Cramer's Morning Take: Nvidia Earnings 2/22/24

Jim Cramer (0:02)

I'm Jim Cramer, and you're about to hear a sample taken directly from today's CNBC Investing Club morning meeting. The market is ripping, and the reason it is ripping is none other than one of our long time faves, own it, don't trade it, Nvidia. And Jeff, I think why it's ripping is because we no longer have to do a multi-quarter thing.

We're really talking about a multi-year, and a multi-year is highly unusual in tech. Usually, tech's quarter to quarter, that seems to be over when it comes to Nvidia.

Jeff Marks (0:31)

Sure, and that was one of the concerns heading into the quarter that perhaps there'd be some type of air pocket of spending from the major cloud service providers, the Microsofts, Amazons, Meta, Alphabets of the world. But there doesn't seem to be an indication that that will happen. The quarter itself, strong revenues up 265%. They beat estimates by 1.5 billion, which we almost shrug off because it is Nvidia. They had been doing this, but that is such a large number.

Big gross margin speed, EPS 516 versus 464 expected. Mentioned the cloud service providers, but it's also Sovereign Nations buying the GPUs as well. China only mid-single digit though. Not much of a concern. They will have some type of new chip for China, but it will take some time. Software revenues at a billion dollar run rate. Here's a big thing. Inference, 40% of revenues.

Many believe that provides visibility for 25, for 26, because there was a perception that they were more of a leader in training, maybe more competitive on the share side.

Jim Cramer (1:39)

When you go to Instagram and they show you the right ads.

Jeff Marks (1:42)

So recommendations, right? Inference, think of it as making predictions from the data.

But the sign that they're still getting a large percentage of revenue from inference is giving some visibility.

Jim Cramer (1:54)

Yeah, I have my own sources within the company who came back and when I was worried about saturation and said very specifically, there are major, major companies and verticals that have not even looked at or considered the H100.

And that means that they are scratching the surface. There are a lot of smart American companies that are in there. That's one of the reasons why they want sovereign because a lot of countries are afraid they'll be importing our culture. They don't want to do that.

Jeff Marks (2:18)

Right.

Jim Cramer (2:19)

But there is something to be said for every single industry, which is why Jensen's calling it the New Industrial Revolution. Everyone has to rip out their traditional general computing, which is based on mostly Intel, and put theirs in because it's 20 times faster and it doesn't burn as hot.

Jeff Marks (2:36)

Yeah, I thought that was a really interesting point on the call. He was basically saying the CPU market running out of steam. He's saying look no further than the cloud service providers extending the depreciation of their data centers from four to six years. There's just no reason to update to new CPUs. We saw that from Amazon's last quarter as part of the operating income guidance. One of the reasons why it was higher than expected was because of this extended useful life.

Jim Cramer (3:03)

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SPEAKER_3 (3:18)

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