Dangerous Catalyst for Nvidia & Chip Stocks [CRWV, NBIS, IREN] - as a Shareholder.

There's a whole lot of confusion going

on about what's going on with Nvidia and

renting back chips. No, they're not

buying back chips, but renting back

chips. What's going on with DGX Cloud

and what's going on with this material

service agreement with Nvidia? Because,

see, yesterday I made a video on this

topic and there were a lot of people

that seem to really misunderstand what's

going on. And I I think there's a chance

maybe they only watched 2 minutes of the

video, came up with a conclusion, and

then left, which is really their loss

because not a lot of people are actually

talking about this. I feel like once

again, I'm early and I'm one of the few

people talking about this. Like for

example, there's this one person said

yesterday, what are you even on about?

Are we reading the same filing? This

isn't proof of over supply. It's just a

contract clause where Nvidia shares some

downside risk if utilization drops.

Okay. Then I said, "The filing literally

says, Cory, we've entered into a new

order demanding Nvidia buy unused

compute." And the person replies and

says, "Yes, the filing says Nvidia has

to cover unused capacity." That part is

true, but it doesn't prove over supply

today. It just shifts some risk back to

Nvidia. Yes, but you have to realize

this is the first time we are hearing

about this with Nvidia. We never knew

that these agreements existed to the

point that in 2023 apparently we have

this material services agreement from

2023

which is now being activated. That's the

key, right? You have to understand it's

now being activated. Floreave isn't just

reminding you, hey, we have a material

service agreement where Nvidia is going

to buy our unused capacity. Clore is

literally saying, "Hey, Nvidia, we can't

sell this. We are potentially overs

supplied," which is implied when they

can't sell capacity. They have like,

"Hey, we we have too much. We can't find

buyers for this server technology. You

need to buy it." So, we are entering the

order for you to buy it. That is by

definition either a sign that Chlorine

sucks at selling, which is possible, or

there's over supply. though yes it

doesn't guarantee there's over supply

but it's an early canary it's an early

red flag and we'll get the full material

service agreement when the next earnings

call from coreweave comes out which is

expected to be between November 12th and

14th Baron says the 12th so I'm going to

go with the 12th to be safer on that

side now why is this such a big deal

well it's such a big deal because it's

also coming at the same time as Nvidia

is also agreeing to rent back from

Lambda uh over 18,000 of its own chips,

which you think, okay, well, that's

probably because they're building out

their own data centers, right? But

they've been scaling back their own data

centers. Now, this is so fascinating

because think about this. Nvidia has

been pitching the DGX cloud that, hey,

in August of 2023, Jensen tells us that

DGX cloud is an enormous success. Then

in late 2024, we hear that this enormous

success generates $2 billion of

annualized revenue. Well, that's less

than 2% of the money they make from

chips. Then in 2025, we're not going to

spend any more money building out our

own cloud infrastructure, which remember

cloud infrastructure is warehouse,

utility, power, infiniband, network

connections. It's a lot of

infrastructure, chip stacks, uh you

know, that could be partly their own. Uh

and then of course server rice. There's

a lot that goes into this and then you

have to manage it all, right? It's a lot

of work.

But now all of a sudden September of

2025 comes around and we hear from

Nvidia that they're no longer

prioritizing DGX for external use at

all. Instead, we'll just go lease from

other cloud service providers. And this

is where things and people start

scratching their heads and gohm this

feels a little circular because on one

hand you were telling us that DGX cloud

was such an enormous success. your own

NVIDIA data centers were such an

enormous success and now you're telling

us yeah we're not like that's that was

an enormous success and it was good

revenue but it's less than 2% we're not

going to focus on it you know we'll just

use it internally that's the argument

now is what we're just using our own

servers internally to design chips and

and to work on CUDA and in case you're

wondering why our commitments to leasing

chips are skyrocketing where we're

leasing our own AI chips back from the

likes of Microsoft Oracle and for reef

as reported by the information. Uh don't

worry, this is totally normal. We are

doing this because we need the

technology.

Okay? Or it's potentially because it

makes more sense to recognize the

revenue and then be able to buy back

your own stock because it makes people

inside and holders of the stock very

very rich. But it does create serious

concerns that this start of over supply

has begun. Now consider this when it

comes to this lambda deal. I want you to

think about this.

Nvidia agreed to rent 10,000 of its own

chips from Lambda for $1.3 billion over

four years and another $200 million deal

to rent another 8,000 chips. So

recognize how this works and why this

makes so much money. And this is why

people get pissed off when you call this

stuff out. It makes massive money

because Nvidia gets to recognize the

chip sales immediately. If you enter

into a chip purchase with Nvidia, Nvidia

gets to recognize the revenue

immediately. They recognize the Nvidia

and they re the revenue right away and

they recognize the margins right away.

