The News Today On NVIDIA Stock, Micron Stock, SK Hynix, SpaceX Earnings - NVDA Update

Right. When you think about the size of like Nvidia, you do like Nvidia, right? >> Yeah. You know, uh like I said, I think that there are definitely opportunities in leadership. Um but you know, if you take a little bit of an out-of-the-oney call option, if you will, on some of these, uh you know, breath and depth names, I like that. But and to Nvidia's point, I think that Nvidia is a great example of the difference between a stock price that we see in the marketplace and the actual value of that stock because of how they've grown so substantially. You can actually see their forward earnings multiple depending on exactly how you know you calculate it and what analyst projections you look at in the mid teens. In the last 12 months it's around 23 times. I think a value uh I I see actually some value in a name like that. I think the market actually over time will likely reate it higher. >> Simply say none of this has anything to do with the fact that demand remains um unabated. It it it just keeps going. any headline you want to look at. I mean, whether it's Bite Dance >> buying $35 billion worth of Nvidia chips, whether it's OpenAI accelerating its fundraising ahead of again what we continue to wait for, that S1 from Anthropic and the potential for an IPO not long after that, uh, Anthropic and NScale in talks for a another multi-billion dollar deal. I mean, the demand for compute continues regardless of what Core Weave's borrowing costs are. Jim, >> you're absolutely right. And I think that we're caught in the vortex of this because a lot of the people we speak to are saying, you know what, I wish that all the semiconductors could rally, but they're stuck in core. This one, the Ellis, I thought was going to be a bridge too far because it was 150 million and we're taking down the edifice. Maybe today is the day that we separate, but it's the SKH Heinix reacting to the Ellis that made this con go down. SK Heinix is a really big company. I can't dis divorce it because I can't divorce SKH. >> Uh yeah, SKH down 30% in about 10 days. Got about 4% recovery yesterday. It's going to give all that back uh this morning. Even though I mean Morgan Stanley's pretty positive on memory this morning. Look, but they did say Western Digital. They had they said some good things Seagate. So, they had to say some bad things Western Digital. Uh we're also laboring under the loop down what the downgrade of uh Apple, which I I think is I can take one later in the show, which I will >> uh particularly because this is probably the best time I've ever seen Apple. But, you know, David, when I see this kind of stuff, I I want to know, let me ask you something. >> How about if I started and and this is just an alternative universe. It's I don't think it's wrong saying you know we can continue to focus on core but coreweave frankly is just a company that doesn't have its balance sheet ready. Ellis is a company where the dealer failed to be able to do a good deal. What matters is that Amazon has almost unlimited capital. What matters is that Alphabet can tap the market. What matters is that we're seeing Microsoft doing much better. That would be, I think, the alternative narrative that may be more in play that I'm choosing not to do because I pick up the papers and I look at Core. >> Yeah, but you're right about all those things. All of those companies you mentioned do have at this point um easy access to capital at rates that are not that far above still corresponding treasury. And they keep wanting to spend. I mean, we're going to hear from Meta tomorrow, right? And we're going to get a new capex number potentially there as well. >> And there's no doubt is their ability to continue to spend, Jim. So, you know, at some point perhaps that narrative will take over once again. >> Yes. >> I mean, at the same time, Jim, NeoClouds are almost half of Nvidia's data center revenue. >> Well, the problem is is that Nvidia said, "I can't just deal Jensen said, I'm not going to just deal with the hyperscalers. I'm going to go Neocloud. Uh Nebas, he's going to go he's going to go Iran. It turns out there's always a new one somewhere. Australia, whatever. He backed a lot and and it is like the railroads. There are a lot of railroads that you back, but only four ended up making it. Uh but that didn't mean that it was bad investment. >> So, let's start with the behemoth and Nvidia as your first trade today. Uh what are you seeing in Nvidia right now? Yeah, Nvidia since basically last earnings Marley has been the worst performer of these big three names, Apple and Microsoft, the other two we're going to look at. Down about 3% over that time frame, but approaching some major support uh right around that kind of 212 a.5 215 area. So, I kind of like it going forward here. Earnings are coming mid of November. So, I'm not going to get kind of in the way of that. I'm gonna structure a trade just short of that. Take advantage of the fact that IV has popped here in Nvidia on the downdraft. So, kind of like uh where the stock's at. Really like where the IV is at. Uh and stay away from earnings. So, just going out to November selling the 20520 put spread. Getting about a buck here. So, still plenty of downside cushion about 5% and get out of the way earnings. take advantage of an Nvidia that has come back down and should I think find some support somewhere around here. Certainly, I think their business will continue to uh you know be the best of the best, but the stock price well off the highs, but I