Wolfe's Chris Caso on Nvidia's Q2 beat: What's clear is demand is still well ahead of supply

Published: Aug 28, 2024 Duration: 00:03:28 Category: News & Politics

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EXTENDED TRADE. MIKE? >> CONTESSA, THANK YOU. >>> MOVE TO TODAY'S MOST IMPORTANT STOCK NVIDIA. SHARES LOWER DESPITE THE FACT IT BEAT TOP AND BOTTOM LINE EXPECTATIONS. GREW REVENUE MORE THAN 120%, GAVE SOLID GUIDANCE AND ANNOUNCED A $50 BILLION STOCK BUYBACK. EXPECTATIONS APPARENTLY SO HIGH FOR NVIDIA IT APPEARS ANYTHING SHORT OF CRUSHING EVEN THE MOST OPTIMISTIC FORECAST IS SEEN AS AT LEAST A MILD DISAPPOINTMENT. JOINING US NOW CHRIS CASO, SENIOR ANALYST. CHRIS, I GUESS A LITTLE BIT OF NOISE IN TERMS OF THE CADENCE OF PRODUCTION FOR THE NEXT GENERATION IS PROCESSORS, YOU HAVE A LITTLE BIT OF MARGIN COMPRESSION, PERHAPS. END OF THIS FISCAL YEAR, BUT ANYTHING IN THE RESULTS OR THE GUIDANCE THAT MAKES YOU RETHINK THE PACE OF DEMAND OR THE OVERALL STORY? >> REALLY DOESN'T. AS YOU SAID, EXPECTATIONS HIGH INTO THE REPORT. MAGNITUDE OF THE BEAT IS A LITTLE LESS THAN SEEN IN SO QUARTERS. 2.5% OVER CONSENSUS FOR GUIDANCE. WHAT WAS CLEAR IS THAT DEMAND IS STILL WELL AHEAD OF SUPPLY. SUPPLY IS STILL COMING, AND THAT'S ALLOWING REVENUE TO GROW INTO THE SECOND HALF OF THE YEAR. LOOK INTONEXT YEAR OR OPTIMISM IS A NEW PRODUCT FAMILY BLACKWELL ADDS A LOT OF CONTENT. WHAT I THINK THEY DID WELL ON THE CALL IS ACKNOWLEDGE SOME OF THE CHATTER OUT THERE ABOUT SOME OF THE CHANGES TO THE ARCHITECTURE OF THAT PRODUCT. HOWEVER, IT'S STILL COMING OUT IN THE FOURTH QUARTER OF THIS YEAR AND SEVERAL BILLION DOLLARS OF REVENUE. THAT MAKES PEOPLE FEEL GOOD ABOUT THE NEXT PRODUCT CYCLE AND THE CONTENT THAT COMES WITH THAT. >> I GUESS THAT, YOU KNOW, IF YOU REALLY WANT TO KIND OF BROADEN OUT THE STORY, IT'S REALLY ABOUT HOW MANY YEARS OF THIS TYPE OF URGENT DEMAND AND BUILDOUT ARE WE IN FOR HERE? IT DOESN'T FEEL AS IF -- A CAPEX HEAVY SECTOR OF TECH, BECAUSE IT TAKES SUCH DEEP POCKETS TO GET THESE FACILITIES BUILT, TO KEEP REINVESTING IN THIS AREA, FEELS LIKE WE'LL GET TO A POINT NOT THAT IT'S DONE BUT THE URGENT PART IS DONE. DO WE HAVE CLEARANCE THROUGH FISCAL 2026 AT THIS POINT WE ARE NOT GOING TO HIT THAT POINT? >> A GOOD QUESTION. REALLY, IT COMES DOWN TO, FOR HOW LONG ARE THE HYPER SCALERS, ENTERPRISES, CONTINUING TO PUT CAPEX IN PLACE FOR THIS. ONE PART OF IT, YOU MENTIONED IT IN THE PRIOR SEGMENT. ABOUT GETTING AN ROI ON THAT. IT'S EARLY DAYS IN A.I. NOW. NOT EVERYBODY SPENDING IS GETTING AN ROI BUT A LOT ARE. FROM THERE IT'S A QUESTION OF, WHEN DOES THIS KIND OF GET TO MATURITY? THE WAY WE APPROACH IT, LOOK AT DATA POINTS, KEEP LOOKING AT. ONE YEAR AT A TIME PRODUCTS CYCLES. FOR THIS PRODUCT CYCLE COMING UP AT LEAST, DEMAND IS NOT BEING FULLY FULFILLED BY SUPPLY, AND SUPPLIES COMING ON, GIVING ROOM FOR NUMBERS TO GO HIGHER. THEN KONNAN TENT IS COMING UP. ONE OF THE THINGS THAT IS NOW CHANGED IN THE WORLD OF SEMICONDUCTORS. PRICING GOES UP EVERY YEAR NOW, BECAUSE IT'S MORE EXPENSIVE TO MAKE THESE CHIPS AND YOU NEED MORE TRANSISTORS TO DRIVE THAT PERFORMANCE. AS LONG AS THAT'S HAPPENING THE STOCK WILL CONTINUE TO WORK. >> ALL RIGHT. QUICK,

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