Closing Bell - Closing Bell Overtime: Nvidia Earnings Bonanza 5/22/24

Episode Date: May 22, 2024

Nvidia reports Q1 earnings – and extends its recent impressive run. We have you covered from every angle, including analysts, shareholders and contrarian plays. Plus, earnings from Snowflake, ELF, and Synopsys. 

Well, stocks losing some ground on Fed uncertainty, but attention now turns to the big event coming in 20 minutes. That is the scorecard on Wall Street, but the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. And you know what the moment is. I mean, it's NVIDIA results. Wall Street's been waiting for it, and those results are just minutes away. Could set the tone for the entire market. That's how big this potentially is. We're going to bring you those numbers and analysis as soon as they cross. And we have an all-star lineup of shareholders, analysts, and industry insiders ready to break down these results from every angle.

Three of those all-stars join us now. Long-time NVIDIA shareholder Barbara Duran of BD8 Capital Partners. Stephanie Link of Hightower Advisors and CNBC contributor. She follows the space closely. And Patrick Moorhead of More Insights and Strategy, CEO, who covers NVIDIA and other names in the chips sector. It's so great to have all of you as we do wait to get these results from one of the biggest of the mega cap tech names. Barbara, I'll start with you. The fact that we did see a record intraday high for

the Nasdaq, but we faded those gains. We drifted lower here into the close. It does seem like there's really been three big pillars to this market. It has been the reads we've been getting from retailers on the consumer. It's been the macro, particularly with all the Fed speak. And then it's been the AI growth story and whether that demand continues to be as robust as we do await these NVIDIA results. Your thoughts? Yeah, I think that's right, Morgan. And it's been the growth story and whether that demand continues to be as robust as we do await these NVIDIA results. Your thoughts. Yeah, I think that's right. You know, Morgan, and what's happening today is we're really having a bit of a stutter step because investors are very nervous about the NVIDIA earnings. If you look at last year's S&P earnings, NVIDIA was nearly a third, in fact, actually more than a third of the earnings.

And this year, in terms of price action for the Nasdaq 100 and the S&P 500, it's somewhere over 40 percent in its contribution. The stock's up over 90 percent year to date. So it's really a referendum on AI. And of course, we know the excitement around that and how big the potential market is. But people are worried any kind of a slowdown, any kind of a misstep because it will impact other companies. So I think people, you know, a lot of people are coming out with very positive notes on this, but it's a question of, one, you know, are they going to miss, you know, or not be as exciting, you know, as people hope for? And, you know, we will see about that. Yeah, I mean, the bar is extremely high, Steph, and we've been talking

about it for days now, but an overtime regular, Adam Crisafulli, probably sums it up the best when he said today in his note, investors are treating this NVIDIA earnings as if it were an FOMC decision, CPI, PCE, and non-farm payrolls all wrapped into one super catalyst. Do you see it the same way? It's pretty big. I mean, it's 5% of the S&P 500. It's very widely owned, obviously very popular. I think it's going to be great S&P 500. It's very widely owned, obviously very popular. I think it's going to be great. I really do. And whether it can rally on great, just given the high expectations, as Barbara just talked about, we don't know. But I think if it is weak, I think it gets bought.

I mean, the hyperscalers told you all we wanted to know, that the big four hyperscalers are going to spend $177 billion this year alone on CapEx for cloud and Gen AI. Globally, we're going to see $225 billion being spent on CapEx. So that's a huge tailwind for not only NVIDIA, but obviously for the space in general. There are going to be many winners, and there have been many winners. I like what Supermicro had to say and their results. That's a nice tell for the results for NVIDIA. And they had growth of 580% year over year and about 10% sequentially.

So I think that kind of bodes well. We had some Taiwan export numbers that came out that actually also very highly correlates to strong data center. So the number is on data center, 20.6 billion. I've seen numbers as high as 22 billion. That's the number we're all focused on. Pat Moorhead, I don't think we've seen a moment like this, a stock like this, I should say, like NVIDIA in tech, since Apple's run post 3G when mobility just became the word throughout the world of tech like a decade or so ago.

At a certain point, every stock goes through a digestion period, even though things are still going great. Sometimes management decides to let things cool a little bit in their language, if nothing else. What are the chances that that moment is coming for NVIDIA? Yeah, so I don't think that moment is coming anytime soon, John. Demand is off the rails. We're seeing it, as you heard, with the hyperscalers. And that demand is increasing at the hyperscalers. And now we're seeing it extended to the traditional OEMs like we saw with Dell Technologies World this week, where enterprises are engaging, where 75% of the data is on-premises and on the edge. John, I don't see this slowing down for at least a year.

