Nvidia Crushed Earnings! These Stocks Are the Big Winners!

Welcome back to another episode. Today we are going to take a closer look at Nvidia. They just crushed earnings. Jensen just gave us an amazing guidance not for just this year but for next year as well that has the market excited. Now in today's episode we are going to take a closer look at those top level numbers. More importantly, we are going to discuss certain stocks that can benefit from what we just heard this AI giant say. 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 analyst, make sure to check out the pin 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, Nvidia just reported earnings. Neil and I were just listening to the call and we have a lot of information. Neil, I'm just going to pass it over to you because there's so much to discuss and I think we just need to get started. >> There is a lot to discuss. We'll keep it as uh brief as possible, but this was probably one of the best earnings reports and especially earnings calls from Nvidia since probably at the start of this whole AI revolution. They crushed the earnings estimates for for this quarter. We can actually have a look at at the numbers. Absolutely incredible uh stuff beats across the board. margins for guidance and of it. We'll talk about that because the margins they do get impacted because of memory. They did touch on that. But the fact that this is a over $5 trillion company that is now growing revenue over a 100% yearover-year while not having the same let's say price to free cash flow multiple as some of the big tech companies. This is a this is a name that is trading at a low forward PE low 20s forward PE price to free cash flow also close to low 20 times forward. This is again something that we have not seen before which is also probably why the market is always skeptical when they see these types of numbers this type of growth but this is the fourth consecutive quarter where we've seen revenue accelerate and the guidance is nothing short of incredible >> first just crazy 106% year-over-year growth and um when we go before we go on to the next one it's just I I want to really hit that point where I I personally believe one of biggest threats for the market is just for Nvidia's the market just we can't imagine can this continue right 106% I I don't expect to continue at these levels but when you're trading at a 4 P ratio like you mentioned of low 20s even somewhere in the 20 in like 20% year-over-year growth wouldn't seem crazy and so to me like we have so much buffer room before we even get to even those types of level of revenue growth and as we're going to see guidance in a bit for not just next quarter but for the upcoming fiscal year. The visibility for this is extremely insane, right Neil? >> Yeah, that was probably one of our big questions we did cover. We did do a pre- Nvidia earnings video a couple of days ago. We wanted to see okay all of the commitments all of the guarantees the numbers are becoming bigger and bigger and bigger but do they become bigger because they have the visibility of the revenue that's coming up or is it speculative and it's it's quite clear from their answers that it's far from being speculative and they actually said look with regards to the the recent uh big deal that they've announced for the energy one with OpenAI and the other company they they said they could deploy up to what around 1.5 million GPUs and that could generate them between 150 to 200 billion dollars. And when you're getting these types of numbers, I mean, of course, why wouldn't they invest that that amount of money? It makes sense. >> Yeah. And and and you know, more importantly with that, it was two 150 200 per generations of GPU. And I think uh for those that are not familiar there Nvidia made a land powershell um kind of like commitment um for multiple years. I think it was 20 years. Um and they say hey if you're upgrading every 6 years or so that's about three to four cycles or or generations that you can get from Nvidia. So 150 to 200 times 3 to four. And and you're only putting a backs stop that just in case they don't pay. But if they do, if everything goes wood, you're you're you're you're just kind of taking all that revenue um and adding it back to the bank. So, uh it it's definitely scary to see these commitments and I know we have a slideshow later on on it. Um but a lot of those answers I think a lot of those questions and doubts were answered um during this earnings call and it's one of the things we were talking about in the preview earnings is is exactly this right Neil like if you're going to give us a commitments and you're you're supply capacity right 279 billion for investors that are not familiar this is Nvidia locking in memory locking in TSMC locking in uh optics and and and advanced packaging to make sure they're going to be able to make all the chips that they need uh and I think the timeline goes from like here till 2032 thereafter uh Neo if I if I'm correct and I think the biggest was 2027 at like 120 billion so it's it's a big load right now obviously because that's where they see the most visibility and then it goes down from there I think 2028 it's another like close to 100 billion and then you start to see a drop off but it's all based on the visibility that they have right now but this is what the market is fearful right I I think Dale before I'll pass it over to you when we saw this commitments and in the press release the market stock was down and I do believe it's because of of 366 billion the market starts to look how are you going to get that money right where is it going to come from um as we're going to see later on during the earnings call they did answer that and that's when we did see a kind of a a reversal on some of the price action >> yeah I mean when again when you look at these types of