Daily Short

Nvidia

The Nvidia CEO, Jensen Huang’s gave a two hour address at the GTC (GPU Technology Conference), which significantly, was not at its usual location in San Jose California but Washington.

There were thousands in the audience including the CEOs of the many dozens of companies who are partners in the broader Nvidia ecosystem. However, another key audience was the Trump administration as Huang kept talking about the American manufacturing renaissance. He noted the new latest Nvidia chips are being made in Arizona by TSMC while computer racks are manufactured and assembled in Texas by Foxconn.

For all its great success, Nvidia has seen its sales in China plunge thanks to the long-standing restrictions (some dating back to the Biden era) on selling the most advanced technology to China. Huang thinks it is bad for the US to be shut out of the second largest AI market in the world, and he wants the ban to be removed.

In the address, which can be found below, Huang highlighted a dizzying array of new technological innovations.

He also announced a number of new partnerships with companies like Nokia, Lilly, Uber and Palantir as they see AI, accelerated computing being used in many new areas such at telecoms infrastructure, autonomous vehicles, drug discovery manufacturing etc

Nvidia famously refreshes its most advanced chips, named after famous scientists, every year. The current version in Blackwell and Rubin is coming down the track. Huang outlined the demand he is seeing for these:

“We now have visibility, and I think we’re probably the first technology company in history to have visibility into half a trillion dollars of cumulative Blackwell and early ramps of Rubin through 2026... This is how much business is on the books, half a trillion dollars worth so far. Now, out of that, we’ve already shipped 6 million of the Blackwells in the first several quarters, I guess the first four quarters of production, three and a half quarters of production. We still have one more quarter to go for 2025, and then we have four quarters, so the next five quarters, there’s $500B. That’s five times the growth rate of Hopper.”

These numbers surprised the market. 6mn Blackwells at $25k each average selling price is $150bn. That implies about $350bn of demand over next five quarters.

If we assume networking revenue will be $40bn that adds up $390bn of demand.

We estimate the analysts were pencilling in about $320bn of revenues for the next five quarters. (See chart above) Therefore $390bn is about 20% plus (!) above what analysts were estimating yesterday.

The Nvidia stock rose 5% yesterday as the market responded to this positive surprise.

We have written many notes on Nvidia in the last three years. It is out largest holding. We continue to believe it is the leading “Shovel” play on the AI investment boom.

Yesterday’s impressive presentation showed the strong immediate demand and significant future expansion of the company’s Total Addressable Market (TAM).

We will continue to hold. Analysts will be issuing upgrades today.