NVIDIA’S AI EMPIRE IS JUST STARTING! 🚀 NVDA PRICE TARGET REVEALED! | Nvidia Stock | STOCK MARKET

Here, listen, Vivek, this is a big deal. I don't even know where to start because there's all of the drama around Hugging Face with the open AI attack, which was more about what these AI bots are capable of. Now here comes NVIDIA, almost kind of turning itself into a competitor of some of its biggest customers. Good afternoon, Kelly. I think what's happening is that this is essentially a $13 billion statement from NVIDIA that it is all in on AI. I mean, we kind of knew it, but this I think kind of reinforces the message that they really want to influence, encourage, help accelerate the adoption all the way from a data center to the software stack. And what I think they have made clear is that there is going to be a big room for open source models because the open source community is what will help to accelerate the adoption of AI. In certain cases, it will help to lower the cost of AI and its adoption by enterprises. So I think this is a very important strategic view. And if they are able to complete this deal, it effectively gives them control of the town square in which a number of developers are coming and interacting. And oh, by the way, when they're developing those models, it helps give NVIDIA an upper hand in understanding where the technology is going. And it can also shape how its silicon is developed alongside. So I think it's a very important and strategic announcement that they are making. It's protective in some ways, because if you are open AI, if you're anthropic, if you're any of the large language models, for lack of a better word, NVIDIA is a major cost for you, a major cost setter. So of course they're all trying to, Google has its TPU, they're all trying to build out their own, take that profit margin back from NVIDIA. And here comes NVIDIA saying, well, we're going to make sure that if you do that, that we're going to be the one that all the open source models effectively can kind of run off of, 3 million plus open source models. So yeah, and Meta obviously doing the open source thing as well. So now we have to talk about and do you think we're getting too far ahead of this conversation? It's still a small acquisition, but three years from now, is it going to be, I'm sorry, anthropic versus open AI, versus kind of the NVIDIA ecosystem, maybe versus a Meta, I don't know. No, it's a fair point. But if one believes, right, there was some public discussion recently about anthropic suggesting that the addressable market for AI over a long period of time could be in the order of tens of trillions of dollars. I think I saw the $30 trillion number. This year, we will be less than a trillion. So the point is we are in such early stages of AI adoption by consumers and enterprises and governments and around the world that I think it is too early to try and pick winners and losers. You're right that different parts of the ecosystem are trying to maximize their competitive positioning. You know, hyperscalers are working with NVIDIA. You know, a few days ago when NVIDIA reported, they announced that Amazon is buying 2 million more of their Vera Rubin chips. At the same time, Amazon is developing its own custom chips, right? Same situation at Google. So I take your point, but I think it's too early to try and proclaim who are going to be winners and losers because we are very early in that adoption curve. But I do believe that part of what NVIDIA is also doing is helping create an ecosystem that is away from the incumbents because, you know, sometimes the incumbents don't move as quickly, right? They have constraints, you know, they have, you know, prior baggage. They have a lot of constraints in many ways. But this new emerging set of companies that are the Frontier Labs, that's the open source community, right? That are the new cloud, they can move much, much faster and quicker and accelerate that adoption. So that's the part of the ecosystem which doesn't have the balance sheet to support itself. And I think that's the part of the ecosystem NVIDIA is really trying to encourage significantly. But I don't think it's an either or. I think they are working closely with both sides. Next, I know NVIDIA is up 22% for the year, but, and that'd be a lot for every other company, but not for NVIDIA! This is NVIDIA for heaven's sake. I'm going to do my fantasy thing next week. You know, we do that thing here. I'm not trying to figure which player NVIDIA should be, but I am leaning right now toward Gibbs. Anyway, NVIDIA bought Hugging Face today. I know it sounds like a foreign version of Kleenex, but it's a king of open source AI. I think it's a brilliant move. It'll put to rest all the nonsense that NVIDIA's technology is only good at training, not inference. It's foundational! I'm throwing that word around all day today because it makes me look really smart. But what matters is that NVIDIA sells it less than 15 times next year. I'm going to say