01:01:11 · Immad Akhund, Tae Kim, John Coogan, Dylan Field
[01:01:11] S5: Mhmm. [01:01:11] S3: And there's gonna be 20 a need for 25 times more GPUs. Wow. So he said, multiply 25 by 25, you get 625 more revenue, etcetera. And you layer onto the fact that four years ago, all these memory companies saw their revenue, you know, get cut in half. So they didn't expand capacity. It takes three to four years to expand capacity. So Mhmm. We're gonna see, like, mega pricing power. Like, we haven't seen anything yet. These stocks are gonna go keep going higher, and their revenue revenue rates are are gonna be astronomical. So everyone makes fun of these Koreans Yeah. For piling into single digit PE stocks growing at triple digits. And this cycle is different because there are only three companies that can make make the HBM memory. [01:01:58] S0: Yeah. [01:01:59] S3: So don't make fun of the Koreans. They're [01:02:00] S0: right. Don't. Is the the the pullback that you pushed to that you mentioned, like, the when they were beaten up, was that the post crypto slump when semiconductor equipment and and GPUs were being used to mine crypto, and then there was a pullback there. Is that what you're referring to? Like, what is the prehistory? Why were these stocks beaten up? [01:02:19] S3: So in 2022, like, we had a kind of a a tech recession. [01:02:24] S6: Mhmm.
01:02:24 · Dylan Field, Tae Kim, John Coogan, Marcus Milione
[01:02:24] S6: Mhmm. [01:02:24] S3: Like, everyone's all these tech companies were laying off people. Yeah. Even Intel and NVIDIA had these 50% drawdowns. Yeah. The whole you know, everything was it's almost like the the post COVID kind of overhang Yeah. Where people bought too many digital computers, electronics Yeah. And there was too much overcapacity. [01:02:43] S0: And so what yeah. What was [01:02:44] S3: is different this time, really? [01:02:45] S0: What was NVIDIA doing during that 50% drawdown? Were they buying the stock back? [01:02:51] S3: Not not really. NVIDIA's if if they buy [01:02:54] S4: a little [01:02:54] S3: bit of stock Okay. Back, but not not really. And back then, this is a different NVIDIA where, like Yeah. Data centers 10% of the revenue and gaming is 89%. Now now it's Yeah. Yeah. Where data centers nearly everything. Yeah. What happened with NVIDIA back then is everyone's mined their GPUs to mine Ethereum. Mhmm. And then Ethereum did the whole proof of stake group of work thing, so demand for GPUs collapsed. [01:03:17] S0: Mhmm. [01:03:17] S3: And NVIDIA had like a terrible quarter. They where they missed by like 2,000,000,000, which was a big number back then for that. [01:03:23] S0: Now That's a rounding error. [01:03:25] S3: Back then, it was 20% of the revenue, and the stock got hit hard. [01:03:29] S0: Yeah. So what are you looking forward to from NVIDIA this quarter, this year? What are you watching?
