Expect ‘Another Great Quarter’ from NVDA

**SPEAKER_1** (0:00)
And we learned this week that SpaceX will now exclusively be using Nvidia chips moving forward, according to Elon Musk. So, let's go deeper on Nvidia in our tech spotlight. Joining me for that, John Belton, Portfolio Manager Gabelli Funds. It's great to see you, and what a vote of confidence from Elon Musk to say that Vera Rubin of Nvidia, they talked about the architecture, the processors, just being the very best, and that's why they want to work.
Elon Musk, SpaceX wants to work exclusively with Nvidia. What did you think of that? Because that certainly helped to boost Nvidia's weekly performance up 10.5 percent this week.

**John Belton** (0:39)
Yeah. Thanks, Nicole. I think in addition to that being a key vote of confidence for Nvidia, I think there's clear implications for numbers as well. SpaceX, another thing they talked about this week is they're planning on adding somewhere between, call it, four and eight gigawatts of compute next year. That basically means they're going to be expanding their AI infrastructure at a pace that looks like the biggest hyperscalers. So there could be real dollars or there will be real dollars coming into the market for AI infrastructure from SpaceX next year. Seems like a lot of that's going to accrue to Nvidia.

**SPEAKER_1** (1:22)
Understood. We're going to talk about AMD in a little while, but let's stay on Nvidia for the moment. We're also anticipating earnings. We've heard from a lot of the hyperscalers and the CapEx spend, and Nvidia will be reporting in a couple of weeks on the 28th of August. What are your thoughts on Nvidia's upcoming news and earnings report? Will you be watching for some details there? Tell me more.

**John Belton** (1:47)
There'd be another great quarter. What did we learn from hyperscale earnings this cycle? We learned A, every hyperscaler is still supply constrained, too much demand to satisfy. B, hyperscaler CapEx outlooks are still being revised higher. We've also seen intra-quarter several encouraging demand signals like H100 rental prices still increasing at a really healthy clip, token consumption still exploding higher. All these things point to a very robust demand environment for Nvidia, should be another strong quarter.
The other thing beyond the numbers we'll be looking to hear about is early indications on the Vera Rubin product rollout, which starts in the next quarter, in the October quarter.

**SPEAKER_1** (2:35)
It's also been somewhat of a laggard when you look at the semi-group, as you noted, historically low valuation here though. Do you then say now, there are a lot of folks who look at the PE, you talked about the valuation, that it's more attractive now than it's been in a long time. Would you agree with that?

**John Belton** (2:55)
Yeah. I think given the fundamental profile, the robust demand they're seeing, the growth they're still putting up, combined with the low valuation, it feels like pretty good risk reward here still. Particularly if this AI infrastructure investment cycle has legs beyond 2027, which at this point, it feels like it does.

**SPEAKER_1** (3:16)
You mentioned AMD in your notes too. We heard from AMD, they also had the AI conference.
What are your thoughts when you compare the two? AMD often viewed as the little brother to Nvidia. Is AMD on good footing in your opinion?

**John Belton** (3:33)
Yeah. I think these are two separate companies with different strengths. AMD clearly benefiting from an inflection in CPU demand from agentic AI. That market seems to really be taking off. AMD has been a long-term share gainer in that market. Seems like that's going to continue. I think the outlook that they talked about over the coming years for their server CPU business is very strong. I think that is the core of what propels AMD's earnings. Now, in addition to that, AMD has been trying to break in as a second merchant GPU supplier to compete more directly with Nvidia. They also have a new product series launching later this year.
I think, definitionally, they're going to be taking share in that market from Nvidia, which is the starting point for Nvidia is like 100%.
That's definitional. But we'll see. I think AMD has signed up some pretty big customers and it seems like they are starting at that product going in the right direction.

**SPEAKER_1** (4:38)
We also talk about sovereign AI, governments and many of them, over 90 percent of them were training on Nvidia chips. That's another testament to Nvidia, right?

**John Belton** (4:52)
I think that's been another nice growth opportunity for Nvidia. Still seems like a lot of legs there. I think as of a couple of years ago, that was like a $10 billion revenue business for Nvidia. I think it then grew to $20 billion last year. Still clearly plenty of opportunity to continue to grow that area. Those are clearly long-term customers interested in the best infrastructure, probably less price sensitive. So those are good customers for Nvidia.