Stephanie Link, I got to go back to you because I think I heard that you don't own NVIDIA, which to me at this point is more of a choice than owning it. Right. Because like most people, if they've got an index fund with the S&P 500 sort of own a big portion of NVIDIA. Why don't you own it? And as expensive, arguably, as it is now, you know, Apple was arguably expensive 10 years ago. What would it take to get you to buy it now? Well, John, obviously I missed it, but I have played this theme in other names, in Broadcom and in Lamb Research. And in the last year, Broadcom's up 100 percent and Lamb Research is up 80 percent. So it's not like I've missed out on the theme. I prefer to try to find companies that may be a little less popular,

although I would argue that Broadcom has gotten much more popular over the last year, for good reason, by the way. I think the valuation for Broadcom is cheaper. I like the fact that they have a diversified total revenue mix with data center and cloud, but also networking, traditional semi, which is troughing at this point. I like the VMware acquisition, which gives them recurring revenue and higher margins. They have best in class gross margins that are only getting better, in my opinion, and free cash flow of 12 billion. So I think there's plenty of room left in the tank for that

one. And then on lamb research, we haven't even begun to see NAND wafer fab equipment spend recover. We're at a trough there. And I think in the second half of this year, you are going to see an improvement. And you need six times the memory for AI. And I think that's underappreciated. So those are the ways I'm playing it. Not saying anything wrong with NVIDIA.

I think it's going to be great. I just mentioned it. Whether it can hold its rally, we'll see. But I do think it gets bought. I'm not one of them. I'll probably add to these other two over time as well. Okay. Well, speaking of earnings, we're starting to get some other results. We've got VF Core, Snowflake, and Synopsys out. We're going through those results. In the meantime, Julia Borsten has the numbers for Elf Beauty. Julia. That's right. Elf Beauty beating expectations in the top and bottom lines with adjusted earnings

of 53 cents per share that's higher than the 32 cents estimated revenues of 321 million surpassing expectations of 292.6 million and net sales did grow 71 percent year over year which the company says was driven by strength across retailer and e-commerce channels. But take a look at that stock now trading down 11% in after-hours trading, and that is on weak guidance. The company guiding to fiscal 2025 full-year revenues in a range of $1.23 to $1.25 billion. That is below the consensus of $1.27 billion. And the adjusted earnings outlook also falling short of expectations.

The company giving a range of between $3.20 and $3.25, a share well below consensus guidance, consensus expectations rather, of $3.51. Shares now down about 12% in after hours trading. John? All right, Julia, thank you. Meanwhile, heading in the other direction, Snowflake, those earnings are up and the stock is higher. Seema Modi has those numbers. Seema. Hey, John. And while Snowflake did report a 4 cent miss on its bottom line, it did produce better than expected revenue growth of 33 percent year over year at $829 million, which did come ahead of Wall Street consensus. The company also outlines that it's

seeing more C-suite demand, 709 Forbes Global 2000 customers versus the 691 it saw in the fourth quarter. The new CEO, Shridhar Ramaswamy, who investors are looking forward to hearing from on the earnings call, really touting the company's push into artificial intelligence, saying our core business, very strong. Our AI products now generally available are generating strong customer interest. They will help our customers deliver effective and efficient AI powered experiences faster than ever. This is the cloud data management company that brought its expectations down for 2025, which sent the stock down about 30 percent over the past three months, now getting a bit of relief here in overtime.

John and Morgan. All right. Yeah, I mean, as you mentioned before, expectations had been brought lower on the stock, and we see it responding in overtime. Don't miss Jim Cramer's exclusive interview with Snowflake's CEO. That's coming up at 6 on Mad Money. And now, Barb, Steph, Patrick, you know, stick around.

We're going to see you in a moment when those NVIDIA numbers come out. And let's talk to you, continue at this point. Barb, we're still looking ahead to NVIDIA, but you got to pause and look at Snowflake, because this is a data management database company that's operating in this same data surge preparation for AI. When you see that company that had tamped down expectations popping after hours, does that add to the sense that there's a continued pipeline of demand for this technology? Well, I want to see why they did have a nice speed on the revenue side. And I might point out, though, that they had really, once again, management did a good job

lowering expectations. There were something like two dozen cuts in EPS and revenue going into this. And I know they really just rolled out one of their first AI products in April. The CEO's been there just over a year. So it'd be interesting to see if that revenue is because of AI. And if it is, that is very promising because they've been behind their competitors, you know, MongoDB and Datadog. So this is very promising. And if this is the case and AI, the stock has a lot further to run. All right. Hold on. We got more earnings. Synopsys is out. Christina Partsenevelis, how does it look? Well, for the actual quarter, it was a miss on EPS and revenue. So EPS came in at three dollars a share, less than the street anticipated on revenues of $1.46 billion, also a little bit less. For Q3 guidance, EPS was

