I'm going to have to sort of rethink my numbers on a lot of different things. How can you not rethink the earnings numbers in the same >> you are but it's relative to the growth you're still going to achieve and it becomes much more selective on what you want to own. The higher leveraged players are going to have a higher weighted average cost of capital. There's going to be more compression in their earnings. They might not even be able to attract capital, but the strong will absolutely survive. Right now, the NASDAQ and some of the best names from a fundamental standpoint in the index. Yes, they've moved from being cap light and huge returners of capital to more capital intensive because they have attractive investments to make. >> Understand? But you're shrinking the market at the same time you're doing that. You >> you're making the point that now you're going to have a much smaller correct pizza. >> Yeah. It's going to be more selective. One >> it's going to be like a personal pie and you're going to have three or four names that live up to the billing of what you are talking about. Whereas before you had like a huge pie where all these winners were going to be the power plays the semiames this that and the other the oracles the Dells the whomevers of the world who were going to participate in this. You just made the case that the pizza went from here to here. >> I do think it gets narrower specifically in in in the short run. And I think the this was a rising tide that lifted everything including our economy. As Malcolm said, the whole economy was underpinned by this one trade. And that's why everybody was trying to figure out if the financing issues were going to be such an endemic problem, right, and bring us down to lower GDP growth. something else has and that's the the election result with the AI referendums that have definitively slowed that. Yeah. >> Right. And so now we've got a different backdrop and I think you're going to have the the AI providers of compute with the beneficiaries and I think you saw in healthcare by the way yesterday as well. Look at what were the strongest places yesterday. It was the hyperscalers and a lot of the health care companies that I think are going to be the large beneficiaries of early compute power. I I do think that um also like the elephant in the room like you think principal Jensen is going to let the neocloud segment go bust. No. Like by principal Jensen I mean Nvidia. Uh so I think that Nvidia for for example like 8% of their revenue is coreweave. Do you think that's they're going to allow the narrative that they're going to have a local peak on their pricing power and they're going to start having their growth erode happen right now? No, not at all. And Nvidia is printing $200 billion of cash starting in 2027 annually. What are they going to do with thating? You we can go on and on about the circular financing if that's healthy or not. Fine. I get that. But it's coming from an actual cash flow that Nvidia is creating, not the capital market. So I think starting next year, there's going to be a lot more creativity on how this bout is going to happen for the tier 2 and tier three names. Also, like Nebius has showed us signs already on what's under the hood of these spot market prices on their bare metal. Like they post it online. You can see it every single day. And they also made the comment 50% of their uh customers do prepayments now for them. That could be a new signal going forward as well. So, I think that there is a multiple lanes of capital. I think Jensen is going to save the day. He's been also awfully quiet all of a sudden past two weeks. I don't like that. I'm annoyed by that. I think it's cuz they're reporting earnings in a week or so, but worst timing ever for him to just all of a sudden go hang out with the family on some island somewhere, which I don't think is happening right now. But man, I would love Principal Jackson to kind of speak up a bit right now and buck this narrative. >> I I I do think they could save the day, but we were all chatting before and Shai um mentioned some chatter that's on the street uh about a delay in uh Anthropic IPO. That's a curveball. And then obviously OpenAI announced, you know, that they are going public in 2027. Enterprise is now um leading the way revenue and sales. And so that's that's a whole another curveball um that we're looking at. >> Yeah. I mean, I personally think Nvidia is going to be a nothing burger. Again, like it's there shouldn't catch anyone by surprise. Like they've been a nothing burger all year. I think they're going to validate everything that's happening to AI demand. It's going to be record numbers. They can say the moon, the pathway to the moon is so extensive for AI. Nobody really cares because unfortunately the narrative on AI isn't really AI. As ridiculous as it sounds, it's not AI demand. It's just more rate markets. Like what's the Fed meeting going to say in December? What's this anthropic IPO going to look like around Thanksgiving? Is it going to actually get validated on what the multiple is going to look like for