Microsoft's New Announcement: A Game Changer for Nvidia| Nvidia Stock | NVDA Stock

[Music] chip Soxs losing some steam today as the NASDAQ rolls over earlier gains giving up some of those earlier gains on that softer than expected manufacturing data now today's move to the downside what you are seeing play out within the chip sector follows yesterday's risk on rally actually looking at yesterday's move the chip sector recorded its largest single day gain in 14 months who led the charge was none other than Nvidia we want to bring in Paul Meeks he joins us now he's Harvest portfolio Management's co-chief investment officer Paul it's great to talk to you again so we're seeing a bit of a give back following yesterday's gains not nothing necessarily to get uh too worried about I don't think up until this point I'm curious though what you make about the sentiment The Narrative surrounding these chip makers and whether or not some of the developments that we've seen this week makes it more likely that we are going to see another leg higher I actually think we will see another leg higher but even in my own Tech portfolio I have a Prohibition right now on new buying at least we till we get through this very weird and squirrly earning season because as we've gone through this earning season some companies are posting pretty strong results whenever a company uh posts earnings there's always going to be a couple flies in the oint I mean that's to be expected but companies that have had good things to say sometimes their stocks go down the next day so it's just uh too difficult of a market I plan to add to my favorite AI infrastructure plays which would be some of these semiconductor names data networking companies and data server companies but only till we get through the end of this reporting season you know give me about uh two weeks okay well a lot of followup questions potentially off of that Paul but I want to start on whether or not you think come Nvidia earnings when given the you know beats that we've seen from the likes of meta Microsoft uh alphabet and Amazon all of those make up 40% of nvidia's Revenue I know we're still waiting on that last name given that we've seen those positive earnings from some of those names so far do you think you'll regret not buying Nvidia when they're likely to have a good quarter based on that I think I may regret it but uh I have such a large position and I've held it so long at such a lower cost basis I'm pleased to wait but you think about it all of their customers the hyperscalers were now through all their quty reports and the only thing that was not controversial at all was how much damn money they're going to spend on Ai capex and so unless they're lying about their Capital expenditures their Capital expenditures are high and potentially even Rising into 2025 so this bodess incredibly well for NVIDIA and Nvidia is trading at 31 times next year's earnings it's not egregiously expensive so I plan to when the stock settles Andor we get through their report on August 28th you know what I'll probably following Tuesday's Market Clos Microsoft NASDAQ msft released its fiscal 2024 fourth quarter results which likely disappointed a lot of investors the Ed behemoth's Cloud Revenue fell short of wall Street's projections its shares open down on Wednesday as a result but other investors were pleased with Microsoft's most recent quarterly report including shareholders of Nvidia this is the reason Microsoft recently gave Nvidia some positive news during the company's fiscal key for conference call Microsoft officials talked a lot about businesses that were seeing rapid development revenue from Azure and other cloud services increased by 29% in the past year customers for multicloud and hybrid Azure ARC Management increased by 90% aure I's client base grew by about 60% the number of copilot users Rose by over 60% the ongoing high demand for artificial intelligence AI goods and services is the driving force behind all of this progress Microsoft does not see a decline in this demand during the conference call CEO Satia Nadella announced that the business has expanded its data center portfolio citing the additions as nonetheless Amy Hood CFO of Microsoft explained the financial effects of this a driven appetite in key4 of its fiscal year the corporation spent $19 billion on capital projects she mentioned Microsoft's expenditure declined dramatically over the entire year here's the most crucial section Hood remarked we will scale our infrastructure Investments with FY 25 Capital expenditures estimated to be greater than FY 24 in order to satisfy the growing demand signal for our Ai and Cloud Solutions Microsoft's already enormous Capital expenditures will rise even faster Hood said given our cloud and AI demand as well as current AI capacity constraints we expect Capital expenditures to increase sequentially Hood spoke on Microsoft's increased Capital spending but she left out Nvidia she didn't have to though that being said Nvidia should be pleased with what she did say Hood clarified that in the most recent quarter infrastructure more particularly the construction and leasing of data centers accounted for around half of capital expenditures according to her servers use the remaining half mostly for C CPUs and gpus it is not a given that CPUs and gpus will receive the same portion of the additional spending Hood added that we've been investing in CPUs for a while now but Microsoft has the ability to reduce that expenditure there's a good chance that GPU spending will exceed CPU spending it's not up to us to speculate as to who Microsoft's expanded GPU investments will primarily benefit one of nvidia's largest clients is Microsoft that is not going to alter not a single official from Microsoft mentioned nvidia's