Market views Nvidia's incremental raises as 'less impressive', says Deepwater's Gene Munster

Summary

In a CNBC discussion, it's noted that despite NVIDIA's impressive earnings and guidance, its stock fell, dragging down other semiconductor stocks. Gene Munster explains that the market expected 'great' rather than 'good', and while NVIDIA's incremental raises are less impressive, the real story is the company's shift from October to January guidance, which, when adjusted, shows a significant 12% increase. Munster remains optimistic about NVIDIA's future, predicting a 'blowout' in the January quarter and asserting that AI will be more transformative than the internet, as it commoditizes intelligence at a scale and speed beyond human capability.

Takeaways

• 📉 NVIDIA's stock fell despite reporting good numbers and guidance, suggesting the market expected great results, not just good ones.
• 🔍 Gene Munster from 'Fast Money' believes the market is viewing NVIDIA's performance as a pause, wanting more impressive growth.
• 📈 The guidance for NVIDIA's October quarter was raised by 2.5%, which was less impressive compared to the 5.2% increase previously guided for the July quarter.
• 🎯 Munster points out that if the guidance is adjusted for the shift from October to January, NVIDIA actually raised its guidance by 12%, indicating an acceleration.
• 🚀 Munster is optimistic about NVIDIA's future, expecting a 'blowout' in the January quarter when their AI technology ramps up.
• 💡 He argues that to achieve general and super intelligence, the scaling laws in tech will require more hardware and data, which will benefit NVIDIA.
• 🌐 Munster believes AI will be more transformative than the internet, as it commoditizes intelligence at a scale and speed beyond human capability.
• 🤖 The discussion suggests that NVIDIA and AI are seen as bellwethers for the market, with the potential to influence broader market trends.
• 📊 The correlation between NVIDIA's performance and the market's performance is noted to be getting smaller, indicating a possible shift in market dynamics.
• 🔮 Munster predicts a future where every company integrates AI into its operations, similar to how mobile and the internet have become ubiquitous.

Q & A

Why did NVIDIA's stock fall despite reporting huge numbers?

NVIDIA's stock fell because the market expected more than just good results; it wanted great results. The market perceived a deceleration in the company's growth, with incremental raises in guidance becoming less impressive.

What did Gene Munster suggest about the shift in NVIDIA's Blackwell project?

Gene Munster noted that NVIDIA's Blackwell project shifted from the October to the January quarter. This shift was not fully accounted for by analysts, which meant that the true impact of NVIDIA's raised guidance was underappreciated.

What does Gene Munster believe about the future of NVIDIA in relation to AI?

Gene Munster believes that NVIDIA still has two great years ahead, driven by the scaling laws of technology that require increased compute power to achieve general and super intelligence. He is optimistic about NVIDIA's future in the AI space.

Why does Gene Munster think AI could be more transformative than the internet?

Gene Munster argues that AI could be more transformative than the internet because AI represents intelligence at scale and speed that humans cannot match. While the internet was built on human intelligence, AI takes this to a new level, effectively commoditizing intelligence.

What concerns were raised about NVIDIA's recent stock performance?

Concerns were raised about the possibility that traders may be losing confidence in NVIDIA as a tradeable stock, especially given its lack of significant gains in recent months despite strong numbers.

How does Gene Munster view the current state of the AI trade?

Gene Munster views the AI trade as still being in its early stages. He believes that the market is in a three to five-year bull market driven by AI, which will be very transformative.

What does Gene Munster predict about NVIDIA's January quarter performance?

Gene Munster predicts that NVIDIA's January quarter will be a blowout, with significant revenue from the Blackwell project contributing to strong results.

How does Gene Munster see the relationship between AI and the broader market?

Gene Munster believes that if AI continues to grow, it will pull up the rest of the market as well. However, if AI doesn’t pan out as expected, leadership within AI-related companies might still emerge.

Why is there a concern about the deceleration of NVIDIA's growth?

The concern arises because the raises in NVIDIA's guidance are becoming smaller over time, which the market interprets as a slowdown in growth momentum.

What is Gene Munster's long-term outlook on AI's impact on the tech industry?

Gene Munster is very bullish on AI's long-term impact, believing it will be more transformative than the internet and lead to significant advancements in technology, benefiting companies like NVIDIA.