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NVIDIA's CEO Forecasts New $50 Trillion Opportunity & Other Quotes from Their Annual Meeting

Eric Bleeker

Published: July 2, 2024 12:26 am

Last Updated: July 2, 2024 12:27 am

On June 26th NVIDIA (Nasdaq: NVDA) hosted its Annual Meeting of Stockholders. At the meeting, NVIDIA CEO Jensen Huang took questions from stockholders and the company released new documents laying out its vision for the future. We dug into statements from NVIDIA’s Annual Meeting of Stockholders to highlight three areas investors can’t ignore.

What NVIDIA’s CEO Said at the Company’s Annual Meeting of Stockholders

Here are some highlights from 24/7 Wall Street Analysts Eric Bleeker and Austin Smith discussing NVIDIA’s recent Annual Meeting of Stockholders:

• NVIDIA hosted its Annual Shareholder Meeting last Wednesday. At this meeting, the company not only puts more emphasis on their vision for the years ahead but also takes questions from shareholders that can tell us more about the company’s thinking.
• Here are a few areas NVIDIA CEO Jensen Huang touched on at this meeting that are important for NVIDIA investors to follow.
• First, Jensen Huang addressed NVIDIA’s strategy to maintain its market-leading position. 
• His answer emphasized NVIDIA having the “lowest cost of ownership” among companies that make AI accelerators. In addition, he noted how NVIDIA has thousands of engineers who spent the last decade focusing on deep learning and built an AI systems and platform company. In short, the company’s competitive advantage is their expertise, scale, and velocity in building end-to-end AI computing systems.
• Our response to this question might be surprising. We actually don’t think NVIDIA should be too concerned about competition.
• The company will likely lose some market share, especially in markets like inferencing where Broadcom (Nasdaq: AVGO) has done very well building custom chips for customers like Google.
• However, more important than competition is the overall growth of the AI market in general. If there’s a drop in NVIDIA shares in the next couple of years it will be due to factors like data centers cutting back orders as demand for inferencing is lighter than expected or advancements in models leading to less need for NVIDIA’s chips.
• In short, watch overall AI demand trends with more attention than worrying about one of NVIDIA’s key rivals surpassing them in the near term.
• Second, Huang emphasized that NVIDIA’s upcoming Blackwell is going to be the most “successful product in their history and for the entire history of computers.” 
• That’s a bold claim, after all, technology has birthed products like Windows 95, the iPhone, Intel processors, and far more in the past 50 years.
• Yet, we believe this claim is largely correct! Demand for Blackwell products (like the B200 and GB200) looks incredible. Early demand trends for it have been a key reason NVIDIA added more than a trillion dollars in market capitalization in the weeks that followed its recent earnings report and why we’ve said time and time again that we believe NVIDIA will hit $150 per share by the end of summer.
• The bottom line: NVIDIA announcing Blackwell and its annual AI chip refresh have added more value in a short period than any past technology product announcement.
• Finally, NVIDIA is placing a lot of attention on future markets for AI. In a 2024 Review document placed on their Investor Relations site, NVIDIA immediately emphasized AI’s impacts in areas like healthcare, weather forecasting, robots, self-driving, and a new industrial revolution.
• On the call with investors, Huang noted that $50 trillion in heavy industries could benefit from AI automation.
• This number represents half the world’s economy and is basically saying, that NVIDIA can be placed across all manufacturing.
• We believe the key industry in this regard to watch is robotics. Most manufacturing infrastructure is fixed with long lifespans and isn’t going to embrace AI immediately, but robotics needs advances in generative AI to take off. 
• So in terms of priorities, if you’re an NVIDIA investor wanting to see markets that are small today but could get significant in the next few years, I’d be watching robotics. If it takes off, the trajectory into manufacturing can suddenly get real, but until then – it’s just NVIDIA selling another industry on embracing AI.

Transcript:

Eric, we’re looking at NVIDIA again, the company of the year in many cases, perhaps the company of the decade, both this decade and the coming one.

But NVIDIA recently hosted its annual shareholder meeting.

And at this meeting, the company not only just put more emphasis on its vision ahead, but it also takes questions from shareholders that can tell us a lot about company’s thinking and what their vision of the future is.

So, Eric, you’ve always watched the video really closely.

And I’m just wondering, what do investors need to pay attention to from this meeting?

