Life after Huang

00:00:00: Hi and welcome to SwissCode.

00:00:01: Stay deep!

00:00:02: Market talk is Friday, the headlines continue to be crowded by Jensen Huang's departure and what that means for NVIDIA.

00:00:15: So we will continue talking about risks & opportunities that pop with Jensen Hong's departure of a powerful man in little bit about yields as well.

00:00:26: but before we do it please keep in mind opinions are my own!

00:00:31: And this is not financial advice.

00:00:55: fourteen percent before recovering these losses and ended the session down by around four point.

00:01:01: thirty percent as dip buyers just stepped in trying to figure out what's next for NVIDIA without Jensen Huang.

00:01:08: And also, What's Next For The Brother AI Complex Without Man In Leather Jacket?

00:01:14: So we'll start with Collette Cress who she is.

00:01:17: We will dive into earnings and risk of Jensen's departure.

00:01:21: on earning.

00:01:22: Collette Kress is a new interim CEO at NVIDIA today.

00:01:25: She has been around since two thousand thirteen as the company's CFO, she knows the business ,she knows customers .She know finances very well and actually helped oversee NVIDia extraordinary expansion alongside.

00:01:39: Jensen Huang said that they will continue advancing work made by NVIDA leader in accelerated computing and AI and execute on opportunities ahead.

00:01:50: So the message was, we will be continuing to do what we best.

00:01:56: Now no one knows how NVIDIA will operate within a complex web of investment circular deals and business relationships that have been built under Jensen Wong where he is very much involved.

00:02:08: but We are sure investors that NVIDIA the company will continue in the same trajectory than Jensen Huang said and it could deliver without him at all.

00:02:24: Yes, a company of NVIDia's scale worth around four trillion US dollars would better off with just one person.

00:02:33: no matter how brilliant he is at the board or at the center of attention, a company can stand alone.

00:02:39: So to me this is an opportunity for NVIDIA Thanks to great products that it sells in the foreseeable future.

00:02:53: So there is that need-to be priced incorrectly, obviously That means we could see further downside if more news flow and If more unpleasant news flow.

00:03:02: And on Thursday for example Reuters reported that Justin Huang had another affair with Another NVIDIA employee taking a total of these love affairs Three.

00:03:14: Now, with Huang's departure any further internal affairs will certainly have limited impact but external affairs spy affairs affairs linked to China could have far reaching implications for the company and their brother.

00:03:29: AI complex remember mega speed executive Alice Wang which was a first scandal that popped up is suspected to have smuggled NVIDIA chips & super micro products into china.

00:03:41: The amount and the potential impact of chips smuggled to China on NVIDIA's earnings remains unclear for a moment, but the information recently revealed that at least seven-and-a-half billion US dollar worth of NVIDia chips may have been linked to the network to mega speeds networks since the year three thousand twenty-three although scale off any illegal diversion.

00:04:03: And the potential impacts on Nvidia's earnings remain unclear.

00:04:06: as this point we will certainly be digging into NVIDIA's clients more in detail and try to figure out what is the risk.

00:04:15: On the usual business front, Nvidia sales & earnings should not be impacted by too much beyond export restrictions on smuggled chips in China.

00:04:24: Hong scandal doesn't change the fact that NVIDia chips are premium!

00:04:29: Those are most advanced products we have today and customers need these NVIDI products in their middle of an AI boom.

00:04:38: so they are not going to just stop buying NVIDIA chips overnight.

00:04:42: Once the portrait will rocked about, it's certainly but a technology gap that NVIDia has with rest of... AI builders is such that the company probably has two to three years.

00:04:52: It's said before investors start worrying about companies losing edge on the technology front.

00:04:58: now looking at competition, now AMD was among the biggest gainers of one scandal this week.

00:05:04: Google Amazon and Microsoft are also you know building their own homemade chips Also benefit from the turmoil and hope they would be eating into Nvidia's eighty percent market share here.

00:05:16: but note that to AMD and others won't happen overnight.

00:05:21: Looking at AMD, well the company offers better performance for price in some segments but not a better performance per se!

00:05:30: And if you look at Google, Amazon & Microsoft's homegrown chips they are adopted into their own ecosystem.

00:05:36: They're no direct replacement to NVIDIA's system.

00:05:39: So this advantage gives Nvidia sometime to regain confidence?

00:05:42: place talents and eventually keep his advantage over competition.

00:05:46: For Chinese chip makers, there is an opportunity to shine with US products no longer being available in the country!

00:05:53: Now on investment front this one of big headaches because of circular deals.

00:05:56: when NVIDIA has an extended web of investments its clients so the circular financing you know?

