What Nvidia investors will be looking for in Q2 earnings

Published: Aug 25, 2024 Duration: 00:04:03 Category: News & Politics

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the biggest test for the markets this week well it is NVIDIA the highly anticipated results that we are going to get on Wednesday after the Bell the stock is up 160% so far this year the chipmakers earnings are they going to spark a rally we want to bring in Ruben Roy he's Steel's managing director and applied technology analyst Reuben it's great to have you here so I think the big question here for so many investors is whether or not this is going to be a beaten raise quarter for NVIDIA what do you think the setup looks like hey good morning thanks for having me well I I think it needs to be a beaten rage quarter because I think that's uh sort of built in to investor expectations certainly the discussions that we're having would Su suggest that there's widely anticipated um expectations for a beat uh for the July quarter earnings and then a a sort of a beat on the uh the guidance for the October quarter the focus of course is going to be on the data center segment which is where all the AI action is both for AI compute and AI networking and I'd say the data points coming through June quarter earnings would suggest that the AI as you mentioned that the AI trade is still on the AI investment cycle is still on the uh capex from the cloud service providers was up higher than expectations and I think the guidance and outlook for most of those companies was also up as you look for the towards the back half of the year and then other supply chain companies like Taiwan semi which manufactures Nvidia ships or super micro uh which makes a lot of the the servers that are used in in the cloud service provider networks also had really really uh significant uh beats and raises and so we think the setup's uh pretty strong here going into the print you know Ruben as we think about what we've heard over the course of this earning season companies who are getting out in front of their investors and their analysts and saying well here's why we need to spend this much because the risk of underinvestigated that it's showing investors that it is investing itself and putting capex towards even more of those solutions that they could bring to Data Centers uh and and what does that look like for investors as well here evaluating what that spend looks like going forward yeah BR that that is the the biggest debate sort of we're having with investors which is you know this idea that okay there's a lot of investment going on today but what's the ROI what's the ROI look like and and when are we going to start to see some of these Enterprise uh companies that are investing a lot today make uh make money on this stuff I'd say you know on your on your point about Nvidia certainly from an R&D perspective Nvidia is investing quite aggressively they've accelerated the Cadence at which they bring out uh compute technology to the marketplace so um we've got the H series of uh gpus Hopper 100 Hopper 200 out today uh Nvidia you know widle has um talked about the uh the Blackwell series which is coming out and and we could talk about that you know some some chatter in the market about potential delays and whatnot but you know that's that's on track we think to to Really ramp in 2025 and then just behind that there's a new architecture that Nvidia announced earlier this year called Ruben that's coming out in 2026 and so they're investing they're investing on new technologies faster than we've ever seen and then on the flip side if you look at the m&a uh landscape you know there there's a lot going on early last week AMD announced that they were going to buy ZT systems which is essentially a manufacturer of uh you know massive servers AI servers that then get installed in data center networks and so you know why do they do that well they're they're doing that to acquire a lot of Engineers that are experts in you know sort of the next generation of data center architectures which are changing very very quickly based on these compute technologies that companies of convid and AMD are coming out with and so there's a lot going on that would suggest that the investment cycle continues and to your point a lot of companies I absolutely agree that we speak to say they'd rather over invest by a year than underinvested by quarter

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