think we'll find some support here over the coming weeks. >> Yeah, I mean we're we're certainly well off the highs and some of the more parabolic moves we saw from this name last year. It's been a bit more sideways for Nvidia. Uh KG, as we look at the chart here, uh and Tim highlighting that this is the worst performer of the big three that we have today, what are you seeing in the technical setup and noting again that we're also a ways away from the earnings event reports at the end of the season? >> Well, Marley, you kind of just did my job. I mean, the stock has been trading sideways or in a range and it tries to break out, but we are kind of back within that range that we've seen for the most part for the better part of this year. If you look at this time last year, we did see the stock kind of pull back below the 20-day 50-day moving average and it consolidated with the area of support sitting at around 170 and an area of resistance at around 195 before we did see a breakout and we started making those highs of around $236. Unfortunately, pulled back, leveraged the 200 day moving average as a key area of support and then we started making higher lows and then we did have a failed breakout. Technically, we got to that 243 level and now we have pulled back below the 20 below the 50-day moving average. Now uh there is a reason to say that maybe we are closer to an area of support. That 210 level has been uh an area over the last two months, 3 months where buyers have actually stepped into this name. Maybe that's going to be the case today. And over the last four days, we've kind of been trading between 211 and let's say 220 or so. Uh and we are trying to consolidate. Now the RSI did break the higher low succession. So that's something to be mindful of. MACD is in a bearish formation. still above the zero line but the 12 EMA below the 26 EMA here. Uh you got to pretty much hold this level. If not, you're looking at the 200 day moving average. If we go to the weekly chart, you could also then make the case that the 20week moving average is acting as an area of support. But the problem that you kind of have with this uh pattern with higher highs, higher lows is that you are starting to see a little bit of a rollover in the RSI as well as the MACD which did actually cross in a little bit of a bearish formation. So moving average has to hold on the 20week moving average. But if we do kind of get an acceleration once again, go back to that 200 day, which is approximately close to where we are seeing that 50week moving average at around $200. >> All right. Right now, we've got Nvidia just trading marginally higher, about a tenth of a percent on the session at 21730. You want to be in the trade. And if you think growth is slowing, you've got to own technology cuz they're the reliable earners. >> So people are going to look at it and say, "Oh, oh, but core, it's the canary in the coal mine." And I would say maybe for coreweave >> it is. But to put it differently and speak to these concerns, we all know that this is the buildout part of this incredible technology that you're referencing. >> You know, and at some point you feel a little nervous about what comes next. You read, oh, data center this slowing or you know, you read that, you know, this Amazon report, you know, there's there's extra GPUs. They're not even using all. So speak to those anxieties. I mean, can you still be fully invested? Should you stick with the leadership because that's usually what takes you through all these rallies and and you're talking about mega cap defensive tech but what about even kind of those you know strongest most high-flying parts of the AI trade. >> Well I think you want to own some of that in your portfolio but if you if you want to be in a position uh if if the market slows if we get a correction which we haven't had in a year and a half a real one um if if you if you think those are coming then this is a great way to play it. I mean there you know I had three names for you. One of them uh was Nvidia. They're all obvious. Like none of these are secret names. Um but you're getting paid to wait also for a number of these names. Apple, Microsoft, and Nvidia all play pay dividends. All are buying back shares. So you you know this notion that they're not going to be able to finance the buildout. And these are debtlight names that I I gave you because there is concern. And that's good, Kelly. There was no concern during the internet bubble. There was none. So when people say this is a bubble, I'm in the Howard Marx camp, I'm happy to say. Uh I don't I don't see it. I don't believe it. I was managing money during the last one. It was very very different. There was no skepticism. It was all euphoria. And you know, people will say, well, there was the dot boom and bust. Then there was kind of the housing bubble boom and b like there's always a bust. And >> so Nvidia is an interesting one to pick because the market cap is so high as it is. And maybe I'm too stuck on that. I mean, you could say the same for Apple, 5 trillion, right? Um, >> put that into some context. >> Okay. Earnings growth. Yeah. But how well can you how much bigger can these companies continue to get over the next 5 10 years and beyond? >> I I think they could double easy. I mean, if you've got 96% earnings growth, it's going to decelerate to 70% next year in Nvidia, for example, and then it it decelerates to 20 30%. We went through that with Azure and and the stock was still able to perform. you if you're still growing at 35 to 40% um that that's something but uh to to really uh pay