a beat, 3.25 to 3.30, so slightly a little bit higher than midpoint. But it was the Q3 revenue guidance. The midpoint was $1.57 billion, and that fell short of estimates. And yes, I can point to the full year guidance being strong, but you have to keep in mind that this company still has two more quarters to go. It's an electronic design automation firm, often compared to Cadence as well as Arm, and they already upped their guidance for the quarter back in March at their analyst day. So that's something to keep in mind with this report contributing to the 4% sell-off right now. All right. Christina, thank you. Right now, let's get deeper into Snowflake

as we get prepared for NVIDIA to come out. Snowflake just reported moments ago, you can see it is 8% higher at the moment in overtime. Michael Turin of Wells Fargo joins us for that. Michael, this report can be challenging to read for overall expectations because they really do focus on product revenue. How does the guide in particular look to you here? Guide looks encouraging. So investors were looking to see if Snowflake had finally set a conservative enough bar, particularly given the new CEO taking over. As of last quarter,

the beat was $40 million on the quarter. That's the biggest beat we've ever seen from Snowflake. The guy goes up by a little bit more than that, $50 million. So having set a low baseline seems to be the initial reaction here. So in light of that, you got a new CEO in place. You have the bar being lowered, arguably lowered perhaps more than you otherwise would have seen because you do have somebody coming in that's you have the bar being lowered, arguably lowered perhaps more than you otherwise would have seen because you do have somebody coming in that's new at the helm. How does this position Snowflake with this new AI era and these products that they're beginning to unveil? We think there's a really good glide path for Snowflake. Last year was a difficult year for

many software companies because it was the year of cost optimization and ratcheting downspend. We think areas like data management saw some headwinds there, but you talked about the hyperscalers are starting to come out of those. We think companies like Snowflake stand to follow after that sequence. Now there's a catalyst with AI to get data preparedness in order, and we think Snowflake is very well positioned to take advantage of that with new AI-focused products set to come to market that can keep the positive trend line moving. Michael, how much should investors expect a tone shift, given that now in Sridhar Ramaswamy, who came over from Neva, used to be at Google, very much in the guts of this developer mindset that's key to AI right now. Should we start to hear Snowflake sound less like just an execution machine, not to minimize it,

because Frank Slootman certainly was an execution machine, but also to lean more into the inspiration of what could be created based on the technology that they're coming up with now. Yeah, you're onto something there, John. I agree. The foundation has been put in place from a go-to-market perspective. Frank is great at that. And now it's a much more deeply technologically focused conversation, particularly because of how much interest there is in generative AI. So I expect them to spend a lot more time on the product. There's a very good event coming up after this, the first week of June, which is Snowflake's customer conference,

which will be multiple days of product announcements and an investor session. So this print helps set a foundation for a positive narrative around the product story to form, and Sridhar is going to be instrumental in framing that. When we talk about the stabilization of consumption trends, is this a Snowflake specific story or is this a rising tide that lifts all boats? Or are we sort of at an inflection point after what we've seen with belt tightening and things that aren't necessarily directly AI related in IT up until now? Yeah, it's a rising tide that's going to lift several boats, certainly not all, because it's still a more focused spend environment.

But I think there's a return to modernization, a return to digital transformation that we're starting to pick up on that is quite encouraging. And so, you know, that's what's leading Azure and AWS and some of the hyperscalers growth profiles to pick back up companies like snowflake are very well suited you'll see other consumption names and we've heard other consumption names speak to how encouraging it is to talk to customers about modernization where the technology can get you not just how you can help save on the bottom line

um and and maybe cut costs on employees. Okay. Shares of Snowflake up 7.5% right now. Michael Turin, thanks for joining us. Thanks for having me on. Much appreciated. Don't go anywhere. The main event is just moments away. NVIDIA is due out with results at 4.20 p.m. Eastern, so less than five minutes.

We're going to bring you those numbers. Instant analysis from our panel of experts right after this break. Welcome back to Overtime. We are just minutes away from NVIDIA's results, but first, more news crossing in the chip space. We've got global boundaries moving lower after announcing a secondary offering of $950 million of ordinary shares, all of which will be sold by a current shareholder rather than by the company itself. Nonetheless, those shares are down 5%. Global Foundries says it will not receive any proceeds from the sale. And news on OpenAI as well. Just signing a

multi-year partnership with News Corp to bring its content to OpenAI, including from The Wall Street Journal, Barron's Market Watch, and The New York Post. You can see those shares are up 4%. We're seeing more and more of these types of deals with media, new revenue source. And NVIDIA could drop any moment. So we are on pins and needles now. Let's bring back our panel, Barbara Duran of VD8 Capital Partners, Stephanie Link of Hightower Advisors and CNBC contributor. And Patrick Moorhead of More Insights and Strategy also joining us, the CNBC Senior Markets Commentator, Mike Santoli. Mike, as we are perhaps seconds away, no guarantee, they don't promise to put it out right at 420 on the second. But if they do, we're really close.

