The market is somewhat hard to predict. Earnings beating expectations doesn't always reflect to price appreciation but surely create fluctuations. Nvidia (NVDA, Financial) was said to fail to impress investors despite better-than-expected third quarter results by showing a drop of 3.21% in the premarket trading Thursday followed by another drop of 1.31% in the market opening.
Anyway, here's a recap of the latest developments in Nvidia:
Third quarter results
On Wednesday, Nov. 20, revenue came in at $35.08 billion, higher 94% year-on-year exceeding the expectation of $33.16 billion with earning at 81 cents per share above analyst expectation. But the sales growth in previous quarters are higher; 122%, 262%, and 265% respectively.
Blackwell GPU
It is the newest graphics chips that enable advanced artificial intelligence functions. Jensen Huang, the CEO of Nvidia, stated that the demand for the chip is exceeding supply.
However, the chips are reported to have overheating issue when connected to custom servers. Especially the GB200 superchip that requires high power consumption in thousands of watts with peak rating up to 2,700 watts. And the server rack that was designed to hold up to 72 chips can consume up to 120,000 watts leading to significant overheating issue.
So, Nvidia needs to redesign the racks over and over again and implement the liquid cooling solutions, causing delays in shipments to its clients like Google, Microsoft and Meta.
Partnership
Edom Technology partnered with Nvidia as an authorized distributor of Nvidia's Jetson Orin series and other components for edge AI applications serving clients from various industries, healthcare, manufacturing, retail logistics, smart cities and so on.
Alphabet Inc. (GOOG, Financial) also partnered with NVIDIA to accelerate the design of its next-generation quantum computing devices using NVIDIA's CUDA-Q platform.
Competitive Landscape
Nvidia under CEO Jensen Huang is not scared of the increasing competition. Startups like Grog and Cerebras are creating fast AI inference chips to train AI models to make decisions and prediction.
And Huang feels that's a healthy competition meaning that the industry is growing and attract more players. Right now, Nvidia's chips are the gold standard to train AI models and Huang is confident with Nvidia's position in the AI industry and not feeling intimidated by more players.
Small players might not shake Nvidia but perhaps from major player like Amazon and Microsoft as they began to enter the AI space. But Huang feels that Nvidia as a leader in AI and GPU technology is already several steps ahead Amazon and Microsoft.
Nvidia has strong position and technological advancement it plans to not slow down. Now they open to more collaborations and partnerships for market dominance.
Druckenmiller regrets his decision to sell his Nvidia stocks
Billionaire Stanley Druckenmiller (Trades, Portfolio), the president of wealth management firm Duquesne Family Office bought Nvidia shares in fourth-quarter 2022 and sold 22 different common stocks in this quarter including Nvidia.
"I've made so many mistakes in my investment career, one of them was I sold all my Nvidia (shares). ... I own none. ... It was a big mistake in terms of AI." He spoke.
Jensen said that build a company like Nvidia is insanely hard
Jensen Huang, the CEO of Nvidia, started Nvidia more than 30 years ago and he found that build a company like Nvidia is "a million times harder" than he expected.
“You can do all the right things and still end up fail” he proceeds. But he tricked his brain that he can do the challenges and keep motivated until now.
Nvidia team now consists of dedicated members with strong resilience and many of them been with the company since the inception. If he needs to restart a company like Nvidia again he refused as starting is challenging and exhausting.
Nvidia to comply with President-elect Donald Trump's trade policies
Nvidia relies on Taiwan's TSMC for chip production, and Trump's proposed worldwide tariffs and his defensive stance to China create concerns to Nvidia. However, Nvidia CEO Jensen Huang assured that Nvidia will fully comply with any regulations and adapt to changing policies.
China was once an important country as the sales in China made a significant portion to Nvidia's revenue. But it has decreased now thanks to Biden's export controls and now the Trump's potential new tariffs are anticipated to create deeper drop in China sales.
Now Nvidia is seeking more partnership especially from India which could account for significant revenue growth.
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