CFRA Research's Angelo Zino Talks Nvidia's Revenue Outlook

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**Paul Sweeney** (0:07)
The news of the day yesterday in terms of company earnings was Nvidia. Some numbers after the close, the street likes it, the stock's up 70%.
The number that jumped out at me was they projected revenue for the next fiscal year. Growth rate of 70%, 7-0. Now put that into context.

**Alexis Christoforous** (0:22)
I mean, it's, it is stunning.

**Paul Sweeney** (0:23)
And this is on a run rate of $300 billion.
So it's not like they got a couple million dollars. This is $300 billion of revenue growing at 70%. So it's just extraordinary. And I think the tech space, tech investors breathe the sigh of relief that the AI investment momentum continues. Angelo Zino, he does this stuff for a living. He's the Senior Vice President and Tech Lead for CFRA Research. Angelo, what were some of your takeaways from Nvidia's earnings and conference call last night?

**Angelo Zino** (0:52)
Yeah, so, you know, I'd say the biggest takeaway, obviously, is kind of the revenue numbers that you guys had just alluded to in terms of expectations for 70% growth next year from mid-40s. And, you know, I think what's happening right now is the number of factors. One, hyperscalers are planning to spend much more than maybe we previously anticipated.
You know, I think Nvidia pointed to about 1.3 trillion next year, and that was about 200 billion above our expectations or forecast for next year. So I think that's kind of a big driver. And also, you know, what you're actually seeing away from the hyperscalers, those neoclouds plus Musk is kind of the bucket I would throw it in. And that's actually growing faster than the hyperscalers. And I think it's helping to really kind of diversify Nvidia's broader business. And then, you know, what I would also say is the content growth story. And that's the biggest reason why we have been bullish here over the last couple of years continues to exceed our expectations. So we see no signs of that letting up as we kind of look here over the next couple of iterations. And then, of course, I mean, I'd say the one blemish was the margin issue out there. But that being said, they are going to increase pricing as we go into, you know, calendar 2027 And that, you know, clearly is supporting that 70% growth trajectory and helping to kind of maybe ease some of those pressures and stabilize the margins going into next year.

**Alexis Christoforous** (2:16)
But Angelo, let's talk about some of the possible hurdles for Nvidia and for growth going forward. I mean, are they too dependent on a small group of tech giants like the hyperscalers as customers? And then also remember, some of these customers are increasingly developing in-house chips that could potentially take business away from Nvidia.

**Angelo Zino** (2:36)
Yeah, no, absolutely. You're absolutely right. And I'd say the competitive pressures are out there.
And, you know, we still look at Nvidia even after the monster moved today, you know, I would say that the multiple remains compressed based on some of those concerns, some of the competitive pressures out there, maybe some of the circular financing concerns that are out there as well. But as far as the competitive dynamics and the customer base is concerned, the good thing is we are starting to see, and there are signs that that customer base will diversify going into next year, essentially Nvidia pointing towards more of a 50-50 split as we go into next year. And that kind of helps alleviate maybe some of the concerns from a customer concentration perspective, but that will remain for the foreseeable future. But in the same respect, listen, when you think about Nvidia's ecosystem supporting about 6 million developers or so, those hyperscalers will need to continue to spend. I will just say this, maybe the growth rate from the hyperscalers going into next year, let's call it closer to 50 percent, whereas maybe for some of the non-hyperscalers, those Neo Clouds, you'll see significantly higher growth, let's call it closer to 90 to 100 percent.

**Paul Sweeney** (3:51)
Angelo, one of the concerns out there for Nvidia specifically, but I think just for the AI space in general, some of the circular funding structures that are being created out there where maybe Nvidia is funding some of its customers in various formats, what does the company say about that? Did they address that last night?

**Angelo Zino** (4:13)
They did.
I think for them, it's an area of strength and in many respects, it is. I mean, historically, when you look at the competitive advantage that Nvidia has had, it has been that CUDA software, right? And now, it's not just CUDA, it's also the fact that they've got some massive scale.