Summary of Conference Call Notes Company and Industry Involved - The conference call primarily discusses developments in the **AI hardware sector**, particularly focusing on **NVIDIA** and its product offerings related to AI computing and data centers. Core Points and Arguments 1. **Blackwell Series Products**: The HGX series 8-card servers have been in production since last year, with deliveries starting in February. The GB200 cabinet is fully produced, and an upgrade to GB300 is expected in Q3 of this year [1][2] 2. **AI Factory Core Computing Unit**: The GB300 is positioned as a core computing unit for AI factories, supporting large-scale inference and training tasks. There have been significant upgrades compared to the GB200, although detailed specifics were not reiterated in this call [2] 3. **Production Challenges**: Q1 production rates were lower than expected due to assembly issues at ODM factories, leading to a downward revision of the annual cabinet shipment forecast [2][3] 4. **NVLink Fusion Technology**: This new technology allows customers to purchase only an NVLink Switch chip or NVLink Fusion IP, simplifying the procurement process for ASIC chips [3] 5. **DGX Spark and DGX Station**: The DGX Spark is aimed at personal supercomputer users, featuring NVIDIA's GB10 chip and supporting local model training. The DGX Station is a desktop-level AI supercomputer capable of running large models efficiently [4] 6. **AI Supercomputer in Taiwan**: NVIDIA plans to collaborate with TSMC and Foxconn to establish the first AI supercomputer in Taiwan, which is expected to be a cornerstone of the local AI ecosystem [5] 7. **RTX Pro Servers**: The RTX Pro servers, announced by ASUS, are designed to accelerate the transition of IT data centers to AI factories, boasting performance improvements over previous flagship systems [6] 8. **Software Ecosystem Expansion**: NVIDIA is also expanding its software ecosystem, launching various professional acceleration libraries aimed at standardizing AI acceleration capabilities across industries [7] 9. **Taiwan's Semiconductor Role**: Taiwan's advanced semiconductor manufacturing capabilities are crucial for NVIDIA's hardware deployment, fostering a deep collaboration in design, manufacturing, and application [8] 10. **Market Outlook**: The overseas computing power sector is gradually recovering, with companies in this space expected to release strong earnings this year. The computing PC sector is noted to be at a relatively low valuation [8] Other Important but Overlooked Content - The conference highlighted the ambition of NVIDIA to standardize and modularize AI acceleration capabilities across various industries, indicating a strategic direction towards broader applications of AI technology [7] - The establishment of a new NVIDIA office in Taiwan, named NVIDIA Constellation, signifies a commitment to local research and development, particularly in AI and semiconductor design [7][8]

Investment Rating - The industry investment rating is "Recommended," indicating an expected increase in the industry index by more than 5% over the next 3-6 months compared to the benchmark index [37]. Core Insights - NVIDIA reported FY26Q1 revenue of $44.1 billion, a year-over-year increase of 69% and a quarter-over-quarter increase of 12%, significantly exceeding market expectations of $43.3 billion and company guidance of $43.0±2 billion. This growth was primarily driven by the data center business, which generated $39.1 billion in revenue, up 73% year-over-year and 10% quarter-over-quarter [3][7]. - The Blackwell architecture contributed approximately 70% of the data center computing revenue, marking the fastest ramp-up in GPU production in the company's history [4]. - The company expects FY26Q2 revenue to be $45.0 billion, with a potential loss of $8.0 billion in revenue due to recent export control restrictions affecting the H20 product line [5][8]. Summary by Sections 1. Performance Overview - FY26Q1 revenue reached $44.1 billion, with data center revenue at $39.1 billion, reflecting a 73% year-over-year growth. The GAAP and non-GAAP gross margins were 60.5% and 61.0%, respectively. Excluding a $4.5 billion expense, the non-GAAP gross margin would have been 71.3% [3][7]. - The diluted earnings per share were $0.76 (GAAP) and $0.81 (non-GAAP), with a potential adjusted non-GAAP EPS of $0.96 when excluding the aforementioned expense [3][7]. 2. Business Segment Performance - **Data Center**: Revenue reached a record high of $39.1 billion, with computing revenue at $34.2 billion (up 76% YoY) and networking revenue at $4.957 billion (up 56% YoY) [4]. - **Gaming**: Revenue was $3.763 billion, showing a 42% year-over-year increase, driven by strong adoption of Blackwell architecture GPUs [4]. - **Professional Visualization**: Revenue was $509 million, with a 19% year-over-year increase, although it remained flat quarter-over-quarter due to tariff-related uncertainties [4]. - **Automotive and Robotics**: Revenue was $567 million, reflecting a 72% year-over-year increase, driven by strong demand for autonomous driving and electric vehicles [4]. 3. Future Guidance - The company anticipates FY26Q2 revenue of $45.0 billion, accounting for an estimated $8.0 billion loss in H20 revenue due to export restrictions. Expected gross margins are projected at 71.8% (GAAP) and 72.0% (non-GAAP) [5][8].

