Potential Nine Straight Quarters Of Beat

With Nvidia reporting earnings after the bell on Wednesday August 27th, the market consensus forecasts $48 billion in revenue.  Nvidia's had an enviable track record of 8 consecutive quarters of beat and raise.  If Nvidia exceeds $48 billion in revenues, this would be up over 53% YoY.  The stock has been up almost 25% for 2025, and 1300% in the past 5 years.  With over a $4.4 trillion market cap, this represents almost 7.4% of the S&P.  The PE is 39.2 and market value is 30 times sales, making this the least held of the Mag 7 by institutional investors

Hyperscaler And AI Demand Continues To Grow

With six of the Mag7 still buying and making $80B to $100B annual commitments for AI, the AI data center expansion story still has legs. Given the build out and almost $15 trillion of foreign direct investment for tech in the US with as much as $5 trillion allocated for AI investments, demand remains off the charts. Add the fact that intelligence is doubling every seven months a.k.a. (Ray's Law), the demand continues to outstrip supply.

Ray’s Law

Chip Supply Chains Are Solid And Not At Risk

Channel checks on supply chains and TSMC's own reporting show that deliveries are expected to be on time.  GPU production appears to be booked for the year.  Supply chains have never been more resilient. As Blackwell availability increases and organizations install the chips, that foundational user base will provide a strong up-sell and upgrade base for decades to come.

China Headwinds Factored Into Price, Upside Potential With New China Chips

The recent deal with the administration bodes well for Nvidia and AMD, despite the bizarre arrangement.

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Tariff wars and export restrictions with China impact more than $30 billion a year in revenues for Nvidia.  Despite gaining H20 approval from the administration, the CCP continues to spread rumors about back doors and security issues with Nvidia to prevent adoption.  As Nvidia's suppliers are told to halt production, new chips such as the rumored B30 and others with a single die version of the latest release will most likely meet export requirements and meet China's needs.

Furthermore, China's strategy on AI appears to take a play from the Russian playbook of open sourcing IP or commoditizing the West's IP in order to take away their revenue streams.  In fact, lighter deep seek like models are not the threat to AI dominance. Open sourcing is the Napster moment the way Russia took out our Entertainment industry with pirated content.  

Future Demand For Nvidia Chips Remains Strong

The growth in Sovereign AI and a move to on-premises for AI workloads to optimize token economics bodes well for Nvidia chip sales. Physical AI (robots) and gaming are expect to pick up over time.

Constellation Research’s forecast for the AI market shows $1.67T by 2031.

Assume Global AI market was $275B in 2024 with a CAGR of 34.3%

Future Value (FV) = Present Value (PV) * (1 + CAGR)^Number of Years.
FV = 275 * (1 + 0.343)^6

The Bottom Line: The Founder CEO Model Still Works Well

When one considers Jensen's unpublished 10-year roadmap, almost every factor and technique to create moats has been accounted for.  From how Nvidia aggressively allocates chips to their investment in Horizon 2 and 3 ecosystems and startups, the moats are huge.  Inside sources share how allocation to hyperscalers includes a percentage clawback for Nvidia's own resell use. While execution ultimately will impact success or failure, each fundamental layer from data centers to CUDA to Omniverse play a role in the future of compute and Nvidia's leadership position.  The moat makes all the difference.

Jensen's success is a testament to the Founder/CEO model that has taken Silicon Valley to many blockbuster hits and unicorns. Not having short-term oriented shareholders cashing out helps in creating long term value and dominating new markets.  While China remains a threat to Nvidia with their goal of open sourcing US innovations, Nvidia's lead is durable should Chinese companies create a dependency on US technology. 

Silicon Valley may be weakened but the spirit of innovation and the founder CEO remains quite healthy in the Age of AI, especially in dynamic growth markets.

Your POV

Will there be a challenge to Nvidia? Can China's Open Source strategy take out US innovation? 

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