Nvidia ($NVDA) – Shareholder Meeting – June 29, 2024
Founder/CEO Jensen Huang’s portion of the meeting was a carbon copy of his recent Computex presentation. He spoke about the historic revolution taking place within computing, which Nvidia is leading by a mile. He spoke on the firm’s full suite of products powering accelerated computing data centers, or “AI factories.” This suite includes best-in-class GPUs, switches, and SpectrumX networking technology to vastly bolster the number of connections Nvidia can blaze amongst its GPUs. This setup is augmented by its Cuda software suite and Nvidia Inference Microservices (NIMs) to create end-to-end tools for standing up, seasoning and deploying industry-specific GenAI applications. This all powers superior efficiency, bandwidth, performance and total cost of ownership (TCO). That’s 30,000 ft. view. I dove into things a bit more in my coverage of the Computex chat, which can be found here.
There were a few new nuggets from his chat. The main item was his brief commentary on the new Blackwell platform. This is its latest GPU superchip, which will replace Hopper and begin shipments later this year. Blackwell offers a 25x TCO edge over Hopper, which was the TCO leader before this new platform was introduced. Demand levels, adoption and bookings activity from Blackwell all convincingly point to this being its most successful product ever.
That’s encouraging to hear for any company. It’s especially encouraging to hear in light of Hopper’s amazing success (and Grace before that). Continued supply constraints, tech edges and coinciding pricing power are not going away in the near future. This commentary points to the GenAI chip boom still having legs, with Nvidia in the lead to capture that incremental opportunity.
Two things are obvious: First, Nvidia is leading the GenAI chip boom. Second, this chip boom will not last forever. The bet that investors are making today is that the current wave will continue for some time. Blackwell commentary this week bodes well for that bet. This is the formula that MUST remain intact for Nvidia to keep working as an investment. With this scenario in place, 25x sales still means well under 40x EBIT and a 1x EBIT growth multiple. It must maintain its tech lead and must maintain pricing power for 25x sales not to eventually mean 100x+ EBIT and less attractive risk/reward.
