Nvidia is a Monopoly | $3000 Stock.

nvidia's data center Revenue might

double over the next year but not just

that I'm not worried about the next year

I'm worried about the years after that

what's going to happen in 2024 and five

and six and who is actually the

competition for NVIDIA because I hate to

say it but nvidia's Revenue last year

ending in January was 15 billion dollars

specifically for the server segment the

server segment alone data center there

it is Data Center Revenue 15 billion

dollars that represents out of their 27

billion dollars approximately of total

revenue 55 percent of all their money

over the last year already came from

data centers well next quarter in

quarter two of the Year we're expecting

uh well a quarter to their Quarter Two

we're expecting data center Revenue

potentially to come in at 7 billion for

the quarter that would be an increase

increase from about the 4.3 they did in

this quarter well 7 billion in a quarter

if we just stay at that rate we're

looking at a 28 billion dollar source of

Revenue just from data centers alone if

you annualize out the next quarter

forget gaming for a moment forget

professional visualization forget

Automotive which is growing already at a

rate that's doubling this is their

Orient platform this is their Omniverse

platform which is like the realistic

version of the metaverse that actually

makes money

and gaming obviously makes a lot of

money they're still going to compete in

gaming in fact gaming has finally

bottomed and we're seeing growth in

gaming but the numbers that we got today

from Nvidia told us that they're

expecting data center revenues to be at

around 28 billion dollars annualized for

the year that's more than they made all

of 2023 2022 oh wait ever

so just data centers alone

could see a doubling almost a doubling

of Revenue just this year and if we get

another say 50 growth next year not even

a doubling of Revenue you ready for this

not even a doubling of data center

Revenue anymore forget all of the other

data let's just make this so simple 28

billion dollars of data center Revenue

in 2023. now we're going to add 50

that's going to put us at 42 billion in

24. let's add 50 percent growth again

that's going to put us at 63 billies at

50 again that'll put us at 90 plus uh

one and a half that'd be 94.5 billies

right so by 2026 so in other words in

three calendar years so called three and

a half years or so we could be close to

a hundred billies of data center Revenue

100 billies of data center Revenue just

roll with me for a moment so you could

see the Ridiculousness of what could

potentially happen and I don't think

anybody saw this coming and I want to be

clear about that the stockmart Wall

Street was expecting this stock to move

four percent in after hours it moved

over 20 because nobody expected their

forecast of seven billion dollars of

Revenue to be a joke and instead their

actual forecast to be 11 billion dollars

of Revenue that is a massive increase to

say we're gonna have seven billies of

Revenue and then to beat That by 57 is

absolutely insane on top of the fact

that you're selling these chips at

nearly a 70 gross margin probably around

a 50 net margin so let's call it a

hundred billies by 2026. a hundred bill

by 2026 and then we'll talk risk factors

right that's going to bring you 50

billies to the bottom line there are two

and a half billion shares outstanding 50

divided by 2.5 means you're looking at

twenty dollars of eps by 2026 per share

from data centers alone okay add go

ahead and add I don't know 20 billies or

whatever for uh for all the other stuff

the gaming the automotives uh whatever

so 70 divided by 2.5 that's gonna put

you at uh 28 of earnings per share so if

we now multiply that by let's say

because they're growing growing like

crazy let's just take a 30pe ratio

that's what Apple's trading for now this

makes this a 600 stock by 2026 with this

sort of growth rate and if we include

the other aspects of the business you're

actually at close to an 840 stock you're

looking at potentially you know what 80

percent return over the next uh three

years to potentially a double even at

today's levels at 375. how crazy is that

just from going from a double of data

center Revenue that would be a hundred

percent to get here and then fifty

percent fifty percent fifty percent

that's assuming Nvidia only grows at

these levels now what we heard in the

earnings call was actually remarkable

that the data center revenue or data

center sort of total data center market

cap is about a bill now I did a little

bit more research after this it's

somewhere between a bill to 1.5 Bill and

about 50 percent of that is for CPUs and

gpus but going forward and this is the

big thing so let's go ahead and say it's

you know we'll take the midpoint number

here 1.25 Bill let's call that the data

center Revenue today 50 of that is the

chip segment so if 50 of that is the

chip segment that puts about 625 million

dollars available for chips While most

servers are still the old school setups

they're just CPUs that's because their

data center storage thing servers where

you're storing static images pictures

video uh you know text files PDFs

whatever generic crap Google Drive