numbers you can panic and ask the questions like how are they going to finance all of it. But you do also have to remember like you said the the big chunk of this number is going to happen in fiscal 27 fiscal 28 for Nvidia. So calendar year 26 7 8 and 9 that's the big chunk that that's going to happen for them and they they've talked about also their investments in the Frontier Lab. These are not huge investments that will happen every single year for the foreseeable future. And once this business goes past this huge investment cycle, the free cash flow just continues to compound and they're they're on track to generate hundreds of billions of dollars in free cash flow for the foreseeable future. And and so it can for their from where they're standing, it makes absolute sense to do these types of deals. >> Yeah. Uh Neil, I don't know if we want to jump into kind of the um forecast for the fiscal year of 2028, which would be calendar year of 2027. Well, this is quarter 3. Let's start with quarter 3 first. Yeah. So, quarter 3, fiscal year 2027, revenue $18 billion, right? That would be um I don't know if you have the math here, Neil. What kind of that would be over a little bit over 90%. >> Close. Yeah, close to 90%, which again if you can add you add here plus - 2% or you assume that they're going to be their own guidance, it's going to be again above 90% year-over-year growth. So a small deceleration from the quarter we had right now, but the dollar amount is getting uh bigger and bigger. Of course, the bigger story is that second line, right? It's a gross margin story. >> Yeah. Yeah. Yeah. That gross margin, right? A it is down sequentially memory cost and I think they even mentioned that for count calendar calendar year of 2027 I'm going just start saying calendar year for calendar year 2027 um they expect it to grow uh a little bit lower right um it's going to go down to 71.5 for two reasons you have the Vera Ruben ramp and you also have the memory cost but then from there on you expect it to kind of at least finish off somewhere around 72.5%. Now I I I think this is pretty interesting because this has been a bearish case for Nvidia that you can't keep that 75% margin but to me I mean 7 going from 75 to 72.5 and you're doing that when memory costs are increasing almost we we've heard from Micron certain quarters you're growing memory cost at 60% on a sequential basis sometimes even more and even with all those sequential races you're still your your margin hit has only been about 72 to 72% 5. I don't see that as as a crazy bearish case. Like is that the worst you got when you're both memory prices and ramping on new product? Uh any thoughts there, Neil, before we talk on on that revenue growth rate? >> No, I mean it it has been the bearish case for an Nvidia. It has been the bearish case for memory players players as well. Your margins are super high right now because you have pricing power. But what happens when that pricing power goes away? How profitable can you really be? And that's why we've seen that the multiple does not expand that much for a memory player like a Micron SK Hinings or or even even the others. Same here could be said with an Nvidia. But then again, if if the worst that will happen is them going to a low 70s%. Okay, give me that all day when you're growing 100% 90% revenue uh every single quarter right now. And then when they told us the preliminary revenue growth for for the upcoming year, right now that sits at 70%. Which is much higher than what the market was expecting. And and that number is not even the final number. This is a number that could go to 100% if they have unconstrained demand growth. If they can grow more, they will be growing more. Which means it is not impossible to see Nvidia grow next year, next fiscal year by another close to 100%. Yeah. Yeah. And and and you know, I think Jensen ended up mentioning that one of the reasons they haven't given a lot of preliminary earnings u or or preliminary revenue growth potential was because the supply chain was just changing so much, right? It was changing so much. So they could have given us a number, but it it it what they would have given us today would have been different. So I think now they feel comfortable where this is definitely a good baseline that we have 70% for fiscal year 2028 and for the fools watching analysts for this quarter for this year are expecting revenue of around $400 billion I think it's like $399 um I personally believe Nvidia is going to do over that but if we just do that base of 400 billion um and that's the numbers prior to what these earnings which they already beat earn they already beat uh analyst expectations But if you just do that 400 billion and do a 70% year-over-year growth, that is close to $650 billion in in in revenue for next year. Uh, Neo, so now when you start to see that and you say, "Hey, you have $650 billion in revenue and you have about a hundred billion in commitment." Pretty much is it goes on par with like your margin. So it's nothing scary. It's like it's you're you're making this commitment because you see that visibility. And it when we got that number, I think people started to do that quick math and we started to see that stock price really change after it. >> Yeah. I mean, even by my own estimates, I was far from it. I I was closer to 85 86% growth this year and then next year growth slowing down. So, a bit like Wall Street, but yeah, now now they're going to find an extra hundred billion dollar or so. And it's it's not the only uh thing that they've announced, right? We had a AWS expansion up to 2 million GPUs and if we go that's I think for the next two years. So I think up to Q2 fiscal 2029. So two years. And if we do the the same math as their own uh commitment from that open AI agreement the 1.5 million GPUs that could generate 150 to 200 