Market views Nvidia's incremental raises as 'less impressive', says Deepwater's Gene Munster
Summary
TLDRIn 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.
Outlines
📉 NVIDIA's Stock Decline Despite Positive Earnings
The discussion begins with a focus on NVIDIA's stock performance, which fell despite the company reporting strong earnings. The conversation involves financial analyst Gene Munster, who suggests that while NVIDIA's numbers were good, the market expected greatness rather than just good performance. Munster highlights a deceleration in the company's guidance, pointing out that the incremental raises are becoming less impressive. He also notes that the market may not have fully adjusted for the shift of expected revenue from the October to the January quarter due to the rumored Blackwell product launch. Munster believes that NVIDIA's stock will see a significant boost in the January quarter and maintains a positive outlook on the company's future, attributing its potential to the scaling laws of technology and the pursuit of general and super intelligence.
🚀 A.I.'s Transformative Impact and Market Outlook
The second paragraph continues the conversation on NVIDIA and the broader impact of artificial intelligence (A.I.) on the market. Gene Munster expresses his optimism about A.I.'s transformative potential, even suggesting it could surpass the internet in its impact. He argues that A.I. operates at a scale and speed beyond human intelligence, which could lead to significant value creation. The discussion also touches on the correlation between NVIDIA's performance and the overall market, questioning whether the market can continue to rise if the A.I. trade does not materialize as expected. Munster believes that A.I. will become a fundamental part of every company's operations, similar to mobile and internet technologies, and this integration will likely lead to higher margins and market growth.
Mindmap
Keywords
💡NVIDIA
💡AI
💡Stock Performance
💡Guidance
💡Semiconductor Stocks
💡Market Expectations
💡Deep Learning
💡General Intelligence
💡Super Intelligence
💡Scaling Laws
💡Bull Market
Highlights
NVIDIA's stock fell despite reporting strong numbers, indicating the market expected more than just good results.
Gene Munster believes the market wanted great results, not just good ones, from NVIDIA's financial report.
NVIDIA's guidance was 2.5% higher than street expectations, showing a deceleration from the previous quarter's 5.2% increase.
The shift of NVIDIA's focus from the October to the January quarter was not fully accounted for by analysts, which could have affected stock performance.
On an apples-to-apples basis, NVIDIA raised guidance by 12% when considering the revenue shift to the January quarter.
Gene Munster predicts a blowout performance for NVIDIA in the January quarter, suggesting the market may be underestimating its potential.
NVIDIA's recent performance has raised questions about investor and trader confidence in the stock as a tradeable asset.
Despite recent stock performance, Gene Munster remains optimistic about NVIDIA's future, citing the company's role in advancing artificial intelligence.
Munster argues that AI has the potential to be more transformative than the internet, as it commoditizes intelligence at a scale and speed beyond human capability.
The discussion suggests that AI's impact on the market could be broader than NVIDIA alone, with potential for other companies to benefit.
The conversation highlights the importance of scaling laws in technology, which could benefit NVIDIA as AI and superintelligence advance.
Munster's belief in AI's transformative power is so strong that he stakes his career on it, indicating a long-term bullish outlook.
The potential for AI to become a foundational aspect of all companies, similar to mobile and the internet, is discussed as a key market driver.
The conversation concludes with a debate on whether the AI trade is a temporary trend or a long-term market influence.
Munster anticipates that if the AI trade doesn't materialize, there will be a shift in market leadership within the AI sector.
Transcripts
WANT TO STAY AHEAD.
BRIAN?
>> BIG NUMBERS THERE.
KATE ROONEY, THANK YOU VERY
MUCH.
ALL RIGHT, SO, LET'S DIG DEEPER
INTO THE NVIDIA STORY AND A.I.
IN GENERAL.
NOW, NVIDIA, AS YOU HEARD, FELL
TODAY, AND IT TOOK DOWN OTHER
SEMICONDUCTOR STOCKS WITH IT.
NVIDIA'S NUMBERS WERE HUGE, SO,
WHY DIDN'T THE STOCK RESPOND IN
A POSITIVE WAY?
LET'S BRING IN GENE MUNSTER,
"FAST MONEY" FRIEND.
