01:07:57 · John Coogan, Tae Kim
[01:07:57] S0: Yeah. [01:07:58] S3: Because that's like, if you guys remember during the whole iPhone, like, when when the iPhone five and six came out when they actually had the large screen iPhone, Apple was trading at PES seven. Wow. Like, x cash. Like Yeah. People thought Android was gonna almost look at the same thing. Like, Androids come in and destroy the iPhone market share when iPhone went on this generational run Mhmm. With the large screen iPhones. Right? Mhmm. But a big thing that Apple did was they started buying back stock, and that's when their multiple started going from single digits to 15 to 20 to 30 times. Mhmm. And I I think what and they already kind of hinted at it, but I think NVIDIA is gonna start buying stock buyback in size. They they said 50% of their free cash flow in the next twelve months. They're a little bit cryptic on if that was after or before prepaid the prepayments they have for the inventory and suppliers. I But think we're gonna get some more clarity tonight. And if they if they actually put numbers, maybe it's this quarter or next quarter. If they actually put the actual you know, we're gonna buy x hundreds of billions of stock, you know, in the next twelve months, I think the the the PE is gonna rerate much higher. Yeah. So, you know, as soon as we get visibility that next year is gonna keep growing at 50% or higher, I think it's gonna be higher. And the year after that, you know, stock that stock should go on top of the rerating from the capital returns.
01:09:17 · Jordi Hays
[01:09:17] S1: Gavin Baker was on our friend Patrick's show this morning. He was making the point that it's possible that t s m TSMC could prevent a bubble just given that they are not investing in in CapEx as aggressively as, let's say, Jensen might want them to. He said, you know, basically said what you're saying, which is NVIDIA could sell a trillion dollars of GPUs, you know, pretty much immediately if they if they had the supply. What what's your what's your read on that? Do you think that TSMC well, is
01:09:53 · Tae Kim
[01:09:53] S3: so I think I've been I mean, I've been following Chip, the industry for, you know, thirty, forty years. So, you know, I I I'm very good at reading I'm very good at reading the tea leaves, and I've noticed that Jensen and what TSMC, what the CEOs have been kind of hinting at, that their tone has changed in the last two, three months. Yeah. So TSMC just reported, their q one earnings. And, you know, if you read the transcript, there it's pretty obvious that they're just gonna raise CapEx on on a different order of magnitude for the next year and the year after. They said their CapEx is going to be much higher over the next three years than it was the last three years. And basically and all the stuff they're saying, you know, they're saying and Jensen's been going out there during these speeches and q and a's. He's he's confidently saying the supply issues in two, three years are going to be on a different level. Like, even with memory, he's he's saying all these component issues that we have now in two, three years I think he even sat down the podcast interview. Two, three years, this all will be, like, less of an issue. So I'm confident that TSMC memory might be a a little problematic, but TSMC wafer wise, you know, it's gonna be dramatically higher over the next two,
01:11:05 · John Coogan, Tae Kim, Dylan Field
[01:11:05] S0: three years. Even if they raise capital, it feels like there might be, like, a, I don't know, a speed bump essentially. Because if they if they triple capacity and that takes two years, but everyone's sort of pricing in or expecting ten x a year or or half an oom a year. So so that's there's a mismatch there. That's that that [01:11:24] S3: they What I'm saying is right now right now, the NVIDIA valuation is trading like it's growing at 10 it's gonna grow at 10% the next year [01:11:31] S0: or two. Mhmm. [01:11:32] S3: Right? They grow at 50% the next two years. Yeah. I mean, that's definitely, you know, like, TSFCs is gonna raise our CapEx Yeah. Yeah. The next so it's like an the numbers are way off. [01:11:44] S0: Yeah. Yeah. I'm more just thinking from [01:11:46] S6: a Yeah. [01:11:47] S0: I mean, we're not gonna get perspective. [01:11:49] S3: The 10 x is not gonna happen. Yeah. But, you know, 50 to 75% the next three years, I think that can happen. Yeah. And stocks will go much higher if that happens. [01:11:59] S0: Yeah. Yeah. No. That makes sense. [01:12:01] S3: That 10 x is, you know Yeah. It's not software. I mean, this you know, you have to actually move physical atoms. [01:12:07] S0: Yeah. That makes sense. How do you how do you think NVIDIA will be positioning China exposure, China opportunity? That that was an interesting point of debate on the door cash episode.
01:12:07 · John Coogan, Tae Kim
[01:12:07] S0: Yeah. That makes sense. How do you how do you think NVIDIA will be positioning China exposure, China opportunity? That that was an interesting point of debate on the door cash episode. [01:12:18] S3: I mean, I I've given up on China. I mean, at GTC, Jensen said, you know, he got approvals on both sides, and then weeks later, like, that, you know, fell through again. Like Mhmm. It it's forget China. It's it probably isn't gonna happen. There was also another report that gaming GPUs were incrementally banned in China. Like, I I just think, like, we you you can't rely temper your expectations. I don't think China's gonna happen. [01:12:44] S0: Now relevant to the business case or the valuation, but potentially important to, like, the geopolitical story? [01:12:52] S3: I I think it's just gonna be the status quo where NVIDIA is not gonna be able to sell to China. And and anything that happens is incremental upside, but it's not gonna be a huge number anymore. Even the stuff that is allowed is is a limited number. The the way The US has, you know, approved the licenses, it's China is the one that's saying, no. We're not gonna let you sell right now. Like, it's been going back and forth between China and The US, you know, who bans what and whatever. Yeah. But even the incremental numbers, even if China starts approving it, it's it's not a huge number the way it was in the past. So I would temper expectations on China. It's just it's been so back, you know, so back and forth and unreliable the last last couple years.
01:12:52 · Tae Kim, Jordi Hays
[01:12:52] S3: I I think it's just gonna be the status quo where NVIDIA is not gonna be able to sell to China. And and anything that happens is incremental upside, but it's not gonna be a huge number anymore. Even the stuff that is allowed is is a limited number. The the way The US has, you know, approved the licenses, it's China is the one that's saying, no. We're not gonna let you sell right now. Like, it's been going back and forth between China and The US, you know, who bans what and whatever. Yeah. But even the incremental numbers, even if China starts approving it, it's it's not a huge number the way it was in the past. So I would temper expectations on China. It's just it's been so back, you know, so back and forth and unreliable the last last couple years. [01:13:31] S1: Yeah. What was your reaction to Google IO?