How much is the market potentially hinging on these results, especially given what you were just telling us yesterday about how much risk appetite has expanded up to this point and how much of that NVIDIA represents? Yeah, the market is definitely positioned mostly, I think, for positive outcomes at the moment. What NVIDIA most matters for to me is the forward-looking durability of this massive investment boom. Now, whether it's good enough to get the stock to trade immediately up or down, who knows? But I do think that's what it's all about. How many more quarters can we count on this boom coming from the huge tech companies into NVIDIA?

So, Barb, I want to go back to the fact that we have seen this broadening out in the rally, because up until recently, so much of the earnings that we saw in the S&P, the earnings growth was NVIDIA related. That's starting to be less of the case, but it's still incredibly outsized. As we know, it's been outsized in terms of the gains for the broader market as well for the S&P and for the Nasdaq. So how much, as you see the rally broaden, how much does this result and the move we see in the stock still matter to the S&P? And I will note that NVIDIA is actually out. We're going through those numbers right now. OK, you want me to answer or just wait for the video? Oh, answer, answer. We're looking, but you got to answer. No, I think, you know, in terms of the economy and it is economy and earnings that drive the

stock market, it's not going to be significant. I think in the short run, because mega caps and Nvidia have led this market pretty much up until recently when it is broadening out, it'll have a big impact, but I think it'll be short lived. And I think whatever it is, it's going to be probably about duration and durability of their earnings growth. And that's really a NVIDIA-related and hardware-related thing and how quickly it spreads out to other. So even if there's a dislocation after we go through these numbers, I think it will likely be short-lived as people digest whatever it is that we're digesting right now. Well, yeah, I mean, we're going to get those details from Christina Parts and Evelis momentarily.

But shares are shooting higher in the meantime. Christina, how does it look? Bottom line, $6.12, which is a beat for Q1 on revenues of $26.04 billion. So stronger than the estimate, also matching the boogie number, the whisper number at $26 billion. And I'd like to point out so far with data center revenue, also a beat, $22.6 billion, higher than what the street was anticipating. And I'm going through the report, but one line stands out. The next industrial revolution has become, and they're going on about talking about the data center growth, fueled by strong and accelerating demand for Gen AI, as we know.

So we'll get back to you on all the numbers, but top and bottom line beat so far. All right. So Patrick Moorhead, I want to go back to you on this. We got a top. Go ahead. And a 10 for 1 stock split that I just read right now. Also announcing a 10 for 1 forward stock split of common stock to make ownership more accessible to employees and investors. The split will be effective through an amendment to NVIDIA's restated surfeits. Let's see, scan through. June 6th. So as of the close on Thursday, June 6th, they'll get nine additional shares of common stock. So again, 10 for 1 Ford stock split at the close on June 6th. All right, Christina Parts Nevelis, thanks for bringing us those initial headlines. Patrick, I'm going to go back to you. Data center beat $22. All right, Christina Parts Nevelis, thanks for bringing us those initial headlines. Patrick,

I'm going to go back to you. Data center beat $22.6 billion, higher than expectations. Revenue overall higher than expectations, or at least it seems like meeting the whisper number. I mean, we went into this report expecting a third consecutive quarter of 200% plus revenue growth, expecting 243% plus revenue growth. We've just topped that. How does it speak to what you were saying to us earlier about where we are in this cycle? Yeah, so it aligns perfectly with what I said,

which is the demand is off the rails in the hyperscalers and they just want more, more and more. And that's shifted to their new platform, upcoming platform, Blackwell, which isn't shipping yet, but will ship. And that demand is now going to the data centers that aren't necessarily connected to the hyperscalers like Lenovo, Dell, NHPE, and Cisco. And so this increased insatiable demand to work on generative AI models continues, and I believe it will continue at least for the next year. Okay. Our Christina Partinella is doing a great job scrambling on that news as it was crossing.

Barbara, and I want to go to you now. NVIDIA is close to being a thousand dollar a share stock right now after market. Shareholders of record as of Thursday, June 6th, are going to get nine additional shares of common stock. We'll actually see the split adjusted price reflected Monday, June 10th. How does this make you feel about being a long termterm holder of this stock and given the the accessibility that um stock splits normally give to shareholders does that factor in at all or given that you know robin hood and sofi and like all of these fractional shares are common right now does it not matter as much as it used to well actually i think it does still matter it shouldn't you know arithmetically but it does

i mean it does open up to a lot of retail investors who, you know, if they could afford a couple, two shares, it doesn't seem worth it. So I think that that is delightful news that they're on top of the good fundamental news. And also what I think you're seeing in the aftermarket right here, there's a lot of momentum traders. There's a lot of trading going on. And I think tomorrow when the market opens, you're going to see a lot of retail traders, you know, leaping aboard a 10 for one stock split like you had with Chipotle. They announced what it was a 50 to one, you know, and in that stock just, you know, kept moving ahead, even though it's expensive. You know, after their earnings, they announced the stock split. It was very positive for the name. So I think this will be, too. OK, I want to bring Mike Santoli into this conversation. I mean, we're starting to see some of the other A.I. plays trade higher in sympathy right now as I go through.

