Nvidia’s new Blackwell era

Hey Superheroes,

It’s been two weeks since the U.S. election and while the “Trump Rally” has taken a breather, Bitcoin continues its seemingly unstoppable climb towards US$100,000. Unsurprisingly, we’ve seen increased trading momentum on Bitcoin-related stocks and ETFs.

The big retailers, Walmart and Target, both shared their earnings reports this week — but with very different moods. While Walmart is celebrating its record-high shares and strong earnings, Target might be shedding a tear over its 22% share drop on Wednesday.

Let’s jump into this week’s biggest headline.

Nvidia’s Blackwell chips to generate US$7B next quarter

Nvidia released Q3 earnings yesterday morning. Despite a slight dip in after-hours trading following the announcement, shares closed higher overnight. 

Let’s have a look at how it did last quarter.

🌎 World’s Most Valuable Company

Here’s how NVIDIA performed compared to what analysts expected:

• Revenue: US$35.08B vs. US$33.16B expected (↑5.79%)
• Earnings per share: US$0.81 actual vs. US$0.75 expected (↑8%)

Total revenues grew 94% year-on-year, with revenue from its data centers more than doubling over that time to hit a record US$30.8 billion. Net income surged to $19.3 billion, more than doubling from $9.24 billion in the same period last year. 

More importantly, Nvidia’s market value has skyrocketed by 203% this year – from US$48 at the start of this year to US$146 – officially earning the title of  the most valuable publicly traded company in the world. Once again, it’s taken the top spot from Apple and Microsoft.

📊 AI And Gaming

According to Nvidia, the robust sales are primarily driven by increasing demand for GPUs used in PCs, laptops and gaming consoles. Some of its customers include Microsoft, Amazon and Google.

With the age of AI in full stream, the bulk of Nvidia’s revenue now comes from its data centre division with AI processors and related parts used for language models and generative AI tools. Networking parts also added approximately 10% to total data centre revenues.

While Nvidia has pivoted from gaming to AI and data, Nvidia’s gaming business revenue still stood out, generating US$3.28 billion in revenue last quarter. This figure exceeded expectations by 8.25%, thanks in part to Nvidia’s role as the primary supplier of chips for Nintendo’s Switch.

🌄 The Rise Of Next Generation

Nvidia has begun rolling out its next-generation AI chip, Blackwell, to major customers including Microsoft, Oracle and Open AI. 

Blackwell, its new flagship chip, is now in “full production”, as stated Nvidia CEO Jensen Huang. 

According to Nvidia, the challenge isn’t demand but in whether production can keep up with the overwhelming market interest. As production ramps up, Blackwell’s sales are expected to surpass those of Hopper, Nvidia’s current-generation AI chip. 

The chip alone is projected to generate US$7 billion in revenue during this quarter, with Huang confident that Nvidia can deliver more units than initially estimated. That’s equivalent to about 20% of Q3’s total revenues.

👀 What’s next

Looking ahead to Q4, Nvidia’s anticipation of US$37.5 billion is still above US$37.09 billion forecasted by analysts.

Many analysts remain bullish on Nvidia’s share performance, citing its significant AI potential within the broader opportunities outlined by Blackwell.

🔦  Some other things we’re shining the Spotlight on:

• GAME IS OVER: The U.S. Department of Justice (DoJ) has filed proposals forcing Google to sell Chrome, following an August ruling by a federal judge declaring Google’s monopoly over search services illegal. Google has announced plans to appeal the decision.
• NOT GOOGLE AGAIN: As if the pressure from the U.S. DoJ wasn’t enough, OpenAI is now planning to develop a web browser featuring its chatbot. The company has partnered with Apple to integrate ‘Apple Intelligence’ with OpenAI and is in talk with Samsung, one of Google’s key partners. Could this move challenge Google’s search monopoly?
• MILKY WAY: A2 Milk Company Ltd (ASX:A2M) shares surged over 16% to A$5.60 on Friday, following news of a strong performance in the first half. More importantly, A2 Milk announced it will begin paying dividends for the first time.

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