01:03:29 · John Coogan, Tae Kim
[01:03:29] S0: Yeah. So what are you looking forward to from NVIDIA this quarter, this year? What are you watching? [01:03:35] S3: So we had, like, two unbelievable quarters the last two quarters, and I expect another great amazing quarter. I mean, Jensen is out there saying GPU consumption is through the roof. On Monday, he said AI demand is far exceeding supply and capacity. So I think the numbers are gonna be great, this is without even China. So, I mean, the absolute scale of these numbers are mind blowing. We're talking, like, 80 growth on $80,000,000,000 numbers, 79 or 80,000,000,000. Just think about it in three months. Right? [01:04:06] S0: Yeah. [01:04:06] S3: So the absolute scale and the stock is, like, almost as cheap as it's ever been. Like, it's trading at 19 times forward, below the, S and P 500, which is growing at, like, 10%. Yeah. NVIDIA is growing at 80%. So this this dichotomy where NVIDIA is becoming more and more undervalued Yeah. And we could talk about why. [01:04:26] S0: Yeah. Yeah. I'd love to know. Is that just because they're the largest company, 5,000,000,000,000. It's hard to wrap your mind around a $10,000,000,000,000 company. [01:04:34] S3: So every year we go through this cycle, the last three years during this whole upswing up, everyone says peak is here. Right? NVIDIA can't grow anymore. Mhmm. And NVIDIA keeps growing at some ridiculous growth rate. So the the skepticism the only reason why it's trading at below market multiple is that the AI skeptics believe that the peak year is near. Right? There there's gonna be a no growth
01:04:34 · Tae Kim, Jordi Hays, John Coogan
[01:04:34] S3: So every year we go through this cycle, the last three years during this whole upswing up, everyone says peak is here. Right? NVIDIA can't grow anymore. Mhmm. And NVIDIA keeps growing at some ridiculous growth rate. So the the skepticism the only reason why it's trading at below market multiple is that the AI skeptics believe that the peak year is near. Right? There there's gonna be a no growth [01:04:56] S1: AI is it AI skeptics or is it TPU and Trainium enjoyers? [01:05:02] S3: That too. They believe competition is coming and they're gonna gain market share. Yes. I I kinda laugh at that and the numbers that people, you know, put out there for the competition, it's it's like a rounding error. It's like a small single low single digit number compared to what NVIDIA's gonna grow the next few years. And what people keep forgetting is, like, if you actually look at the numbers [01:05:24] S0: Mhmm. [01:05:24] S3: I mean, NVIDIA has a trillion dollars in orders. Right? They're the ones that have locked down all the memory. Like, I I met someone guy guy at GTC. He he he's the optical startup, and NVIDIA locked up all the capacity for lasers and optical. Right? [01:05:39] S0: Mhmm.
01:05:39 · John Coogan, Tae Kim, Jordi Hays
[01:05:39] S0: Mhmm. [01:05:39] S3: So NVIDIA has the supply components with memory, wafers, optical. So they're pretty much the only game in town if you want to actually buy AI GPU capacity. Like, TPU gets headlines, but, I mean, $5,000,000,000, like, is nothing when you you look comparing it to a trillion dollars. Right? So they have the volume. They have the the great power, you know, power per watt numbers and metrics that basically if you're doing inference, NVIDIA GPUs, even they cost a lot more upfront, when you actually do the inference, performance per watt is excellent with these Dura Rubin $4,500 [01:06:18] S0: Yeah. Dollars How did you grapple with the question of whether or not NVIDIA is a car? There are competitors. You said low single digit percentage of the market, but AMD is getting its act together. Intel's maybe back in the game in a few years. You have Tranium and TPU. Competition is rarely a good thing. Is NVIDIA a car or not? [01:06:42] S3: Okay. Obviously, it's not a car. We're talking about how, you know [01:06:45] S1: I would've loved to I would've loved to be in the room with you while you saw that segment. You're just, like, taking your computer, smashing it.
01:06:45 · Jordi Hays, Tae Kim, John Coogan
[01:06:45] S1: I would've loved to I would've loved to be in the room with you while you saw that segment. You're just, like, taking your computer, smashing it. [01:06:53] S3: I I think I was tweeting about it. I think I wrote a piece on it. I I wrote, like, you know, four or 500 words about that Sure. Podcast. I don't know if we wanna go into that on that. They they you know, they're gonna be 90% of the market. Maybe they'll lose 10% of the market share in 02/03 Mhmm. But 90% of a market that is growing, you know, 70% a year and the hyperscale or CapEx numbers went up huge. There's like 780,000,000,000 going to a trillion dollars next year. Yep. Like, the market believes with NVIDIA's valuation that NVIDIA's going stop growing within the next year or two. Mhmm. But the overall market, I think, is going to keep growing at 50% at least. If it grows 50% in the next two or three years, NVIDIA's going to grow. Even if they like maintain market or, and I don't believe that's true. I think they're they're actually gonna maintain or even increase market share. But even if market share goes down 10%, I mean, the numbers are just insane. And I don't think Nvidia's gonna trade at, like, ten, twelve times earnings when they're growing at 50. I mean, that that doesn't make sense to me. So I think it's gonna be rate higher. And then the key thing here is the stock, stock buybacks. [01:07:57] S0: Yeah.