upcoming Blackwell GPU architecture it's likely though that a portion of Microsoft's higher Capital expenditures will be used to purchase the potent new Blackwell based CPUs with Blackwell Nvidia is well positioned to maintain its hegemony in the GPU industry according to the business compared to its prior Hopper design the Blackwell architecture can allow the construction and operation of trillion parameter large language models llms at up to 25 times lower cost and energy consumption according to CEO Jensen hang Blackwell is likely going to be the company's most successful product ever several prominent figures in AI including Microsoft have already committed to utilizing Blackwell we are committed to offering our customers the most advanced infrastructure to power their AI workloads Nadella stated in a press statement from Nvidia announcing Blackwell Nvidia is well positioned to maintain its hegemony in the GPU industry with all these developments under consideration and analyst predictions we'll talk about Target projections and advice in today's video so make sure not to miss out however before you do if you'd like to stay up toate on video's most recent updates and the most recent news from the stock market you can subscribe to our Channel we publish daily updates about the biggest shifts in Market catalysts so click the Bell icon button to ensure you don't miss the most recent updates all right back to today's video Nvidia shares climbing higher once again today the stock soared yesterday adding $327 billion doll to its market cap it was driven Higher by strong results from competitor AMD now despite the recent rally though Nvidia Shares are still sitting roughly 133% below their all-time high joining us now for where Nvidia and some of its competitors are headed we want to bring in Stacy Rasin he's Bernstein's manag director and Senior analyst Stacy it's great to talk to you again so it looks like a lot of that excitement has now returned I'm curious do you think there's been just this shift in sentiment following amd's results that we got yesterday so I don't actually think it was about amd's results I think it's about the capex guides we're seeing from lots of the hyperscalers Microsoft and and meta and Google um all of those those capex outlooks look very supportive like we're starting to see those numbers continue to go up and I think that's what's been driving uh the AI trade I don't think really it was AMD result amds results were not bad necessarily they took their own AI guidance up a little bit but I don't think they took it up any more than people thought they were going to I don't think it was above where where people thought so Stacy then given that capex guide that we are getting from some of these hyperscalers what does that tell us just about the opportunity the upside here that we are potentially seeing for these chipmakers well I I mean look for for companies like these I mean some of the numbers are are very large right as you're as you're looking forward in terms in terms of where expectations are and you know the hyperscalers they're they're big customers they're doing a lot of that spending and so you do want to see those those numbers go up this was a concern if you go back I don't know a quarter or two ago there was a big mismatch at that point between like where the capex Outlook was at the time and a lot of these AI names and we've continued to see the the capex guides actually go up materially I think even meta reported last night and and not only do they take their capex gu it for the year they said that they're going to have like probably substantial increases next year and so I think that's really what's important the the big worry that people have is just is there an air pocket like coming there's so much spending going on the numbers have gotten so big so quickly people worry about sustainability and what we've been hearing from some of the customers is it looks like that spend at least for now is sustaining I think that's what's what's been driving things and so Stacy as we think about growing into some of these valuations I mean what are these companies going to have to show that they can do in order to grow into the the lofty numbers as we've been discussing well I mean so so be careful like lofty numbers lofty valuations are two different things not all these companies are expensive right you can look at a company like like Nvidia it's actually quite a bit cheaper today than it was before the Run started you know a year or a year and a half ago um because as much as the stock has gone up the earnings of estimates have gone up far more than that and so that becomes the question like is are the earnings actually achievable um I they need to clearly clearly the numbers need to go up I mean I I would say that you know given where the sells side numbers are the investor the buy side numbers are going to be even higher than that um and so any kind of increases we can see the customer spending any sort of clarity we can get on business models what are they actually doing with this spend is is helpful and I would say at least in in in the near term what we're hearing from that supply chain and from the customers is constru Nancy Pelosi the representative for California's 11th congressional district made some noteworthy stock market purchases according to a recent Congressional trade report two noteworthy transactions involving Microsoft Corporation and NV Corporation were noted in the study Pelosi made a partial sale of her Microsoft stock for a total transaction value of1 million and $15 million a total of 5,000 shares were sold the report states that on July 26 2024 this transaction took place Pelosi made a big investment in Nvidia shares that same day additionally the investment which consisted