Even Intel's up fractionally. AMD Supermicro is trading higher, Mike. But but just to go back to the stock split, what does this do to make NVIDIA now a contender for the Dow? You know, it obviously would put it in the zone if the Dow committee were so inclined to try and add another company of this size. It's pretty conspicuous how big it is and not being part of the Dow. I don't know that that's necessarily something either that's the motivation of NVIDIA or that they're necessarily seeing getting itchy to do. They just recently added Amazon. I'm sure they feel as if they're participating enough in that. To me, it's more just a soft gesture of management confidence on some level. And then you take

them for their word that for employees, it actually does matter. If you're compensated to a large degree in shares, it matters if you can just peel off small bits of it and sell some into the market. Walmart did something similar on that basis, too. So to me, it's more of a little enhancement to the overall story. The fact that the stock is only up 4 percent, I also would, strangely enough, take as a positive because it shows a certain level of maturity and predictability. The forward guidance looks OK. Now, who knows? They could say wonderful things or scary things on the call and gets the stock moving a different direction. But I think that's a pretty good thing to hold the recent gains up 4 percent. And what really has happened to the market based on this huge boom that's being funneled through NVIDIA largely

is that all the companies buying from NVIDIA. Right. So it's Microsoft. It's Amazon. It's Meta. It's Alphabet. They would otherwise have been retaining those earnings mostly. So it was kind of inert cash for the investor in the S&P 500. And now it's getting funneled through NVIDIA in the form of profits. And it's helping out kind of lubricate the system in that way and obviously add to aggregate reported profitability. So, you know, the system's working for the moment. I hear you on the 4 percent. But last quarter, NVIDIA did move a lot in the back half of the four o'clock eastern hour and then during the call as well so we'll see about that let's get back to our christina

parts and neveless for more on nvidia's guide christina yeah so for q2 revenue guidance is coming in at 28 billion dollars so again if we talk about this buy side boogie whisper number uh that was a spot on what the street was anticipating at $28 billion. I'd like to point out if we're going to go for categories. So we talked about data center revenue coming in at 22.6 stronger. Gaming was 2.6, so relatively in line. ProViz, that category was actually a little bit lower at $427 million, so lower than the street. Robotics and auto, surprisingly, a little bit higher, $329 million. So some strength there. And then, you know, gross margins, the company has talked about it peaking this particular quarter. They're

guiding for gross margins to be between 74.8 and 75.5, kind of alluding to what the CFO and CEO have said in the past, that it will eventually hit mid-70s. So again, pretty much hitting on the park, on the dot, on all of their promises thus far. But we'll see what they say in regards to momentum going forward in the Blackwell chip. Thank you, Christina Partinello. Stephanie Link, I am not picking on you for not owning NVIDIA. No, you have not missed the AI trade. But a lot of investors are going to be thinking about, OK, at 100 roughly bucks a share, maybe a little less

pretty soon next week. Well, no, a couple of weeks from now, should I buy this at this point? So what's your calculus? At what point, despite how expensive NVIDIA might seem, do you go, all right, well, I believe in this AI trade. So, yeah, even though it looks a little expensive, I'm going to own it. Well, I happen to own Snowflake, and that's an AI play as well. And that's up a lot more because the expectations were a lot less. NVIDIA, it's interesting that it is only up about 4%, but we'll have to hear about the call. All the things that were said, all of these things are very, very positive. But expectations were for that they were going to beat by a billion to $2 billion on revenues

and that they would guide to beat by a billion to two billion dollars on revenues and that they would guide about a billion higher. All that kind of came to fruition, which is good, but it was kind of the whisper and kind of expected. The biggest piece, obviously, data center. That's a lovely number, a twenty two point six billion. That's four hundred and seventy twenty seven percent year over year growth. That's incredible. I definitely think that that's why people are in it. We don't necessarily care about the other segments. And I think spins and splits work in general. And so that's why I think the stock certainly could be interesting to some.

