Nvidia expectations...

05/21/2024 15:40 Nvidia, which Goldman described as “the most important stock in the world” in February, will announce its 2024 Q1 balance sheet according to the calendar year after the session tomorrow. Nvidia is the third-highest weighted stock in the S&P 500 with a market value of $2.3 trillion. It has a weight of 5.12% compared to yesterday's close. It is the “clear” market leader in high-performance artificial intelligence chips. The “total revenue” figures it announced in the last four quarters were well above its “own” forecasts… The share movements after the balance sheet were also quite “exciting” for a company founded in 1993. Nvidia's four “biggest” customers: Microsoft, Meta (Facebook), Amazon & Alphabet (Google). Although not listed, Tesla also makes high-volume purchases of Nvidia chips. With the theme of artificial intelligence, MSFT, META, AMZN & GOOG are increasing their investments in this area. Increased investments = Increased demand for Nvidia chips. On the other hand, the “first stock movements” after the 2024 Q1 balance sheets of its largest supplier (which produces its chips), its largest retailer SMCI and its biggest competitor in Artificial Intelligence chips, AMD, were in the direction of SELLING. The main reason for these sales was the market questioning the expectations for the current quarter/fiscal years rather than the Q1 figures. According to the news in April, the “delivery lead time” for H100 chips has decreased from 16 weeks to 8-12. Although the delivery timing is better compared to the past, it still indicates strong demand. In addition, the fact that the delivery of H200 chips started in Q2 may have also driven consumers to new models. Nvidia CEO delivered the first H200 to OpenAI CEO “handily” in April. Blackwell chips are also expected to start shipping in 2024… With all this information, we don’t think Nvidia’s Q1 figures will be bad. However, it is not easy to answer the question of whether it can satisfy the market with its future predictions with “Yes, it definitely will”. In fact, the first share movements of TSM, SMCI & AMD after the balance sheet are a sign that there are downside risks for Nvidia. What we do know is: The share of data center revenues in total revenues increased from 45% at the beginning of 2022 to 83% by the end of 2023. There is a triple-digit percentage growth in data center revenues in the last three quarters! “An incredible second spring” for a 31-year-old company… The other thing we know is that some of its biggest customers are working on “their own chips”… (Microsoft, Facebook) Let’s continue with what we know: China’s share in total revenue decreased from 25% at the beginning of 2022 to 8.8% by the end of 2023… In short, Nvidia shares are close to their historical highs before the balance sheet… Even if the tree is a sequoia, it will not grow forever…