a frontier model for the first time? because we've only gone private equity stories for the past couple years on what Anthropic should be worth. Now it's actually there. Let's see what the market's actually going to be willing to price it. If it's at goes public at 1.5 trillion, which again is like uh it's supposed to go at 2 trillion, 1.5 and it's still red and goes to towards 1.2. I think that's going to be a repricing event for the whole AI trade. And I'm not saying the AI demand is going to erode. I'm just saying the AI trade is going to get a multiple compression. And I think the anthropic IPO Fed meeting that's a bigger um kind of saving grace I guess or a clearing event on what's happening in AI man if the Fed gets hawkish like I I might just like close the computer the rest of the year uh or it might ruin my holidays honestly at this point. So I think uh I don't think that will happen but also like Nvidia can't disappoint either. I mean that would be catastrophic. That'll be the first time in what 3 or 4 years uh that Nvidia disappoints. So that's you expect greatness. If it's not greatness, that's going to be way worse. If it is, nobody cares. >> I totally agree with Shay here. The three critical moments for the balance of this year. One, Nvidia earnings report on November the 17th. Two, what the Fed decides to do or not do at the beginning of December. And three, whether or not Anthropic still goes public this year or delays going into next year. I think if they delay, that could be perceived by some investors as bearish. I think if they don't delay and their IPO fails or comes in below expectations, that could be perceived as bearish to certain investors. Damned if you do, damned if you don't. But if in fact Anthropic, let's just let me allow me to paint this for a second. These are a lot of ifs, but let's say they do go public and there is demand and they meet their price and it exceeds and stays at that price. If the Fed does meet in December and they stay on pause, at least for the bounce of this year, and if Nvidia beats on the top line, beats on the bottom line, guidance higher, promises the moon as it relates to AI growth going forward and the stock doesn't sell off, boy, would that be a strong three tailwinds to guide us forward through the balance of this year and provide a great balance and close out to the year. Will those three things happen? I don't know. But certainly three things for all of our uh listeners to pay attention to. >> Closer look now at the chip stock selloff with the semis down 10 and a half percent for the stocks ETF. And yes, Qualcomm missed estimates in its earnings last night, but it's hard to connect the dots. This move has also been much broader than what we're just seeing today. The Socks ETF is down 31% in the past month, and Stacy Rasg knows that well. He is the senior semi analyst at Bernstein. Um, CeCe, what are the catalysts for you and and what was the outlier? Was it the price action going into those highs that we were making a month ago, or is it the rapid selloff that we've seen since? >> Well, I I mean, look, we've actually had fundamentals even since the highs get better, but this is just very clearly a very rapid pivot in narrative and sentiment. And it's, you know, no, nobody right now is questioning the earnings like next year. I think there was always concern about both achievability and sustainability beyond that and and I think given some of the the more recent changes and there were some you know little puts and takes with some of the hypers scale reports and then now the election um where by the way I I think a Democratic win was probably expected. I'm not sure that the pivot in Texas though was expected and that has some some broader implications potentially. So all of that is weighing on sentiment and and we've just got a very like especially the last week or so a very massive um change in in sentiment and narrative. I think since the peak in June, I mean, maybe you could just argue things ran a little little too far, too fast. And we had some stocks at that point where that were trading, you know, quite quite a bit of the group was trading at very high valuations. And, you know, we're we're on on the other side of that extreme now, like like the group is not expensive at all. And many of these stocks are at, you know, m multi-year lows in terms of valuations. But I think that's that's what's what's going on. Um, for now, fundamentals look fine, if not strengthening. Um, people are increasingly like less willing to believe those fundamentals though. We've we've had a pretty rapid pivot um in sentiment and and clearly there may be some other technical issues going on on today. You know, it's near the end of the year and you know there's a lot of leverage in there that may be coming out and you know how it goes once things start to roll like that the snowball rolls down the hill. It's sometimes it's hard to stop. So I think that's what's going on today, >> right? It could be a chance for people to jump in if they listen to you. You say Larry was just saying earnings are going up next