attention to but Nvidia is trading at a 13 and a half multiple so we put it in our value portfolio uh at the beginning of the summer and we did the same recently with Meta we did it with Google two years ago these are really big companies yes but they can double in size there's nothing that says they can't >> right I need to think bigger I mean that's one of it's almost like you learn with age you're not thinking big enough speaking for myself looking at Sylvia what you like and Chris what you like and what we heard from Nancy Tangler just a few minutes ago she liked Nvidia and Microsoft Sylvia you like Nvidia Micron invertive and Chris you like Amazon and Microsoft I mean there's there's you talked to all these different people with all these different approaches and things going on if you just jump in and kind of take that but >> and it all seems to point back with a lot of people who've been in the market a long time to tech but some of the bigger name but but don't worry about the Nvidas and and so forth one of the big things, Kelly, is is that I I come at it from more of a value perspective. So, I'm looking for the riskreward trade-off. I'm not looking for the best appreciation. I'm looking for the least downside in many ways. So, I love the hyperscalers and it seems boring when all these exciting things around, but they are selling more cheaply than in Amazon's case ever. Uh, in Microsoft case, way below its average valuation and and so these two represent a terrific riskreward. earnings are going to increase by more than we thought they would and this earnings growth which is accelerating not slowing down that's the place to be at reasonable valuations plus earnings so as earnings data come in I think Sylvia's exactly right these these worries start to dispel and the market climbs the wall >> you do yeah because Nancy was saying she thinks we get a big run into year end Silia at a time when a lot of people are saying ah you know there's other alternatives there's you know plenty of things to worry there's the midterms and um and yet we're up 13% year to date on the S&P and we can name all of these worries that perhaps we can clear here. I don't know. >> Yes, I I think that, you know, we do have to get past inflation. We do have to get past oil prices and things like this will eventually put stress on the economy and the markets and things like this. But for now, the fundamentals are looking good. The consumer is looking strong. Earnings were great last quarter. You know, so far I think we're about 79% beating um which hardly anyone has reported, but nevertheless, it's a good number. And I think that expectations are high. And what we know from from last earning season is we've got a lot of outlook into what this earning season will look like for the AI hyperscalers for the microns, the Nvidas and you know the AI related names. And if that comes to fruition, I think investors will be less worried about you know funding and the financing and the credit that is out there for this because again you will see that the demand is not going away and that's the biggest thing. You know, some of these companies have 15 billion dollar backlogs like Verdive, for example, that they're going to grow into, >> but boy, you've got some great stellar companies out there selling at great multiples. >> Let's talk about one of them because you say we could be on a on the cusp of a melt up uh here. You know, we talked about this whether it's price to earnings or price to book. You look at these numbers and they're just shocking. You're seeing three times, three times, five times. It's and it goes on calendar year 28 micron trading at less than five times PE. That's unheard of. >> Yeah. multiples across the entire AI infrastructure have been completely compressed. At the same time, growth expectations from the companies themselves and their guidance have gone through the roof. Boy, that screams value. >> So, we were 1100 not long ago, a couple weeks ago on Micron under under 800, under 900 recently, popping a little bit here. This is an opportunity to buy the stock. You know, we think this is a great example of what's going to be a meltup as we go through the the fourth quarter and coming from these low multiples. And what's going to happen is psychology when more earnings come is going to flow entirely other way and you're going to see tons of cash come after stocks like this. >> What about Nvidia? You know, there's a piece in in Business Insider, which I will tell you right now if you read Business Insider is going to be negative against this stuff. Fortune FT economist Business Insider. So, at least know what you read. Business Insider, I think I call it a hit piece, but suggesting that large companies are buying these GPUs. They don't have any place to plug them in, so they leave them in the warehouses and hence maybe all of this optimism about Nvidia misplaced and that's why the stock hasn't truly taken off. What do you say about this? >> I think they're right, but they're way too early by years. So, that will eventually happen. We were going to overbuild and people are going to be doing that. We're not there yet, >> but we're just not there. the use case demand is tremendous from here and towards the end you will see that that's going to be deleted and then there will be that problem but again we're years away. >> So in the meantime you've got a stock that's pulled back. It doesn't look too nefarious on the one and a half year chart but here you can see the sharp pullback. You like these kind of pullbacks to buy these stocks. Yeah, because