iCloud kind of stuff text messages right

well you now go to generative Ai and

let's say you need to rebuild all of

these data centers which are now

Antiquated as generative AI data centers

because everybody wants to start using

AI uh assuming AI is not a fad we'll

talk about risk factors in a moment well

you need to create

725 oh sorry this is a billion actually

you need to create 725 billion dollars

of of or you're going to spend 700 geez

hello you're going to spend 625 billion

dollars on chip spend remember we said

50 would be just the chips part the

other 50 would be like your fire

suppression server racks you know

whatever install Services maintenance

services whatever the building the land

so 625 goes into chips well how much of

that 625 is going to be GPU versus CPU

well new server systems you would spend

about one to two dollars for every about

twenty dollars that you spend on a GPU

so in other words you're spending about

five to ten percent on the CPU which

could be like an AMD processor

compared to the amount of money you're

spending on the gpus

okay so let's say the gpus get 90 of

that 625 market share we're we're not

even going to grow the servers we're not

even assuming servers are going to grow

because the reality is this one to 1.5

trillion dollar server space could

become a three four five ten trillion

dollar server space right The Tam could

grow but forget about assuming the Tam

is going to grow let's just say we're

going to take all the old crap and turn

it into gpus going forward and not

assuming any growth so if we wanted to

assume growth maybe we assume these

servers stay but we create a new 625

it's not an unrealistic expectation that

this would happen within the next three

years especially when you consider

companies like Google have about 70

percent of their revenue at risk because

of AI That's somewhere around 50 billion

48 billion dollars that's at risk per

quarter per quarter per year Google has

about 200 billion dollars at risk

due to Google search advertisements and

placement advertisements on websites

they've got 200 billion dollars of

Revenue at risk if they don't figure out

AI out ASAP so Google's got a big

incentive and that's just Google it's

not Microsoft Amazon Oracle Apple

whatever Apple doesn't even do their own

servers you think Apple's got chips they

use Google servers and some AWS for

iCloud crazy right so anyway if you say

90 is going to go to gpus well so 90

goes to gpus that's actually a 562 uh

billion dollar spend on gpus well what

did we just assume by 2026 we assume

just 100 billies of that would be Nvidia

well right now you know how much market

share Nvidia has of the dedicated

graphic chip Market 88 Bros

88 of 562.5 is about 500 billion dollars

which is actually 5x this number so now

all of a sudden 5x these numbers holy

crap 600 times 5x not even considering

the other parts of the business this is

potentially a three thousand dollar

stock now you might think to yourself

Kevin this is bubbly this is insane

that's true and there's going to be

competition and I'm not suggesting this

right now is definitely oh yeah that's

my price sorry I'm just thinking out

loud I'm like

oh my God this is a very this is a

transformative moment and I want to just

speak logically here we don't want to

make rash decisions but everybody got

caught off guard on this I got caught

off guard on this uh even though even

though I've been for six to eight months

talking about don't invest in software

invest in the freaking chips even though

I got that right I did not think it

would be to this level I thought this

was just gonna end up having like you

know some growth and then a lot of hype

so for me if I drew out sort of my

expectation I thought you probably had

you know this is the growth part right

here and then this purple part is the

the recent sort of hype oh the fund

manager needs exposure to AI so that's

uh you know what you get but what we

really got was this was just a fraction

you know this was actually like the

reality is this right here that whole

thing I just drew is like that size and

the reality is I like all of this is

potentially up for grabs in the server

space it's insane

so it's a massive massive potential

Market at huge margins everybody wants

wants the h100 server sector and then

you look at tsmc and you're like but

Kevin you know they have to be able to

manufacture all these chips yeah but

what happened during the PC slowdown

folks tsmc kept installing new equipment

and they ran it at like 50 occupancy in

other words they had a very very

crumpled up rubber band

now Nvidia picks up the phone and says

yo we need uh to Triple our orders of

h100s yesterday and they're like no

problem we have the machines available I

don't know why they have that accent but

whatever you turn the machines on you

start printing checks

that's why they think they can supply

but they're getting all these it's it's

the demand that they're getting that's

insane so now you have to ask yourself

is is this just a bubble okay so the

questions you have to ask yourself are

the following number one is AI a fad

right I mean like Kevin's got a course

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now for actual productivity for normal

