Ahead of earnings, Futurum’s Shay Boloor breaks down why Nvidia’s long-term AI momentum is still accelerating.
00:00 Intro
00:15 Market Performance Ahead of Nvidia Earnings
01:52 Nvidia Earnings Expectations
02:59 Where Else to Invest
04:19 Nvidia’s Dominance
05:55 Biggest Competitors
06:53 AI Bubble
08:44 AI Build Out
Transcript:
CAROLINE WOODS: Joining me now is Shay Boloor, Chief Market Strategist at Futurum. Shay great to have you on.
SHAY BOLOOR: Thanks for having me.
CAROLINE WOODS: So Shay NVIDIA is out with earnings on Wednesday afternoon. What do you expect. Is this the quarter we find out whether Nvidia’s dominance is peaking?
SHAY BOLOOR: I mean, let’s first get to what’s happened in the market ahead of Nvidia’s earnings, because what’s happening in the past few weeks in the market is the anxiety around the Super Bowl of earnings. Can they keep delivering. Is this the possible end of the AI bubble. Is this the performance the past two years. They’re now asking the question can they keep doing this Nvidia because Michael Barry’s recent resurfacing on the spotlight on his put options against NVIDIA and Palantir has caused a lot of investors to treat this upcoming earnings report from NVIDIA, as, is this the end of the AI boom? From what we’re hearing at Futurum with all the CEOs we talked to that the demand is still insatiable. It is. The timing of Michael Burry’s trade was more on the disbelief of the grid, energy shortages and the specific pockets of bubble in the AI economy. Not really that the AI trade is over completely and AI is a dud. Completely disagree with that notion. But now Nvidia’s earnings this week is kind of more. It’s over indexed because of all the attention that Michael Burry caused the past couple of weeks.
CAROLINE WOODS: OK so a lot to break down there. I should note that Nvidia shares are off about, what, 9% 8% this month heading into this report, but still only, what, like 12% away from all time highs. Nvidia has been beating expectations quarter after quarter. Are we reaching the point where even a beat, though won’t be good enough anymore?
SHAY BOLOOR: I mean, heading into earnings, expectations are high, but we do find it realistic. I think the Street already knows that NVIDIA’s results will be strong. I think the question is whether or not this quarter will show new sustained demand or simply some revenue timing ahead of a Blackwell ramp. So all eyes will still be on the data center segment, because that remains the NVIDIA engine. So if that number beats guidance, and analysts will be asking how much of it came from that little early deliveries versus actual new hyperscaler demand. The other metric is going to be margins. I think NVIDIA is guiding for 74% margins, and if it can hold or expand that level while shipping more systems, it does confirm that pricing and product mix are going to be strong. And that would be enough to communicate the shareholders that the stock will maintain its current value, which I think right now is at one 8190. So it’s all about the massive forward demand visibility. And I think that NVIDIA will deliver that.
CAROLINE WOODS: If Nvidia stumbles though even slightly this quarter. What’s the first place investors will run?
SHAY BOLOOR: I think you’re going to. Yeah I mean I think you’re kind of seeing some glimpses of that recently. A lot of the defense and health sectors have been predominantly dominantly strong. I think the biotech sector is kind of undiscussed right now. It’s SBI is entering a brand new bull market after years of just kind of huddled down in the cave, just like seeing everyone else catch a rerating, all the other industries getting the spotlight. But they’ve been consolidating for quite a bit now they’re breaking out. So potentially there might be a rotation. But again, I think that the recent negative tone around AI spending and NVIDIA’s growth has just been way overstated. I think that’s some people call it a slowdown. What we really anticipate is maybe the market’s just catching its breath after an intense build out phase. I mean, Nvidia has pulled the entire industry forward so quickly that the rest of the ecosystem is just trying to adjust and keep up. So I think the important point will just be on this earnings report that supply remains limited. The real limitation and the demand is still way above the supply. And that is going to prolong this AI rally. It’s just going to take a breather potentially if it does disappoint.
CAROLINE WOODS: Does Nvidia still deserve to be the face of the AI boom, though. And do you think it’s closer to the beginning of its dominance or the end of it?
SHAY BOLOOR: It’s a great question. I think what’s being missed in the market is that NVIDIA is just it’s no longer a data center story.
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