year. This is a tariff tantrum kind of moment. Um, that's all well and good, but what if politics are a leading indicator for where those earnings could be headed? >> Yeah. And to be honest, like the whole political situ like a blue thing. It it was fairly bipartisan, right? And if you read through most of of like the talking points, they're not necessarily so much we want to stop investments. It's more we want to put guard rails and and conditions on it, which is not necessarily a bad thing if you think about it. I think your prior guest also talked about maybe extending the cycle. There are there are other things that could potentially do that as well. I mean, most of these guys right now are still very much supply constrained. Demand is still well above supply and you could argue that all of these things actually are preventing the buildouts that were on the table from going completely nuts and maybe even extend it longer. Um, I'm not saying that if we get like a a a cut like to next year and it extends long. I'm not saying that that's great, but I mean that that's kind of the scenario that we're getting priced in now. But you could argue once it's priced in, if we actually are going to extend things that that's not a a bad thing. It actually starts to it helps to smooth out the peaks and the valleys. >> As we roll the calendar ahead in November, the next couple weeks kind of quiet. We've got the you know Thanksgiving holidays are coming up. The lame duck session doesn't start till after that. I mean, are there names that we could hear from in earnings from executives from investor days from what have you where they could say, "Hey, look, we know what just happened, but we think that this is demand. this is what we expect. You know, I think those data points would be helpful. >> Well, I mean, Nvidia reports on November 17th, so yeah, that's that'll probably be a pretty important call. I would think Broadcom reports in in early December, I believe. Um, and there's a number I mean, we're we're still in the mix of of of semi- earnings. So, there there's quite a few names that are that are reporting now. Now, to be to be fair, most of the reports we've even seen, you know, there's there's been some puts and takes overall, but I would say that the the general like outlook and performance around the data center and AI space has still been very solid. Most of the weakness that we've been seeing so far is is on the consumer end of things, PCs and smartphones and and and the like. And the reason there, by the way, it's you could also read that as positive. The reason like PCs are so weak, for example, it hit Intel like a week or two ago. >> They're weak not because demand is weak. They're weak because there's no memory to build the PCs. And why is there no memory? It's because AI is sucking all of it up. Right. So most of the data points from earnings have been very supportive of data center and AI. It has not helped the stocks. So right regardless of what Nvidia or anybody else says, I don't I don't know what impact it's going to have on the stocks, but the stocks are already down pretty materially. >> Do you think Intel is a buy here? It's what down 50% or more from the peaks. Do you think AMD down 15% today? Is that a buy? I mean across Nvidia down what is it 9% now >> is that a buy >> and it's funny Nvidia like as much as it's down today it's actually outperforming performing the rest of the group you know it is much cheaper and that does help cushion a little bit I'll be honest I'm a little surprised at the AMD performance not not that it's down but that it's down like so much more than the group they actually had had a very good earnings um uh the other day they saw some PC weakness the same as Intel although for AMD like it's just not that big of an issue it's not that big a piece of their business anymore In the meantime, again, their data center uh business both on the CPU side, servers as well as GPUs was was very very strong and they gave some pretty strong outlook with strong visibility for next year. Um, Intel's sort of an interesting situation because again the stocks gotten hammered. Um, you have to remember most of the run that it had though was mostly on narrative and vibes. You know, the story it's still a slo and you know they they've kind of admitted it. I would also say that beyond the PC weakness for Intel, there there's also been a building narrative that their execution was getting a lot better. And as it turns out, like maybe not quite as much as people would have hoped. We're a year into the server cycle. We're in a massive server cycle right now. Their manufacturing footprint is still off sides. They've still got too much PC capacity and not enough server capacity. And so they have they're trying to move it over and it just takes time. And so I think the whole like execution narrative around Intel has been taken down a peg as as well. It's great to hear you talk through these stocks on a day like today. Again, this is the whole point of having a shopping list and all these things we say, right? Um, these are the moments that that