of 10,000 shares overall was valued between $1 million1 and $5 million Common Stocks a sort of investment that signifies ownership in a company and a claim on a portion of the company's assets and profits were involved in both deals the precise account type that Pelosi utilized for these purchases was not disclosed in the Congressional trade report to the best of the filer's knowledge and belief the document did however attest to the truthfulness completeness and accuracy of every assertion included in the report Pelosi has also attested to having declared every transaction in accordance with the stock act members of Congress stock transactions are frequently closely watched by investors because they can reveal information about future patterns in the market it's crucial to keep in mind though that these deals might not always represent a larger plan or an assessment of how these businesses will perform going forward so what does this really mean for Nvidia stock let's find out but first if you made it this far into the video thank you these videos take a lot of effort and time to make so if you enjoyed them please hit the like button subscribe to the channel this goes a long way in helping us grow that said back to the video AI remains worth watching segment for Global Investors in 2024 but how do you keep up with the AI sector and others that you may 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transferring in their portfolio these rewards can be earned together so don't miss out and thanks again to Mumu for sponsoring this portion of the video so I plan to when the stock settles Andor we get through their report on August 28th you know what I'll probably buy some more well I'm curious because because you mentioned Nvidia a lot we all do right just because it's so dominant within this space we did see a lot to like amd's report when we look at that road map ahead is there an opportunity for AMD for some of these other chip makers to close that leadership Gap that we have seen for so long from Nvidia you know I think that they may close the leadership Gap a bit but not significantly I mean take a look at uh AMD yes when they reported the other day they moved their guidance from $4 billion in AI chips this year to 4 a half in the prior quarter they went from three and A2 to four but it's still going to be a sliver an absolute sliver of what Nvidia is going to do so over time the pie will get bigger I still think that uh Nvidia will have most of the slices and AMD hey it's a strong well managed company under Dr Lisa Sue they'll be a good second supplier but Nvidia will have a hold on this market for as far as the there are two very distinct approaches to invest in in the artificial intelligence AI Market expansion Nvidia and c3i for processing complicated AI activities Nvidia is the leading Global provider of data center gpus and c3.ai creates AI algorithms that can optimize speed and automate tasks for large Enterprises however during the previous three years the stock of Nvidia increased by 480 while the stock of C3 decreased by almost 50 % nvidia's rapidly increasing sales of gpus for data centers stuned the Bulls but as the company's losses mounted and sales growth slowed C3 lost its appeal will vvidia continue to perform better than C3 in the near future the biggest manufacturer of discrete gpus for PCs and servers worldwide is NVIDIA its data center GPU segment is now its largest and fastest growing company having previously made the majority of its revenue from gaming PCs due to the AI Market's explosive growth in the most recent quarter data center chips accounted for 87% of the company's Revenue according to Tech insights and jpr Nvidia holds a 98% market share in the data center GPU segment and 88% in the discret GPU segment overall the corporation should continue to be the Cornerstone of the AI industry thanks to its Market domination in the fiscal year 2023 nvidia's Revenue growth stagnated as the worldwide PC market outpaced its pandemic induced surge however when the Market's demand for the company's AI chips outpaced Supply its sales skyrocketed 126% in the company's fiscal year 2024 in the fiscal year 2025 analysts project a further 98% increase nvidia's Revenue according to generally accepted Financial standards Gap Nvidia is continuously profitable whereas c3i is accumulating large GAA and non-ga losses in the first quarter of 2024 c3i retracted its initial goals of turning a profit on a non-ga basis in order to increase its research and development as well as marketing expenditures in novel generative AI Technologies analysts predict that nvidia's EPS will increase by 109% in fiscal 2025 on a non-ga basis however as it increases its AI expenditures they anticipate that c3's non-gaap net loss would increase this year in light of its projected growth rates in the foreseeable future nidia's current trading price of 43 times forecast earnings appears fair with a farce slower growth rate AMD its primary rival only has a little lower forward multiple of 41 it's simple to understand why Nvidia performed better than c3i it has a considerably broader MO is bigger is growing quicker and is more lucrative these advantages opt to raise its stock price and enable it to beat C3 I going forward with all of these considerations Nvidia is unquestionably a great buy especially if you're looking to invest for the long term because the company hasn't reached its full potential yet what do you think about Nvidia stock is is it a good buy at the current price please share your opinions with us in the comments section and don't forget to let us know what you think Nvidia is worth if you're interested in learning what other companies like Nvidia have been up to lately click on the next video on your screen we'll see you there