that again, less than 15 times next year's earnings estimates. If it announces tomorrow that it's going to buy back a half a trillion dollars of its own stock and manage that buyback aggressively, like I would if I were in charge of it, not on autopilot, it is, but when the stock drops from these ridiculous dips they're in there buying, stock grows up 50%. I am not, hey, look, I nailed the Dell for 100 points. Give me some credit here. I think this thing goes up 50% if I manage the buyback where someone like me, like an AI version of me, Tesla. All right, it only needs one thing to happen, the SpaceX buyout, okay? It stocks down 16% for the year. That seems wrong. Remember, remember my supposition. If the rest of the market was doing nothing, then it would be fine that the week 2007 is doing nothing. But the bottom line is that's not the case. The market pulled ahead of the mag seven. We got sick of them, right? I mean, the group's about to reap the profits finally and spend all that money. And we now decided that we're so close to, 2027 and we're not giving you many credit. That's wrong. This stocks are cheap. I think it is time. Say the AI trade is becoming more selective and it's clear. And some would argue becoming selective, but also shifting, right? Because Simis are not as in love as we've gone back to software. Describe for me how you see the evolution of the AI trade. Yeah, I think what's happening right now for the most part, and I'm an F1 fan. So it kind of, it's going to be a very niche specific reference, but there's a race, the Canadian Grand Prix in 2011. It's the longest race in history. It was four hours, four and a half hours. But what's interesting about that race, it was like the fastest that the cars essentially have ever been going into that race. But the safety car came out six times. And I feel like that's exactly what a lot of the AI trade is dealing with right now. Earnings have been spectacular. You look at Dell, crushed their earnings, even the Whisper. You look at NVIDIA, really great quarter, crushed their earnings. Semtech, crushed their earnings. So you look at the underlying earnings, very strong. But when you look at what's going on from the macro perspective, it's a lot of headwinds. So you're looking at oil over 90, you're looking at the 30 year, you're looking at globally interest rates rising. So it's very hard for the companies to get credit for how durable their earnings have been and how strong their earnings have been. When you think about, so the strength that's there, you can see it obviously by the numbers. What would you say about where investors should look for opportunity? Yeah, I think there's a lot of really interesting segments that you look at in the market. One that we tend to look at quite frequently because we have large positions is memory. We still think that there's a lot of misconceptions around memory, specifically around high bandwidth memory. There was some architecture decisions by NVIDIA on their Rubin Ultra to reduce the stack height from 12 to eight. Now, if you read the headline, it's, oh, wow, 33% less high bandwidth memory. There's gonna be less memory sold. But in reality, the total number of bits or actually the amount of memory stays the same as what it's sold. And the way that you can look at it is the bits are fixed, but NVIDIA can sell more GPUs. So for SK Hynix, it's relatively unchanged. But I think the piece that's underappreciated with that is it's actually really, really hard to stack memory 12 high. So when you reduce it to eight, you actually get better yield. So the fixed number of bits is relatively the same, but the memory providers may actually end up with better yield and a little bit of a price increase for what they can sell for their bits. So let me ask you this. You're also focused on networking as part of the AI stack and where there's opportunity there. I'm curious to know your thoughts on that. And if you have thought on cybersecurity. Yeah, definitely. When you think of, again, a lot of these slices and dices of the AI trade, people tend to view them a little bit as zero sum. And there are some aspects where you make architecture changes. There are some winners and there are some losers. And one of them that ends up being in that bucket is memory and networking. When you look at those two side by side, again, we think memory is very important, but when you have less locally to store the data, you end up having to move the data. So when you look at what's really important for the next phase, it's making sure that the movement of that data is as fast as possible. But not only that, it's the highest integrity as possible. And that's very important because it's almost like the slowest link in a GPU cluster pulls back the entire task when you're moving data, which is very expensive because you've already purchased all the equipment, the compute's expensive. So you wanna make sure that the GPUs are orchestrating in the most seamless way possible. And that's