this is when you're, you know, as a great money manager once said, always buy into the fear if the fundamentals are strong and the guidance is is good and and so Nvidia I think is maybe one of the best ways to play this at 19 times earnings growing in excess of 60% a year. >> Are you growing more cautious on the AI trade or do you think this is overblown whatever sort of fear is circulating the market? >> Well, I think that there doesn't get enough attention. And I mean, we talk about it. The massive delevering in the hedge fund space is huge. And I think investors really need to understand that distinction. You could say the AI trade is, let's say, blowing off. I think we're just having this massive delevering on top of that midterm weakness. And so, I think let it settle and then November, December, I think, will be quite positive. So, I'm still looking at this time period to add to positions. And I just think we're kind of at peak bearishness. But I think more of this is more of delevering than actually something fundamentally changing in the AI narrative. >> Oh, interesting. So, you think it's a bit of a sort of a false tell on where the overall story is going. We're we're making too much of the the selling that we've seen in some stocks and also the volatility. >> I do. I mean, you're seeing the delevering like we haven't seen sometimes somewhat since 2008 on the hedge fund side. These trades are so crowded. All of these hedge fund longs were in the same positions. They're delevering and when you have like four or five times leverage of these multistrats unwinding, it's really going to put weakness on top of all of what's happening in the Cosby. So, I think let it settle in, but I wouldn't get too bearish because once the midterms happen, I think this AI trade's going to pick back up. >> Well, SpaceX earnings are out. Morgan Brennan has the numbers. Morgan. >> Hi, Mike. That's right. We're still going through this report, but it looks like a pretty big beat uh at least on the top line for SpaceX. 14.58 billion. Uh that was 161% increase year-over-year. Better than expectations for 12.7 billion. GAP estimates coming in at 35 cents. We're going to hold off on comparing those to street estimates here, but uh that looks pretty strong as well. Um in terms of the breakdown of the different businesses, space revenue coming in better than expected 1.77 billion. Connectivity, this is the Starlink business, 5.25 billion, also better than expected. and AI revenue now known as SI super intelligence revenue uh also much better than expected at 7.56 billion total adjusted IBIDA also much better 8.8 8 billion that represented a 306% increase year-over-year. Um you saw beats on Ibida and the space business connectivity business but that SI adjusted Ibata really beating street expectations at $4.95 billion. A few other stats I'll give you here. Compute 1.7 gawatt as of the end of the quarter. Um so they're continuing to add that compute capacity here. And capex the street was expecting about $18 billion. They came in higher than that at $19.6 $6 billion in capex for the quarter. And you can see shares right now of SpaceX are popping. We're up about 1 and a.5%. Um, but overall, uh, stronger than expected numbers. I'm going to continue to go through all of this because there's a lot of metrics that matter here. But that SI business, formerly known as AI, is really what's going to drive it. And, um, what we hear in the conference call in just a few minutes around guidance. There >> is a big driver around SI revenue um, leasing wholesale data. I would expect this is the first, we'll find out more color, more context, but this is the first full quarter where you have that lease deal with Anthropic and then of course they've signed other deals too. So that conversion from you know deals to compute deals to actual realized revenue as they continue to build out all the infrastructure here seems to be turbocharging in this quarter. We'll see what they have to say. >> Okay, Morgan, thanks. Joining us now is Julie J from Moffett Nathansson. Julie, great to have you with us. Your first take on this report. >> Thanks for having me. Um, look, I I think it w it was just covered now. Um, it was a a beat against consensus across the board, particularly in the AI segment, which I think folks will be listening on the call with particular interest in um in terms of one whether or not the 100 billion AR target for December is still on track, if not higher, and also what this means in terms of potentially incremental deals signed on the infrastructure as a service business. >> Yeah. And what uh do you think the the kind of bogey is in terms of how much capacity will be added next year? I know they've talked about, you know, pretty aggressive plans for additional compute at this point. >> Yeah. So, by the end of next year, um on the last uh quarter uh quarterly earnings, uh SpaceX had noted that there could be up to potentially um 10 gawatt added. Um sorry, 8 gawatts added. And I think where the street landed is closer to six absolute gigawatts at the end of 2027. Um whether or not on this earnings call we hear if that incremental gigawatts added is going to come to fruition next year, we have uh yet to see. But as of today um the SpaceX reported gigawatts installed is pretty much in line with um what folks had expected for this quarter. In terms of SI revenue, Julie, are we to understand that the bulk of SI revenue comes from leasing that compute capacity? Um, we are in a period where now they've signed a bunch of deals, Google being one of them, where in, you