Pressure Points: Nvidia Earnings 2Q'25

welcome to pressure points our topic is NVIDIA post earnings and as of this recording which is about an hour after the conference call ended Shares are trading down 7% in after hours the stock was down about 2% during the day so call it 9% collectively trading down since the beginning of the day the NASDAQ was soft today it was down a little bit more than 1% but uh clearly under performance from Nvidia and I would say at the punchline here is I think that the stock is just blowing off some steam and I continue to believe that this stock will trade higher over the next week and so I'm going to jump into uh the pressure points there's two of them today first is related to Blackwell and second is related to commentary of when they're going to reach Supply demand equilibrium and the Blackwell topic I got a lot of questions there was a lot of commentary in some their prepared remarks around it but it still wasn't totally clear about how much of a slip happened they made some changes to the chemistry and so there was something that happened there and they talk about the ramp being uh later this year when it was before kind of back half of the year and so my sense is that this slipped about two to three months and so uh the again they weren't like explicit we had a two-month delay they never talked about about delays they just talked about the products in a great place it's tested out well they're getting ready to ramp it and there's a ton of demand for it but reading between the lines I think we got a two to three month delay uh that is important because it shines some context into uh what how to think about guidance and for the October quarter they guided for Revenue to be about 2 and a half% higher than where the street was at now for a company like Nvidia that's just been blowing out the lights for the last year uh 25% doesn't feel very exciting but when you put it in the context that there was likely Blackwell Revenue that was moved from the October quarter to the January quarter and so if you would have brought that Revenue back the number would have been higher potentially would have been 10% kind of higher of a of a raise versus if Blackwell would have been on time so that's important context the 2 and half% would have been better I think materially better if not for the timing of what's going on with Blackwell uh the the second piece uh the second pressure point is related to timing of when we reach Supply demand equilibrium and on the call uh the message was that we're going to do it sometime next year and that's kind of similar to Jensen's comments three months ago when he said uh into next year Well into next year was his comment the the word well was not used this time uh but that's getting to a point of splitting hairs the bottom line is that they're going continue to remain Supply demand uh out of balance until sometime next year my guess is it's middle of next year and for the people are more skeptical about Nvidia the I think the takeway is going to be that that's just not enough if uh it was a similar kind of a time frame as before for this stock to keep moving higher you have to keep moving that bar higher and at a faster pace and we just didn't see it and so this plays into I think what is the general commentary around the the call is that things are good they weren't great and you got to have the stock be great for it to continue to work and I just want to take a sidebar on that and deep water we do own Nvidia and from our perspective nothing changed and what happened was we had some timing around blackw we continued to see their products being need continue to believe the world shifting from CPU to gpus and nvidia's competitive position and most importantly uh I think Beyond kind of those details that the the debate should include a question of to what degree do you believe AI is going to be transformative if you're in the camp that this is going to be as transformative of the internet there is probably not a good reason to own Nvidia at this point I think that you can build a case that um yes they will grow they'll continue to do well but we're not going to continue to see numbers go higher for longer if you're in the camp this is the camp that I'm in that it will be more transformative than the internet then you can see a case where this growth can continue well into 2026 and the street numbers for 2026 are for 16% growth I don't think those numbers are going to change much after tonight but ultimately I think that that number can be closer to 25% growth and so uh kind of thinking forward over the next eight quarters I still think that this company will continue to exceed estimates uh and continue to uh be be one of the fundamental companies that are building uh a transformation that is bigger than the internet so uh that's the wrap for pressure points bye for now