why data integrity is really, really important if you're gonna reduce the memory count. And we've seen some interesting names have come up that we're very passionate about. Like Semtech is one of them. Again, they're kind of in that analog IC component that really helps when you're moving data as fast as possible. Keep it as high integrity as possible, which is very important. Okay, all right. David, we'll have to leave it there for time because we've got some jobs to get to moments from now. That's David Featherstone-Hall. He's the EVP and investment strategist over at VistaShare. President Trump taking to social media to threaten tariffs on countries with which the U.S. has a trade deficit if the Fed doesn't cut interest rates. Quote, lower the rate, the president said, or I'll stop trading with countries with which we have a deficit. The Fed board with its great new leader must get smart. Be patriots for a change. I'd point out that macroeconomically, countries that have a deficit with the U.S. tend to recycle the dollars back into treasuries, putting downward pressure on interest rates. So it's, at best, unclear how halting the trade with these countries would help the president's cause, but it's the first time I can see that he's threatened the Fed with a tariff action. Carl? And Steve, the list of countries that would ostensibly be included under that would include some of our largest trading partners. Not just our largest trading partners, which, Carl, you know is a tautology when I tell you they're also the people that hold the most bonds, right? So China, Japan, all these countries that have trade deficits with the U.S., they buy our stuff, we give them dollars, they take those dollars, they buy our treasuries, put downward pressure on treasury rates and yields. We have an awful lot of debt to sell. I don't know we're positioned to be hurting our customers for that debt. All right, so let's start off with this. Zero-coupon debt, the idea here is that you don't get the interest payments, and you also, a lot of these cases, you have the chance to convert it into stock. So is there a lot of risk here? Is this a safer way to invest in this AI build-out? Yeah, it depends on what your angle is. I think that, one, you have to understand what a convert buyer is doing, right? You're buying an underlying bond, and you're buying a call option in the stock. So downside protection if things don't work out, because ultimately you're senior to the common if things don't work out, but ultimately what you're doing is making a call on the upside of the stock if you're just going long the convert itself. I think you really have to unpack it and say who's actually buying these instruments and what are they doing on the other side? In many instances, right, it's just a play for volatility. You're shorting the stock, you're longing the convert, and you're hoping that they collapse over time. So is it a safer way? Yeah, in a way, you've got the bond protection on the way down if things don't work out, but it isn't necessarily something that most average investors are buying and saying, hey, give me a convert so that I can get a 0% coupon on it. I think you also have to understand why the companies are doing this. One, you're not paying any cash interest, so no tax on your pre-cash flow. Two, you're protecting your credit rating, so very little impact to your overall balance because that debt most likely won't be treated like debt because it is convert or equity linked. So yeah, we are seeing record issuance of convert. Yes, they are getting favorable terms. Much of that has to do with underlying volatility in the market and not so much about playing the idea itself. Seth, give us a sense where the other side of this is. We see the neoclouds and we see others raising at very high levels. And at some point, will we likely to see some sort of meeting in the middle, if you will? Obviously, the guys who can raise at the terms in which you're talking about are gonna continue to do that, especially as they have demand for CapEx bill and all that sort of stuff. But on the flip side of that, does the other side, if it starts to go bad on these neoclouds or Oracle, that sort of thing, might it kind of just, I don't know, pull back a little bit demand for this sort of debt anyway, one way or another? Yeah, I think you think about it from pools of debt, right? So where they're actually sourcing their capital from. Listen, you guys talk about the ROI on the CapEx. Tim, we can discuss that later. But the idea behind where the actual capital is coming from, public investment grade, we've seen maybe in total, right, about $500 billion of issuance so far this year. That probably won't stop. So back to the point of where they're going to go, CFOs are going to attack where the cheapest cost of capital happens to be. So it's not about whether or not the instrument itself works. They'll approach it from an investment grade corporate perspective, if that's the cheapest