NVIDIA’s Hidden Venture Fund & Lucky Strike + Show Announcement

**John Creteau** (0:00)
This episode is brought to you by Charles Schwab. Timing the market, fighting inflation, managing risk? Financial decisions can be tricky. Investing isn't just math, it's psychology. Your neurons are playing favorites, and the market doesn't care. Financial Decoder, an original podcast from Charles Schwab, can help.
Join host Mark Reapy as he breaks down practical strategies to help overcome the mental traps that may affect your investing decisions.
Listen at schwab.com/financialdecoder.

**Ann Berry** (0:32)
Dollar Tree versus Dollar General, two discount retailers, two very different reactions to their earnings. We unpack why one stock is heading south, while the other one moves on up.
Lucky Strike, the bowling chain throws a gutter ball. We have the latest from its earnings. And Nvidia, another blowout quarter, but will margin pressure catch up with the stock? And what about those venture investments? We break it all down. For Thursday, August 27th, it's Brew Markets Daily, and I'm Ann Berry.
More market details to come. But first, Nvidia, of course, Nvidia, churning out another blockbuster quarter with eye-popping headlines. The AI chip giant reported second quarter revenue of over $96 billion, up a whopping 106% from a year ago and comfortably ahead of Wall Street's roughly $92 billion of expectation. Adjusted earnings per share came in at $2.22, also topping estimates. Well, the engine, of course, remains the data center business. Revenue there hit $89 billion, up a staggering 117% year-over-year, as spending on AI infrastructure continues to accelerate. And Nvidia said that its next-generation, hotly anticipated Vera Rubin platform is already ramping into full production. So that's recent history. That's the look backwards. But the outlook was strong too. Nvidia is forecasting $108 billion in revenue for the next quarter, plus or minus 2%.
And importantly, that forecast still assumes no data center compute revenue from the massive market that is China.
The company also looked further out, saying it expects revenue to grow roughly 70% in fiscal 2028, so that's a rare one-year forward look. And that, by the way, is growth even with supply chain constraints. Now, in amongst the blockbuster headlines, we went foraging for some nuggets, and here's one that caught our eye. Nvidia said that it's non-marketable equity securities, that's a lot of words, but primarily investments in privately held companies were worth a massive $48 billion as of July 26 Now, that sits on the balance sheet. It's in the notes of the 10Q, if you're curious and want to nerd out with me, and compares with about $22 billion at the beginning of the fiscal year. So that bump showing just how valuable and how much Nvidia has placed value on, becoming one of the world's biggest venture capitalists. Well, over time, Nvidia has invested in CoolWeave, SpaceX and Cerv Robotics, all since gone public, and with gains as a result sitting in Nvidia's financials. And Nvidia also has positions in the likes of Figure AI, that's a startup that applies AI software to autonomous robotic systems. And of course, in the likes of OpenAI, in a deal that's famously fueled debate over circular financing. Now, private company valuations are notoriously opaque, especially on the early stage, volatile and they're ridden with timing issues. That's usually a bit of a lag. So one item that we're watching for, it's any changes to these valuations as the AI boom continues, good news, but also as AI trade fears and valuation concerns rise. Now, there was one transparent potential pressure point in the earnings. Nvidia expects gross margin to slip ever so slightly from 75% this quarter to about 74% next quarter. Small, very small, but keeping investors hawk-eyed on how the cost of supplying all that AI infrastructure might be rising and whether competitors are honing in.
The market, though, ultimately liked what it heard after initially falling Nvidia shares reverse course heading up around 9% today. We're coming up in a moment, a spin through the headlines that are moving the markets today, including earnings out of Salesforce and how the software giant is flipping the script on SaaSpocalypse fears. But first, this episode is brought to you by Charles Schwab.

**John Creteau** (4:34)
Could recency bias be skewing your potential stock picks? Do you feel attribution bias might be messing with your retirement plan?
Sometimes, overconfidence ends up overestimating our own abilities. Or loss aversion kicks in and losing that dollar hurts way more than gaining one. Financial Decoder, an original podcast from Charles Schwab, explains how these cognitive and emotional biases can affect the decisions you make about your financial life.

**Ann Berry** (4:56)
Host Mark Reapy, head of the Schwab Center for Financial Research, and his guests offer actionable insights on how to guard against decision-making biases. Download the latest episode and follow at schwab.com/financialdecoder or wherever you get your podcasts at schwab.com/financialdecoder.