I have plenty of other AI exposure, John, and I like them better. And we talked about the other two. And then Snowflake, to be honest with you, that one was better than expected. Yeah. other AI exposure, John, and I like them better. And we talked about the other two and then Snowflake. I'm not trying to sell it to you. I was just wondering. That one was better than expected. Yeah. Well, it's all about, well, look, it's all about diversification and it's all about trying to play the same themes just with different names that are maybe less popular. And that's all, nothing wrong with NVIDIA at all. And congratulations to those that own it.

I just think that there are other ways you can win as well. Yeah. And I keep sticking with that theme, Patrick. I mean, as we mentioned, there are a number of other A.I. plays that are trading higher in sympathy right now. That being said, NVIDIA, two and a half percent move higher. So so we're we're we're faded the gains from the initial pop here. How much do gross margins and the guidance we got there, how much does that matter? I mean, profitability here is, on the gross margin side, is exceptional. And I think what it shows is that even though NVIDIA was talking about potentially lowering prices on some of their future chips,

they've been able to hold pricing power here. And it also shows that whether it's competition from AMD or Intel or even some of the pressure that they're getting from the hyperscaler developing their own ships is not necessarily coming into play and hurting gross margins. So it's a very positive sign. Now, we haven't seen the Blackwell effect yet. And if we're going to see gross margins change, it would be when it starts shipping later on this year. OK, well, thank you to our panel, Barbara Duran, Stephanie Link, Patrick Moorhead and our own Mike Santoli, who we will see a little bit later in the hour. Let's get another take on NVIDIA's results. Angelo Zeno of CFRA Research joins us now. Angelo, I want to get your initial thoughts. As we do see the stock trade higher, we did see them beat on the top and bottom lines and come in much stronger on some of those key metrics like data center. Obviously, we just talked about the gross margin and other metrics for the guide as well.

Yeah, no, thanks for having me. So as far as the results are concerned, I mean, I think that it's probably as good as you wanted it to be. I mean, you didn't want the numbers to be too hot, but you wanted them to be better than expected. And that's exactly what you kind of got this quarter. So we're perfectly happy with that. I mean, they did announce a number of other things like an increase in the dividend as well as, you know the stock split and what have you but as far as kind of the fundamentals are concerned um and and the results for the the april quarter and july quarter guide um data center numbers continue to drive this business and um that continues to look promising so um all in all i'd say um you know we're pretty happy with that number i say as far as gross margins are concerned, yes, they outperformed during the quarter.

But when you kind of look at the guide relatively in line to expectations and when we kind of look at the back half of the calendar year here, we do expect it to kind of be more modest in nature. So call it, you know, mid 70s range. So as far as again, that guide was concerned, relatively in line with expectations. Angelo, as the AI story kind of matures, we've been talking for several quarters now about how some people are saying, well, more of this compute is moving to the edge. It's moving away from the data center. We're seeing Qualcomm talking about that. We were just seeing Microsoft talk about that with Qualcomm and about others with the Copilot

Plus announcement. There's also rumblings that NVIDIA is going to participate even more at the edge, perhaps on the CPU side with chips later. How do you see NVIDIA positioned as the AI story broadens out to laptops and such devices? Yeah, no, I think that's a great question. So when we think about NVIDIA, I think what's great about the story is they've got so many levers to this story long term. And we kind of look at over the next kind of three to five years and even over the next decade. To your point, you know, kind of on device edge computing is going to be a huge part of the story, not only for the problems of the world, which are clearly seeing kind of a nice inflection now, but also the NVIDIAs of the world. I mean, I think you kind of look at their auto business, still small in nature. We think that's going to be a multi-billion dollar business here over the next couple of years. And, you know, you also alluded to laptops. I think when you start thinking about kind of the entire industrial revolution that kind of NVIDIA alluded to,

I mean, these GPUs are going to be in all these type of devices out there. So that's a critical part of this story for NVIDIA longer term in nature. I'd say as you kind of think about also the data center business here, I don't know. Yes, it's maturing in terms of kind of the run rate in terms of the revenue year of year revenue rates have to kind of start, you know, start to decelerate. But that said, I mean, we do think there's this kind of AI war in the clouds going on. And we do continue to see upside potential to where some of the capital intensity rates are for a number of these kind of mega tech companies, specifically on the cloud and the digital ad side of things. And don't forget the whole sovereign AI story, which it'll be interesting to kind of see, you know, how if, you know,

Jensen Wang kind of talks about that, you know, on this poll, because that provides further kind of validation to the long-term story of this company. Yeah. And that's exactly where I was going with you, Angelo, because I remember last quarter, I mean, well, we'll call it a couple of quarters ago, you've had the Commerce Department. I just spoke to, you know, Secretary Raimondo earlier today on CNBC. I asked her about export controls, which we know have affected NVIDIA and many and other semi names as well. Whether she felt like they have gone far enough. She said they're continuously assessing that it had been a large piece of revenue. China had been for NVIDIA. They've been de-risking that.