Core Viewpoint - NVIDIA's CEO Jensen Huang expressed concern over the H20 export restrictions impacting the company's access to the Chinese AI market, which is valued at $50 billion, while highlighting the robust demand for AI processing capabilities driven by the Blackwell chip production [1][8][45]. Group 1: Financial Performance and Market Impact - NVIDIA's Q1 revenue reached $44 billion, a 69% year-over-year increase, despite the challenges posed by export restrictions [25]. - The company anticipates a loss of $8 billion in H20 revenue due to new export limitations, significantly affecting future business prospects in the Chinese market [8][43]. - The data center revenue grew by 73% year-over-year, driven by the rapid ramp-up of the Blackwell product line [5][27]. Group 2: AI Demand and Technological Advancements - There is an explosive growth in AI inference demand, with token generation increasing by 500% year-over-year, particularly in complex AI workloads [12][29]. - The Blackwell architecture is designed to support this demand, offering a throughput that is 40 times higher than the previous Hopper architecture [12][10]. - The average deployment rate for major hyperscale customers is nearly 1,000 NVL72 racks per week, indicating strong market adoption [10][28]. Group 3: Strategic Insights on AI Market - Huang emphasized that winning the Chinese AI market is crucial for global leadership, as it houses half of the world's AI researchers [3][45]. - The company is exploring options to create attractive solutions for the Chinese market in light of the export restrictions [8][46]. - The rise of open-source AI models like DeepSeek and Qwen is seen as a strategic advantage for the U.S. in maintaining its leadership in AI technology [13][46]. Group 4: Future Outlook and Growth Engines - NVIDIA is optimistic about future growth, citing multiple key growth engines including surging inference demand, sovereign AI initiatives, and enterprise AI [19][49]. - The company plans to achieve $45 billion in revenue for Q2, with expected gross margins of 71.8% [20][43]. - The establishment of AI factories globally is seen as a foundational step in building the necessary infrastructure for AI deployment across industries [15][62].

Investment Rating - The industry investment rating is "Positive" [2][29] Core Insights - NVLink Fusion builds a semi-custom AI infrastructure, enhancing the ecosystem's moat. Nvidia's CEO Jensen Huang announced NVLink Fusion at COMPUTEX 2025, marking the opening of Nvidia's proprietary high-performance interconnect technology NVLink to partners for integrating third-party CPUs and AI accelerators, thus creating a semi-custom AI infrastructure. This aims to overcome traditional data center bottlenecks in scale and performance, providing more flexible and optimized system design solutions for cloud service providers and large enterprises [6][11] - The GB300 is expected to launch in Q3 2025, with multiple personal and enterprise products announced. The new AI computing platform Grace Blackwell and its upgraded version GB300 were introduced, with GB300 offering 1.7 times the inference performance of the previous H100, equipped with 1.5 times HBM memory and 2 times network bandwidth, achieving up to 40 petaflops per node [13][23] - The data center market is transitioning to a nearly trillion-dollar market driven by AI factories and infrastructure. Nvidia's CEO stated that the data center is on the verge of becoming a trillion-dollar market, driven by AI factories and infrastructure. The expansion of AI infrastructure investment is expected to increase orders for quality companies in the domestic AI industry chain, with fundamentals likely to continue to deliver [23] Summary by Sections NVLink Fusion - NVLink Fusion provides two main configurations: one connects third-party custom CPUs with NVIDIA GPUs via NVLink, and the other connects NVIDIA's Grace series CPUs with non-NVIDIA custom accelerators (GPU, ASIC, FPGA) to meet various computational needs. Initial adopters of NVLink Fusion include MediaTek, Marvell, Alchip, Astera Labs, Synopsys, and Cadence [7][11] GB300 Launch - The GB300 is set to launch in Q3 2025, with significant performance improvements over its predecessor. The Blackwell system is expected to start mass production by the end of 2024 and has already been deployed on platforms like CoreWeave [13][23] Market Transformation - The report emphasizes the transformation of the data center market into a trillion-dollar industry, highlighting the impact of AI infrastructure and factory investments on the domestic AI industry chain [23]