know, starting in October, we're going to see a major ramp up in in sort of these deals falling to revenue. What is your sense of that trajectory and and have you gotten anything from this report that that either confirms that or dispels that? >> I I think that this uh report at least is quite confirmatory. Um you'll see the majority of the ramp start later in in the fourth quarter of this year. Um kind of going to the the bolus of the deals should come in by the first part of 2027. Um you're going to see anthropic ramping in this particular quarter. Next quarter you're going to see Google and then two additional unnamed deals that were uh announced both in in Q2 and and during the conference season um the past couple of months. And so today I'll be listening for are we going to see incremental deals on top of what has already been announced, but the but the ramp and the trajectory is is as expected. >> SpaceX's analyst call is underway. Morgan Brennan has the highlights. What are we hearing, Morgan? >> Uh yes, and this call is very much still going on. Uh Mike, here is the headline for you. Elon Musk saying just a few moments ago he's expecting annual recurring revenue of between 500 billion and a trillion dollars next year. Yes, you heard that. between half a trillion and a trillion dollars next year in annual recurring revenue. This is tied to uh the AI segment which is now called the SI segment. How do you get there? Uh well, Musk also saying on the call that he's fairly confident getting to 10 gawatts of compute online in 2027. So that is the upped uh range of guidance that was previously getting given. That's in addition to 2 and a half to three gawatts of compute capacity they expect to come online by the end of this year. In other words, we're talking about 13 gawatts of compute capacity by the end of 2027. Here's where it gets even more interesting. He's deploying one of the top SpaceX teams to all of this terrestrial compute infrastructure. Um because he says that the real bottleneck here isn't the chips, it's power and cooling infrastructure. So, they're building out an incremental 20 gawatt on top of that 13 gawatts that they expect to come online next year in anticipation of being able to deploy all of those Nvidia chips. He's also talking about usage of Grockbox that that Grockbot that that's increasing per user. They're getting ready to deploy that for enterprise as well. >> Can you extrapolate what SpaceX said about its SI business and specifically leasing uh compute business onto Neoclouds? on on one hand you can say it's it's great for the Neoclads of course that there's demand out there um and there's a shortage of of compute power but at the same time SpaceX is also talking about Elon specifically talking about a huge bottleneck is going to be power and water and how we can overcome those bottlenecks because of the financial resources that we have which would then seem make it seem like the neoclouds have a disadvantage when it comes to the fight. Well, you know, my initial read was his comments were positive for the Neoclouds and that still is my read because I think there is this subtle narrative that there's an overcapacity some of the downgrade with core weave of their relative to their debt last week was about what's the ultimate end demand of this and have kind of we reached this kind of level where we're kind of peing off and uh so I think that you know his comments are that we're not even close to that and so as far as like how the Neo clouds would compete with like a SpaceX one other thing you mentioned some of the advantages that SpaceX had one other thing that they enumerated on the call was this whole vertical integration. I mentioned the whole vertical AI piece, but some of the the power components they're listing out some important power components that they're building themselves. Very unique relative to other the Neoclouds for example. I think the biggest issue with Neoclouds is this anxiety that investors have that we're near the end. And I think that to that end, that question that investors have, I think this is really reaffirming that the demand for compute is still early. Remember these personalized bots, there's probably 15 million daily users in the world. It hasn't even started. 10 to 15x the usage versus a chatbot. And then physical AI hasn't even started. When you think about those layers, you can build a case where we see these numbers going up and the compute numbers going up for it won't be forever, but for the next 2 years. >> All right, I hope you're all doing well today and staying calm in this market. Tuesday was a positive day throughout much of the market and somewhat of a muted session among tech stocks as oil moved lower. Tuesday's session was initially negative for many AI tech stocks following another rough session overnight in South Korea. This is after a Neocloud named Elise went public in South Korea and dropped more than 30% after trading began. That spooked investors both in South Korea as well as the US. As I said recently about the firmst IPO that was shelved in Australia. That was a situation of a company trying to go public at a valuation that was way too expensive. The Elise IPO appears to be a similar situation of a company going public at too high of valuation. It's also worth mentioning that the IPO was established earlier this month before the recent sell-off in AI stocks. So, I would not read this situation as a sign of waning AI demand, not at all. But given the recent nervousness around tech stocks, you can understand why this situation caused many