market. They'll go to the high yield market, mentioning some of the neoclouds who have approached the high yield markets and gotten some financing there, or they'll go to straight converts. The zero coupon phenomenon really applies to a few companies. Many of the others who have approached the convert market actually have been paying coupons. So are we going to see widening of spreads and difficulty getting financing done? The investment grade corporate market, particularly for the hyperscalers, we're already 50 basis points wider. Now, that's not a ton, but 50, a half a percent on your investment grade corporate debt, that does become at some point an issue. We're nowhere near that for their balance sheets, but can other companies continue with this financing? It does depend, right? We're starting to see some of that. I heard you guys discussing circular financing. There's some of that, right? I'm going to lend you the ability to kind of lean on my really strong balance sheet in order for you to get your financing done. That actually is happening today. We're seeing that very, very small in scope. When you're talking about the size of many of these companies, the idea by what we're seeing, it really is irrelevant to their underlying balance sheets, but we are seeing that. And so the market is digesting this in the first 90 minutes of trading today as maybe a little net negative, given what it means for interest rates? Yeah, I think it is all eyes on the Fed at this point. And so after Waller's speech yesterday, I think that the market had decided that the default was probably a whole, I mean, it was 50-50 odds. And of course the CPI that comes out next week is going to decide it. And if you read between the lines with what Waller was saying, anything that rounds up to a 0.3 month over month would be grounds for a hike. Anything that rounds down to a 0.2, they would be on hold. So we're getting to the hundredth decimal place on the CPI here. 0.25 is kind of the line in the sand. I think this morning's jobs report coming in so strong and the labor force participation rate rebounding without pushing the unemployment rate up is kind of throwing a new wrinkle in here. And it puts the impetus on the probabilities on a hold. If I had to get down to that hundredth decimal place, like Waller kind of guided us to, I'd say anything above a 0.2 after this report, as long as oil stays up here around 90, we're probably gonna get a hike or at least a very strong tightening forecast in the SEP in the September meeting. So that's what I think is going on with the market today. Yeah. You also know the importance of data center build-out in terms of what it means for job creation. How durable do you see the numbers from August persisting throughout the remainder of the year? I mean, they've been durable through all of 2026. And to me, that's the big story. One of the classic signals that you watch in macro is residential construction payrolls. It's like before every big recession, you get like a three to 5% drawdown in residential construction payrolls. That's kind of happened this year as the housing market has suffered, but the data is the non-residential specialty trades, which is really what you see from the data center build-out. That group has really exploded jobs there and more than offset the losses we've seen in residential construction. So I think it's an absolutely, you're seeing CapEx numbers exploding through next year. Data center build-out, as long as we don't have a political hiccup, which I think is the new big risk to the AI trade, then yeah, I think it makes this cycle durable. What do you mean by political hiccup? Is that the backlash that we've seen, the political backlash against data centers? And if that is the case, does the midterm election kind of represent a hurdle by which to surpass in order to get through it? Yeah, absolutely. I mean, if you start looking at, look, you saw Senator Sanders yesterday come out and basically had some very draconian suggestions, pausing all data center build-outs, making AI models like anything over a certain level, banning them, making them illegal. I mean, these are, I don't know how realistic that is to get that enacted, but I think it's a risk and the market has to discount it. And then you look at how the semi-group, which I think is the beating heart of the AI trade within the market, it's kind of locked, it's kind of started to move with the Republican odds of pulling the Senate. So if we see a blue sweep coming out of the midterms and data centers have become a very, a hot button issue, you could see some real turbulence enter into the AI trade. I think that's the most important risk, the token declines and the fundamental stories that the bears like to tell. We don't see it. We see rental rates staying strong and actually turn around and going higher. We see availability on the floor, so you can't get these GPUs. So the fundamental story for AI is really strong. The political risk is now in focus.