Group 1 - ByteDance issued a compliance notice urging business partners not to give gifts or cash to employees, emphasizing a zero-tolerance policy towards corruption and bribery [2] - Kuaishou faced allegations of requiring employees to use its app for one hour daily, which was later denied by internal sources, stating that while usage is encouraged, it is not mandatory [3] - Kunlun Wanwei's newly launched AI product experienced high user traffic leading to service limitations, indicating strong initial demand [4] Group 2 - The co-founder of Zero One Everything, Gu Xuemai, has left the company to pursue new entrepreneurial ventures, as the company shifts its focus towards lightweight model training and application [5] - A paper published in a top journal was found to contain inappropriate language, prompting an investigation by the journal [6][7] - Elon Musk announced his return to a 24/7 work schedule, emphasizing the need for operational improvements at X and Tesla [9][10] Group 3 - NVIDIA's Blackwell GPU set a new record for AI inference speed, achieving 1000 tokens per second per user, showcasing advancements in AI processing capabilities [11] - Apple plans to open its AI models to third-party developers to stimulate new application development, aiming to enhance its competitive position in the AI market [12] - OpenAI is acquiring AI device company io for $6.5 billion, marking its largest acquisition to date and expanding its hardware capabilities [13] Group 4 - JD.com is investing in ZhiYuan Robotics, indicating strong interest in the embodied intelligence sector, with the company positioned among the top players in this field [14] - Google announced the launch of Google AI Ultra, a comprehensive AI suite aimed at enhancing productivity across various industries [18][19] - Tencent introduced a smart agent development platform and plans to open-source multiple models, reflecting its commitment to advancing AI technology [21][22]

Investment Rating - The industry rating is "Overweight" indicating that the industry stock index is expected to outperform the benchmark [6]. Core Insights - The report highlights the emergence of an open interconnected ecosystem led by the deployment of AI at the edge, which is expected to accelerate productivity transformation in AI [1]. - The introduction of the NVLink Fusion platform allows integration with third-party CPUs and AI chips, signaling a shift towards an open ecosystem and potentially increasing NVIDIA's market share in data centers [3]. - The establishment of AI factories, which are essential for producing AI tokens, is seen as a significant infrastructure development, with NVIDIA collaborating with major companies to enhance AI capabilities [2]. Summary by Sections Section 1: AI Deployment and Ecosystem - NVIDIA's CEO emphasized the importance of AI infrastructure in driving an industrial revolution, with new products like DGX Spark and RTX PRO servers catering to both individual developers and enterprise clients [1][4]. - The collaboration with Foxconn and TSMC to build an AI supercomputer in Taiwan, equipped with 10,000 Blackwell chips, showcases NVIDIA's commitment to expanding its AI infrastructure [1]. Section 2: AI Factory and Tokens - The concept of AI Factory is introduced as a smart factory for producing AI tokens, which are models that generate ongoing value through inference services [2]. - The report suggests that companies with efficient AI factories will possess future "digital productivity," marking a significant productivity transformation driven by AI [2]. Section 3: Product Launches - The DGX Spark, set to launch in July 2025, will offer 1 Petaflop of AI computing power and 128GB of unified memory, while the DGX Station will provide 20 Petaflops and 784GB of memory [4]. - The RTX PRO server will support up to eight RTX PRO 6000 Blackwell GPUs, enhancing enterprise-level AI workloads [4]. Section 4: Robotics and AI Models - NVIDIA updated its open-source platform for humanoid robots, Isaac GR00T N1.5, which can generate synthetic motion data for training robots [5]. - The AI-Q Blueprint connects enterprise data with inference systems, significantly speeding up data retrieval on NVIDIA GPUs [5].