AI stocks to initially trade lower in the US Tuesday morning. I'm going to address SpaceX earnings in a moment, but first, let me cover some other news. Tuesday morning, Reuters reported that Chinese tech giants Bite Dance, Alibaba, and Tencent have ordered more than 3 million NVIDIA RTX Pro 5500 workstation GPUs worth more than $35 billion. Importantly, the sale of these chips is compliant with US export controls. The chips are also not subject to the US government's 25% cut of advanced semiconductor sales to China. According to Reuters, a source said that Nvidia told partners they might only receive 5 to 10% of the quantities requested, and another source said Nvidia could produce no more than 3 million of the chips globally in 2027. Total orders in China have exceeded 6 million chips, according to two sources. Something else that's getting a lot of attention is a story from Business Insider saying that Amazon is buying billions in Nvidia systems that it can't turn on due to power shortages. The story claims that AWS expected to receive roughly $5 billion in Nvidia's GB 300 server racks at US facilities before final deployment. The company also projected roughly $3 billion more in GB 300 racks each month for the foreseeable future. According to the story, some AWS sites had room for more racks, but not enough available power to turn them on, leaving finished equipment to be staged at intermediary warehouses until the facilities were ready. The story mentions the concept of dark GPUs. GPUs that are ready to be used but lack the necessary electricity to power them. To be clear, as I've said in the past, 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. GPUs sitting dark due to a lack of use cases and demand is a very different situation from GPUs sitting dark due to a lack of available power. Now, I'm sure you can imagine what the usual bears thought of this story as they began dancing on Nvidia's grave. Ironically, many of them fail to realize that the lack of available power is due to the underlying demand being so strong. Supply constraints are bittersweet for Nvidia. On the one hand, they're not ideal to work through, and on the other hand, supply constraints exist because the underlying demand is so strong. A lack of available power is not evidence of nefarious activity as some of the notorious bears incorrectly pontificate. Rather, a lack of available power along with other supply constraints are further evidence of strong underlying demand that exceeds available supply. I noticed Ben Behron of Creative Strategies made a good point on X, saying that any concerns of GPUs waiting to be energized are a nothing burger. Ben points out that based on his conversation with a friend and a major hyperscaler, lead time is and always has been a range of 1 to two quarters. Given the data center timing, which is called staged integration, the supply chain is notoriously difficult to manage across compute, power, cooling, etc. In other words, when you're bringing online very large and complex facilities and clusters, there's a wide range of components and factors involved. And in order for capacity to be operational, you need all the necessary ingredients: compute power cooling networking memory construction, and so forth. None of this works unless you have all the necessary ingredients in place. Because of this, when you're building out capacity at hypers scale, it's entirely normal to receive delivery of various inputs at different times. In this specific instance, Amazon is reportedly receiving delivery of NVIDIA systems while they're simultaneously waiting on power delivery. You're never going to receive delivery of all the necessary components all at the same time. The buildout process simply does not work that way. Additionally, you're going to see large-scale data centers come online in phases rather than coming online all at once. A 1 gigawatt data center is a massive amount of capacity. If you're the company bringing that capacity online, you're not going to wait until the entire 1 gawatt facility is built and fully kicked out. You got to bring it online in phases as you receive the necessary inputs to support each phase. That way, you can start monetizing a portion of the plan capacity while the rest of it is still being built out. Put simply, I agree that the concerns are largely a nothing burger. The reality is that AWS is monetizing new capacity as soon as it comes online. They have hundreds of billions of dollars worth of backlog. They recently reported accelerating cloud revenue growth and expanding cloud operating margin. And listen what Ben Horowit said about his recent conversation with Amazon CEO Andy Jasse on the All-In podcast. This clip was published on October 16th. >> And this this this shortage is so bad. You know, I was speaking with Andy Jasse who runs Amazon yesterday and I said, "Yeah, like we're out of everything, you know, till 2028." He's like, "Oh, it's beyond 2028 bit. Like, I don't think we get stuff back." Like, end of 2028, maybe. Uh, so everything else is sold out. So, he he has the advantage of that. He's got supply in a great shortage, which is extremely different than the internet bubble. The internet bubble, we didn't have enough demand because we had to build the internet. People had to get broadband. You know, you needed uh all this stuff. people had to buy, you know, originally they had to get their browser app fries, all this kind of thing. There weren't enough consumers on the internet to absorb all the bandwidth that had gotten built out and they had a massive amount of debt, not unlike