00:09 Speaker a
It is currently a world dominated by AI, with Nvidia’s chips leading the way. However, most people still know the company about game chips. Today’s stocks and translations show how the money engines of the world’s largest companies by market capitalization change and why they are important to investors.
00:23 Speaker a
First of all, Nvidia’s data center quick visuals are basically AI and gaming business. First, let’s focus on the left covering the data center.
00:37 Speaker a
This is a warehouse of network servers that run apps and AI, and its products are AI chips and systems for the cloud.
00:46 Speaker a
Who is buying them? Amazon, Microsoft, Google, and other large tech companies. They are scooping them up so they can provide AI services to businesses and sometimes even to the public on a large scale.
01:00 Speaker a
On the right is the game. Think GeForce PC graphics and Nintendo console chips. And everyone, both retailers and online, from PC gamers to PC manufacturers, pays for these premium graphics chips.
01:14 Speaker a
The intensifying purchases are the big game releases and new releases of the game chip itself.
01:22 Speaker a
And let’s show how big each of these two markets is in fact as of Nvidia’s final quarter in late July.
01:28 Speaker a
This top bar shows Nvidia’s revenue or revenue, between $4.1-42 billion, in the data center business. And you will soon realize how small the bar below it is, only 4 billion. It’s the gaming business, just one tenth of the AI business, and not a subtle difference.
01:46 Speaker a
And how did you get here? AI native companies have been built around AI since day one, exponentially expanding their actual revenues. Listen to Jensen saying.
01:57 Jensen Fan
Last year, if you look at AI native companies, they all went $2 billion together. The first year of AI revenue. In the second year of AI revenue, $20 billion, a 10-fold increase in one year.
02:11 Speaker a
Next, let’s take a look at data center sales vs. games again. However, over time, it goes back to 2014. Keep an eye on how both lines are tracked against each other for years until the white data center suddenly rises high, and the game continues for years to almost sideways.
02:22 Speaker a
Incidentally, these two lines go from solid to dotted line to the right of the chart representing estimates for future sales.
02:30 Speaker a
What is clear is that the gap between the two segments is expected to increase only as data centers grow more rapidly, as the pace of growth is stable.
02:40 Speaker a
And, simply put, that’s probably the number one risk for this stock. If data center growth slows rather than maintain its current pace.
02:51 Speaker a
And this is the twist. AI is boosting Nvidia’s gaming segment, so listen to Jensen again.
02:57 Jensen Fan
And now, what’s surprising is that AI is back to revolutionize GeForce for the game. And I think the last quarter had a record quarter of the game between GeForce and the Nintendo Nintendo Switch.
03:13 Speaker a
Think of Nvidia as the AI infrastructure and the second game first. Also, the game is much better thanks to the feedback loop from the AI. For investors, that means that the biggest driver is still the data center engine, but the game benefits from the new GPU and the title also hits.
03:26 Speaker a
Now, here’s what we’ll see for investors. For data centers, industry-wide spending and backlogs for cloud AI should be monitored. This is in addition to shipping the AI ship UH chips as well as supply that seeks to meet that demand.
03:38 Speaker a
And be aware of the release of new hit games under the game.
03:45 Speaker a
If cloud budgets continue to grow and freight remains on schedule, there is room for data center stories to run. Also, if your rivals push prices on or supply is solid, look at those margins on Nvidia. Therefore, the game allows the franchise to easily give additional lifts with a strong holiday lineup or a new GPU cycle.
04:00 Speaker a
And the bottom line, Nvidia’s reputation was built on the game, but today’s story is an AI factory. The chart shows it, the order confirms it, and the roadmap expands it.
04:12 Speaker a
Tune into stock episodes and translation podcasts to bust more jargon. New episodes on Tuesday and Thursday at Yahoo Finance website or where you can find podcasts.
