Nvidia Reports August 26: These 4 Stocks Could Explode Higher

Welcome back to another episode. Today, we are going to take a closer look at Nvidia. They are expected to report earnings in just a few days, and I believe the market is going to go completely, completely crazy. Especially, especially since in the last 24 to 48 hours, we've gotten a lot of recent news impacting this AI giant. Now, before we finish today's episode, Neil and I are also going to take a closer look at four stocks that we believe can benefit, or unfortunately, maybe dragged down depending on earnings that Nvidia reports this upcoming Wednesday. So, let's take a closer look in today's episode. Now, before we continue with today's episode, if you want market-beating stock picks from our analysts, make sure to check out the pinned comment and the description. Using that link gets you a promotional offer as our thanks for being a viewer. Thank you, and let's get back to today's episode. All right, Neil, like I mentioned in the intro, we're going to take a closer look at Nvidia. Earnings are about 72 hours from now. Let's start off with what analysts are expecting, and then after that, we'll probably jump into kind of some of the recent news. So, I'll pass it over to you to give us kind of some of that information that investors should know right now. >> Yeah, so if we look at Nvidia's stock year-to-date, it's been okay. I'd say it's up 13.9%, let's say 14%. It's a company worth 5.2 trillion dollars. The PE ratio, the pricing multiples on a trailing 12-month basis are, you would say, higher than usual, but then again, it's not that high for a company of this quality. If you look at the forward one, it becomes much more attractive. You're looking at a forward PE closer to 21 times, a PEG ratio of 0.5, and of course, whenever we look at price-to-free cash flow, when it comes to the big tech players, the hyperscalers, the number is either negative or 100 or 200 with an Nvidia, which is of course a huge, huge winner in this whole AI space. it's only 21 .9 times. Now, remember, this is a company worth $5.2 trillion that has generated $253.4 billion in revenue over the past 12 months. Now, you would think that such a company would not be growing revenue quickly but when we look at what the market expects this company to do this quarter and even the quarter after that, the market is expecting $92 billion a quarter. That's revenue. And that represents close to a 100% increase year over year. So, a $5.2 trillion company generating $92 billion in just one quarter is managing to grow 100% year over year. If we look at the quarter afterwards, just a little sneak peek, then we are already in an age or an era where Nvidia will start to generate over $100 billion a quarter. And you would think, "Okay, if they grew this quarter 100%, next quarter should be much less." Actually, it's also quite close to a 90% high 80% or so. And that's the crazy part. It's again, a $5.2 trillion company that is growing much faster than smaller companies, even companies in the same space, which for example is an AMD. AMD is worth I don't remember exactly, $800 billion right now, generating way less revenue, and at the moment is growing slower than Nvidia, yet it trades at a higher multiple. Now, I own an AMD, quite bullish on it. I think Jose is quite bullish on AMD as well, but there is, in my opinion, still a disconnect when it comes to Nvidia because the market wants to look at, "Okay, you're managing to grow this much this year, you're super profitable. What about maybe 2027, maybe 2028?" But even when we look at that, purely revenue-wise, we can see that the growth rates for fiscal 27, which is the year the fiscal year that they're in right now, they're expected to grow 84.7% then 44% and then close to 22% in fiscal 29. So, even even then, the growth rates are quite high and in my opinion, could also be higher. >> Yeah, yeah, Neil, man. And I think the craziest thing, like you mentioned, was forward PE ratio on this company is in the mid-20s, if that, maybe a below mid-20s. And I I I actually think it's interesting, right, with that Nvidia and AMD comparison, right? I mean, if if you kind of look at a bit of valuations and stuff, they're different. Um uh and and it's like I think the market is likes data. And excuse [clears throat] me. Unfortunately, with Nvidia, there's no data on how far this can go, right? It's like the market is always fearing, is this the top? Is this the peak? How far can you go from here? Where unlike for AMD, it's like, all right, in some form of world, I'm not saying that I I I am an AMD bull, but I don't think this is true, but at least in some form of reality, there is uh some data that says, you can be this big because Nvidia is already this big. So, I wonder if that's like kind of some fear that there it's just the uncertainty of where this can go for Nvidia. Um it's what's holding back some of that valuation, Neil. >> The the thing with uh I'll go to the other side. The thing with an AMD, for example, is that right now, the market gives it the benefit of the doubt. It says, look, Nvidia is worth $5.2 trillion. Nvidia is growing extremely rapidly. AMD is coming out with Helios, with the MI400 series. They should They should be able to show accelerated growth, which is what the market expects. But, I do think that the bar has been set very high when it comes to AMD. And so, if AMD were to maybe have a a little misstep in 2027 when it comes to growth, it could get hit much, much harder than an Nvidia which is trading at a forward PE in the low 20s. And as I've just I mean, I show you here the free cash flow for Nvidia is expected to more than double in fiscal 27. And it's expected to reach approximately $366 billion by fiscal 2029. And we know that Nvidia buys back an insane amount of shares. It has increased dividends as well. And it has been investing in a lot of AI companies, in a lot of data center