The fact that it's not front and center as a metric in this earnings report tells us what? Yeah, I mean, I think you kind of hit it when you said that they've kind of been de-risking, you know, that part of the business here. I mean, it'll be interesting to kind of see what they have to say about China. Listen, China's the second biggest market out there. So you do want that to be an open market here for NVIDIA longer term. I think it improves kind of the long-term trajectory for this company if they can participate even more than they currently are within the China market. But I think you kind of hit the nail on the head when you kind of said, hey, listen, they've derisked

from this story. It's not 20% to 25% of their data center business. It's closer to a single digit pace. But that said, now we now see it as more of a potential opportunity if they are allowed to continue to open up that market there. But maybe to your point, you know, at this point in time, it's one of those things where it's not kind of a central kind of thesis to our story. But the hope is potentially it could kind of come back a little bit. All right. Angelo Zeno, thank you. NVIDIA stock up a bit more than 2% at the moment in overtime. But hey, the hour and the evening are young. Coming up, Mike Santoli is going to look at the mega cap horse race between NVIDIA and two other tech giants in light of today's results.

And after the break, we will check in on the other names making notable moves right here in overtime. Stay with us. Welcome back. NVIDIA is not the only name moving in overtime, so let's get you up to speed. Snowflake is higher after beating on revenue. Their earnings came in about 4 cents light at 14 cents per share. Nonetheless, you can see those shares are up about 5 percent right now. Product revenue is up 34 percent year over year. Synopsis missing on both lines. Third quarter revenue guidance was soft as well. Those shares are under pressure right now. VF Corp also missing on both lines. Revenue at its the North Face brand fell 5 percent. Revenue at the Vans brand fell 26 percent. And those shares are down 8 percent

right now. Elf getting hit on a soft full year outlook though it did beat for the quarter perhaps raising more questions john to next week when we get ulta knowing how strong beauty retailers have been in this environment at least until now ah so many questions and so many numbers to answer them that's what i love about overtime well up next what nvidia's speaking of, could mean for other AI-related stocks as we count down to that conference call at the top of the hour. Be right back. Welcome back to overtime. Well, the stock of the hour, NVIDIA is rising up about 3.5% after beating on the top and bottom lines. Joining us now is 314 Research co-founder and chief data scientist, Fernando Vidal.

Fernando, got to play for you. Speaking to Jensen Huang just a couple weeks ago about how NVIDIA is helping to seed the next phases of the AI revolution. Here's what he said. Pre-training these AI models, developing new revolutionary models for coding and otherwise, and then lastly, taking these AIs, packaging them into microservices that can run in every cloud, on-prem, anywhere. We've been working together to basically reinvent every single layer of enterprise computing. And so this is where it's starting first. All right, Fernando, last August, you felt like NVIDIA was overvalued. Now, I mean, the price is at least higher. For now, soon it's going to be splitting. How do you feel?

Yeah, you know, it's funny in that clip, you know, Jensen's talking about training, and that is basically what the story is about. Inference, on the other hand, which I think is a much more important argue with the stellar quarter, implies something about the amount of capacity that's out there. in three years, there'll be enough NVIDIA hardware out on the market based on what analysts forecast for their revenue are to allow everybody to use the latest chat GPT language model for four hours a day, everybody on earth. So inference is something that is less compute intensive than training. And if it's the case that AI, like we're still in the early stages of how good these models can be, then you can be an invidiable because the GPUs we have today are going to look like nothing compared to the GPUs we're going to need in two years. But what I've seen and something to keep in mind is that the progress in AI has been a little bit more incremental over the last 12 months, especially when chat GPT came out. Four months later, we had GPT-4, and it was like an order of magnitude better. But things have been more incremental.

But what about the software argument on NVIDIA, which in part says, hey, CUDA support, they're going to be able to get revenue off of everybody who wants to build on top of the chips that they've already bought, much less the ones that they continue to buy. So there are potential new revenue streams. We were just talking about streams at the edge with CPU replacement chips potentially coming. Does that affect the outlook for you? You know, it's an interesting argument to make. I think that the software advantage that they had early on, which is really powering the reason why they're at, you know, they just reported a huge gross margin and they've been reporting crazy margins on their H100 GPU. And CUDA and software and the fact that they have their supply chain

set up to meet this crazy surge in CapEx spending is the reason they're succeeding today. But over the last 12 months or so, there has been a lot of progress in new frameworks for training AI models. There is competition. And I'm sitting and saying all this because no one can deny that today, NVIDIA is the hardware you want to train and run AI models. But there's been an incremental progress in leveling the playing field from the hyperscalers working on their own chips, from even little startups designing their own silicon and designing a lot of open source solutions

