Angelo Zino, SVP at CFRA Research, explains how tensions in China could have an impact on Nvidia.
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00:00So how do we see the China-U.S. relationship impacting NVIDIA long term?
00:06I would say it's an extremely, the dynamics are extremely important.
00:11What comes out of that relationship here over the next couple of quarters and years is going to be very important to the long term potential for NVIDIA.
00:20Jensen has alluded to the fact that it's a potential $50 billion market on an annualized basis and growing, which is really important to note.
00:30And again, we talked about the $8 billion in lost revenue here for the July quarter from China.
00:37So, you know, when you think about where the biggest hyperscalers are in the world, they are still in the U.S.
00:43But when you kind of think about the next level, the Alibaba, the Tencent and the Baidu's of the world, your next levels are really out in China right now.
00:52And it's so important, especially when you look at their capital spending plans, some announced from the likes of Alibaba, essentially more than doubling CapEx run rate here over the last two quarters, looking to then more in the next three years that they have in the last 10 years.
01:08So there's some aggressive spending going on in China. NVIDIA wants to be part of that, and they want to take advantage of that.
01:15If they can't, it's a huge missed opportunity, not to mention it allows a company like Huawei, which is probably now their biggest competitive threat, to really gain in power.
01:26And that's going to be a thorn for this company here in the foreseeable future if NVIDIA can't get in that market.
01:34In many ways, Huawei is a thorn in the likes of a company like Apple right now.