people entrepreneurs and employees alike

daily Hardware working Americans that's

what this is for so is AI going to be a

fad like the metaverse

if you think that you probably haven't

experienced much AI yet but I'm going to

go ahead and conclude that at this point

the answer to that is no and the reason

for that is that AI is everywhere in

practical ways whether it's accounting

legal fact checking uh proofreading

researching in health care

in cancer research I don't care what it

is autonomous driving uh you name it AI

is there programming right it's in

everything sales it doesn't matter it's

everywhere unlike the metaverse the

metaverse was a joke it still is I mean

maybe we'll have virtual reality at some

point we'll have the Ready Player one

world but that's 10 years out AI is now

ai could literally cancel the recession

you could see so much spent from

businesses that the recession gets

canceled

because businesses do not want to get

left behind by AI so they would actually

be more likely to potentially hire or

over hire people to make sure that we're

not getting left behind in the AI race

and I'm saying like AI capable workers

right you're not going to hire people

who would otherwise get replaced by AI

this is why you have to be comfortable

with AI and get used to it and add value

to AI

and realize where its weaknesses are so

you still have value all of which will

teach but

if companies are going to adapt to

artificial intelligence and everybody's

going to get in on artificial

intelligence

then companies are going to go through a

transition eventually there will

probably be more layoffs because

artificial intelligence takes your jobs

but is now the time to do that weeding

probably not now is the time to figure

out what's your value proposition how

can your company make more Revenue

that's the goal right now now it's it's

a gold rush folks and Nvidia is selling

the pickaxes that's what this is a video

is like the only one selling the

pickaxes

yes AMD does CPUs that'll sit on those

server racks but again one Buck maybe

two bucks for every 20 you're spending

on Nvidia it's insane

so tsmc is a winner yes AMD is a winner

of course AMD or Nvidia is a winner

because they're selling the pickaxes of

the gold rush so if you think AI is a

fad you're probably not even watching

this video so let's get past the fact

that it's a fat so what's the next risk

to Nvidia well the next risk to Nvidia

is competition competition is the next

risk who's your competition

I'll wait

oh uh startups

okay well good luck starting a chip a

server chip manufacturing company and

actually getting the bandwidth to get

any of your orders fulfilled at tsmc

when Nvidia is just gonna load all that

stuff good luck getting into those

Supply chains good luck getting

designers to make those server chips

eventually that'll happen but companies

that are relying on AI I don't think are

going to gamble trying to save a little

bit when they need guaranteed uptime for

the AI Services otherwise they're big

software businesses fail I don't want to

bet on the software businesses it's too

speculative to bet on the software

businesses I don't know if snowflake's

gonna beat our palantir or palantir is

going to beat out you know some other

service or some other startups gonna be

both of them I don't know that

but I do know they're all running in

video all of them

and I don't think a startup can make a

better pickaxe can they really make a

better pickaxe that's the question and I

think the answer that is no so then

you're looking at the um Cloud providers

basically uh the CPA whatever the cloud

provider Services these are your Oracle

your Microsoft uh Amazon uh Google right

your cloud provider Services well Google

came up with their TPU their tensor

Processing Unit which they started work

on in 2017 but guess what they're still

doing they're still buying Nvidia chips

because they're better the Nvidia stuff

is just better

and then you have to ask yourself

uh Google spends roughly on just data uh

like chip stuff so the way you can

figure this out is you look at their

whole capex say their capex is seven

billion dollars you look at their

financial statements you're like okay

well of that maybe only about 2.2

billion is uh infrastructure for servers

that puts you at about 1 billion for

chips because we know about 50 is the

chip cost the other 50 is the building

the land and the other stuff so if

they're spending a billion dollars a

quarter on let's say chips

uh from Google right

what does Google want to do more get a

little bit like get those chips for

cheaper

uh uh basically try to save money on uh

save on the one bill or or does Google

care about oh wait the 50 billion per

quarter we have at risk because of AI

well to some extent you could say both

but if they de-prioritize actually

making the chip and video is just going

to create them so why bother that's the

problem Nvidia is turning into a

monopoly I hate to say it's after

today's earnings or a call I'm looking

for reasons not to think that Nvidia is

a monopoly uh they have an AI chip

Monopoly this is insane so I want you to