IT'S A GOOD QUESTION.
THE NUMBERS WERE GOOD, THE
GUIDANCE WERE GOOD, BUT
APPARENTLY, THE MARKET WANTED
GREAT, NOT JUST GOOD.
>> BRIAN, I'M A BIG BELIEVER,
WHEN YOU START EXPLAINING YOUR
LOSING AND I RUN THE RISK OF
EXPLAINING HERE TODAY, SO, MY
PERSPECTIVE WAS, I THINK THE
MARKET IS VIEWING THIS EXACTLY
LIKE GUY LAID OUT.
IS THAT THE INCREMENTAL RAISES
ARE GETTING LESS IMPRESSIVE.
IN FACT, IF YOU LOOK AT THE
GUIDANCE, IT WAS UP 2.5% FROM
WHERE THE STREET WAS EXPECTING
FOR OCTOBER.
THEY GUIDED UP 5.2%, BACK WHEN
THEY GUIDED THE JULY QUARTER,
SO, YOU SEE THAT DECELERATION.
BUT I THINK THERE'S AN IMPORTANT
PIECE THAT CAN BE MISSED HERE,
WHICH IS -- IT WAS VERY CLEAR
THAT BLACKWELL SHIFTED FROM THE
OCTOBER TO THE JANUARY QUARTER.
AND VERY FEW ANALYSTS MADE ANY
ADJUSTMENTS TO THEIR NUMBERS AS
THAT WAS BEING RUMORED.
SO, IF YOU LOOK AT THE GUIDANCE
ON AN APPLES TO APPLES BASIS,
AND BRING IN THE SEVERAL BILLION
IN REVENUE THAT JENSEN OUTLINED
FOR THE FIRST QUARTER, WHEN
BLACKWELL RAMPS, IT'S NOW IN THE
JANUARY QUARTER, BUT BRING THAT
BACK TO THE OCTOBER QUARTER,
THEY RAISED GUIDANCE BY 12%.
AND THAT WOULD HAVE BEEN AN
ACCELERATION.
SO, AGAIN, I'M EXPLAINING.
I THINK THE MARKET IS JUST
VIEWING THIS AS TAKING A
BREATHER, WANTING MORE.
BUT THEY'RE GOING TO GET MORE
WHEN IT COMES TO THAT JANUARY
QUARTER.
I EXPECT THAT'S GOING TO BE A
BLOWOUT.
>> GENE, YOU GAVE GUY A NICE
COMPLIMENT, WHICH IS NICE.
AND YOU HEARD WHAT HE SAID,
WHICH IS, IS THIS THE START OF
SOMETHING IN A BAD WAY, AND
STOCKS CAN TURN.
FIRST OF, NVIDIA HASN'T REALLY
MADE ANY MONEY IN TWO MONTHS,
BUT STOCKS CAN TURN QUICKLY.
WHEN YOU HAVE THESE KINDS OF
NUMBERS AND THIS KIND OF
FORECAST, AND WE DON'T SEE
POSITIVE PRICE ACTION, DO YOU
THINK THIS COULD BE TO GUY'S
POINT KIND OF THE START OF
INVESTORS NOT LOSING CONFIDENCE
IN NVIDIA, BUT MAYBE TRADERS
LOSING CONFIDENCE IN NVIDIA AS A
TRADEABLE STOCK?
>> I THINK WE STILL HAVE TWO
GREAT YEARS LEFT OF NVIDIA.
DEEPWATER, WE OWN THE STOCK.
THE REASON WHY WE OWN IT IS THAT
WE BELIEVE THAT TO GET TO
GENERAL INTELLIGENCE AND
EVENTUALLY SUPER INTELLIGENCE,
THE SCALING LAWS IN TECH ARE
GOING TO HOLD.
AND THE SCALING LAWS ARE TO
INCREASE COMPUTE, YOU HAVE TO
PUT MORE HARDWARE AND DATA AT
IT.
AND IF THAT'S THE CASE, IF YOU
BELIEVE THAT IN ORDER TO REACH
GENERAL AND SUPER INTELLIGENCE,
THE SCALING LAWS WILL HOLD,
NVIDIA'S GOING TO HAVE AN
OUTSIDE BENEFIT TO THAT.
