The Shocking Truth About Nvidia Stock's Future | NVDA Stock Analysis

In the late 1890s, Nikola Tesla invented an AC generator. We invented an AI generator. The AC generator generated electrons. NVIDIA's AI generator generates tokens. Both of these things have large market opportunities. It's completely fungible in almost every industry. And that's why it's a new industrial revolution. Where is NVIDIA stock headed next? It's up 5% in the last several days. I've got some news and some price predictions for you. You may recall several months ago on the channel, we covered Blackwell and how this is going to be huge for NVIDIA and the future growth driver. This is an AI superchip, 208 billion transistors. Well, Blackwell was designed for this generation and has several very important technologies. One, of course, is just the size of the chip. We took two of the largest, a chip that is as large as you can make it at TSMC, and we connected two of them together with a 10 terabytes per second link between. The world's most advanced SERTIs connecting these two together. We then put two of them on a computer node, connect it with a gray CPU. The gray CPU could be used for several things. In the training situation, it could be used for fast checkpoint and restart. In the case of inference and generation, it could be used for storing context memory. Ladies and gentlemen, this is Blackwell. Blackwell is in production. Incredible amounts of technology. This is the most complex, highest performance computer the world's ever made. This is the gray CPU. You could see each one of these Blackwell dies, two of them connected together. You see that? It is the largest die, the largest chip the world makes. And then we connect two of them together with a 10 terabyte per second link. And the performance is incredible. Take a look at this. You see the computational, the AI flops for each generation has increased by 1,000 times in eight years. It's almost hard to comprehend what Jensen's saying there. 1,000x in eight years. And this simple chart gives you an idea of what that looks like. From 2016, 2017, very gradual increase. Significant increase 2020. And then we just got a parabolic chart from there. So why did Nvidia's stock sell off in the first place? A few different reasons there. The whole market rolling over, obviously that's going to be part of it in August. You also have the fact that the stock just went absolutely bonkers for five years. And there was a lot of profit taking. But the big one, I think, the rumors that Blackwell production was going to be delayed and that we might not see any deliveries in Q4 at all. So as you probably know, Blackwell production relies on Taiwan Semiconductor. And this packaging technology, it was difficult for them to get in high volume. They had to make some tweaks to the design. Nvidia's Blackwell family is encountering major issues in reaching high volume production. This setback has impacted Nvidia's production targets for Q3, Q4 2024, as well as the first half of 2025. This affects Nvidia's volume and revenue. And of course, traders are going to make moves off headlines like this. And in recent days, we've gotten much better clarity of Blackwell and the deliveries in Q4 in early 2025. And this just came out. The headline really says it all. Nvidia expected to produce 450,000 Blackwell AI GPUs in Q4 and potential $10 billion in revenue for the chipmaker. Now, this is speculation, but let's dive in. So analysts from Morgan Stanley believe that despite low yields, that was also part of the reason why the stock was selling off and just the market overall saying, okay, it can't keep growing at this. The growth's starting to decelerate. There are a lot of reasons why the stock would pull back, low yields being one of them. But despite low yields caused by significant yet easy to fix design issue, Nvidia is going to produce around 450,000 AI GPUs based on the Blackwell architecture. And of course, if this information is accurate, this is speculation by Morgan Stanley, this would translate into revenue opportunity of $10 billion, over $10 billion just in Q4. How significant is that you ask? Well, this last quarter, $30 billion in revenue. So one third more. The question though is how much is this cannibalizing off of existing technology? In other words, from the H100 to the Blackwell, what's that look like? So looking at some highlights this morning posted in Discord from this Morgan Stanley report. So the Blackwell chips are now entering volume production with demand from major customers driving significant growth potential for the company. H200 chips are seeing increased demand from smaller cloud service providers and sovereign AI projects. Now this is huge and here's why. So if you look at H100, that of course progressed in the H200, the Blackwell, the B100 and beyond, right? So if you think about it, if you had the large mega cap tech companies like Meta buying the H100s, now you have smaller companies that are focused more on these older, and I say older in parentheses because it's still very good, but these older GPUs and now the large, the mega cap tech companies are focused on the Blackwell technology. You can see a ramp up in that revenue as they sell to more customers because to this point, Nvidia has sold the majority of its GPUs to those large mega cap tech providers. And the mega cap tech companies are buying the Blackwell chips. You can see some big numbers from Nvidia. And one thing to note here, when we talk about Blackwell, it gets a little bit confusing and this is a bit in the weeds, but you'll see B100, B200, B200A. This is from KeyBank, you know, overweight $180. And it's talking about how they believe Nvidia effectively canceled B100 and they're gonna replace it with a lower cost performance GPU called the B200A. So if you see something like B100, B200, just understand both of those, if they have B in front of it, that's gonna be Blackwell. H100, H200 is gonna be that previous technology. On this last earnings report, we beat on top and bottom lines, but it was the lowest beat we've had for several quarters. That was another one of the long list of reasons why the stock might've sold off. But Blackwell chips are, like we talked