To The Moon

Nvidia, the chipmaker at the center of an artificial intelligence boom, gave another bullish sales forecast, showing that spending on AI computing remains strong. Second-quarter revenue will be about $28 billion. Analysts had predicted $26.8 billion.

Results in the fiscal first quarter also beat projections. The upbeat outlook reinforces Nvidia’s status as the biggest beneficiary of AI spending. The company’s so-called AI accelerators have become a hot commodity in the past two years, sending its sales soaring. Nvidia’s market valuation has skyrocketed as well, topping $2.3 trillion.

Broke the 1000 resistance finally

Nvidia CEO Jensen Huang told analysts on the earnings call that OpenAI, Google, Anthropic and as many as 20,000 generative AI startups are lining up for every GPU the cloud providers can put online.

“All of the work that’s being done at all the [cloud service providers] are consuming every GPU that’s out there,” Huang said. “Customers are putting a lot of pressure on us to deliver the systems and stand it up as quickly as possible.”

Huang said Meta has declared its intention to spend billions on 350,000 Nvidia chips, even though the company isn’t a cloud provider. Facebook parent Meta will likely have to monetize its investment through its advertising business or by including a chatbot inside its current apps.

Meta’s cluster of servers is an example of “essential infrastructure for AI production,” Huang said, or, “what we refer to as AI factories.”

Nvidia also surprised analysts by giving an aggressive timeline for its next-generation GPU, called Blackwell, which will be available in data centers in the fiscal fourth quarter. Those comments allayed fears of a slowdownas companies wait for the latest technology.

The first customers for the new chips include Amazon, Google, Meta, Microsoft, OpenAI, Oracle, Tesla, and Elon Musk’s xAI, Huang said.

In a nutshell

The shares rose further in extended trading on Wednesday. They had already gained 92% through the close. The company also announced a 10-for-1 stock split following a 25-fold surge in the company’s share price over the past five years and boosted its quarterly dividend by 150% to 10 cents a share.

⚠️ Trading tips: apart from taking credit spreads on NVDA yesterday, I will be considering its beneficiaries like TSM and SMCI as the latter provides a more attractive premium towards 7 June (NVDA stock split date). There will be opportunities to buy the dip during profit taking leading to the event so patience will be rewarded. Question now is to sell put, take more credit spread or buy the shares 🤔 

Taken before ER

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