Boloor: NVDA Growth Runway, Beating A.I. "Exhaustion" in Focus

Core Viewpoint - Nvidia's upcoming earnings release is highly anticipated, with expectations of continued strong performance, but concerns about market sustainability and investor sentiment are prevalent [1][2][4]. Company Performance - Nvidia has beaten earnings expectations for 20 consecutive quarters, and the focus is on whether the market will continue to support its valuation as a key player in the AI infrastructure space [2][3]. - The market anticipates a 50% growth this quarter, with guidance for Q4 at 58%, indicating high expectations based on ongoing AI infrastructure demand [6][7]. Market Sentiment - Recent investor actions, including notable exits from positions by figures like Michael Burry and Peter Thiel, have led to anxiety about the sustainability of Nvidia's growth, although this is viewed as a market correction rather than a decline in AI demand [4][5][8]. - The demand for Nvidia's GPUs remains strong, with every unit sold out before leaving the factory, suggesting ongoing robust demand despite market concerns [9]. Business Model and Future Outlook - Nvidia's business model is likened to a recurring platform rather than a one-time hardware sale, which may provide stability against margin erosion from competitors [10]. - The company is projected to have over $500 billion in potential orders through 2026, indicating a strong growth trajectory and customer commitment [13]. Key Metrics to Watch - Analysts will focus on the data center segment's performance and gross margins, with Nvidia guiding for 74% gross margins; any expansion in these metrics could reinforce confidence in the company's pricing power and product mix [12][13]. - The unpredictable nature of the Chinese market remains a variable, but the absorption of Nvidia's products by hyperscalers globally mitigates some risks associated with potential losses in that region [14][15].