Why Dan Ives Says It’s Still the First Inning for Nvidia

The Compound

2 Sept 202429:37

Summary

TLDRIn this discussion, Josh Brown interviews Dan Ives, a top tech analyst from Wedbush Securities, who shares his bullish stance on Nvidia and the broader AI theme. Despite Nvidia's stock sell-off post-earnings report, Ives remains optimistic, highlighting the company's robust growth, AI chip demand, and the potential for a trillion-dollar market cap. He addresses concerns over Blackwell delays, emphasizing the technology's efficiency and profitability. Ives also discusses the multiplier effect of AI investments on tech stocks and the strategic importance of Nvidia's ecosystem and services, comparing its potential to Apple's success.

Takeaways

🚀 Dan Ives, a managing director and senior equity research analyst at Wedbush Securities, has been highly bullish on Nvidia for over two decades, especially regarding their role in the AI Revolution.
📈 Post-earnings call on Wednesday did not change Ives' bullish stance on Nvidia; he is even more optimistic about the company and the broader AI theme due to the positive outlook and enterprise demand.
🌐 Nvidia's AI chip demand is surging, and the company's financial performance, including a 122% year-over-year top-line growth and a robust outlook for the next quarter, reinforces confidence in the AI Revolution's ongoing growth.
💹 Despite Nvidia's stock price sell-off after the earnings report, Ives believes it's due to high expectations being 'baked in' and that the growth story is still very much intact.
💼 Ives sees the AI market as being in its early stages, with only a small percentage of enterprises globally having adopted AI, indicating a massive potential for growth.
🔮 The upcoming Blackwell AI chip from Nvidia is not delayed due to functionality changes but because of yield improvements, which could make it more profitable.
💰 Nvidia's financial health is strong, with a new $50 billion buyback program on top of an existing $7.5 billion authorization, signaling the company's confidence in its future cash flows.
📊 Nvidia's operating margins are impressive, staying in the low to mid-60s despite significant investments, showcasing the company's efficient scaling.
🌟 The discussion highlights the importance of Nvidia's ecosystem and services, which go beyond chip sales, creating a continuous revenue stream similar to the Apple model.
🌐 The potential for sovereign AI development by countries for security and cultural reasons is noted, which could further drive demand for Nvidia's technology.

Q & A

What is Dan Ives' current position at Wedbush Securities?
-Dan Ives is the managing director and Senior Equity Research Analyst covering the technology sector at Wedbush Securities.
How long has Dan Ives been a tech analyst on Wall Street?
-Dan Ives has been a tech analyst on Wall Street for over two decades.
What does Dan Ives think about the current state of AI and Nvidia's role in it?
-Dan Ives views the AI revolution and Nvidia's role in it as being in its early stages, likening it to 'LeBron in high school' and believes that the opportunity for Nvidia and AI in general is immense.
What was the main takeaway from Nvidia's earnings call according to Dan Ives?
-Dan Ives believes that Nvidia's earnings call put to rest concerns about Blackwell delays and showed that the demand for AI chips is surging, indicating that the AI revolution is just starting to kick off its next phase of growth.
Why did Nvidia's stock price sell off after the earnings report, according to the discussion?
-The stock price sell-off was due to high expectations; the market was looking for a higher revenue forecast for the next quarter, and although Nvidia's forecast was strong, it was slightly below the 'whisper' numbers.
What is Dan Ives' prediction for Nvidia's market cap in the next six months?
-Dan Ives predicts that Nvidia is looking at a trillion-dollar market cap in the next six months, driven by demand from hyperscalers and enterprises.
What does Dan Ives think about the future of tech stocks, especially in relation to AI spending?
-Dan Ives is very constructive on tech stocks going into the end of the year and into 2025, seeing AI spending as a generational spending cycle that is just starting.
How does Dan Ives view the difference between selling a chip and selling an ecosystem and services in the context of Nvidia?
-Dan Ives sees the sale of an ecosystem and services as more valuable in the long term, comparing Nvidia's strategy to Apple's, where the initial sale is followed by ongoing revenue from services and software.
What is the significance of Nvidia's Blackwell chip, and why was there concern about its delay?
-Blackwell is Nvidia's next-generation chip, which is expected to be a significant leap forward in technology. Concerns about its delay were due to the fear that it might affect Nvidia's competitive edge and financial performance, but the delay was actually due to increased yield and efficiency in production, not functionality issues.
What is Dan Ives' view on Nvidia's financial strategy, including their new $50 billion buyback?
-Dan Ives believes that Nvidia's financial strategy, including the new buyback, is a true reflection of their confidence in their financial position and future growth, and that they will likely act on this buyback authorization.