uh we're building today, although not as big. Um but but the lack of demand killed it. We don't really have a lack of demand in AI. So I think the dynamics will be different. Again, the supply constraints exist because the underlying demand is so strong and AWS simply cannot satisfy the demand. If the demand were not strong, the supply constraints would not exist. This is fundamentally different from the do-com bubble. I did not say theoretically different. I said fundamentally different. We got some positive news Tuesday and after hours. First, Super Micro released a preliminary business update saying that Q1 revenues are estimated to be in a range of $18.5 to 199.5 billion versus guidance of 14.5 to 15.5 billion primarily due to increased demand for AI platforms. Gross margins are estimated to be higher than the guidance range as well. That bodess well for Nvidia. We also got SpaceX earnings Tuesday during after hours. As a reminder, SpaceX is leaning heavily into the hyperscaler business model. They have committed to building exclusively on Nvidia's platform moving forward. And Jensen recently said on the BG2 pod that Invidious moved Elon from their ACIE customer segment to their hypers scale customer segment Tuesday evening. SpaceX reported revenue up 161% year-over-year fueled primarily by their super intelligence segment and accelerated growth in connectivity. But what really stood out to investors was what was said on the earnings call. Let me go over some of that. On the call, Elon said, quote, "What I think you hear from other hyperscalers is you don't hear a lot of detail about how many GPUs they're actually turning on every month. And with us, you are. I'm being as precise as possible about this. It is absolutely insane to be deploying and providing the power and also the electrical equipment, the cooling, the batteries, the networking, and everything else that's needed to turn on 220,000GB 300s a month. But that is actually what we're doing right now. And that pace will obviously accelerate next year. Elon also said that SpaceX has a plan that if everything goes right, they will have 20 gawatts of incremental power and cooling by the end of next year. That said, he doesn't expect everything to go right and so he's fairly confident of 10 gawatts next year. He said 20 gawatts is difficult but not impossible. Elon said that SpaceX is tracking to bring online roughly 200,000GB 300s per month for the remainder of this year and continuing that pace next year. Elon is fairly confident in bringing online an incremental 10 gawatts of compute in 2027. As I mentioned, that would be in addition to the roughly 3 gawatt that they'll have online by the end of this year and Elon said that next year the compute will primarily be Nvidia's Vera Rubin platform. leadership said that SpaceX remains on track to deliver their previously stated goal of $100 billion in ARR by the end of this year defined as annualized revenue based on the month of December. And Elon said that based on what they discussed regarding the business and their expected buildout, that implies SpaceX's annual recurring revenue by the end of 2027 is somewhere between 500 billion and $1 trillion. That is mind-boggling to think about. As a reminder, at $50 million per megawatt per year, SpaceX can get a payback on new capacity in less than one year. And on the call, Elon said that it's not impossible that SpaceX will have a six-month payback period for compute next year. That is very strong. So, we have another major hypers scale customer for Nvidia that specializes in bringing large-scale capacity online quickly. And they have committed to building exclusively on Nvidia's platform moving forward. As I've said in previous videos, I do not think the market has given Nvidia adequate credit for the impact that SpaceX will have on Nvidia's business in future years. This is also great news for Micron. By the way, Elon spoke positively about Micron on the last earnings call and more recently he's posted positively about Micron online. Additionally, SpaceX's earnings call bodess well for Neoclouds as leadership spoke about the massive demand for compute throughout the call. SpaceX is seeing very strong demand for compute both internally for their own uses as well as externally from customers. Elon spoke about the fact that companies simply cannot get access to the compute that they need today because the demand is so great. And he said, quote, I don't think we're going to have a demand issue here. Also, SpaceX now expects fourth quarter capex to be in the range of 35 to $40 billion. For context, Microsoft spent $41 billion on capex last quarter. So, SpaceX's Q4 capex outlook of 35 to $40 billion is comparable with the other major hyperscalers. All of that is very positive for the AI ecosystem, and it's why we saw many AI stocks trade higher in after hours Tuesday evening. Looking ahead, Jensen Hong is scheduled to deliver a GTC keynote at GTC Berlin on Wednesday, October 21st, starting at 11:00 a.m. Central European Summer Time. For those of us in the US, that's October 21st, starting at 5:00 a.m. Eastern, 2 a.m. Pacific. And then we have Hypers scale earnings with Meta earnings this Wednesday after market close. Alphabet and Microsoft earnings are both scheduled for October 28th. And then we have Amazon earnings on October 29th. What these companies say about capex, capex guidance, demand monetization, and their overall AI strategies will have important impacts on how the stocks of Nvidia, Micron, SK, Hinx, and the entire AI ecosystem trade moving forward. Let's briefly go