Core Insights - NVIDIA is entering a new phase of development as a leading provider of AI infrastructure, with its market value continuing to rise [1] - The company announced the launch of new technologies and products, including the NVIDIA NVLink Fusion chip, during the Computex 2025 event [1][2] - NVIDIA is transitioning from a single hardware supplier to an open ecosystem platform by allowing third-party access to NVLink IP [1][2] Group 1: New Technologies and Products - The NVLink Fusion technology enhances ecosystem compatibility, enabling integration with CPUs from Fujitsu and Qualcomm to build high-performance AI infrastructures [1][2] - NVIDIA introduced the RTX PRO server for enterprise-level AI inference, capable of supporting up to 8 Blackwell RTX Pro Graphics 6000 cards [2] - The company updated its robot foundational model, Isaac GR00T, and introduced a synthetic data generation framework for humanoid robot training [2][4] Group 2: Partnerships and Collaborations - Initial adopters of NVLink Fusion include MediaTek, Marvell, and others, but no Chinese companies are among the first group [2] - NVIDIA is collaborating with Foxconn and Taiwan partners to build a supercomputer with 10,000 Blackwell GPUs, with TSMC as a primary customer [5][6] - The company plans to establish a new office in Taiwan to strengthen its ecosystem partnerships [5][6] Group 3: Market Presence and Future Plans - NVIDIA's revenue in China is projected to be approximately $17 billion in 2024, accounting for about 14% of its global total [6] - The company is leasing new office space in Shanghai to accommodate current employees and prepare for future expansion [6]

Core Viewpoint - Huang Renxun, CEO of Nvidia, emphasizes the company's leadership in AI infrastructure and expresses confidence in the continued growth of AI computing demand despite challenges posed by U.S. export restrictions on AI chips [1][3]. Group 1: Nvidia's Position and Strategy - Nvidia has evolved from a chip company to a foundational infrastructure company, aiming to reshape every layer of the technology stack in response to new computing methods [3]. - Huang Renxun highlighted Nvidia's unique position by disclosing a five-year plan, which is uncommon for tech companies, indicating the company's commitment to the AI infrastructure sector [3]. - The company is constructing a giant AI supercomputer in Taiwan, collaborating with partners like TSMC and Foxconn, to enhance the AI ecosystem in the region [5]. Group 2: AI Chip Development and Challenges - Nvidia's new Blackwell GB300 chip is set to enhance inference performance by 1.5 times and increase HBM memory capacity by 1.5 times [4]. - The production of Blackwell chips is challenging due to the nearing limits of Moore's Law, which complicates the iteration of AI chips [8]. - The H20 chip, a special version for the Chinese market, faces export restrictions, with Nvidia estimating about $5.5 billion in related costs for the first quarter of fiscal year 2026 [9]. Group 3: Market Trends and Future Outlook - Global IT spending is projected to grow, with server/storage expenditures expected to increase by over 60% in 2024, and continued double-digit growth in 2025 and 2026 [11]. - Nvidia is driving a trillion-dollar enterprise AI IT investment globally, with significant demand for AI chips as data centers continue to be built [11]. - The company has established a chip supply agreement with Saudi Arabia's sovereign wealth fund for a large data center project, indicating its pursuit of new business opportunities [11].

