Nvidia's Next Catalyst? Ryan Shrout Looks at Earnings and Vera Rubin Expectations

**SPEAKER_1** (0:00)
Ryan Shrout, Futurum's president over at Signal 65 Ryan, thank you so much for your time, and happy Friday to you.
What would you say if you could take a wild guess as to what the market moving headline from Jensen Huang will be next week?

**Ryan Shrout** (0:17)
Wow, that's a great question. I think the earlier discussion about the market building in already a lot of what Nvidia does day to day is actually very true. And so, I think it's hard to surprise us with what they'll say on earnings. I think the most important thing that he could say that would move markets and that would move the stock up is to give some significant update on the ramp of their new Vera Rubin technology, right? And I think we all know that the transition from Blackwell to Rubin is kind of the next big step for them.
They've talked about this being the window of when they will accelerate into the production of that newer, faster, more profitable technology. So I think if he could say something about that ramp being ahead of schedule and start to talk more specifically about it, that's probably what would get people most interested.

**SPEAKER_3** (1:08)
And Ryan, I mean, the expectations are sky high. I was looking across analyst coverage. Virtually everybody is bullish in this name. But Alex Coffee was just highlighting that six of the previous eight quarters, the stock was down in the day after the earnings report. And then as he looked out over the next month, seven to eight of those quarters, it was still lower despite the fact that they put up some very impressive numbers. So what kind of numbers do they have to put up? How significant does the beat need to be? How much higher does the guidance need to be above street estimates for them to finally get a positive reaction here?

**Ryan Shrout** (1:45)
Yeah, I think it's interesting to see a company that has beat its own estimates by 13 straight quarters, I think.
But the amount that they have beat it by has kind of compressed over that same time period, going from over 20 percent to just about five percent in the previous quarter. So I think seeing that accelerate again, seeing that go higher, five, 10 percent above what their expectations would create some of that spark. And then also, the guidance for the next quarter is really what's going to do it. I think the Q3 consensus is like 103 billion. So can they push that above that to 105, 110, 115 billion? That's really what's going to move things. But then they have to have something to support that. And that's where I think a lot of the product discussions and technology discussions need to be seen.

**SPEAKER_1** (2:33)
How much do you anticipate the conversation, or at least the communication, from Jensen Huang to be centered around, there's no doubt the analysts are going to ask him about this, the circularity of financing and depreciation?

**Ryan Shrout** (2:49)
I think we'll hear a lot about it. I think both of those topics are super interesting, right? The depreciation or shelf life of these GPUs is a really interesting topic. They've talked a lot about it in their financial dealings that suddenly these are going to be six to nine year lives for GPUs.
In the previous way of the world and how this worked in the last couple of decades of us tracking it, GPUs were kind of outdated in two to three years. And what they're saying and what we're seeing even in our own discussions with Nvidia customers like the clouds and Neo Cloud providers, they're still renting out these A100 GPUs that are probably five to six years old at this point. And so I think that will come up and can they make that case again and make that case very strongly that these are still going to be in high demand and all the technology, Blackwell, Hopper, all the GPUs they've released to this point will still have that same shelf life. And then in terms of the financing side, I really look at this as the particularity of the financing is maybe a little bit beyond my ability to make comments, but I think that they're creating another moat for themselves. If you look at the GPU itself was a moat, CUDA and its software stack was a moat, then they moved to like rack scale as a moat, meaning this is how they differentiate versus any other potential competitor.
And now they're moving into the world of financing and funding and creating the baseline of this infrastructure to differentiate and keep the competition for being able to catch up, the AMDs and the Broadcoms of the world, right? And so this is just another way they're creating that differentiation.