Nvidia Earnings: The $200B Risk Investors Can’t Ignore

Welcome back to another episode here. What the chip happened? What I believe is the greatest semiconductor and AI YouTube channel out right now. Now today's episode I want to take a closer look at my favorite favorite semiconductor company and that's going to be Nvidia. More importantly earnings right earnings are less than few days away and this is one of my biggest investments and I believe it's going to dictate a lot of what the semiconductor and AI industry is going to do in the next couple of months. Now, there are a lot of videos probably already covering Nvidia's earnings, but I don't think there's an episode like this where we're going to look at what analyst should be picking on. What are some of the important things that every Nvidia investor should truly listen for? So, let's take a closer look in today's episode. But before we begin, if you're serious about semiconductor and AI investing, I break down major earnings and conferences inside my community. Institutional Quality Research built for retail investors. Get 33% off at whatthechipappen.com. All right, like I mentioned, I really want to focus on Nvidia's earnings. Nvidia right now sitting at $214. Year to date, the stock is up roughly 13.7%. We really haven't seen much movement, sitting at a market of roughly $5.2 trillion. Now, I do believe Nvidia has the potential, right? The potential as long as this AI story continues to innovate to outperform the market in the long term of things. maybe in a year, maybe in a few months. It's not going to do that. But in the long term of things, I am still very much bullish in Nvidia. This is a company that I've had for a very very long time and it's one of the main reasons I'm able to do what I want with my work schedule and everything. Now, if we look at expectations, right, for this upcoming quarter, analysts are expecting roughly $92 billion in revenue. Now $92 billion I am going to uh this is kind of in line with what Nvidia has also presented to us. Revenue when they gave us quarter 2 outlook last earnings about three months ago was around 91 billion plus or minus 2%. So it's putting us pretty much with what analysts are expecting already. Now the other thing that we have noticed is analysts are getting a lot better at projecting actual results. Even though Nvidia continues to beat earnings expectations, they haven't done it by much, right? A few percentage points here and there in the last few months compared to maybe when this whole AI story started. There were certain quarters where they were outperforming by like 21% by like 12% by high single digits. But now we're kind of getting those low single digits. And this is one of the reasons why kind of when you say the stock is priced to perfection. This is one of the things that they mean right we we we see the overall analyst really pricing and kind of giving the price target that they expect based on revenue and based on earnings per share. Uh the other thing I do want to mention is this company is a massive cash for CFO cash from operating activities monster right in the last 12 months $125 billion. The reason I bring this up is because throughout the episode, we're going to be talking about long-term obligations and some of the things that the market and I believe analysts are really going to be pushing on to. So, financially, I think India is going to do great. We might even see closer on 94 $95 billion. I want to get more clarity on the Vera Rubin, more clarity on the Vera Rubin plus LPX. There's so many different solutions that Nvidia is announcing that we we have so many other things happening as well that I do potentially expect these earning beats to be closer to 5% uh compared to 3% which we've kind of seen in the past few quarters. Now I wanted to look back into some of the major changes that happened last quarter, right? To kind of and see what were some of the big questions that analysts were asking 3 months ago and if we got any updates there. So the first thing is there was a new business change uh or segmation. So so in the data center space right in the data center space Nvidia used to just kind of go with data centers. Now they broke the data center market into two place. Hypers scale which is your Microsoft your meta your Google and then they put AI clouds industrial and enterprise and it's pretty much a onetoone basis on quarter 1 but they did mention the second one the AI clouds industrial and enterprise is going to be growing much faster. I would love to see how that's projecting here or producing here because the market still is fearful. And the reason Nvidia did this is everybody says, "Oh, Nvidia just makes money from the big players and the big players are designing their own AI chips." Well, Nvidia was like, "Okay, if you think that's the case, let me break it down for you, right? Let me dumb it down for you." And you're going to see that we're making one:1 ratio right now, and we actually believe one segment is going to be outperforming the other. So this fear, this bearish thesis of Google, of Amazon or whoever making their own AI chips is something to discover, but or or something to think about, but it's not that big of an issue in in my opinion, right? This is what we're kind of seeing here with some of the numbers that that Nvidia has given us here. The other thing that they kind of really talked about last quarter was the inference market and the Vera Rubin. And Jensen mentioned that the Vera Rubin, which is the chip that's going to be coming here in the second half of this year, mainly more in quarter 3, right? The Vera Rubin starts in quarter 3, rims further in quarter 4 with quarter 1 of next fiscal year to be very big. Though it was early to size the ramp slope precisely. So now that we've gotten closer to Vera Rubin, right, Vera Rubin is supposed to be coming out in quarter 3. We are actually already running quarter 3 right now. So what kind of