projects as well. So, this is a company that is extremely, extremely profitable, has hundreds of billions of dollars in free cash flow that will be generated over the next coming fiscal years. And so, that for me makes me way more relaxed when I look at this AI build-out that the money or or well, you might say the money that comes from Nvidia is not really that big. Although, the headlines are much, much bigger, but at least it's coming from a company that is very, very profitable, that is generating a ton of cash. Maybe we can talk about what we want to hear during the earnings call, especially when it comes to all of these recent announcement, the $500 billion, the $120 billion or so, and all of their investments in neo clouds or data center projects. >> I I think it's great that you we finished at least these this type discussion with the free cash flow because for me, that is going to be one of the biggest I'm I'm hoping analysts push this a lot. As you mentioned, we have multi hundred billion dollar deals. I was just looking at their at their previous 10-Q report Neo for last earnings. And they had over a hundred billion dollars in just supply commitments. Then they had about 30 billion dollars in cloud commitments. Then they had about I forget over 30 billion dollars as well on investment commitments. And just this quarter alone we saw even more within the we're probably talking about it in a bit in the past 24 hours we've seen reports that they're even investing another six billion dollars or so into another AI company. So I would say about a a quarter ago or two quarters ago these numbers made sense where it was a percentage of this company's cash flow or a percentage of this company's strength and balance sheet when you add cash and and operating cash flow as well. But now it it it's looking with these numbers that we're seeing that it could either be more of a one-to-one ratio of these commitments versus the cash plus the free cash flow or sometimes even a little bit above that. So that all starts to get a little bit interesting. So I would just I'm not worried because I believe this is the right approach but I would love to hear more clarity from from management like where does it stop? How further like just to go or are you planning on going further than this? Where do you think this is ending? How you've given us visibility of one trillion dollars for Blackwell and Vera Rubin but that's just till 2027. If you're increasing your commitments dramatically can you give us some confidence as investors of this is the visibility we now see till 2028. Like if you're increasing this this type of commitments dramatically I would love to be as an investor I would love to see the reason why and maybe it's that visibility. So just more puts and takes I don't think it's anything that's scary for me because I do believe on this AI build out story but just clarity would be great. I think a little bit more data points from management would be great for for me to hear. >> Yeah and on that recent news we had this one right here which is Nvidia is spending $6 billion to build a powerful US alternative to Chinese AI such as DeepSeek and Kimi. And the investment is in a startup called Poolside. It aims to build an open AI ecosystem, not open AI the company, but an open ecosystem in the United States to compete with the Chinese heavyweights and American AI giants. Now, it's another form of the invest, but they are also taking engineers from the arts. I believe it had 100 engineers. So, another acquire from that company. They're licensing the the tech, the model, the intelligence from that company. Now, what I found extremely interesting and maybe also weird is that if they want to go and compete against the Chinese heavyweights, but also an Anthropic and an Open AI, which are some of the biggest customers of NVIDIA, wouldn't they naturally compete against their biggest customers, which to me is a bit strange because you want an Anthropic and an Open AI to be successful, but if you are trying to make sure that open-weight models are super competitive, are very powerful, and are being operated at a lower cost, wouldn't that in turn hurt those Anthropic and Open AI out there, which means less orders for NVIDIA chips. How How should investors think about this whole twist here? >> Yeah, Neil, I think this is a interesting one, right? Because I think NVIDIA has to play it smart. So, first, what what is happening out I I think in my opinion, we're seeing, like you mentioned, a lot of Chinese models that are being built out right now, especially in this open-source space. Now, one thing that we have seen in the past few years, or especially recently, is that the Chinese players are becoming a little bit more focused in domestically building the semiconductor supply chain. So, I feel uh Jensen has always said that he's very paranoid. I feel like the paranoid that Jensen has right now is if all these open models come from China, are we going to And And right now they're using our chips to be able to make these models and to kind of either be able to inference them. But what happens in the future where maybe these models start to go into Chinese domestic make it made AI chips. That completely eliminates any form of revenue segments cuz in theory right now, even if these chips are open source, any form of cloud server provider can run them on Nvidia solutions because they are optimized for Nvidia. So, even though they're Chinese, you can run them on Microsoft server, you can run them on any Neo cloud servers, and you still need that demand for for Nvidia. But what happens if China ends up making these chips and say, "Look, it's actually runs so much more cheaper on our AI chips instead." So, Nvidia here is trying I I I feel like they're trying to say, "Okay, we've already kind of secure the frontier models are in the US side. We're going to win the frontier models." And I think even Mark Zuckerberg