Sending this out early for you early-risers, will send the usual Morning Wrap out shortly…
NVDA: Solid results with Total revs/DC revs hitting bogeys / Q3 rev guide a bit light / GM guide the debate…
One-liner: Not much to change narrative/#s here, buyside #s staying at ~$4.75-$5 in FY26
Q2 DC revs $26.3B vs $26B+ bogeys $25B street
Total Revs $30B vs $28.8 street and $30B+ bogeys
Q3 Revs guided to $32.5B vs street at $31.9B and bogeys of $33B
Debate last night and this morning and why stock is down centers around GMs. NVDA reiterated that Oct Q gross margin drifts back to 75% with full year in the mid 70s (assuming that means 75% its shy of street’s 76% and implies Q4 at ~72% vs street’s 75% assuming same $2B beat cadence through year end) - while in line with what they said last call in terms of Blackwell initially being dilutive to GMs, it does imply a downtick of a few 100bps in Q4 (Jan) (note, nvda has also said eventually BW margins will be in ~80% range for BW similar to Hopper).
Other point of contention is China strength (up 50% q/q and grew more than $1B related to H2) but CFO basically said geography a bit misleading as some of the product is sent to assemblers abroad and come to end users in the states.
On the positive side, Arcuri at UBS points out that the most important metric they watch - NVDA’s purchase commitments and supply obligations - grew significant for the first time in several Qs at $10B a 40% q/q increase after having been flat in Q4 and up only 15% last Q. UBS says this foreshadows very strong rev growth over the next few Qs - starting in Jan Q as Blackwell will layer on top of Hopper.
In terms of Blackwell timeline, they said BW was “widely sampling” in Q2 and that they expect to ship several billion dollars of BW rev in Q4 of FY25 while production is also set to begin in Q4. In terms of improvements, they said just had to change BW mask production step.
CSPs in aggregate represented 45% of DC revs in line with last qs and down from Jan Q >50% while consumer internet was 50% of total revs.