EP 90 | The Week of 8/28 - 9/1

🚨 Jackson Hole Recap | Has Nvidia Peaked | Risk with Taiwan? | ❄️ Snowflake a beast for coming Decades 🛒 InstaCart IPO 🎬New Tesla Immersive Experience | 🏠Zillow Offering 1% Rates | 🚴‍♂️Peloton moves in B2B and Colleges | 🚘 Vietnamese Nikola? |🔓 SentinelOne Acquisition Target?

Happy Almost Labor Day Pounders!

The world may sometimes seem in chaos, however, here at PTT were are back at full strength with Tony jumping back on the pod and ready to get more involved.

We are introducing Deep Dives to the mix each week as well as the week ahead of earnings.

                WEEKLY DEEP DIVE: Nvidia 

Did NVIDIA’s Earnings Highlight AI Dominance?

In today's AI landscape, it's easy to get lost in all the names that claim that the AI movement will be a major tailwind for them that will offer exciting innovations. But once in a while, a company comes along that demands attention not just for its current achievements but also for its potential to shape the future. Enter NVIDIA ($NVDA).

The World’s Leader in GPUs

At its core, Nvidia is a graphics processing unit (GPU) producer. But they don't just make any GPU; they engineer some of the world's most advanced. These GPUs, originally designed to boost gaming experiences, have found utility way beyond just rendering stunning visuals in video games. Their GPUs, especially with their CUDA platform, make parallel processing a reality, accelerating intricate tasks like deep learning. That's why many AI research facilities and businesses turn to NVIDIA when they need the raw power to train large neural networks.

NVIDIA's reach stretches into the heart of data centers. Their acquisition of Mellanox, a data center networking solutions provider, underpins their intention to not only supply the computing muscle but also facilitate data movement. The combination of NVIDIA's GPUs with Mellanox’s high-speed networking ensures seamless, fast, and efficient operations in data centers, making them a must-get for enterprises relying on cloud operations. Don't believe me? Well they just reported a whopping 171% uptick in their data center revenue year-over-year.

Our Autonomous Future

The future of driving is autonomous, and NVIDIA is steering its way into this future. NVIDIA's DRIVE platform offers a comprehensive ecosystem for the development of autonomous driving, from powerful hardware to complex software tools. With the rise of IoT and the need for real-time data processing, NVIDIA is positioning itself at the edge of computing.

Beyond gaming and AI, professionals in design, content creation, and scientific research lean on NVIDIA’s GPUs. For tasks that demand intense graphical fidelity and computational accuracy - like simulating an architectural structure's reaction to an earthquake or creating life-like CGI in movies - NVIDIA's Quadro series comes to the fore.

Back-to-Back Blowouts

Looking at the numbers from NVIDIA's earnings yesterday, they reported a mind-blowing 101% increase in its YoY revenue, which now stands at $13.5B. And if you're someone who values profitability, NVIDIA's non-GAAP EPS has catapulted by 429%, settling at an impressive $2.70. The company’s Q2 Data Center revenue stands at $10.3B, mainly driven by the high demand for their Hopper and Ampere architecture-based GPUs. Now with a strong 71.2% gross margin and FCF that has skyrocketed by 634% YoY to ~$6.1B, is it safe to say that Huang is the new GOAT?

Not stopping there, NVIDIA has also made the strategic decision to repurchase 7.5M shares and set aside a cool $25B for future buybacks. Looking forward, the company is clearly optimistic, anticipating a revenue of $16B for the upcoming quarter, which could translate to another 171% YoY growth. And knowing NVIDIA's history of outdoing itself, I wouldn't be surprised to see that figure get close to ~$18B.

Admittedly, Nvidia’s current valuation includes a substantial premium, priced to reflect market’s high expectations over the underlying business’ AI potential. On a multiple basis, the stock implies a 53x forward EBITDA or 45x forward earnings at current levels at the time of this writing, which is about 3x the broader market average and 4x the semiconductor peer group average.

Another Way to Play

If Nvidia’s premium is too high for your taste, Super Micro Computers might be an alternative play. A couple weeks ago, SMCI reported Q2 revenues of $2.2B which turned out to be ~20% of Nvidia’s data center revenues. Nvidia just posted Q2 data center revenues of $10.3B which was 76% of total revenues ($13.5B) and just guided to $16B of revenues for Q3. If SMCI revenues come in at ~20% of $NVDA data center revenues, we're talking about ~$2.5B for SMCI in Q3 versus current estimates of $2.1B compared to $1.8B a year ago (55% YoY growth if it happens)

Own NVIDIA, Don’t Trade It?

NVIDIA’s trajectory is clear. They're not just a participant in the unfolding AI narrative; they're directing its course, setting trends instead of merely following them. Beyond their gaming prowess, their pivotal role in AI, data centers, and autonomous driving makes them an undeniable powerhouse.

                SPONSOR SECTION: MASTERWORKS

MASTERWORKS JUST HAD A 77% return on its latest Art Investing – but the rest may surprise you!

The news is true: Masterworks’ 15th sale just weeks ago returned an impressive 77% to investors. While such a high return is an outlier for the blue-chip art investing platform, you might be wondering what their prior sales delivered. Glad you asked…

Every one of their sales has returned a profit to investors, with 12 of them delivering double-digit returns, and 1 delivering triple-digit annualized returns.

In full, Masterworks has over 300 paintings and their 15 exits have delivered: 32%, 39.3%, 36.2%, 27.3%, 9.2%, 33.1%, 21.5%, 17.8%, 13.9%, 35%, 10.4%, 325.5%, 4.1%, 17.6%, and 77.3%, net annualized returns*.

You can sign up with our special link here and get to the front of the line.

Every sale but one outperformed the stock market in the period from when it was offered to when it was sold.

With performance like that, offerings on the platform can sell out in minutes. However, Pounding the Table readers can skip the waitlist to join with this exclusive link.

Performance of exited investments is not representative of artwork that has not yet sold and past performance is not indicative of future results. See important disclosures at masterworks.com/cd

Disclaimer: The views expressed on this podcast and newsletter are for entertainment purposes and not investment advice. Content is based on personal experiences and general stock market knowledge. It's not a replacement for professional financial advice. Consult a qualified advisor before investing. Stocks entail risks, so consider your situation, tolerance, and goals. Hosts and guests aren't licensed advisors. Market changes impact information accuracy. Listener discretion advised; hosts, guests, and producers aren't liable for investment outcomes.