gets tested and your insight helps. Stacey, >> it's a tough day out there. For sure. For sure. >> It is, Stacey. Thanks. >> We don't know what to pay for any of the stocks connected to the data center anymore. And that's why this moment is just so darn fraud. I mean, that is the real issue because if the election results aren't met with a slew of new regulations, you probably should start buying these stocks pretty soon. But if tight regulations and bans are now going to surface throughout the country, you have to avoid them. Unless, of course, the regulations don't cover any of the near-term developments planned and approved. Phew. Tomorrow, I'm hosting our CNBC Investing Club annual meeting. Always a lot of fun. Although, this year's meeting might be a tad cover tougher. And I am totally conscious that no one really knows how to value stocks in a world where things might be good next year, but not the following year or maybe the year after that. If you think, for example, that Nvidia is going to have a good year in 2027 and just meet the current estimates that had been set out for the company, then you'd have a stock with a growth rate of 70% that's selling for less than 12 times next year's earnings. I mean, that's an incredible, ridiculous bargain. And now it's down for the year. But it is not a bargain if the following year it can't grow any further because the US won't permit new data centers as fast as they do now. How fast will they permit them? Will it be like the oil and gas pipelines which companies struggled to get approvals for from the fossil fuel hating Biden administration? Will they be like the nuclear power plants in the early mid70s when the country turned on that fuel? Or will the whole thing just be delayed a little bit and the buildout still occur just at a more leisurely pace than the frenzy way it is having now? See, we don't know. The data center stocks have gone up so much over the last few years that it's difficult to tell how much they can fall. If Nvidia had a clear line of sight to its own destiny, and that line of sight is positive, it should be buying back billions of dollars of shares right here as part of its $235 billion buyback that it's already committed to. Remember, companies have been throwing money in Nvidia. And while it's been a big spender itself, buying stakes in many companies, it is not that they gone all in when it comes to own its own stock. Why not buy it? Of course, maybe they're gunshy, too. Perhaps the read is that there won't be nearly as much demand in the next few years as there is right now, which means the stock has some downside. Or maybe they bought a ton today and they don't have to disclose. See, that's not that's not how I would do it, though. When I ran buybacks, I waited for days like today to stand there at each level and buy until the sellers were sad. Sure, that may be too hard today, but I think Nvidia at under 12 times next year's earnings is going to prove to be a bargain. You know, they have to take some pain first. It's tougher to get to the more commodity oriented companies though. For example, Micron has many strategic customer agreements that are known as take or pay contracts. Many companies will have to pay them even if they don't take delivery of the chips. Now though, you might have to ask, will they be around to pay them? I know that sounds dire, but what if companies like I've been talking about these Neoclouds, smaller Neocloud builders with no other businesses to fall back on, sign take pay contracts. Could they possibly default to them? Anything's possible. Still, Micron has some ability to forecast based on those strategic customer agreements. It is free to do a gigantic buyback if its wishes starting December 9th. That's a date imposed by the company's deal with the federal government as part of its chip acts funding. Perhaps the toughest to analyze is the stock of AMD. They just reported Tuesday night and it was spectacular. >> One of the best quarters I have ever seen. [music] When I interviewed CEO Lisa Sue yesterday, she reiterated that she sees a trillion dollar total addressable market for the data centers and it's hoo coming up. If that's the case, then you can and should be buying her stock right now. Do you want to? The stock was at $188 in March. 188. Hm. By that token, 404 went out. Seems awfully high to me. Maybe that's the real problem. Here's the bottom line. These dramatic moves you're seeing reflect the market trying to figure out in real time how much to pay for stocks, where the next year still looks great. But it's absolutely true that the future for tech is now darker than it was before this week's election. to be sure. It's a messy process that we're watching. You need to be careful when the swings are this violent. But if you keep your head, have some cash, like I said before, you know what we're going to do? We're going to get through this together. All right. I hope you're all doing well today and staying calm in this market. Thursday was a rough day in the market, and it was an especially rough day for AI infrastructure stocks. This is on