So, it's kind of like you selling

lemonade for $100 and then promising to

buy back one cup of lemonade for five

bucks every year for the next seven

years. Okay. Well, you still only paid

back 45, but you got a hundred. You got

a 100 today and you gave back 45 divided

over the next seven years. It's a great

deal for Nvidia because Nvidia gets the

revenue today, recognizes the margins

today. It gives some of that back to

Lambda. Lambda goes public. When Lambda,

like Corewave, goes public, what do they

do? They raise money and then they can

use that money to buy more Nvidia chips.

It's extremely circular, right? That's

that's why people start wondering is

this is this bubbly? Because look at

what in Lambda is forecasting. Lambda is

forecasting that well, they're telling

us they had 114 million of revenue in

Q2. That's a little under half a billion

dollars of annualized revenue. They're

estimating to double to a billion

dollars of revenue by 2026. That could

be reasonable. Could be very, very

reasonable. But would it be reasonable

then to say we're going to 20x after

that? I don't know. Lambda is literally

estimating that they're going to 20x by

2030. But wait a minute. In order to

double, we're already relying on Nvidia

leasing back the very chips that we are

buying. That's to get to a double. Now,

we're supposed to expect that Lambda is

going to 20x from here. I thought this

random comment put it very well. When

there's no killer app, money needs to be

cycled around. And that unfortunately

seems to be a little bit of what's

happening here. And it's pissing off a

lot of people who have big allocations

to the chip place. And mind you, I have

a bunch of exposure to Nvidia as well. I

promise course members that when I sell

Nvidia, they're going to be the first to

hear. I will send out an alert to my

course members in our alpha report just

like we do when I buy stocks in the top

10 stocks to buy list. For example, you

know, I've been sending out alerts on

like, you know, there was a company that

just recently IPOed. I almost never buy

IPO companies. We bought this IPO

company. We did fundamental analysis

together. We sent out the alert to buy

it. That stock today that it's been like

a week now since it's IPOed. That

company today is up another 13%. This is

based on the fundamental analysis that

we do and the technical analysis and

those are the kind of calls that we like

to make. And then when I send an alert,

I send it to members in the alpha report

last week. You got I'm buying this

stock. I plan to buy more. I'm buying

this allocation now. And then I even

bought the dip on it soon after that.

And now it's way up from there.

because it, you know, was expected to be

volatile within the 24 hours after IPO.

Very normal. Now it's way up, which is

exactly what we expected. Anyway, my

point is like I'm not trying to be

negative on people making money. I want

people to make money. I want you to make

money. And as an Nvidia shareholder, I

look at this and I'm like, some of this

stuff makes me nervous. It's like you

guys are expecting me to believe that

you can 20x your data center, but you're

already forcing Nvidia to buy your

excess capacity at Lambda and at

Coreweave

and you're walking back from running

your own data center for external use

because you're realizing that's not

where the money is being made. And yeah,

we'll just use that internally, which is

a nice copout. But we also don't know

how much Nvidia uses themselves versus

rents out. Again, I'll give you an

example. Let's say Nvidia rents, you

know, back 100%. Uh, so whatever they

rent back, they rent back $10 billion

worth, right? Let's just make up, let's

call $10 billion 100%. Well, maybe they

rent out 30% of that to somebody else,

like they rerent it basically, and maybe

they use 10% themselves. They're still

losing, you know, 60 to 70% there. We

don't know what that number is, but it's

a red flag because it's likely to lead

pricing to go down over time. Now,

hopefully not, but it is likely to lead

pricing to go down. And that's the

concern that Nvidia actually went from,

in my opinion, being a company that

which is what made me so excited about

them. They went from a company that

could recognize the revenue and not be a

bag holder to literally committing to

being the bag holder. and this this

coreweave 8K. I think people are

misunderstanding it. Like they're

they're being like blind here to this

being a red flag. Like I can be bullish

Nvidia and I could love the margins of

Nvidia and I could love what Nvidia does

as a company, but I can also recognize

that this is a red flag and I can also

recognize that people are, you know,

shilling

without letting their brains realize

this is bad. You know, like somebody in

the chat earlier, this jackass in the

chat earlier, he's like, "Oh, Kevin, you

sure like it when they buy back their

own stuff, don't you?" And like, first

of all, you're you're acting like I'm

trying to be like sinister or like do

something greedy or whatever. I'm

providing you perspective as I usually

do on this channel. That hurts me,

right? As an Nvidia shareholder, me

pointing out a red flag of Nvidia hurts

me. And I don't shear the buybacks. I

actually see the buybacks as a red flag.

