"I Don't Understand the Downtrend At All" for Nvidia (NVDA)

minutes there. Nvidia faded back down below 120. But the Nasdaq strength just kind of shifted into the Russell. So now the small caps are the highest on the day. All right we're still up but Nvidia is still down Dave Altavilla joins us. Principal analyst at Hot Tech Vision and Analysis Dave welcome back to the show. Good morning. Good morning Oliver. Good to see you again. Great So tell me firstly about Nvidia here. We're still kind of within recent ranges a little calmer move than many investors expected but still down. So is that going to be an issue I don't understand the downtrend at all on the stock price. I'm a technology analyst and from what I'm seeing, the leading indicators for Nvidia are very strong. They had a big beat. Obviously another blowout quarter, on the call last night, Nvidia CEO Jensen Huang noted that the Blackwell delay their next generation GPU that was being rumored about was basically a speed bump. It's a spin to one of their mask sets to improve yield. It wasn't a functional spin. So the product is working fine. They're just trying to get better yield out of it, and they expect to ship several billion dollars of Blackwell systems in Q4. So that's going to be incremental to the H 100 H 200 GPU business they're already enjoying in full production. So I don't see this train slowing down anytime soon. And the data center I build out is strong with all the major hyperscalers. Whether you look at Microsoft Azure, AWS, Oracle Cloud, you name it, Google Cloud, everybody's building out and investing CapEx in the build out. And I think that trend is going to continue. The other thing to remember quickly here is that Blackwell, their next generation GPU, is not just a GPU. It's an entire rack scale solution, including some very high speed proprietary interconnect called NVLink. And so Nvidia, with its OEM partners, are delivering full platform solutions to market with Blackwell. They're not just selling chips. And I think that's what you need to compete in this very aggressive data center. AI market. Okay, like the point about how much comes with this product and really the varied kind of uses and applications. I want to come back quickly to the Blackwell thing, because the detail is important as they having to fix that mask. I mean, that's pretty much like the template using to make the, the, the chip. And they're basically trying to get higher yield. They want better, I guess deposition or whatever part of the process it is. But that's something that is like they're trying to increase basically the margin on it. Right? So it's not like it doesn't work. It's not like it's faulty. It's not like anything that didn't work out as planned. They're just trying to say we want to make it even better. Yeah Basically it's how many of these chips you get out of a wafer. They're trying to improve yield with this mask change. Functionally, the there isn't an errata in the chip that they had to spend because it's not working. And so this again in talking to some of their OEM partners, whether it's the Supermicro or the Dells of the world, this is just a few weeks speed bump. This this product will be shipping. It's already in customer data centers in bring up and running, but it will be shipping in Q4 to the tune of several billion dollars, quote unquote, based on their earnings call information yesterday. So I do not see an issue with that at all. Really. Okay. So then thinking about where the incremental buyer comes from, because this has been my other question, which is we see all these CapEx numbers from the hyperscalers, Microsoft, alphabet and others. Given how huge and expensive these you know, the Blackwell chip is, where does that surprise come from? Like, who's going to be the next buyer that we haven't known from already? Like, who might surprise us? Or will it just be those same hyperscalers saying, another round, here we go. We're going to keep it up the pace. Yeah, I think I think you're going to see certainly the investment coming with the hyperscalers, the big guys, the Microsoft Azure and Google Cloud and AWS. I think you will also see some data center, you know, high end data center, large data center, whether it be fintech or what have you, installations on things like this as well. But Blackwell is a training and inference. Monster of a, of a platform and so it's really bigger iron stuff that, that, that the hyperscalers tap into. And so, you know, I it's hard to say, but I think, I think enterprise AI is a possibility in the largest of enterprises, the other thing is there's lots of beneficiaries in this. And if you look at guys like micron who are supplying the HBM three memory to Blackwell and to other Nvidia platforms and AMD's platforms by the way, they're booked out through 2024. Demand is huge. For that kind of memory to support these systems. Okay. The potential for the, what we heard on Supermicro, this notion of just the fact that maybe some of these numbers aren't as powerful as they thought, that this is a client of Nvidia's. Is there any overlap in the case that we might discover something in Supermicro that bleeds over to Nvidia? I mean, they're buying a lot of stuff from Nvidia. Yeah. You know, I'm I'm not sure what Supermicro is. Ills are to be honest, you know, I, I do not hear this from folks like Dell. By the way, who is who is all in on this product, and I would look to some of those other major OEM providers for, for signals as well. I think you look at Dell, you look at HPE, those folks are driving strong sales of this type of product. I, I, data center and server products in general. So I'm not sure what's going on with Supermicro, but I wouldn't say it's too indicative of what's going on with Nvidia. Okay. Well, from the report, it seems like there's a very realistic possibility. All these things are kind of specific to Supermicro and what they've been doing with accounting, but there still is overlap, you know, when you're a customer. So, as far as the Dell trade goes, though, I mean, we're going to talk about the chart for that in a second. I mean, that is been a huge, kind of knock on trade within the whole AI space. So should this be an invigorating opportunity for the other applications, the other parts of these, you know, big server build outs and stuff? Dave Yeah, I mean, I think you're talking about huge CapEx expenditure continuing through to into next year, and I think there's going to be lots of, you know, there's lots of equipment and infrastructure that goes along with this. And so I don't I don't see this trend softening. I think I think it's going to be a growth trend for everybody in the business that is driving in a measurable way. AI data center build out. And so Dell Dell will be in that in that mix for sure. Okay Dave, thanks for the thoughts. Good analysis. And I set up here for us to continue talking about this with more earnings coming up next week in the category. Appreciate your time. My pleasure. Dave Altavilla, principal Analyst, Hot Tech vision