continued concerns regarding data center pushback and potential moratoriums following this week's midterm elections. As I mentioned in last night's video, the main election result that spooked market participants was the governor race in Texas. This is because a large amount of data center capacity is being built in Texas and the incoming governor has advocated for a moratorium on data centers until the legislature can meet to put protections in place. As I mentioned in Wednesday night's video, while I expect there to initially be opposition to data centers, I do expect that opposition will decrease at some point in the coming months because of the economic benefits both jobs and tax revenues that data centers and data center construction provide to Texas. And so, while I can understand the short-term reaction, I do think it is somewhat overdone. Keep in mind that there are other states and countries that are welcoming of data center construction. Nvidia has a large global customer base allowing them to redirect capacity as needed. Jensen Hong spoke about this at length back in October. And I don't think the hyperscalers are going to pull back substantially on their capex plans given that they're seeing very strong cloud growth with backlogs worth hundreds of billions of dollars and they're also investing heavily to protect the modes of their core businesses that said some notable voices reigned in their bullishness on the AI buildout Thursday which exacerbated the selling. I've also seen indications that there may have been some foreselling on Thursday which would have exacerbated the downward price action. If that is correct, I noticed Gavin Baker pointed out on X that the governor elect of Texas previously indicated in an interview that she will pass laws pertaining to newly permitted data centers going forward for delivery in 2028 and 2029, but all currently permitted data centers in Texas will be allowed to finish construction. Gavin makes the point that this covers all of 2027 and likely well into 2028. And so again, I understand the knee-jerk reaction in the market, but I do think some of the selling is overdone. Now, let me cover a few news stories about Nvidia and Micron, and then I'll cover iron earnings after that. Reuters is reporting that about 600,000 Nvidia H200s are stored in Hong Kong, awaiting shipment to mainland China as Beijing withholds approval for large-scale imports despite there being demand from technology firms in China. Sources indicate that some chips have been allowed to enter China in recent months with some Chinese internet companies obtaining about 10,000 H200s each in the past few months. In other news, The Information published a story claiming that Nvidia has approached Apollo about converting existing telecom facilities into AI data centers. The project could span about 20 US states. The buildings belong to Apollo backed Bright Speed, which reportedly operates more than 130 facilities. Nvidia reportedly identified about 1 gawatt of available power capacity across the facilities. I have no idea if this story is true or not. I'm just bringing it to your attention so that you're aware of it. Bloomberg published a story saying that Micron paused work on a $4.5 billion memory plan in Taiwan due to an extended labor dispute. That added fuel to the fire the AI infrastructure selloff as some market participants perceive the reported pause as being related to the midterm election results and a signal of weakening memory demand due to a slower AI buildout. That doesn't appear to be what's actually going on with this story. I'm just telling you what some market participants knee-jerk reaction to this story was. Now, let's cover Iron earnings. I'm just going to rapid fire important points both from the earnings report and earnings call. Iron reported quarterly revenue of $228 million versus roughly $221.7 million expected. Quarterly AI cloud revenue was $200 million. I was expecting somewhere in the range of $160 to $185 million. So that's better than what I was expecting. Bitcoin mining revenue was only $28 million for the quarter as iron decommissions mining hardware. 28 million is lower than what I was expecting. Overall, that's a positive from my perspective because iron exceeded my expectation for topline revenue even though Bitcoin mining revenue was lower than what I was expecting for the quarter. Bitcoin mining revenue declining is overall positive because we want iron to transition from mining to AI cloud quickly. So, that's a positive. AICloud ran at an 86% gross margin for the quarter. Quarterly net loss was $263 million driven by $148 million of depreciation and amortization, including charges on newly commissioned data center and GPU assets, $16 million of non-cash stockbased compensation, and $22 million of net finance costs. Iron's more than $4 billion ARR target is fully contracted, which is a change from last quarter, and it is fully funded. Iron expanded its contract with the unnamed Frontier Model Company after the quarter end. That's likely anthropic, but we don't know for certain yet. Iron also said