Investment Rating - The report maintains a recommendation for the industry, indicating a positive outlook for investment opportunities [5]. Core Insights - NVIDIA is transitioning from a chip company to an AI infrastructure company, focusing on building intelligent infrastructure based on power and internet, with advancements in AI, robotics, and quantum computing [1][12]. - The introduction of the GB300 chip, which offers a 1.5x improvement in inference performance compared to the GB200, highlights NVIDIA's commitment to enhancing AI capabilities [2][39]. - The NVLink Fusion platform allows for the creation of semi-custom AI infrastructure, enabling users to mix NVIDIA's CPUs, GPUs, and third-party hardware [2][54]. - NVIDIA's open-source initiatives, such as Isaac Groot N1.5, aim to advance humanoid robotics and establish a supercomputer ecosystem in Taiwan [3][46]. Summary by Sections Industry Overview - NVIDIA's CEO emphasized the evolution of AI from perception and reasoning to autonomous decision-making, aiming for physical AI that can execute real-world tasks [1][12]. - The company is actively pursuing advancements in 5G/6G and quantum computing, indicating a strategic focus on future technologies [1]. Product Developments - The GB300 chip is set to launch in Q3 2025, featuring a 1.5x increase in inference performance and enhanced memory capabilities [2][39]. - The NVLink Fusion platform is a groundbreaking solution for building flexible AI infrastructure, allowing for a mix of NVIDIA and third-party components [2][54]. - The DGX Spark and DGX Station are new AI computing systems designed for developers and researchers, capable of handling large AI models [2][64][66]. Strategic Collaborations - NVIDIA is collaborating with partners like Foxconn and TSMC to establish a large AI supercomputer in Taiwan, enhancing the region's AI infrastructure [3][46]. - The report highlights the importance of a robust ecosystem involving over 150 companies to support the development of NVIDIA's technologies [50][62]. Market Performance - The industry has shown a 38.9% absolute performance increase over the past 12 months, indicating strong growth potential [7].

Summary of Key Points from Conference Call Company and Industry Overview - The conference call primarily discusses **NVIDIA** and its developments in the **AI computing** and **PCB** sectors, as well as the **overseas computing market** dynamics. Core Insights and Arguments - **NVIDIA's GB300 System**: Positioned as the core computing unit for AI factories, supporting large-scale inference and training, with an upgrade expected in Q3 2025 [1] - **Improvement in Assembly Rates**: High-speed copper cable assembly issues have gradually improved, leading to a recovery in ODM manufacturers' output rates [1][2] - **Overseas Computing Market**: Initially faced deflationary expectations due to various factors, including the impact of Deep Sick R1 technology and order adjustments from major North American manufacturers. However, optimism is returning due to improved outlooks from North American C2S manufacturers and a rebound in AI server cabinet shipments from Taiwanese ODMs [3][4] - **PCB Sector**: Companies like **沪电**, **胜宏**, **生益电子**, and **真蓝** are highlighted for their low price-to-earnings ratios (around 20 or below) and significant upward potential as their annual performance is expected to increase sequentially [5] - **New Product Launches**: Huang Renxun introduced the **Nvlink Fusion** version, which lowers the barrier for customers to use NVIDIA's networking solutions. New products like **DGX Box** and **DGX Station** are set to launch soon, targeting local model training and desktop-level AI supercomputing applications [1][6] - **RTX Pro 6,000 Workstation Series**: This series includes 8 GPUs and supports the latest CXI 8 network card, enhancing AI model training and inference speeds. The design accelerates the transition of enterprise IT data centers to AI factories [7] Additional Important Content - **Collaboration Plans**: NVIDIA plans to collaborate with **台积电** and **富士康** to establish Taiwan's first AI supercomputer, which will serve as a core pillar for the local AI ecosystem [8] - **Performance Breakthroughs**: The latest systems outperform previous flagship products, with performance improvements of up to four times under DGP workloads and approximately 1.7 times higher performance in specific tasks [9] - **Software Ecosystem Expansion**: NVIDIA has expanded its software ecosystem with various professional acceleration libraries to support AI applications across different industries, indicating a strategic move towards standardizing and modularizing AI acceleration capabilities [10][11] - **New Office in Taiwan**: NVIDIA's new office, **NVIDIA Constellation**, aims to support local research and manufacturing upgrades, including collaborations with local universities and semiconductor design initiatives [12] - **2025 Overseas Computing Market Expectations**: The overseas computing sector is expected to gradually recover, with a focus on companies in the computing PCB sector, which are currently at valuation lows [13]