Nvidia Stock Valuation and AI Outlook with Bernstein Analyst Stacy Rasgon

Nvidia's Stock Performance and Outlook

• 💡 Despite a recent decline, Nvidia is at the beginning of what is expected to be its largest product cycle ever, driven by its Blackwell product.
• 📈 Investors who bought Nvidia at valuations of 25 times earnings or below historically saw average one-year returns of 150%.
• 🎯 The current valuation, around 25 times earnings, is considered a trough valuation and a historically good buying opportunity.

GTC Conference Expectations

• 🚀 Next week's GTC event is anticipated to provide updates on the Blackwell product cycle.
• 🔍 There may be previews of future generations like Rubin and discussions on related technologies such as "copac Optics," Quantum, and ARM PCs.
• 🤖 Topics like Robotics and physical AI, previously discussed at CES, are also expected to be covered.

Impact of AI and 'Deep Seek'

• 🧠 The emergence of more cost-effective AI models, like those potentially driven by 'Deep Seek', is seen as a positive catalyst for adoption by software companies.
• 📈 Contrary to market fears, 'Deep Seek' has led to increased demand for compute, with H100 inventory decreasing and rental prices rising.
• 💰 Sales of Nvidia's China-legal parts into China have also seen increased demand due to the need for more compute power.

Hyperscaler Spending and Economic Uncertainty

• 📊 Hyperscalers are making long-term, existential investments in AI, which has led to a shift in spending away from traditional server CPUs.
• ⚠️ While no hardware spending is entirely recession-proof, AI investments are considered less likely to be deprioritized compared to other areas.
• 📉 Broader market multiples have compressed due to economic uncertainty and tariffs, impacting stock valuations more than earnings.