contracted pricing continues to rise, up 11% on three-year deals and up 12% on 5-year deals. And this next point is big. Iron signed a short-term contract for $40 million per IT megawatt of revenue. That's very strong. Importantly, that's for it megawatt of revenue, but we don't know which site that contract pertains to, and so we don't know the pee. But the important takeaway is that contract pricing is moving higher. As a brief side note, if data center capacity is truly going to become more scarce following the midterm elections, that's positive for the prices that companies like Iron can charge customers to rank capacity. Iron says that the more than $4 billion ARR target for year-end 2026 is now targeted for January 2027 following a customer requested change in supplier timing and it may even extend to February 2027. On the earnings call, leadership confirmed the rumors. Microsoft made a request to reconfigure some of the network infrastructure after iron delivered Horizon 1. Iron said yes to the requested change and that is the reason for Iron pushing its year-end for billion dollar ARR target back to January 2027 possibly to February depending on supplier timing. So the rumors are true. Importantly, Iron built Horizon 1 to spec and Microsoft accepted delivery meaning Iron delivered the data center to spec. So it's not like Iron made a mistake on Horizon 1. Microsoft requested the change after they accepted delivery. Iron also mentioned signing a contract after quarter end at approximately $22 million per IT megawatt per year on a 5-year contract including customer prepayment covering 90% of associated GPU capex. Iron also mentioned that they have $20.6 billion of total assets including $6 billion of data center assets with 20-year useful lives and their assets and revenue are underpinned by customer contracts with 15 customers. Twothirds of revenue backlog is with investment grade counterparties. Iron also said they have $5.8 8 billion of cash, including $2.3 billion of restricted cash reserved primarily to finance GPU deployment. On the earnings call, we learned that Iron expects $250 million of AI cloud revenue to be recognized on the company's next earnings report. That number would have been higher if there were no delay related to customer requested changes. By June next year, Iron expects to have $25 billion of GPU and data center assets. Iron CEO was asked about modular data centers and said they're talking with Nvidia about that. As a reminder, Jensen Hong recently announced Nvidia DSX Pods at GTC Berlin, which is essentially a ready to go AI factory assembled in the supply chain and housed in a transportable container which serves as a shell of a data center. It removes the need to construct a large building to house the AI factory. As I've said before, I think Nvidia's DSX pods will likely be a major success and an important accelerant to growth. That said, it will take time for the industry to get fully on board. Iron recently recontracted H100 capacity at double its original pricing. Iron spent about $5 billion on capex during the quarter and their expectation for capex through the remainder of the fiscal year is about $15 billion which is down from their prior forecast. Iron was asked why expected capex was lowered and leadership said it's not because of a lack of demand. It's purely because of the current state of capital markets. Iron wants to strike the balance between expanding to meet strong customer demand while at the same time not raising money at all costs. They want to strike the right balance. Market participants like that. That said, leadership made clear that the demand signals are there. They recently signed a short-term contract at $40 million per megawatt and iron recently recontracted H100 capacity at double the original pricing. Leadership indicated that Nvidia liquid cooled Vera Rubins are expected to start arriving late next year and the supply of Vera Rubin next year is incredibly scarce. Iron is excited about the economics in light of that scarcity. Also, Sweetwater 1 and 2 are both under construction and included as base load in the batching process, meaning that the 2 gawatts across those two sites in Texas are secured. As a reminder, the incoming Texas governor has indicated that sites that are already under construction will be allowed to continue. Sweetwater 1 and two are both under construction. Overall, I would say this earnings call was much better than the last one. Iron appears to be exercising some restraint on raising capital and capex in light of current market conditions. And at the same time, they're seeing stronger contract pricing and demand from customers. As I said, quarterly AI cloud revenue was higher than I was expecting and topline revenue was higher than I expected, even though Bitcoin mining was less than I was expecting. That's all positive. Previously, I shared an expected price range of $100 to $150 per share for the first half of calendar 2027. And I said I would adjust that range over time as needed. The reason the range was so wide was because of Iron's large $6 billion ATM