commentary can we get from Jensen Juan on how the Vera Rubin is doing? One thing that we did see with the Blackwell transition, the Blackwell transition did have an impact in margins for a bit. Are we going to see that similar type of margin hit with the Vera Rubin or did they learn a lot from Hopper to Blackwell? Right? Because from Hopper to Blackwell there were a lot of changes that caused kind of those margin hits. there were a lot of issues, delays, but now if they learned a lot from Blackwell, there might be some margin hits, but maybe it's not to the same type of value that we saw within Hopper and Blackwell. I think that would be very exciting. So any commentary here with the Vera Rubin, we already saw Vera Rubins were getting put on by certain clouds or providers like Cororeweave. I think Nebus also mentioned it and a few other Neoclouds already talked about receiving certain Vera Rubin solutions. So would love to hear what are their thoughts here. Is it a little bit earlier than expected? What is the RAM process going to look like and any updates on that number within the Vera Rubin? There are also a few solutions. The CPU, right, we're kind of got a huge opportunity in the CPU market. We got the TAM increase from AMD. We see aentic AI being a massive opportunity for the CPU era. So any more commentary here versus last earnings or versus the last conference would be very bullish. And the final is the LPX. One thing for for those that are not familiar, the LPX is a system where Nvidia connects their GPU to a Gro, a Gro AI chip, and it's one for decode, one for pre-filled, different types of AI AI solutions. And we're actually seeing a lot of other players do that. Amazon has done it with Cerebras. We have AMD do it with Cerebras as well. We potentially have Google doing it with their TPUs and something that Marll is going to make. So, it seems like this is a market that's really starting to pick up. back then it was a really niche product. Any update on this? Has this gone from a very niche product to maybe something bigger than originally expected? Any commentary as the LPX is coming out more in the late half of the second half of this year. So any commentary there would be extremely extremely exciting. So those would be the commentary that I am going to be looking from management. Now there is something massive in my opinion that I believe every analyst should expect. But before we go any further, guys, if you are enjoying the episode, if you want one what I believe is the best semiconductor and AI news, make sure to check out my community at whatthechipappen.com. Right now, we have uh 33% off if you go through the link down below. And and this is a year thing where every single week, every single day, I'm posting something. We have exclusive deep dives. We have exclusive live streams, exclusive live streams that you only get there. Deep dive reports on earnings. You have a lot of apps that we've created to kind of follow a lot of different semiconductor industries from optics, from memory, from data centers. We have courses as well, and we continue to get better and better and better every single week and every single month. So, make sure to check it out at whatthechipappen.com. If not, just make sure to hit the thumbs up and the subscribe button. Now, I I I I one of the biggest things in my opinion that we're going to hear from analysts this quarter is going to be a lot of these obligations and a lot of these back stops that Nvidia is making and has announced. And the reason I I I I bring that up is because in the past few weeks, we've seen so many things, right? We saw that Nvidia is securing infrastructure of intelligence. They're backstopping open AI for x amount of money. We saw them working with financial companies to mobilize over $500 billion of thirdparty capital to build out more AI infrastructure. We see Nvidia make uh partnerships and investments in companies like in the Neoclouds. We've seen kind of a partnership with SK Highix for memory. the obligations that they're coming out is insane and I do believe this is going to bring a lot and a lot of questions to overall investors and that's why originally right originally I started off by kind of talking about Nvidia's free cache operations was around 125 billion in the last 12 months I believe it's going to continue to grow higher now in their latest earnings they did kind of talk about kind of their obligations and these are the obligations that we are going to definitely Definitely definitely take a closer look at let's kind of enter full screen here. But there's a few obligations that Nvidia announced in the last quarter. In the last quarter they mentioned that total investment commit uh commitments were around 27 billion as of April 26, 2026 and which they expect will be made through the remainder of fiscal year of 2027. Now we have heard a few more total investments commitments announced this past few months. So we have to see how much of that has been already paid and how much more commitments are they left for the rest of the year. Outside of those commitments, they're also doing other type of solutions. The next one that they have is facility lease guarantees. And in facil uh facility lease guarantees, this is something that I would expect a lot of these data center buildouts to go where they're kind of leasing or guaranteeing the back end of of of the land, the power or the shell. And this is lease obligations in the event of their default in exchange for warrants. Uh and previously it was around 3.5 billion right 3.5 billion and ranging over a long time right ranging over a long time period of time as a lot of these are multi-year. How has this changed especially as Nvidia has kind of grown into that backstopping of a lot of things. Then you also have other commitments and then you have commitments which they mention is manufacturing supply capacity commitments. So here's manufacturing supply and capacity commitments reflect