Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

On November 21st, $NVIDIA (NVDA.US)$ Holding the FY25Q3 earnings conference. Nvidia introduced that Blackwell is in full production, exceeding expectations in deliveries this quarter. The company is striving to expand next year's capacity, but demand still exceeds supply. CSP's demand for Blackwell is very strong. The company already has several generations of integration experience, but there is still a lot of work to be done. The demand for Blackwell is very good, with this quarter's supply and shipments exceeding expectations.

In terms of the roadmap, the company is striving to execute the annual roadmap while providing platform performance. It is also committed to reducing training and inference costs, lowering the threshold for AI use, and maximizing performance per unit of energy under limited electrical utilities conditions, everything is proceeding as planned.

The demand for Hopper will continue into the first few quarters of next year. The number of Blackwell units to be delivered next quarter will also be higher than this quarter, with continued growth into the following quarter. Regarding gross margin, the company expects that as Blackwell shipments begin, the gross margin will start to increase, with an anticipated gross margin of around 75%.

Q&A

Q: What drives the demand for Blackwell?

A: The expansion of foundational model pre-training continues. In addition, there are two types of expansions: (1) post-training expansion, where the first generation involves reinforcement learning from human feedback, and now there is expansion based on synthetic data; (2) inference time expansion, such as models like strawberry and chatgpt o1, the longer the thought process, the higher the quality of the answers, and the model will also consider reasoning chains, multi-path planning, reflection, etc., simulating the thinking patterns humans use when answering questions.

Therefore, there are now three types of expansions generating strong demand for the company's infrastructure, the previous generation model used 0.1 million hoppers, while the next generation will use 0.1 million Blackwell.

Additionally, the growth of inference will drive demand; the company is now the largest global inference platform, and in the future, Blackwell will be used for training as well as inference.

Finally, the demand for AI agents has become the latest trend, which also drives demand.

Q: Considering the recent rumors related to overheating issues, the market is concerned about whether the company can smoothly release various products according to the plans presented at GTC? What is the current bottleneck in Blackwell's production capacity?

A: (1) Blackwell is in full production, and the Blackwell deliveries this quarter exceeded expectations. The company is working hard to expand next year's capacity, but the demand still exceeds supply; the demand for Blackwell from CSP is very strong.

(2) The company has several generations of integration experience, but there is still much work to be done. The demand for Blackwell is good, and the supply and shipment this quarter both exceeded expectations.

(3) In terms of the supply chain, Blackwell has many platforms, including air cooling/liquid cooling, NVL72/NVL36, X86/Grace and other different combinations, supported by the global supply chain, including$Taiwan Semiconductor (TSM.US)$、$Amphenol (APH.US)$、 $Vertiv Holdings (VRT.US)$ SK Hynix, $Micron Technology (MU.US)$ Anker, Jingyuan Electronics, Foxconn, Quanta, Wistron, $Dell Technologies (DELL.US)$ 、$HP Inc (HPQ.US)$、 $LENOVO GROUP (00992.HK)$ The company has an astonishing number of supply chain partners.

(4) In terms of the roadmap, the company is striving to execute the annual roadmap while providing platform performance, working to reduce training and inference costs, lowering the barrier for using AI, and maximizing unit energy consumption performance in situations with limited electrical utilities, everything is proceeding as planned.

Q: Considering that Q4 Blackwell revenue may exceed the original multi-billion dollar expectation, when does the company expect Blackwell's revenue to surpass hopper? What are the outlooks for gross margin?

A: (1) The demand for Hopper will continue into the next few quarters of next year; the number of deliveries for Blackwell in the next quarter will also be higher than this quarter, continuing to grow in the following quarter;

(2) In terms of gross margin, the company expects that as Blackwell gradually ships, the gross margin will start to increase, with an expected gross margin of around 75%;

(3) The market is in two windows of computing transformation, one being the shift from CPU to GPU, and the second being the development of machine learning. The current datacenter is an AI smart factory that can generate new materials. If there are many customers, these factories will run around the clock, which is different from past datacenters. These two transformations will last for several years.

Q: Is it a reasonable assumption that the gross margin will return to 75% in the second half of next year? When does the company expect to see the market enter the hardware digestion cycle? How many quarters does the company expect to meet the first round of demand?

A: (1) The company believes that it is possible to return to a mid-70% gross margin in the second half of next year.

(2) Currently, the vast majority of datacenters are products of the CPU era and do not meet the modernization needs of datacenters. Future datacenter projects will all be AI-driven, and this transformation is part of the demand;

(3) At the same time, generative AI is also driving new increments, such as openAI, harvey, runway. These are not replacements for past functions, but rather new phenomena.

In summary, the modernization of datacenters and the drive of new AI applications will boost the demand for hardware.

Q: What is the expected lower limit for the gross margin? Is there a possibility that hopper will decline quarter-on-quarter next quarter?

A: Firstly, the low point for the gross margin may be in the range of 71%-72.5%, and the company's goal is to improve it to 75%.

Hopper will continue to be sold in Q4, and the demand for Blackwell is also strong, both will happen. As for the quarter-on-quarter performance of Hopper in Q4, there is a possibility of achieving quarter-on-quarter growth, but it still needs to be observed.

Q: What is the company's view on the inference market?

A: The company's vision is for a future world filled with numerous inference scenarios, which would signify true AI success. The company hopes to see every company conducting round-the-clock inference, with user experiences generating tokens when opening Outlook, PowerPoint, Excel, and PDF; in addition, the company has expectations for physical AI, which is very valuable for industrial AI and siasun robot&automation, and presents opportunities for many AI startups. This is the reason the company is building the omniverse.

The company's goal is inference, and it is seeing this growth trend occurring. The challenges of inference include accuracy, high throughput, low cost, low latency, and multimodal, with these innovations and requirements, nvidia's architecture and ecosystem perform excellently. Any innovations can enter nvidia's computing platform, whether in the datacenter or edge scenarios like robots.

Q: What is the current status of the network business?

A: The network business has maintained high growth year-on-year, with only a slight decline this quarter, but the growth momentum is expected to recover quickly. The team is preparing for Blackwell and an increasing number of systems.

Q: What is the outlook for sovereign AI?

A: The company mentioned many projects regarding sovereign AI, therefore, the performance and pipeline of sovereign AI are still strong. Countries are working to build models using their own languages and cultures, which presents a growth opportunity, including opportunities in europe and the asia pacific region.

Q: How is the company's gaming business progressing? Is there an issue with production capacity being squeezed?

A: The company is striving to ensure supply capabilities for different products; there is no issue with the supply for gaming. The challenge lies in how quickly products can be brought to market. With more suppliers returning to the normal pace, improvements are expected. This quarter's supply tightness is only temporary.

Q: With the supply ramping up, will the month-on-month growth rate accelerate again?

A: The company only provides guidance for one quarter, and as blackwell gradually increases output next quarter, more information will be provided.

Q: What is the outlook for the datacenter business in china? Has there been any change after the election?

A: Regardless of the new government's requirements, the company will fully comply with regulations and strive to support customers and participate in market competition.

Q: What is the current ratio of training and inference? The company mentioned the ratio of three expansions.

A: Currently, the focus is on the pre-training of the basic model, and new technologies have just started to emerge after training. Additionally, it is necessary to reduce inference costs as much as possible. All three expansions are developing, and the market requires more and more computation. Therefore, the company must make every effort to increase performance several times at once to maintain the reduction in computing costs.

Editor / jayden