The world runs on Nvidia, says Altimeter Capital's Brad Gerstner

Let's talk about NVIDIA, okay, your read on the quarter which was obviously a beat sales up 94% year on year. That is a slowdown from the prior 3/4 which have just been astounding and 94% up year over year is amazing obviously. But what's your take? I mean, let's let's say at the start, it's down a little bit today because expectations were sky high, but this was a blockbuster quarter by NVIDIA, right? What's clear to me now and what I think the biggest take away from the call is that the world runs on NVIDIA. As Jensen said, AI is in full swing. He said this is a multi year event. This is not just about training AI. This is about moving all the world's X86 architecture. All the applications that run on CPUs are going to be rebuilt over the course in the next three or four years on GPUs that are running machine learning. So I think that the the market is going to have to digest this. This just isn't about training clusters in 2025. This is about GPU data centers that are going to be built in 26 in 27. And so for us, our numbers came up. You saw that I think 10 sell side analysts took up their price targets for the stock. We were buying it premarket when it was down. You're buying it this morning. Yeah. So you know, I think it was a blockbuster for a report and I think, you know, it's clear to me that the Intel's of the world are going to continue to lose share and the Nvidia's of the world are going to continue to gain share. And if you want to bet on the tailwinds associated with AI, you have to have NVIDIA in your portfolio. So it's now your your number two position, correct With buying a little bit more this morning. Josh, what was your take on the quarter? You obviously well known for being in this stock for a very long period of time. I think they were very artful in the way they maintained everyone's enthusiasm for the potential for Blackwell, where orders stand, the fact that demand is still out outstripping supply. But they didn't ratchet up the excitement too much to put them into a position where they just can't win the next time they report. And that's really going to be the company's job going forward. It is already the largest market cap company in the world. It is already most must own stock in the world. There is no need to continue to put pressure on themselves to outperform and outperform and outperform. So it's harder than it sounds because they do have a really bright future and the revolution is real and the the dominance of GPU's and data centers going forward is undeniable and their market share position within that revolution is also undeniable. So they have to now do this quarter after quarter, give people realistic guidance, execute ship products, hit those numbers, but not paint themselves into a corner that they can't escape from where the market expects them to double revenue every year, which of course, like mathematically will be impossible. So far, so good. I think Jensen understands the mission. I think he's accepted the mission. And I liked everything I heard last night. The most important thing, and I'd love to hear Brad react to this, is this idea of the Moat because competitors are coming in with new solutions. Amazon is ramping up production of their own Tranium 2 chips. Like they will not have the whole markets themselves forever, but they can maintain dominance. And it might actually be a good thing for the ecosystem for there to be more products out there. I think that's the the the tone that was set last night. And I think other NVIDIA longs heard the same thing that I heard. What do you think? I mean, that's all about the idea of the installed base. And we've heard Jensen talk about that before almost in the same way. And I think I've mentioned this in the past of thinking about that in the same regard as we do Apple with its own sort of powerful installed base. Yeah. I mean, listen, the stock started the year 49 bucks a share, 50 bucks a share. Today we're at 1, you know, 145 or something. The asymmetry is closed. And part of the reason for that is everybody had this wall of worry, right? Custom ASICS, Amazon's going to have their own Tranium chip. I said on our recent BG2 podcast, of course they're going to use Tranium. It's a cheaper price solution for certain customers. But they also, you know, Jassy has said he's going to buy as much NVIDIA as he can get his hands on for as far as the eye can see. They know the world runs on NVIDIA. So, you know, listen, when we look at our price target for NVIDIA next year, it's up 30%, not up 100% like it was at the start of 2023 or at the start of 2024. So when you ask me as a portfolio manager, you know, we took down the size of our position. It was a really outlier position for us to start the year. It was a normal size position for us coming into this quarter. And we're adding a little on the pullback in this quarter. But we think it's going to be a great compounder and a great bet on not only AI, but also on the replacement, the move from X86 to GPU based data Centers for the next several years. OK, Bryn, what about you? You've been a holder of this stock for a long time too. Yeah. I mean, I think what's so amazing and you talked about this Moat and what this means for the AMD's of the world, etcetera, is Jensen walked through how 64 Blackwell GPU's can be can run GBT 3 compared to 256H2 hundreds. So they're even making chips. The Blackwell it's not a chip. They're making these GPU's that are cannibalizing their own products. And This is why they are so hard to compete with is they just continue to innovate so quickly. And then when he talks about how Oracle is is announced this Zeta scale, whatever that is, AI cloud cluster that can handle over 130,000 Blackwell GPUs. And so I think when Brad talks about this shift going from modernizing from CPUs to GPUs, I don't think we are really great about understanding. Jensen thinks it's a trillion dollars over the next 10 years. I mean, the difference between a billion, a trillion, a billion seconds is 32 years, a trillion seconds is 32,000 years. I think we're start early in this and this Moat is going to last for a very long time. But I do think they're going to be big winners and big losers. And right now NVIDIA is the winner of the bunch. And Liz, I mean, obviously, the market's still trying to digest it. If there was any bit of, I don't even want to use the word disappointment. I mean, there's just so much to live up to. As we said, we had 11 or 12 price target increases on the name. I only see one firm talking about their guidance being below what they would suggest is the bull case. I mean, as you watch the market here react to it, what do you think? Well, I think the most important points that have been made so far are that expectations were so high. Brad said that at the beginning of the show, and then Josh, about making sure that they can set realistic expectations going forward. This market is hard to impress on stock price action. I mean, we're talking about situations where you've got beats and raises being punished in the stock price. So first of all, I think we're still in the infancy of this AI theme. We're going to be in the infancy of it for a little while yet, but as it matures, what we're going to find out is whether or not the companies that have been the winners so far can continue to win along that vein. And then who are the other ones that will come in, and even the other industry groups that will come in? And something that's been really interesting to me in the last month or so is just the performance of software. And I think some of that has to do with the fact that, OK, we've established that this thesis will continue going forward with AI. What else can companies start to spend on? Where can they actually find the profit? And who are the companies that are going to help them create that profit? And I think software is a big group that's going to benefit from that going forward.