think about some of these these uh

tentative things and I have questions

for you so number one uh this could

cancel uh the recession

uh uh number two

Nvidia has a monopoly and you might

think Nvidia going up uh 20 is you

missing out

uh or it's a bubble

what about when it 10 to 20 X's

now people are thinking like oh but

Kevin if it's a trillion dollars now

could it be five trillion dollars

yeah

yeah okay maybe not 10x call call it 5x

let's be generous 5 to 10x I don't know

so okay let's put some of these opinions

aside for a moment because we don't need

to do these sort of projections right

now they don't matter as much what

matters is the questions that I have

okay here are the real questions

so what what growth is the server

Market going to see according to asml

you're going to see 250 billies of

Revenue by 2030 per year

that's nominal however that was

according to a report that asml put

together guess when

February of 2023 why is that date

important because it was before

AI then you have to ask yourself what

percent of servers

today are GPU based well probably very

few because what were gpu-based servers

good for before

cloud-based gaming who cloud-based games

not that many people compared to how

many people are going to use AI so in

other words the odds are

your cloud-based server

uh or your gpu-based servers are

probably far and few between this is why

on the Nvidia call they said most

servers are CPU based right now

huge Tam opportunity the problem though

is anytime you start talking about Tam

you get a little bubbly usually right

and you kind of lose your foundation in

fundamentals and that's scary so you

have to be careful about this but then

again the growth rate for these chips at

Nvidia unless there's a competitor which

wears the competitor

could be phenomenal now we also don't

know if this is going to be like a one

and done right what if it's one and done

in other words what if

everyone buys and orders and h100 and

then they have them and then they're

done okay now we've translated

transitioned the growth slows down you

had a big AI hype boom and then it dies

and then it's like okay data center

revenue is falling again maybe

unless of course AI uh explodes and

everybody's like Oh I thought everybody

was using Ai No actually only one

percent of companies were serious about

using Ai and now everybody's using it

it's very difficult to know

but there is a real there are two

arguments here and I want to know your

thoughts like this is an important one

you I need your help in leaving comments

down below

there are two ways Nvidia I mean there

are many ways Nvidia can go here but

these these h-100s the these GPU server

chips will either get competed away

uh or you'll see this one-time

purchasing right you'll see this

alternatively

you could see h100s via software and Via

just being the best chips that there are

maintain a massive moat

the total server segment could 3x with a

demand to rebuild all or to build all

new as GPU

that would be somewhere around two to

three trillion

in spend on servers

that's an insane number by the way

trillion on spend that's an insane

number

uh you know again Google spent

like seven on capex last quarter that's

like 28 bill

in uh in in the year on average

annualized even if they doubled they'd

be at 50 bill you would need 20 Googles

just to get to a trillion you'd need 40

Googles to get to 2 trillion

that's assuming they already double so

there are definitely some pie in the sky

risk factors over oh my gosh let's just

extrapolate everything to the Moon

so there are definitely risks here and I

do not yet have all of the answers and

I'm already 22 minutes into this video

but my question for you and which I

really want you to answer down below is

why have you not joined those programs

on building your wealth yet where we can

brainstorm together and then the second

question I have is who's the competition

third question what's the growth rate in

your opinion going to look like for the

server sector and how much needs to be

GPU is AI a fad if it's not a fad then

what's to stop Nvidia from being the

Monopoly

of of of this Market

I'm blown away I do not have all the

answers I was absolutely blindsided by

today's report I wholeheartedly admit

that I was blindsided by today's report

I knew the chips would do well so I was

right about that

but I was not

all the way right because I just didn't

realize the magnitude at which this this

thesis would be correct and then then we

do not know how much longer that will

last either so I need your help

please leave comments down below

thorough details especially if you have

experience in this and I will put

another video if you leave good comment

or like real useful comments I'll put

another video together where we do uh

some more conclusive uh research but

these are just my first impressions and

I'm

now I want you to know this when it

comes to AI time is what's going to make

you money and if you can prove that

value to an employer you'll always be

able to be employed so this is another

way of making sure that you don't get

replaced

foreign