mentioned it uh during the recent earnings where he believes there's a world where both models exist. There's going to be a lot of use cases where you need that top frontier model. Jensen says, "We already have that unlocked. Now, let's make sure we have this open AI this open models in lock, too. Let's invest in this uh alternative." And I don't think this is more of like agentic coding, which is where the market is heading right now. I don't I don't believe this is as much consumer-centric. Uh but to me, Neo, that's the focus is he's paranoid not necessarily cuz the risk is there, but I guess just from the way he explains himself, he just is always worried uh of the company um going down. So, I I I think he's just focusing on bringing the open AI world back here into the United States because you're doing it here in the United States, you're most likely using US chips, and if you're using US chips, the likelihood that those chips are going to be Nvidia is extremely high. So, to him, now it doesn't even matter who wins. If Anthropic or or Frontier models win, sure, we have Nvidia chips. If OpenAI models win, that's okay. We have chips that will support that as well. Uh so, I I to me, that's what's happening here and now. >> I think especially in 2026, we have seen this push towards open-source, open-way models. We have seen actually more recently OpenAI, right? ChatGPT, come out and say, "Look, we are going to cut the prices." They're they're cutting prices. They've been cutting, I think, since the month of May, June, they've been cutting quite aggressively. Maybe it's a way for them to hurt Anthropic before they go public. I don't know what type of 4D chess they're playing there, but the prices are coming down. Now, prices are coming down, which means that users will probably start to go up. But, my my question will always be, "Okay, that's that's great for me, the consumer, but at the end of the day, for them to be making more money, I need to spend or a company needs to spend more with them." Me and you and people watching, we're probably paying, like, $20 a month or whatever, maybe $200 a month. And if we get more usage, that's great. Prices goes down, that's great. I get more for the same amount that I'm paying. But, in order for the other side, for our ChatGPT or Anthropic to start making more on me, I will have to spend more than $20 a month. And I think that's still missing here. Of course, that's just me. There are companies that are spending way more because they run out of credits, etc., etc. And maybe that's one way to look at it. But, from me, the consumer side, I I still think we have an extra lever to to pull here on these companies, right? I think ChatGPT wants to come out with a hardware product. So, that's a way for for them to start generating extra revenue. We'll see how how things evolve, but of course prices are going to come down, which means if usage is going to continue to go up, the need for more chips is going to be a bigger and bigger and especially more efficient chips, efficient models as well. So, I can see the direction that we're going, but it still going to be a very very interesting way for them to start to see how we balance thing out, how we don't hurt a cloud or a ChatGPT too much, while also making sure that on the other side we are going to win there when it comes to the OpenAI ecosystem. >> Now, let's go to the fun part, Neil. Four stocks that can benefit. I think we're both going to bring up two. Um I'm I'm I'm I'm going to pass it to you. I want you to share what the first stock you think that can benefit or unfortunately can maybe move negative depending on on the results, right? So, if Nvidia does good, you expect this company to do good. If unfortunately Nvidia stock does bad, you would expect this stock to also do bad with it. >> Yes, I'll just I'll just throw it out there. I think all four companies or maybe all five including Nvidia, they will move in the same direction. I I believe Nvidia will report excellent numbers. Sometimes excellent numbers are not enough because maybe there is a macro event happening and that impacts the whole stock market and then the stock drops, it doesn't make much sense or the stock only reacts positively 2 days after. Just wanted to throw it out there because that's something that we've seen time and time again. Now, the number one pick is to me a a no-brainer when we are going to talk and and see open way model become more and more competitive, open source model become more and more competitive and that's a neo cloud or an AI cloud player that's called Nebius. I think Nebius benefits a lot if we have a lot of leading models, not just a ChatGPT or a cloud, but a lot of Neumotrons, right? A lot of Kimis, a lot of Deep Seek. Because again, they are making money when there are more companies that are getting built. When the ecosystem grows bigger and bigger, they will be making more money. People use more tokens, they go more to Nebius, they continue to build, etc., etc. And the Nebius, let's say, AI ecosystem continues to grow more and more. Of course, we know that Nvidia has invested in Nebius. They're working extremely close together. I I I would even say that they're exclusively Nvidia. They might not have said it word for word like SpaceX AI, but I think it's quite clear that they're exclusively going with Nvidia hardware right now. So, to me, Nebius is definitely one of those, and it's my favorite place. So, I'm maybe I'm biased, but you asked me the question, this is my answer. What about you? >> Andy, I'm going to go biased here. Um and I'm going to go with Core Weave for mine, and very similar to your results. Obviously, Nebius is kind of like the king right now with with enterprise models, with these kind of great contracts that they're working with, with their inference platform. I forget what it's called, but the inference platform. They're able to get really great margins on. And