program. $6 billion is a lot for Iron. And then after the last earnings report, I narrowed the expected price range to 90 to $120 per share. And I told you that I expected to narrow that range even further as Iron issues more shares. I also said repeatedly that the expected price range was not guaranteed. It was simply a general range of what I thought was reasonable. I also said repeatedly that there were multiple assumptions baked into the expected price range. Those assumptions were one that there's not a market downturn, two that iron reaches their ARR target on time, three that the world remains compute constrained, and four that there is no significant dilution beyond the $6 billion ATM. I said repeatedly that if any of those assumptions do not hold true, then the expected price range should not be expected within the relevant time frame. Now, two of those assumptions have not held true. Of course, we've seen the recent market selloff in tech stocks primarily concentrated in AI infrastructure stocks and especially concentrated in the NeoCloud stocks. So, that's the first assumption that didn't hold. There's been a notable market down. The second assumption that has not held true is that iron will not meet its ARR target by year end. Again, that's due to Microsoft requesting a change after Iron delivered Horizon 1 according to spec. So, it's technically not Iron's fault. Still, the assumption did not hold true. Therefore, the expected price range should not be expected within the relevant time frame. If I account for the dilution that occurred during the quarter and the fact that the $4 billion ARR target was pushed out to early calendar 2027, that gets me to a price range closer to 70 to $95 per share in the first half of calendar 2027. But there are a couple problems with that range. First, Iron indicated that there's already been more dilution after quarter end. If I account for that additional dilution, that gets me to a price range of 67 to $91 per share in the first half of calendar 2027. We also have to consider that iron will likely issue more shares under the ATM in the days ahead. and that would bring the range even lower. Additionally, we have to acknowledge that capital market conditions have changed notably in recent weeks and there's been a notable selloff in AI infrastructure stocks. So, put simply, two of the assumptions baked into the original expected price range have not held true. One being a market downturn and the other being iron not reaching its year-end ARR target on time. And so, the expected price range should not be expected within the relevant time frame. The range of $67 to $91 per share in the first half of calendar 2027 is what I think is reasonable. But that range does not account for additional dilution that will happen in the future. I expect to narrow the range further in the future as iron issues more shares under its ATM program. Something else that I said previously was that if iron delivers on its ARR target by year end, then the earnings report released in May 2027 could potentially be the first earnings report that really grabs the market's attention in a positive way. With the ARR target being pushed back to early 2027, I now think the earnings report released in August 2027 is likely to be the first one that really grabs market participants attention in a positive way. Now, I continue to be bullish on Iron and I expect that I will likely be bullish at least through the first half of calendar 2028, depending on what happens. The ARR target being pushed back is simply a timing issue, so I'm not worried about that. And hopefully in the future, Iron will be able to lean more heavily on assetbacked financing and larger customer prepayments as well as ramping revenues. So, yes, I'm still bullish overall, even though I reduce my expected price range for H12027. As I alluded earlier, I do think the selling in some of the AI infrastructure names is overdone and misses important context regarding the AI buildout. That said, I don't know where the bottom is for stocks. And I don't know how long this will last. If you need help with your situation, consider reaching out to a certified financial professional who can help you with your unique circumstance. As I often say, remember to stay calm in this market. Remember to maintain a long-term perspective and to not make any hasty or irrational decisions. Looking ahead, we have Nvidia earnings on November 17th. 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 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 com 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. 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 calendar 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- 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 3 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 and remains in high demand. Vera Rubin is rolling out to customers. Nvidia Gro 3 LPX is in full production. 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. A 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. Thanks for watching and hopefully I'll see you in the next