$NVIDIA (NVDA.US)$ Goldman Reiterates Conviction Buy Followi...

$NVIDIA (NVDA.US)$ Goldman Reiterates Conviction Buy Following Huang Comments at Conference

1) Accelerated Computing: Mr. Huang highlighted his long-held view that Moore's Law was no longer delivering the rate of innovation it had in the past and, as such, was driving computation inflation in Data Centers. Further, he noted that the densification and acceleration of the $1 trillion data center infrastructure installed base alone would drive growth over the next 10 years, as it would deliver material performance improvement and/or cost savings.

2) Customer ROI: Mr. Huang noted that we have hit the end of transistor scaling that enabled better utilization rates and cost reductions in the previous virtualization and cloud computing cycles. He explained that, while using a GPU to augment a CPU will drive an increase in cost in absolute terms (~2x) in the case of Spark (distributed processing system and analytics engine for big data), the net cost benefit could be as large as ~10x for an application like Spark given the speed up of ~20x. From a revenue generation perspective, Mr. Huang shared that hyperscale customers can generate $5 in rental revenue for every $1 spent on Nvidia's infrastructure, given sustained strength in the demand for accelerated computing.

3) Competitive moat: When describing the company's competitive moat, Mr. Huang highlighted the company's a) large installed base of GPUs across multiple platforms (with backward/forward software compatibility), b) ability to augment their hardware with software (e.g., domain-specific libraries), and c) ability to build rack-level systems and innovate across various chips (Nvidia designs 7 chips for the Blackwell platform).

4) Thoughts on supply chain: Mr. Huang spoke to its supply chain partners' agility. He noted that without the help of its partners, including key suppliers like TSMC, the company would not have been able to deliver the hockey stick-like revenue growth in 2H23/2024. That said, he did note that Nvidia has adequate in-house Intellectual Property to shift manufacturing without material disruption should they be required to do so.

5) Reiterated Blackwell schedule: Mr. Huang reiterated that the company will begin shipping Blackwell-based products in FY4Q25 and that shipments will scale in FY2026. He also stated that demand is strong and that he feels a sense of responsibility given the company's position as the key provider to essentially all CSPs (+ other companies) developing AI.