00:06:04: And fear that the circular machine doesn't get enough oil.

00:06:08: with Jensen Huang's departure The latter could arguably slow down company's earnings and the broader AR expansion, obviously.

00:06:15: This is a risk that investors have been pricing in as the company lost twenty percent of its value compared to last Friday's close.

00:06:22: That was around one hundred eighty six dollars per share To this week's lowest point.

00:06:27: One hundred forty eight dollar per share.

00:06:29: That's nearly one trillion US dollar loss In market cap But there is bigger risk to AR expansion than Fonk's departure.

00:06:37: Well, this is the U?

00:06:38: S Congress turning blue from January on and investors have been waiting.

00:06:42: also the cost of AI expansion for months.

00:06:44: So, additional one impact would therefore be marginal but it really depends on investment decisions.

00:06:53: Also, the market is trading today Jensen Hoang as a man who can very hardly be replaced.

00:06:58: And he will be hard to replace indeed if nothing has got close ties with clients, suppliers and high ranked government officials.

00:07:07: so you don't get these relations overnight.

00:07:09: but NVIDIA's standalone company moving forward could come out stronger from The Hoang divorce in the longer run.

00:07:16: On the earnings for now our good news is that EARNINGS WILL GO AHEAD NEXT WEEK.

00:07:20: So we'll see how much Nvidia earned in the third quarter of this year and expectation is that up approximately ninety one percent from a year earlier and adjusted earnings per share of two point forty seven.

00:07:37: that's an increase of roughly ninety percent too.

00:07:39: High expectations are high, high expectations are harder to beat.

00:07:43: I will try to understand how much of the sales may have ended in wrong hands.

00:07:47: so what could be shaved off of these earnings in the coming quarters?

00:07:50: there'll be a lot of speculation next week and scrutiny who our immediate clients is ended in China.

00:08:01: And we will be asking a very important question is whether those risks on NVIDIA's earnings from China smugglings and also the circular investment deals are going to counterweight by this strong demand for NVIDia chips?

00:08:17: So I think that next two years, the strong demand of NVIDias chips will be able to counter weight the risk that we have on earning from these factors when they're longer run.

00:08:28: It will depend on who will replace Jensen Huang, how the company will reorganize without Jensen and what's going to be that impact.

00:08:35: On his technology advanced relationships at investment decisions?

00:08:39: So all of that we'll be very important.

00:08:41: We don't have the answers those questions today.

00:08:43: Those are the questions that would be hanging in there air at the valuation.

00:08:48: readjustment will happen only slowly now.

00:08:51: one bright news here is that investors could be easier to return a cheaper evaluation.

00:08:55: two NVIDIA.

00:08:56: if earning Earnings are strong and if there is no more cockroaches, they're to discover.

00:09:02: From an evaluation perspective with the current numbers, the company has become cheap because at one hundred sixty five dollars per share, NVIDIA trades it around twenty-one times trailing earnings and ten times expected earnings for fiscal two thousand twenty eight which will be ending in January.

00:09:19: two thousand eighty so that provides some room.

00:09:23: I don't know that continued growth strength is the base case scenario here.

00:09:28: The longer term impact from Jensen Huang's departure will be priced gradually, as i just said earlier.

00:09:35: numbers we'll be talking by themselves eventually but with information that we have today in our hands well NVIDIA might have become cheap now.

00:09:42: zooming out of nvidia rotation was a name off-the-game yesterday and no market.

00:09:47: as investors rotated from technology to non-technology pockets down in oil prices, somehow tames that appetite this morning.

00:09:58: This morning features are actually hinting at a very start to today's trading session.

00:10:03: now it will be interesting whether the upcoming anthropic IPO could regain their headlines!

00:10:10: Now that Jensen Hwang is gone and digestion process has just begun also The US will release its latest PPI numbers later today.

00:10:18: Analysts expect slower monthly yet faster yearly figures.

00:10:22: On Tuesday, remember a stronger than expected CPI print from the US had fueled expectations for a fifty basis point hike from the Fed in December meeting.

00:10:32: So another set of strong inflation figures from the U.S this afternoon could sman these expectations – these hawkish expectations push yields higher and some how jinxed their rotation trade.

00:10:47: So let's see what happens, but this is all for this hectic week full of Nvidia.

00:10:52: I'm Ipek Oskar Deshkir and thank you for joining me And Thank You For All Your Beautiful And Supportive Comments!

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00:11:27: So I will meet again next week with more Nvidia Talk & Anthropics IPO.

00:11:34: but until then good day trading.

00:11:36: have a lovely weekend.

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