about, $450,000, $10 billion. This is speculation from Morgan Stanley. While Nvidia is still resolving some technical challenges with these server racks, these issues are part of the normal debugging process for new product launches. And Nvidia's assembly partner is reportedly on track to begin shipments of the GB200 server rack by late Q4 2024. Now this part is very important. So of course that $10 billion, the 450,000 units look significant. But one thing that's a little bit strange here is that the price per unit, $22,000, originally rumored up to $70,000. So it's significantly lower. Now, if you watch the presentation from Jensen Wong or look through a deck like this, you'll notice they have these giant GPUs. Essentially Nvidia putting all this together, server rack together using Blackwell technology and selling it as a bundled solution to its customers. This is the entire Blackwell platform from the B200s all the way up to the spectrum switches. But if Nvidia is not just selling the GPUs, but selling these server cabinets, it's much more profitable for Nvidia. For example, the NVL 36 featuring 36 B200 GPUs is expected to cost $1.8 to $2 million. And the larger version, the 72, starting at $3 million. So selling cabinets instead of GPU modules or DGX, HDX servers, it's much more profitable and earning $10 billion by selling such machines is not unexpected. So in other words, Nvidia doesn't have to supply 450,000 GPUs to earn this $10 billion in revenue from Blackwell. Nvidia told us on the earnings call, essentially debunked a lot of those rumors, changed the photo mass design to improve this production yield. And the company told us that the GPUs will enter mass production in the fourth quarter and continue into fiscal 2026. And told us it's expected to ship several billion dollars in Blackwell revenue. Obviously significantly lower than the $10 billion mentioned by Morgan Stanley analysts. But if Nvidia is being conservative and if Taiwan Semiconductor can get this production out and if Nvidia is selling more of the actual racks and not just the GPUs, $10 billion is definitely not out of the question. What we don't have the answer to is what that total revenue number is gonna look like. So here's what we do know. Nvidia just reported earnings here at the end of August, the 28th of August, actual revenue just over $30 billion beat by 1.29 billion. Now, if I look at the earnings estimates on Seeking Alpha annual, 125.57 billion, we want quarterly. So they're gonna report Nvidia's gonna have earnings November 27th, 2024 post-market consensus EPS estimate 74 cents, revenue 32.91 billion. Now let's just say that Nvidia meets that number and say they get $33 billion. But there's a potentially unexpected tailwind and say Morgan Stanley's wrong. Instead of $10 billion in Blackwell, say it's $5 billion and that just happens to be $5 billion more than the 33. You could have something easily like a $35 billion quarterly number where it can beat by $2 billion, maybe even more. Of course, I don't need to remind you guys that earnings are lagging, right? So if they're reporting the end of November, it's the three months previous. And so some of this could trickle over into that next quarter, which isn't gonna be till 2025. It's important to understand that. So I think there's massive potential. This is a bit of speculation, but we know that Nvidia is doing well. I'm confident it's gonna beat that estimate of 32.9 billion. The question is by exactly how much? And then you wanna know, is the stock a buy now or not? And more importantly, what are my price predictions for the stock in the short to midterm? Of course, it has amazing profitability, A plus gross profit margin TTM over 75%. The growth has been phenomenal, but slowing down. But you still have forward revenue growth of 86%, just knocking it out of the park. Valuation-wise, gap for PE of 44. It sounds expensive, but when you have this kind of growth, it can grow into itself very quickly. Not to mention that Blackwell could blow the numbers out of the water. Of course, those higher numbers, the more revenue you have, you beat those estimates. Well, that's gonna bring that PE ratio down. So let's look at a chart, and I'll show you some possibilities of where Nvidia stock could go next. All right, friendly reminder, you never wanna buy a stock simply off analyst forecast, but I think this is good to look at to get an idea. Strong buy, 39 buys, three holds, and zero sells. The highest price target on the street, $200 per share. The lowest price target is $90 a share. Remember, this is 125 a share right now. So the average price target, $152.44. That's 23.62% upside on the average. All right, trivia question for those who've been following the channel. What have I been telling you all year in 2024? What price would Nvidia be late 2024 or early 2025? Drop your answer in the comments below. Looking at a chart here, this is previous commentary in orange, and you've got the Fibonacci pivot points here. These are just one tool in the tool belt. You don't just look at a chart and buy. You have to put in a lot of work before you buy a stock. 99% of it is gonna be fundamentals. The last 1% is looking at a chart to see where it could go. Possibilities for DCA to buy or sell. Now this stock before the split, back here, October 2022, was $10.81. It ripped from essentially $11 to $140.76. Had a pullback here in early August with the sell-off, got below $100 to $90.69, even lower intraday. Ripped from 90 to 131, pulled back again to around $100 a share, and today trading at $123. Now your first resistance level is around 129, your second resistance level around 139, and this resistance 3R3, $154.34. I think there's a good chance you're gonna have to wait for earnings, which is gonna be late November. If those earnings deliver, and if Blackwell comes, then this speculation we talked about comes to fruition. This stock is gonna rip higher, and I do think you will see it above $150 this year. Of course, if earnings miss, well, all bets are off. If you're new here and wanna be a better investor, make sure you smash that subscribe button. If this video was helpful, drop me a like, drop me a comment. Have a great rest of your day. Take care.