Expect ‘Another Great Quarter’ from NVDA

analysts with a buy rating. And we learned this week that SpaceX will now exclusively be using Nvidia chips moving forward, according to Elon Musk. So let's go deeper on Nvidia in our tech spotlight. Joining me for that. John Belton, portfolio manager at Gabelli Funds. It's great to see you. And what a vote of confidence from Elon Musk to say that Vera Rubin of Nvidia they talked about the architecture, the processors just being the very best. And that's why they want to work. Elon Musk's SpaceX wants to work exclusively with Nvidia. What did you think of that? Because that certainly helped to boost Nvidia's weekly performance up 10.5% this week. Yeah. Thanks, Nicole. And I think in addition to that being a key vote of confidence for Nvidia, you know, I think there's clear implications for numbers as well. Space X another thing they talked about this week is they're planning on adding somewhere between call it four and eight gigawatts of compute next year. That basically means they're going to be expanding their AI infrastructure at a pace that looks like the biggest hyperscalers. So there could be real dollars, or there will be real dollars coming into the market for AI infrastructure from space, from space X next year. And seems like that's a lot of that's going to accrue to Nvidia. Understood. We're going to talk about AMD in a little while, but let's stay on Nvidia for the moment. We're also anticipating earnings. We've heard from a lot of the hyperscalers and the CapEx spend. And Nvidia will be reporting in a couple of weeks on the 28th of August. What are your thoughts on Nvidia's upcoming news and earnings report? Will you be watching for some details there? Tell me more. Could be another great quarter. I mean, what did we learn from hyperscale earnings this cycle? We learned a every hyperscaler is still supply constrained. Too much demand to satisfy. B Hyperscaler CapEx outlooks are still being revised higher. We've also seen intra quarter several encouraging demand signals like H 100 rental prices still increasing at a really healthy clip, token consumption still exploding higher. So all these things point to a very robust demand environment for Nvidia should be another strong quarter. And the other thing beyond the numbers will be looking to hear about is early indications on the Vera Rubin product rollout, which starts in the next quarter, in the October quarter. It's also been somewhat of a laggard. When you look at the semi group, as you as you noted historically low valuation here though, do you then say now, you know, there are a lot of folks who look at the PE. You talked about the valuation that it's more attractive now than it's been in a long time. Would you agree with that? Yeah. I mean, I think given the fundamental profile, the robust demand, they're seeing, the growth they're still putting up combined with the low valuation, it feels like pretty good risk reward here still, particularly if this AI infrastructure investment cycle has legs beyond 2027, which at this point it feels like it does. You mentioned AMD in your notes too. We heard from AMD. They also had the AI conference. What are your thoughts when you compare the two? AMD often viewed as sort of the little brother to Nvidia, is AMD on good footing in your opinion? Yeah, I mean, I think these are two separate companies with different strengths. I mean, AMD clearly benefiting from an inflection in CPU demand from a genetic AI. That market seems to really be taking off. AMD has been a long term share gainer in that market. Seems like that's going to continue. I think the outlook that they talked about over the coming years for their server CPU business is very strong. And I think, you know that that is the core of what propels AMD's earnings. Now, in addition to that, AMD has been trying to break in as kind of a second merchant GPU supplier to compete more directly with Nvidia. They also have a new product series launching later this year. I think Definitionally, they're going to be taking share in that market from Nvidia, which is, you know, the starting point for Nvidia is like 100%. So that's definitional. But we'll see. I think AMD signed up some pretty big customers. And it seems like they are starting to get that product kind of going in the right direction. We also talk about sovereign AI governance, and many of them, over 90% of them were trading on Nvidia chips. That's another testament to Nvidia, right? I think that's been another nice growth opportunity for Nvidia. Still seems like a lot of legs there. I think as of a couple of years ago that was like a $10 billion revenue business for Nvidia. I think it then grew to $20 billion last year. Still clearly plenty of opportunity to continue to grow that area. And those are clearly long term customers interested in, you know, the best infrastructure, probably less price sensitive. So those are good customers for Nvidia. When we look at the earnings which are due out on the 26th, I misspoke when I said the 28th, August 26th. Sometimes you might see a stock run up into the earnings or sell off. Are you expecting a lot of volatility in Nvidia in the near term. But for the long term you like it. Well I think Nvidia there has been some volatility over the last couple of weeks. It's just been good volatility. I think we're coming off Nvidia's the stock's best week in a year something like that. I think Nvidia earnings have been less volatile over the last few quarters. As the markets come to realize that it really is supply that constrains the growth more than demand. So the numbers have become actually quite predictable. I think that's going to continue to be the case this quarter. So no I don't really view at this point Nvidia as likely to be a particularly volatile stock leading up to or around earnings days. That's actually I'm glad to hear that too. I mean, people have had to really ride some big swings, particularly with the hyperscalers over one year. As you noted, a great week this week in a year, in the year. What a great performance. We're seeing 10.5% gain one year up over 23%. And you did note now people will now start learning more and deploying the Rubin architecture. And we'll have to learn more about that and how it's being received overall. John