Inside SpaceX’s Blockbuster IPO Filing

**SPEAKER_1** (0:00)
Many companies are struggling to scale their AI deployments or even move them past the pilot stage. Often the problem isn't technology, but organizational misalignment around goals, processes and incentives. At the break, join Caroline Roach, a senior partner, IBM Consulting, to learn why.

**Imani Moise** (0:19)
Welcome to Tech News Briefing. It's Friday, May 22nd. I'm Imani Moise for The Wall Street Journal.
Nvidia is currently the most valuable company in the world, and its latest earnings report this week showed no signs of slowing down anytime soon. Despite that, it's been one of the weakest chip stocks this year. We'll take a closer look at Nvidia's earnings and why some analysts say the company might actually be underappreciated. Then, SpaceX has filed its eagerly anticipated investor prospectus with the Securities and Exchange Commission, giving the public its first look under the hood of the world's largest private company. We're breaking down its financials ahead of what could be the biggest IPO in history.
But first, on Wednesday, Nvidia shattered expectations again, reporting record sales of $81.6 billion and net income of $58.3 billion for the April quarter. But despite hitting 14 consecutive quarters of blowout growth, Wall Street didn't seem too impressed. The stock actually dipped in after hours trading following the report and continued to fall yesterday. WSJ columnist Dan Gallagher joins us to explain the disconnect. So Dan, can you start by walking us through Nvidia's latest earnings?

**Dan Gallagher** (1:40)
Sure. What Nvidia showed is that they're by far the largest game in AI chips by quite a long shot. Their revenue now surpassed $80 billion, a quarter, which is more than just about any other chip company in the world makes in an entire year. And they also, they gave this interesting detail in the call where they see that the current fiscal year, they're going to have about $20 billion in revenue from what are called CPU chips. Now, these are actually not the chips that Nvidia is known for. It's known for GPU chips that are big in AI computing.
But as more people adopt AI agents, you need CPU chips to really run that. That was seen as a weak point for Nvidia. But now they're selling their own CPU chips and they're very conservative financially. So the fact that they said, we essentially have lined a site to $20 billion in revenue from CPU chips this fiscal year, which was basically a business that didn't exist for them before, tells you what kind of demand they still see.

**Imani Moise** (2:38)
In your latest column, you make the case that Nvidia is, quote, underappreciated. How can a $5 trillion company still be undervalued?

**Dan Gallagher** (2:47)
If you look at what the stock gets, like it's multiple relative to earnings that Wall Street expects for the next four quarters, Nvidia is actually pretty cheap. It's around 24 times projected earnings. That's actually pretty low relative to mostly other trillion-dollar tech companies. It's actually well below what you see with a lot of other chip stocks.
Intel's market cap is a lot lower, but that stock has gone through the roof this year, and now it gets around 90 times projected earnings. So what investors are paying for exposure to future earnings is way, way, way less with Nvidia, even though it has this kind of gigantic market cap to it.

**Imani Moise** (3:25)
And some of your sources say that Nvidia's recent price performance is being driven by apathy. What do you think is behind this apathy from Wall Street regarding Nvidia, despite its consistently strong earnings?

**Dan Gallagher** (3:38)
There's a mix of reasons. One, because you do have such a huge market cap, it does become mechanically hard to get big movements, even if the stock is relatively cheap on a valuation basis. Another big part of it is that it was actually three years ago now that Nvidia first started showing these blowout sales numbers that were coming from AI. So in that sense, it's like an older story relative to some other chip stocks and memory chips and others that have become a new story in AI. And so those are the ones that have really caught fire in the past six months or so. I think the attitude of investors is, yes, we know Nvidia is huge and they're super profitable and kind of dominate the space, but what's new? What's a stock that's likely going to triple?
They're not such the new thing at the moment and investors, especially AI investors, are really going after really strong potential upside.

**Imani Moise** (4:34)
And what do your sources say is the smart play on Nvidia right now?

**Dan Gallagher** (4:38)
Most analysts on the street are rating them as a buy, but also there's the sense of like, well, you know, they'll keep putting up good numbers, but what's going to happen? This is now the fourth quarter, which they put out really strong report and the stock has fallen. So it does cause a bit of a head scratching in terms of like, okay, what's going to get Nvidia moving if really strong numbers don't?