uh billion dollars in revenue. two million GPUs, that's another extra 200 plus billion dollars over the next two years from just one customer. I mean, it's when you start adding all of these all of these numbers together, you can again understand why they're making all of these investments because they see they see the revenue that's coming their way. Uh I I I think even at the beginning of the call, I know I don't think we have it here in the on the presentations, but they mentioned that in fiscal year in this calendar year of 2026, capix from the big five is expected to be around $800 billion for this year and for next year they expect it to be $1.3 trillion by just the big five. Um so again they they they gave us the visibility in revenue, they gave us the visibility on what potential capex from just five of their big customers. And one thing that we do know now, Neo, right, is hyperscalers are only about 50% of the data center revenue, a little bit higher than that. Um, but it's no longer like 80% from these hyperscalers. You still have kind of like the other Neocloud players, the enterprise space that is waking up. And I, it's not necessarily, we didn't talk about it in this episode, but a lot of software companies reported earnings today as well. Um, and they started to showcase a lot of proactive results with AI. So now you're seeing kind of this enterprise market wake up as well uh for this AI story. So a lot of good things that that we saw here. All right, Neil. And I think now that we have a nice overview of earnings, we got good clarity on guidance. We got good clarity on potential capex for the hyperscalers. Uh we even got clarity on some certain pricing of solutions. I'll send you quick uh I'll pass it to you. Two stocks you think can benefit from what we just heard in the earnings call. I mean, we know that they talked about the open source model versus closed model. And as I've said in the preview video, I think a Nebuse is a big winner there. And I'll just reiterate it again that Nebus is is going to benefit from this one. Yes, they work super closely with Nvidia. Nvidia is an investor in in Nebus. Nvidia and Nebus actually they said that Nebus is the first Neo cloud uh that actually runs the new Gro Gro with a Q um system which again is very good news for for Nebus. The second one I would I would directly jump to the second one is probably the memory player and Micron. I'll take Micron for the obvious reasons. Gross margins are coming down for Nvidia because memory prices are going up and of course that means that the Micron and SK highix and Samsung they're all going to benefit uh from that as well. So it's these two players but of course there are many others there are many other players indirectly that can benefit from it right if the AI story is truly working out. We've seen software players having excellent results. We see a Salesforce that suddenly announced a a deep partnership with Entropic and they came out with a new product called Cloud F Cloud Force. So things are moving the right direction. I think there will be many winners, but if I had to pick two, those are the two. I'm sure I already know which one you're going to pick. >> I'm actually not going to go with the Neo Club player this time. Uh Neil, I'm I'm going to go with it's going to be interest a random on AMD. Uh, I'm going to go with AMD here because what we heard from Jensen was that the market is supply constraint. They can only grow 70% because of the current market conditions. If not, they would be able to grow much higher than that. I believe he said I don't think he gave an actual number, but he said much higher than that. If right now we're in a market where AI tokens are truly truly ex valuable, which I do believe they are, AI labs are not going to try to wait. they're going to try to find whoever they can get a chip from and I think AMD with the Helios rack is going to be able to benefit from it dramatically. Um, so that's going to be my first pick. My second pick is going to be I I was going to go with the NeoCloud, but I want to I want to change it up a little bit. It's going to be Marll. Uh I I think I'm going to go with Marll here. Marll has a really great partnership with Amazon. And Amazon is developing the tranium. They're doing a lot of Envy link solutions with uh um Tranium and Nvidia and the NVLink solution and Marll plays a good role there and with this announcement I think they also announced something where Amazon and Nvidia are also partnering up in another type of memory part that is part of the NVLink solution ecosystem. Uh so I believe Marvel is actually going to be a player that can benefit from that as well. So, um, AMD and Marll, which are typically two competitors to Nvidia, but I think can benefit from the current trend that we're in right now. >> And Marll reports Thursday after the market closes. So, that that could be very interesting. Um, it's interesting because a year ago, Marll was under pressure. There were talks that Amazon would move away from them, etc., et much much better. Jensen thinks that Marvel could actually be worth a trillion dollars. So, it's it's interesting to see how a potential competitor now turns into a a sort of BFF. Um, other than that, I think it's been again one excellent excellent quarter by Nvidia, which we could say powers this whole AI ecosystem. They did touch on on that circular financing um argument. I think they did a great job there. Some people might not be happy with the answer, but for them again, I always go back. For them, it makes sense. Jose, I think that's a a good recap of an excellent earnings report. Don't forget to subscribe to the channel so you don't miss any of the future earnings previews, recaps, or any other video out there. Hit the thumbs up button, subscribe, and we shall see each other in the next one. Bye-bye.