data center scale production. Here they had about $119 billion. How much has that grown? Then they also have multi-year cloud service commitments that has grown to $30 billion. Then they had other than their commitments which were $6 billion as of April. So I would love to see how this is changing, right? How has this changed over time? I mean I do have kind of a quick chart here kind of just showcasing Nvidia's type commitments where manufacturing supply in quarter 1 of fiscal year 2026 was around 29. Then you jumped into quarter 4 which was 95 and then I mentioned by the end of quarter 1 it was closer to like 119. So there are a lot of commitments that I think investors are going to kind of be taking a closer eye on. Again, you have the manufacturing supply commitment which I mentioned was 119 multi-year cloud service which was 30 billion. Other vend their commitments which were 6 billion. Then we had the kind of the lease commitments which were around 3.5 billion and then you had the investment commitments which were around $30 billion. Right? So Nvidia financially right now can handle that. But when you start hearing a lot of these news of Nvidia having multiund billion, right, the top number talks about multiundred billion. Nvidia is not going to have all that commitment. But I do believe now the market is really going to take a closer look at, right? There's going to be a lot of questions. And I fear that if some of these numbers jumped a lot compared to where they were just in quarter 1 of this most recent year, you could see some negative price action. I believe Nvidia is going to be fine because I do believe that the AI market is one of that a technology that's completely shifting the world. It's going to completely shift everything. But if you are an investor, I do think that is one of the things to understand that could create a lot of noise and a lot of fear for other investors and could create a massive beer a bear thesis, right? If what happens if commitments jump from like 130 billion or whatever to $200 billion, bears are going to be like, "Okay, well, Nvidia has about 130 billion in cash flow from operations. Uh they have about how much money do they have? Let's take a closer look at their balance sheet really quickly. They have about $80 billion in total cash and equivalence. They could survive, but how much more can they survive, right? How much more can they do these types of deals now? It's becoming like you're very leveraged compared to your balance sheet and that could create fear for me. It's not something I'm worried about, but the market will see it. Now, there has been a lot of news. We've talked a lot about them, right? We have the Vera Rubin shipping out. We have a lot of contracts and a lot of sovereign AI, Japan, South Korea, parts in Europe increasing investments in the AI world. We see kind of the partnerships that they made with SKH Highix. We saw that Open AI and SB Energy commitment and help and and this open AAI potentially this 4 gawatt of data center is multiundred billion dollar revenue for Nvidia. So they have big orders coming through right this one data center one data center could be multiundred billion of revenue every 5 years for Nvidia or every four years depending on how crazy upgrade generations happen. We also saw, right, what are some other things that we saw? We saw Elon and Spacic announced that they were going to go exclusively with Nvidia GPUs and they're going to build about 5 gawatt in 2027. That's a lot of GPUs. Another what, $200 billion potentially from SpaceX if they're able to do this in revenue, maybe a little bit cheaper. But you're talking where single customers are now expected to spend multiundred billion on Nvidia. And you're telling me that at the same time where you also have hyperscalers that are spending a lot of money, you have NeoCloud companies that are increasing their copics. I am very much excited for earnings. I'm very excited about the commentary that Jensen will provide. Now remember, this is not the time when Nvidia is going to give us any new technologies. This is more just numbers and just commentary on the overall space. So there's not going to be too much of surprising a new product announced or a new market announced. I don't think we're going to get surprises or catalysts like that. It's not impossible, but I think the probability is really low. What I'm here for as an Nvidia investor is are things moving in the right direction? What's the commentary on AI? What's the commentary on on certain markets, right? We we saw certain things about AI potentially helping build medicine, personalized medicine for cancer. Are we going to hear a little bit about that? the robotics, the uh the autonomous agents, the agentic solution commentary on how those things are progressing is what I want to listen to because this is the time for someone who's in the top of the AI ecosystem to tell us where to keep a closer eye on, right? So numbers may not surprise, the stock may not move, but can it help me continue to build the thesis for not just Nvidia, but for the rest of the AI ecosystem as well? So, that's pretty much all I have for today's episode of what I'm expecting, what could create the volatility, why commitments might be a big big topic in in Nvidia this year or or this earnings because of kind of the pure numbers we're seeing here and there and and maybe some commentary on a lot of these data center political issues that are happening. What is Nvidia seeing on their end there? The final thing is we did get some rumors that Nvidia potentially is entering back into the China market. Even though Nvidia has reportedly denied denied some of these solutions, some commentary on there would be awesome. Again, if you want more in the AI or me and the AI semiconductor industry, more commentary, more reports, more live streams, the ability to ask questions live, make sure to check out whatthechipappen.com. Take care. Have a good day.