through the four major hypers scale companies. Last earnings season, Meta said they expect 2026 capex to be in the range of 130 to 145 billion and they did not give a guide for 2027 capex. Since that earnings report, Meta launched Muse. The app rose to number one on the app store. User reviews are overwhelmingly positive and early adoption rates are very strong. Meta is also showing impressive progress with multiple model releases from Meta Super Intelligence Labs as they continue on their scaling ladder. Because of these developments, many market participants are starting to believe that Meta will generate a return on their massive investments in AI infrastructure. That was not the case last quarter. I would not be surprised if Meta provides a 2027 capex guide that is notably higher than 2026. If that happens, it will be interesting to see how the market reacts. Last quarter, Alphabet said they expect 2026 capex to be in the range of 195 to $25 billion. And they said, quote, "We continue to expect our capex to increase significantly in 2027." Google Cloud has been showing very impressive growth with revenue up 82% last quarter. Alphabet has a strong incentive to increase capex and the company has many valuable use cases for compute. I expect Alphabet's capex guide to be strong given their previous comments, GCP's impressive growth rate, and the fact that Alphabet has so many different use cases for the compute they bring online. Now, let's talk about Microsoft. So, last quarter, Microsoft said it expects calendar 2026 capex to be roughly $175 billion, which was down from the previously announced $190 billion. The downward adjustment to the capex guide was made because moving forward more of Microsoft's future data center leases will shift from finance leases to operating leases. Operating leases are included in opex, not capex, which is why Microsoft reduced their capex guide, even though they still expect to spend money. Microsoft also said on the last earnings call that they expected fiscal Q1 capex. So capex in the quarter that they report results for on October 28th to be over $50 billion, which is notably higher than the previous quarter's $41 billion. Microsoft also told us last quarter that they expect fiscal 2027 capex to increase year-over-year given the strong demand signals across the portfolio. And the big news last quarter was that Microsoft said it expects to remain free cash flow positive in fiscal 2027. Now, I do expect Microsoft's capex guidance to be strong given the strength we saw from Azure last quarter, leadership's commentary on the earnings call, and the fact that Microsoft is really making a push with their own AI products and services. You may remember just last month Microsoft announced a major overhaul of Microsoft 365 copilot with home code and autopilot and they also announced usage- based billing for more comput intensive AI features. So Microsoft needs more capacity to fulfill its massive cloud backlog worth hundreds of billions of dollars. And they also need a lot of capacity for their own models, products, and services. I expect Microsoft's capex commentary to be positive overall. And then there's Amazon. Last earning season, Amazon CEO Andy Jasse laid out a great case for how Amazon is monetizing new capacity as soon as it comes online. They have clear line of sight to strong financial returns on their investments, and there is far more demand than what they can supply. AWS is the largest cloud. By the way, last quarter AWS posted accelerating revenue growth and expanding operating margin, which is very impressive given AWS large size. Amazon said last quarter that they expect to spend $220 billion on capex in 2026. And CEO Andy Jasse said, quote, "Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026. And I believe this dynamic will also be true in 2027, too. In fact, the demand we already have for 2028 is striking. And more recently, Ben Horowitz joined the All-In podcast in an episode published on October 16th in which he said he just recently spoke to Amazon CEO Andy Jasse. Listen to what Ben said about that." >> And this this this shortage is so bad. You know, I was speaking with Andy Jasse who runs Amazon yesterday and I said, "Yeah, like we're out of everything, you know, till 2028." He's like, "Oh, it's beyond 2028 bit. Like, I don't think we get stuff back like end of 2028, maybe." Uh, so everything else is sold out. So, he he has the advantage of that he's got supply in a great shortage, which is extremely different than the internet bubble. the internet bubble. We didn't have enough demand because we had to build the internet. People had to get broadband. You know, you needed uh all this stuff. People had to buy, you know, originally they had to get their browser app fries, all this kind of thing. There weren't enough consumers on the internet to absorb all the bandwidth that had gotten built out. And they had a massive amount of debt, not unlike uh we're building today, although not as big. Um, but but the lack of demand killed it. We don't really have a lack of demand in AI, so I think the dynamics will be different. >> All things considered, I expect Amazon to have very positive things to say about capex on the Amazon earnings call. 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 do-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. Agent 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 aic 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 spinning 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. 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