00:00Dan Ives of Wedbush, raising its price target on the stock to $300 and writing this,
00:03NVIDIA is at the beginning of this transformational superstar narrative playing out for the tech world.
00:08Dan joins us now for more.
00:09Dan, welcome to the show.
00:10I'm going to repeat myself.
00:11I feel like a broken record, but it's got to be asked.
00:13If that's the case, why has this stock done nothing for four months?
00:18Look, I think right now, I mean, the street is this glass half empty view.
00:22You look at these numbers.
00:23These are Michael Jordan-like.
00:25I mean, in terms of the, you know, the beat that you saw in data center, the $78 billion for
00:31next quarter,
00:31I mean, that's almost, call it 500 to 700 bips above street.
00:35Look, I think, you know, you hit it.
00:37Right now, everyone's focusing on the losers, how AI is going to hurt.
00:40The reality is, is that it's all about CapEx numbers and data center demand.
00:45What you saw from NVIDIA, the AI bubble essentially gets thrown out the window.
00:49And look, I think this is a stock that's ultimately like up 3% to 5% today.
00:54And in my opinion, like $300, as we talk about, that's probably B's case to where this ultimately goes.
01:01I think we're just in one of those narratives.
01:02You follow the numbers, superstar performance.
01:05And yet, Dan, you follow the market response too.
01:07And the market's telling you that much of what you're saying is well understood and well priced.
01:12And now we're starting to get our hands around what the transition is going to look like to Ruben from
01:16here.
01:17Starting to understand potential constraints, maybe even deceleration in CapEx from here.
01:21Dan, what's your response to all of those things?
01:25Yeah, my response would be, if you look at physical AI today, it's less than 3% of revenues for
01:31NVIDIA.
01:31And I could argue that's probably going to be 15% to 20% when you look at the next
01:35few years.
01:35That's not factored in.
01:37I think the streak continues.
01:38If you think about over the last few years of NVIDIA, they underestimate what the demand is going to look
01:44like.
01:44And when you look at the trillions of dollars of spending over the next few years, there's one chip in
01:51the world fueling it.
01:52But it's the derivative impacts.
01:53I think Jensen hit on in terms of the software doomsday trade right now.
01:57I call it an AI ghost trade.
01:59I mean, software is going to play a huge role in terms of the use cases.
02:04And that's another ripple effect in terms of the AI.
02:08Dan, the fact that they had 75% margins to me indicates they can charge whatever they want, that the
02:13demand is so great that they can raise prices significantly more than their input costs.
02:17And I just wonder, where is the competitive mode around that, right?
02:21I mean, how much better are there chips right now that allow them to charge whatever they want at a
02:24time where AMD is trying to come after them, Broadcom is trying to fashion chips for Microsoft and Google and
02:30all the others in order to compete with them?
02:33Yeah, at least right now it's their world.
02:34Everyone else is paying rent.
02:36And I'd say they're probably three to four years ahead of any competitor.
02:41Look, they're a third-rate chip.
02:43An H200 restricted in China, even though obviously no revenues, that's better than Huawei, probably by a year or two.
02:51Now, look, obviously competition is going to continue to increase over time.
02:55Big tech will build their own chips.
02:56But right now, demand and supply is 12 to 1 for NVIDIA chips.
03:00And that's why when you look at those margins, you look at numbers.
03:03I mean, the fact that this is a stock that's under 200 relative to where I think all the earnings
03:11is going to play out.
03:12Now, I continue to view it as a table-pounder name despite, obviously, a muted reaction, at least initially.
03:19Well, Dan, how much do you see actually some competition being posed from the others?
03:23AMD got a lot of attention this week due to their arrangement with Meta.
03:26I just wonder, given how much they have raised prices and given the fact that not everybody needs a Michael
03:32Jordan.
03:32Some people just need an average college coach or even a high school coach to help them get to the
03:37next phase of technology.
03:39I mean, where do you see some of the pull coming from in terms of competitors?
03:45Yeah, look, and if NVIDIA is the Jordan, like AMD could be the Scottie Pippen, right?
03:49I mean, the point is, like, AMD is going to play a huge role.
03:53Micron is going to play a role.
03:55You look down, like, in terms of TSMC and just the whole derivatives on the supply chain.
04:00Look, obviously, Intel is trying to get into the game.
04:03But just the reality is that NVIDIA is so far ahead.
04:07But you think about the spillover.
04:10Meta can't get enough chips from NVIDIA.
04:12They're going to have to go to AMD.
04:13And that's why AMD is one of our, you know, the Ives AI third, and it's a core winner in
04:18terms of everything Lisa Suh is doing.
04:20It speaks to just this overall market opportunity.
04:23You're going to have trillions of dollars spent and also every dollar spent on NVIDIA chips or even overall CapEx,
04:31$8 to $10 multiply across the rest of the tech.
04:33That speaks to what I view as on software and infrastructure.
04:37Street is massively mispricing the ripple effects that's going to happen here.
04:41At risk of totally Duran in the conversation and pulling a tea cake, everyone wants to know who Dennis Rodman
04:46is.
04:46No?
04:47Dan, who's Dennis Rodman of the chip world?
04:50I mean, look, I think if you had to do Dennis Rodman here, that'd probably be the Palantir.
04:54Yeah.
04:55If I kind of had to put that in there to maybe go into that narrative.
04:58That's a good response.
04:59I think they might like that too.
04:59Yeah, I'm actually, I'm impressed on the spot with that.
05:02And maybe the Steve Kerr would be the Microsoft.
05:05There we go.
05:06Something sensible.
05:07That makes sense.
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