The company's so good. Go do buybacks.

Invest more into better equipment or

infrastructure, whatever. If the data

centers are doing so good, instead of

buying back the stock, go build data

centers. Do something productive with

the money. When you're buying back

stock, what you're doing is you're

trying to prop up the stock valuation so

insiders can get rich or shareholders

can get rich or you just end up using

that money to conduct equity investments

into the smaller data center place to

keep the ponds going. That's what makes

me concerned is that there are early

warning signs that there's a pawn. Now,

how do you play that? Well, in my

opinion was a trailing stop. Like, I'm

not I'm not like rushing to the exit on

the video, but I'm going to be aware of

this because where there's smoke,

there's fire. And and when it starts, it

usually doesn't get better over time.

Hopefully, it does.

But again, I want you to recognize that

sometimes you get these sort of like

bots. I mean, the comments that are just

like blind to real issues. Like there

was another one yesterday. Who was it?

Uh like I personally think this is a

pretty important inflection point to pay

attention to. Uh and then and then this

person I think they legitimately didn't

listen to the video at all, but they

make it sound like they're smart people.

Right. This video is theoretical at

best. Nvidia has not bought back any

chips. They're just insurance for

coreweave in a hits the fan

scenario. No, they're not. This is not

in a shitty hits the fan scenario.

Because if it's a shitty hits the band

scenario, guess what? It's happening

right now because Coreweave in their

filing says we are pulling the trigger

on demanding Nvidia purchase unused

capacity now. This is not some contract

clause for maybe. It is. We are doing

it. A B I never said Nvidia is buying

back chips. You didn't pay attention,

homie. Homie Nate. So your comment is

what's theoretical cuz you didn't even

pay attention to the content, which is

sad. And and I think this is where

people don't realize uh there are and

can be red flags. That doesn't mean that

we're going to fall off a cliff, but it

does mean we should pay attention to

these things. Now, Baron says that we

are going to get the copy of this MSA on

November 12th. I previously said that

was November 14th or 15th. Uh that was

based on when I thought the Cory Vern to

be. Baron says it's actually going to be

uh on the 12th. So, I highlighted that

right here. You can see that on screen

right here. So I I adjusted my calendar

and I encourage you to adjust your

calendar as well. But again my POV is

let me provide information you know to

to give perspective on on what could be

a real issue. We don't know if it is uh

you know everything could be just fine

but uh it it is something where what

this sets up is a precedent that anybody

in the future who is going to buy chips

from Nvidia deserves a guarantee from

Nvidia. But eventually you can only

provide so many guarantees, right? The

like the bar to provide guarantees is

going to get higher and higher and

higher. Soon your next data center plays

are going to go, "Hey, I don't want an

agreement that you're going to buy my,

you know, unused capacity through 2032.

If I'm going to spend $10 billion on a

new data center, I actually want you to

buy back my unused equipment all the way

through 2040." You know that that that's

where it's an issue. Jiro here says why

is coreweave buying more if they have

unused capacity. That's the thing.

Coreweave gets to be frivolous with

their investment because Nvidia

guarantees it. So why is Nvidia buying

more or why is Coree building out more?

Because they just dump it all on Nvidia

in a circular motion. So it doesn't

matter if there's unused capacity. That

is the definition of malinvestment.

That's crazy.

That's crazy.

So again, I'm not saying this is a

nearterm pooper dupers, okay? I'm saying

this is a longterm

uh potential issue. Not near-term. It's

a long-term

>> poopy dupee.

>> For now, it might very well continue to

be

>> bullish catalyst.

>> A bullish catalyst.

>> Bullish catalyst. And we like that. But

remember there's there there are some

things to remember about Kevin.

>> Kevin's somebody we consider Kevin is

fantastic too.

>> Kevin is very talented. But I don't know

it's going to be him, but he's a very

talented guy.

>> You know,

>> Kevin is much more interested than most

people by the way in the balance sheet.

>> I'm just saying. All right. So these are

things to pay attention to. Uh if you

want to know what I sell, I will be very

very clear about when I sell my Nvidia

stock in the M Kevin membership. Come

join us this way in the Me Kevin

membership. Every trade alert, all eight

courses, every private live stream,

every alpha report, you get it all uh in

the meet Kevin membership.

[Music]

>> You want to talk about love making,

right? Why not advertise these things

that you told us here? I feel like

nobody else knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have done so

much. People love you. People look up to

you.

>> Kevin Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.