Nvidia's Data Center Opportunity: Bernstein Analyst Stacy Rasgon on Earnings and China

Nvidia's Quarterly Performance and Outlook

• 💡 The recent quarter was described as a transition quarter, with China sales coming off and the GB300 starting to take over from the GB200.
• 🚀 Guidance implies a sharp acceleration in Nvidia's Blackwell sales in the next quarter, with Blackwell growth potentially reaching 25-30% sequentially.
• 📈 This Blackwell ramp is expected to drive the bulk of the company's sequential growth.
• ⚠️ While the absolute numbers were a bit messy due to China noise, there was nothing thesis-changing for investors.

The China Noise and Blackwell Sales

• 🚫 Current guidance and the quarter's results do not include any sales into China for either Hopper or Blackwell.
• 🇨🇳 The speaker suspects that current issues with selling Hopper into China stem more from the China side (potential government halt on purchases) than the US government.
• ❓ It remains to be seen what the US administration and China will say regarding Blackwell sales to China.
• 🎯 There is strong demand for Nvidia's parts in China, driven by a lack of local AI capacity, but permission to sell is uncertain.

Customer Concentration and AI Investment

• 📊 Nvidia has a highly concentrated customer base, relying on a few very large buyers.
• 💰 These large customers, primarily CSPs (Cloud Service Providers), have the balance sheets and free cash flow to afford massive compute investments.
• 💸 Their operating cash flow is in the hundreds of billions annually, supporting hundreds of billions in capex.
• 🧠 These companies are investing in AI with visibility for return and profitability, and for some, it's existential to continue investing to stay competitive.
• 📈 Capex budgets from these major buyers have continued to increase.