AND I THINK WE'RE STILL VERY
EARLY IN THIS TRADE.
WE TALKED, SOME OF THE TRADERS
TALKED EARLIER ABOUT THIS A.I.
TRADE GETTING LONG IN THE TOOTH.
AND I THINK IT'S REALLY HEALTHY
FOR AN A.I. TRADE.
I'M IN THE CAMP THAT THREE TO
FIVE-YEAR BULL MARKET THAT'S
GOING TO BE POWERED BY A.I.
SO, WE'RE STILL EARLY IN THAT.
BRIAN, I'M OPTIMISTIC, AND I'M
BASICALLY STAKING MY CAREER THAT
A.I.'S GOING TO BE MORE
TRANSFORMATIVE THAN THE
INTERNET.
AND, I MEAN, THAT BELIEF INFORMS
HOW I THINK ABOUT NVIDIA.
>> OKAY.
COURTNEY HAS A QUESTION, BUT HOW
CAN A.I. BE MORE TRANSFORMATIVE
THAN THE INTERNET, GENE, ALL DUE
RESPECT, WHEN A.I. RUNS OFF THE
INTERNET?
SO, IT'S LIKE -- THE INTERNET IS
THIS, AND A.I. IS LAYERED ON TOP
OF IT, HOW CAN IT BE BIGGER THAN
THE THING IT NEEDS TO EXIST?
>> THE INTERNET WAS BUILT ON
INTELLIGENCE, WAS BUILT ON HUMAN
INTUITION, IT WAS BUILT ON
INTELLIGENCE.
IT WAS -- AND ULTIMATELY, THAT
IS WHAT A.I. IS -- IS SOLVING
FOR, IS -- IT'S INTELLIGENCE AT
SCALE, AND AT A SPEED THAT
HUMANS CAN'T TOUCH.
AND SO, THAT'S WHY, I THINK
INTELLIGENCE CAME BEFORE THE
INTERNET.
AND, YOU KNOW, WHAT IS THE VALUE
OF BASICALLY COMMODITIZING
INTELLIGENCE?
AND I THINK IT'S -- I THINK
THERE'S A HIGH VALUE THERE.
>> NOW, GENE, WE TALK A LOT
ABOUT NVIDIA AND REALLY IT HAS
BEEN KIND OF A BELLWETHER, IF
NVIDIA DOESN'T DO WELL, THE
MARKET ISN'T GOING TO DO WELL,
WHICH CLEARLY DIDN'T HAPPEN.
AFTER SEEING THE CORRELATION GET
SMALLER, I'M CURIOUS WHAT YOUR
THOUGHTS ARE.
LET'S SAY WE'RE WRONG AND THIS
A.I. TRADE ISN'T GOING ANYWHERE,
DOES THAT MEAN IT'S SOMETHING
NEGATIVE FOR THE STOCK MARKET,
OR CAN THEY CONTINUE TO GO
HIGHER, EVEN IF THAT TRADE
DOESN'T PAN OUT?
>> I THINK THE WAY THIS PLAYS
OUT IS, RIGHT NOW, I WOULD SAY,
IT'S A NARROW MARKET THAT'S
DRIVEN -- THE PERFORMANCE HAS
BEEN NARROWED, AND LARGELY
RELATED TO A.I. HARDWARE.
I'M OF THE BELIEF THAT THIS WILL
IMPACT MARGINS.
THIS IS A WELL-TRAVELED BULL
CASE FOR A.I., IS THAT
ULTIMATELY, EVERY COMPANY IS
GOING TO HAVE TO HAVE A.I. AS
PART OF THE FABRIC OF THEIR
COMPANY, JUST LIKE MOBILE AND
THE INTERNET IS.
SO, IF THAT'S THE CASE, I THINK
WE CAN SEE HIGHER MARGINS.
I THINK THE REST OF THE MARKET
WILL GET PULLED UP.
IF I'M WRONG, I THINK WE'RE
GOING TO SEE LEADERSHIP WITHIN
A.I., SOME OF THESE COMPANIES.
WE'RE GOING TO S
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