And to me, Core Weave is now starting to follow a little bit of that. In the last earnings, we did see that they're they're trying to kind of create this inference platform as well. They're going to start building solutions on that. The other thing is if we just see great results, which I do think we are, it also means the big players are are are are still out building, are going to be building a lot of AI data centers. And Core Weave does have a little bit more in the kind of those massive large cloud service provider deals. So, for me, it's a little bit of both ends. Where very similar to Nebius, it's like they can win on the top end with the big players, and then with these new type of short-term contracts, it kind of indicates that there's the possibility that these will also do good. So, um Coreweave would be uh my my first pick, Neo. Um And again, I do own Coreweave, but I am very much bullish in this company, especially after announcing 500 MW that they built in the last quarter alone. Uh so, Neo, I'll pass it over to you for uh stock number three. >> Stock number three, my second pick here for the momentum that could go their way, up or down, is you know, I I I wanted to switch to maybe to say Meta, cuz Meta might come out with with their new next-gen model that's called watermelon. And they're also saying that they're moving also towards open way open source more more that direction, so it it fits the theme that we're we've just spoken about, but I feel like I've spoken about Meta way too way too much recently, so I'll stick with uh SpaceX AI. Like we said, SpaceX, and we covered that uh in depth, so if you missed that video, that will be in the top right corner, but SpaceX is working exclusively with Nvidia. And if you've tried out the new Grok release, the new Grok bot as well, you can start to see the direction that they're going in. And I do think that here as well, if we're getting cheaper models, cheaper inference, that is definitely going to help a company like SpaceX AI, which remember, they have huge data centers out there right now, or up until now, the usage of Grok has been quite limited. They've rented out capacity to Anthropic, they've rented out capacity to Google. The premiums there are insane, but I do think that if they do get a lot of momentum with regards to Grok and Grok bot, which I'd be surprised if ChatGPT, Claude, or Gemini won't come out with the equivalent over the next couple of weeks, maybe months or so, but cheaper models, cheaper inference is definitely going to benefit a company like SpaceX again them being super super close to Nvidia, wouldn't be surprised if we also see a financing deal between those two companies. So, I think although I still believe it is overvalued right now, I believe they could see uh some momentum, of course, towards the end of the year. There still is a big share unlock for that company. So, don't be surprised if we do see a pullback, but all in all, what's important is the the business momentum. And I do think that their close relationship with Jensen and Nvidia is a huge benefit for them. >> Yeah, Neo. And And stock number two for me, which would be the fourth stock, would be Marvell. You know, Neo, what I thought was funny is all four stocks uh I think Nvidia has announced that or or has a form of investment. They have an investment on Navis and CoreWeave. They have now an investment on SpaceX, mainly because of the investment that they have in XAI. Uh but still, they're in SpaceX. Um and they announced the investment in Marvell as well. Um so, I I think Jensen and Nvidia teams know who can benefit from it because they're all part of somewhere of the supply chain. So, Marvell, the reason I like it, uh Neo, and why I believe it's going to be beneficial if earnings are good, is they focus a lot in networking solutions. Um things like optics, copper as well. They're also working a lot on various type of scale up and scale out across solutions. More importantly, they are a partner of NVLink Fusion. And for those that are not familiar, NVLink Fusion is what it allows you to connect kind of maybe an ASIC chip to Nvidia's platform. Um and and I think they they this is going to be pretty beneficial for Marvell in the future as well. Um so, the other thing is Marvell also is working on things like uh memory storage, memory controller solutions. And right now in the current memory space, um that's kind of creating a fit of a a bottleneck, and you're seeing kind of a lot of demand in this market. With the recent Google and Marvell news, that's one of the parts that they were focusing on. A lot of the memory controller solution, a lot of the memory storage solutions that Marvell has to help optimize some of these memory bottlenecks. So, if if Google is using them, I'm going to be certain that Nvidia is most likely using them as well. So, for that one, that's why I'm bringing number four. We also had to escape the new cloud market really quick. We also had to find something outside of that space. So, and like you you I just want to repeat once more what you said that Nvidia might not perform well in terms of stock reaction, but if the results are strong, I do believe it can benefit and and it seems like we both believe it can benefit the downstream of a lot of these stocks that we mentioned just now. >> And I think that's a good overview and sharing our own expectations for this, I would say, season AI season-defining earnings report. Of course, we also have Marvell's earnings on Thursday after hours. I ran into reporting some cybersecurity names as well. We'll try and cover as many as possible on this channel. We'll have a after earnings video review, so make sure you are subscribed cuz that's going to go live and be uploaded to this channel right after the earnings report. Hope you all enjoy this new episode. Share your thoughts down in the comment section below and we shall see each other in the next one. Bye-bye.