to be able to interface with NVIDIA and other chip manufacturers. So those are the things that every time we get one of these earnings numbers, people are looking for the signs that expectations are not going to keep up the momentum that they have. So far, they have, but that's in the back of everybody's mind on days like today. All right. So you sound very skeptical about this mode that NVIDIA has around itself and continues to aggressively build out now with inferencing and those layers of software. Do you like competitors better then, especially when we start talking about

valuations and what's going to come into the market in the second half of this year and beyond? Well, you know, people talk about AMD being more expensive or, you know, other competitors being more expensive on a PE basis. And that's, you know, just because of NVIDIA's crazy forecasted revenue growth. On the other hand, NVIDIA's margins are head and shoulders above all those competitors. And that's kind of baked into that argument. Honestly, I think NVIDIA is, you know, their success is great, but I've always been more excited about the customers of NVIDIA and their growth potential. The rest of the Mag7, I think, have a very valid argument for AI being a huge lift to their revenues over time. And they have a lot less of a cyclical bent the way NVIDIA does.

And this is a company that is no stranger to, you know, 70% drawdowns when expectations get a little too far ahead of themselves. So I'd rather play in the AI product side with these companies that already have a stable of products that they can improve and upsell. All right. Fernando Vidal of 314 Research. It's great to have you on. Thanks for joining us. And certainly speaking of MAG7, this was sort of the last of the MAG7, really the final hurdle to a mega tech earnings victory lap, which arguably you can say with the results

we got today can now be had. Yeah, strong lap for sure. All right. Well, up next, Mike Santoli looks at where the race for third place in market value stands following NVIDIA's earnings as we do count down to the company's analyst call. Welcome back to Overtime. We've got breaking news on DuPont. Seema Modi has it. Seema. John, DuPont plans to split into three publicly traded companies, which would include proposed separations of its electronics and water businesses. It does follow a restructuring just a couple years ago of the company,

as well as liabilities related to PFAS toxic chemicals. The CFO is now becoming the CEO. So some big changes at this company. And Morgan, it does follow a similar move by GE just a year ago to split into three. You had 3M spinning off its safety business. So clearly a trend we're seeing in the industrial space. Stock up 4.8 percent. I mean, it's amazing.

Dow DuPont was only five years ago that it broke into three companies. And now here we have one of the sub companies breaking again. Sima Modi, thanks for joining us. Time for our market dashboard. Senior markets commentator Mike Santoli is back. He has a look at some of the ways NVIDIA is impacting other stocks and the broader markets. Mike. Yeah, Morgan. And first, just a glimpse of where we stand in terms of the market value of NVIDIA versus its sort of two closest stocks in the S&P 500, Amazon and Alphabet. NVIDIA, the largest at this point, about two point four trillion dollars. And it seems to be holding that just about in the in the post market trading. I would point out NVIDIA also slightly larger than you would expect based on how close

the market values are in the S&P because it uses float adjustment. And of course, Amazon and Alphabet have large kind of shareholdings from their founders. In any case, I also want to point out both Amazon and Alphabet had big, deep stock splits in recent years. I wouldn't let that account for much of the market value gain. Amazon split two years ago, 20 to 1. Didn't do much for the stock in the immediate term. Another thing I want to point out, the types of AI plays that are working and that are not. Goldman Sachs has three baskets. AI infrastructure, which relative to the S&P 500 equal weight, is doing incredibly well year to date. And then you have AI-enabled revenue plays and AI-enabled productivity companies not doing much.

So clearly the entire kind of juice is in those build out companies, the ones that are creating the capacity to do all the AI work and not yet in those trying to monetize it in other ways. It's a great chart. Mike Santoli, thank you. Much more on this wild hour of overtime earnings as we count down to the analyst calls for NVIDIA, Snowflake and Synopsys. Stay with us. Let's get one more check on NVIDIA here as overtime ends right before the call starts. It is back up to just about 4% higher. It has kind of rallied after dropping in the back half of the four o'clock hour again,

Morgan. We were just talking about that. What an impressive moment to be alive and watch this stock represent the AI boom that we're seeing unfold. 262% year-over-year growth in revenue. So much of that, the lion's share of that driven by data center, which came in higher than expectations. It marks the third straight quarter that we have seen revenues for NVIDIA grow more than 200%, and it does not seem to be letting up. And there's more coming in overtime tomorrow, not just about NVIDIA, but Intuit is reporting after the bell. CEO Sasan Ghadarzi is going to give his thoughts as well. This used to be the huge quarter for them, you know, April end because it's a tax quarter, but there's more to the business now.

Yeah, it really is. It's AI, it's consumer, it's Fed speak. That's what's driving the market here. NVIDIA, we're going to see how this trades tomorrow as well after hitting a record yesterday. That's going to do it for us here at Overtime. Here's fast money now.