TOP STORY
📈 Nvidia Up 5% After Data Centre Sales Soar 73%

🐝 Nvidia ($NVDA) reported earnings last night so it’s time for a special edition Weekly Buzz breaking them down!

📈 Based on the stock’s 5% jump this morning, investors were pleased, with NVDA tracking for the company’s best post-earnings stock performance in a year and jumping to its highest level since January (and now only ~6% under its all-time-high).

🏆 Nvidia even retook its throne as the Most Valuable Company in the world, surpassing Microsoft.

📊 And even if you don’t hold it directly, if you hold any S&P 500 ETFs (like $ZSP, $VFV, or $VOO) - 6% of those holdings are in Nvidia, so it’s worth paying attention.

🤿 So, without further ado, let’s dive into the numbers…

🤑 Nvidia Revenue Soars 69%, Beating Profit Expectations by 11%

• 💰 Revenue: $44.05B, up 69% from last year, and 1.7% higher than analysts expected

• 🎯 Forward Revenue Targets: $45B, 2% below analysts’ expectations with a $8B hit from chip restrictions in China

• 💸 Earnings per Share: $0.81, up 33% from last year, 11% higher than analysts expected

✨ Highlights

• 🤖 The biggest revenue driver by far was Nvidia’s AI data center revenue, which grew 73% year-over-year and makes up 88% of total revenue.

• 💰 Data centre growth has been driven by both increased spending across Big Tech (with Meta announcing a big increase in AI spending) and Nvidia’s new lineup of ‘Blackwell AI chips’.

• 🚀 The new Blackwell chips ramped to a massive 70% of sales this quarter, compared to only ~25% last quarter, with Jensen Huang calling it the ‘fastest product ramp in Nvidia history’

• ☁️ Cloud providers like Microsoft Azure, Google Cloud, Oracle, and Amazon Web Services still make up half of Nvidia’s data centre revenue

• 🎮 Gaming - once Nvidia’s main business - grew 42% to $3.8B as Nvidia chips are used as the processor for the new Nintendo Switch 2 console.

• 🚗 Auto & Robotics revenues (including the chips and software for self-driving cars) grew 72% year-over-year to $587M, but still make up only <2% of the total business.

⭐️ Despite the already insane growth to date (with Nvidia up a massive +1,477% in the past 5 years), Jensen made bold claims about the future of AI, saying:

😰 While there was a lot to celebrate this quarter, the earnings report did raise some big concerns about slowing growth and China, but before we take a look at those + how analysts have been reacting to the numbers, a quick word from today’s sponsor Global X Canada! 

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TOP STORY CONTINUED
😰 Nvidia’s Biggest Concerns: Slowing Growth and Struggles in China

Back when Nvidia reported its last earnings in February, the #1 concern was slowing growth.

And while that trend continued this quarter (with growth falling to its slowest pace in 2 years), it seemed like less of a concern as Nvidia had a very clear reason for slowdown this quarter - struggles in China.

🇨🇳 Banned from China

❌ Back in April, Trump and the US government decided to block Nvidia from selling chips into the Chinese market, causing Nvidia to fall by 7% overnight.

💰 This quarter, we got to see the impact of the ban, with Nvidia estimating an $8B hit as it effectively loses access to a market that was previously 13% of its revenue.

👎 Huang has been a vocal critic of the ban, saying that the export controls were ‘misguided’ and are going to encourage Chinese AI developers to switch to homegrown chips.

😬 Even if the ban is short-lived, the long-term problem is that Chinese giants like Alibaba or Tencent have been reliant on the H20 chip, and this ban will accelerate China’s development of domestic chips to compete with Nvidia (such as from Huawei).

While Nvidia may lose China, it may gain the Middle East, after Trump announced large AI projects and investment agreements with Saudi Arabia, Qatar, and the UAE, reversing a push by Biden to clamp down on the region's access to the technology.

⭐️ Analyst Reactions

✅ Overall, despite the struggles in China, analysts reacted positively to Nvidia’s earnings. According to data from TipRanks, Nvidia remains a ‘strong buy’ among the majority of analysts.

🤩 The overall theme was that despite the massive headwinds in China and the $8B loss, Nvidia was still able to beat estimates and even project modest growth for next quarter, summed up nicely by Cody from Benchmark:

💡 My Thoughts

As I shared on Blossom on Jan 30th, I added Nvidia to my portfolio (on top of my exposure to the stock through the S&P 500) after Jensen’s announcements at CES. I’m now up +13% since. Including my S&P 500 holdings, Nvidia makes up 7% of my total portfolio.

Overall, I have a very similar reaction to Nvidia’s earnings as the analysts. While the China struggles are worrisome (and I actually think will likely have lasting impact), from all the Big Tech earnings I covered, the tech giants are continuing to spend more and more on AI, and the use cases are starting to get really exciting (like the 100 new AI features Google announced). So, as for me, I plan to continue holding my Nvidia stock!

🌼 Blossom’s Thoughts

🌼 In the Blossom community, Nvidia was the #3 Most Sold and only the #8 Most Bought this week, meaning investors were selling in the run-up to earnings. I’ll be curious to see whether the earnings report drives more buying or selling over the next week…

🏆 Nvidia ranks as the #1 Most Held Stock in the US, and since last earnings, has de-throned TD Bank ($TD) as the #2 Most Held Stock in Canada and is now behind only Enbridge ($ENB).

💬 As the #1 Most Mentioned there’s been a ton of awesome posts from the community sharing their perspectives so make sure you visit the NVDA stock page on Blossom or visit my post here to join the discussion!

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IN PARTNERSHIP WITH CBOE CANADA
🚨 New Listing Alert! CIBC Launches the CIBC Income Advantage Fund

⭐️ Nvidia wasn’t the only one with exciting news this week - last week CIBC launched a new fund on CBOE called the CIBC Income Advantage Fund ETF ($CCLO)

🇺🇸 This ETF invests primarily in a diversified portfolio of AAA-rated U.S. floating-rate collateralized loan obligations (CLOs), seeking to provide a high level of current income while preserving capital.

💸 The Fund also attempts to reduce its currency exposure to non-Canadian dollar currencies by implementing a currency hedging strategy that is aimed at protecting the Fund from non-Canadian dollar currency fluctuations.