Is there anything that the CEO said that stands out to you that could indicate something important for investors today?

Yeah, I mean, NVIDIA CEO Jensen Huang, I mean, he’s about as inspiring as you could ever be for a chip leader.

It’s not a market that normally gets people’s hearts racing, but he has a firm vision of the future, and he’s become somewhat of a rock star, even signing brassieres and catching other notable attention.

Yeah.

The first thing I would note from the shareholder meeting was a question that Jensen Huang addressed about competition and how NVIDIA would maintain its leading position.

His answer emphasized NVIDIA chips actually having the lowest cost of ownership, which might surprise people because they’re collecting incredible margins.

I think it’s a 78% gross margins in the most recent quarter.

So how could this be?

Well, my response, to this question might actually surprise viewers watching today.

But I don’t really think investors need to be overly concerned about the competition because I think NVIDIA is going to lose some market share, especially as a lot of the costs that these data centers are paying for move towards inferencing.

I specifically think Broadcom is really well positioned as an alternative.

But more important than competition is simply growth of the overall AI market.

Because if there’s a drop in NVIDIA shares, it’s almost certainly going to be driven by a pullback in overall cloud spending.

I think before it’s going to be driven by NVIDIA losing shares.

So if you’re an investor and you’re worried about the competition, I might refocus where I’m watching to that overall cloud spending.

And we did cover this in another video, which anyone out there, if you want more details,

You can find that on 24-7 Wall Street.

We published that other article this weekend as well.

Now, second, I believe that an important quote is Jensen Huang’s emphasis that Blackwell is going to be, and I quote, the most successful product in their history and for the entire history of computers.

It’s a pretty bold claim.

You’re talking about past successes like Windows 95, the iPhone, Intel processors.

But I actually believe that this is correct because demand for Blackwell looks incredible.

It’s a big reason why I said shortly after NVIDIA’s last earnings, I thought they would hit $150 by the end of summer.

Simply put, a lot of investors believed NVIDIA wouldn’t be able to repeat the success of their prior generation, which is the H100, but Blackwell demand will meaningfully build on it.

And NVIDIA going to the faster cycles that they have now with Blackwell, that’s added more than a trillion dollars in value to share price in just a few short months.

No prior product in history can claim that level of value creation.

So I think that statement is true.

Finally, NVIDIA is placing a lot of intention on future markets in AI.

In a 2024 review document you can read on their investor relations site, NVIDIA immediately emphasized AI’s impacts in areas like healthcare, weather forecasting, robots, self-driving, and creating a new industrial revolution.

Long-term investors in NVIDIA will know they’ve spent years talking up these kinds of markets that they’re trying to create.

So it shouldn’t come as any surprise that they’re moving towards AI’s impacts across the world.

And one quote from Jensen Huang that got a lot of attention was saying that 50 trillion in heavy industries could benefit from AI automation.

This number represents half the world’s economy.

So, you know, it’s a big chunk and it basically comes down to manufacturing, adopting AI.

I believe the key industry in this regard to watch is actually robotics.

Because most manufacturing infrastructure, it’s fixed with very long lifespans, and it’s not going to immediately be able to embrace AI at substantial levels.

But robotics, it needs advances in generative AI to really take off.

And you can quickly augment factory floors with robots.

You’ve seen some thought leaders like Elon Musk really embrace robotics as the future of Tesla, for example.

So in terms of priorities, if you’re an NVIDIA investor, I should say, wanting to see markets that are small today, but could present the next growth driver beyond data centers, beyond just a lot of these big tech companies paying for generative AI, I would be watching robotics.

Because if it takes off, the trajectory into manufacturing can suddenly get very real.

But until then, It is just NVIDIA selling another industry on embracing AI.

So there you go, Austin.

Three quotes, three areas to watch for NVIDIA investors.

Eric, thank you so much.

I get dizzy with trying to absorb all the growth opportunities for NVIDIA here, but hearing that their high watermark H100 chips maybe quickly surpassed by Blackwell really puts into focus just how capable and how potent this company is.

The H100s have been the chip of the last 18, 24 months.

And to think that there’s even more powerful, better technology on the horizon and that this company in many ways seems to have almost broken Moore’s law with how much more quickly they’re accelerating their cycles here.

It really is exciting and it does seem like the sky’s the limit for this company.