logo
One of Jensen Huang's Ambitious Goals Might Make Nvidia Its Own Worst Enemy

One of Jensen Huang's Ambitious Goals Might Make Nvidia Its Own Worst Enemy

Globe and Mail3 days ago

The advent and proliferation of the internet in the mid-1990s was a can't-miss trend that captivated the attention of everyday investors. Since this moment, numerous other game-changing innovations have come along that have promised pie-in-the-sky addressable markets. This includes business-to-business e-commerce, genomics, 3D printing, and the metaverse, to name a few hot trends.
But over the last three decades, no trend has come particularly close to rivaling what the internet did for corporate America... until now.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
The evolution of artificial intelligence (AI) looks to be the next leap forward for the tech industry and society as a whole. The vastness of this game-changing opportunity, which allows AI-empowered software and systems to make split-second decisions without human intervention, is reflected in PwC's estimate that AI will add $15.7 trillion to the global economy in 2030.
A $15.7 trillion addressable market means a lot of companies are going to be winners, from hardware to actual application. However, no company has been a bigger beneficiary of the AI revolution than Nvidia (NASDAQ: NVDA).
The potential problem is that one of Nvidia's biggest perceived competitive advantages might also be its undoing.
Innovation comes first for Nvidia and CEO Jensen Huang
Since 2022 came to a close, shares of Nvidia have advanced by more than 870%, with the company tacking on over $3 trillion in market cap and completing a historic 10-for-1 forward split. Though Nvidia's aggregate percentage return has lagged Palantir Technologies, Nvidia's valuation soared quicker than any megacap stock in history.
Nvidia's outperformance is directly reflective of its ideal positioning in AI-accelerated data centers. The company's Hopper (H100) graphics processing units (GPUs) and successor Blackwell GPU have been the preferred options in high-compute data centers. In other words, there's a very high probability that Nvidia's hardware is behind the latest generative AI solutions and the training of most large language models.
Being at the leading edge of the hottest trend on Wall Street over the last three decades has its perks. With demand for AI-GPUs handily swamping supply, Wall Street's AI darling has been able to charge a veritable arm and a leg for its hardware. Last year, Nvidia's Hopper chip was flying off the shelves with a price tag north of $40,000. For the sake of comparison, Advanced Micro Devices was selling its Instinct MI300X series chips for between $10,000 and $15,000.
The ability to charge a premium for its hardware sent Nvidia's gross margin soaring. After consistently producing a generally accepted accounting principles (GAAP) gross margin in the low-to-mid 60% range prior to the rise of AI, Nvidia saw its GAAP gross margin explode to as high as 78.4% in the fiscal first quarter one year ago (the company's fiscal year ends in late January).
But it can be argued that Nvidia's greatest competitive advantage is its innovation, which is led by CEO Jensen Huang.
Huang's aggressive ambition is to bring a next-generation AI chip to market on an annual basis. It began with the Hopper and Blackwell, and is expected to continue with the release of Blackwell Ultra in the latter-half of this year, Vera Rubin in the second-half of 2026, and Vera Rubin Ultra in the latter-half of 2027.
As you might have surmised, Vera Rubin and Vera Rubin Ultra will be running on a new processor, known as "Vera." This processor should be capable of doubling the processing performance of Blackwell Ultra, with considerably improved memory capacity and memory bandwidth than predecessor chips.
The key point being that Huang wants to keep Nvidia in its decisive leadership position on the compute front, which in turn should help the company charge a premium price for its hardware, relative to external competitors like AMD and China-based Huawei.
Could Jensen Huang's accelerated innovation timeline be Nvidia's worst enemy?
For virtually all publicly traded companies, innovation is paramount to success. Huang's aggressive spending on research to develop faster and more-efficient AI-GPUs is something that Wall Street and investors would almost universally cheer.
But there's a very real possibility that Jensen Huang's accelerated innovation timeline may do more harm than good for his company. While it does appear that Nvidia will hang onto its compute advantages for the foreseeable future, there are far more considerations businesses have to take into account than just compute ability.
Imagine for a moment that you're a " Magnificent Seven" business and one of Nvidia's top customers that just dropped tens of billions of dollars on the company's hardware to cement your spot as an AI leader. Now imagine your AI-GPUs massively depreciating in value one or two years later because of Nvidia's accelerated innovation cycle. Are you really expected to drop $10 billion-plus every year or two for the latest chip? Highly unlikely.
What's interesting is that many of Nvidia's leading customers by net sales within the Mag-7 are internally developing AI-GPUs and solutions of their own. Though this hardware isn't going to externally compete against Hopper, Blackwell, or the company's successor chips, it'll be notably cheaper than Nvidia's GPUs. Further, since these internally developed chips aren't backlogged like Nvidia's chips, they'll be far more accessible. This points to Nvidia's largest customers by net sales delaying their upgrade cycles.
Nvidia's GAAP gross margin has come under pressure over the last year. NVDA Gross Profit Margin (Quarterly) data by YCharts.
We might also see Nvidia's largest revenue customers opt for older chips as they depreciate. Though Huang's entire premise of introducing a new GPU annually is to sustain his company's pricing power, his own accelerated development timeline could crater Nvidia's GAAP gross margin as businesses purchasing their own hardware -- not those leasing data center space -- trade down to less-costly but still quick alternatives.
Jensen Huang's aggressive innovation cycle is also potentially damaging to data-center leasing models, such as the newly public CoreWeave (NASDAQ: CRWV). Between 2022 and 2024, CoreWeave used extensive debt financing to acquire approximately 250,000 GPUs, many of which are Nvidia's Hopper chip. The value of these chips will likely depreciate rapidly with Wall Street's AI darling introducing an advanced GPU annually. Businesses wanting cutting-edge compute capabilities might pass on CoreWeave's data centers faster than investors might realize.
While there's no question that Nvidia's AI-GPUs are superior to the competition in compute ability, there's far more that goes into a business's purchasing decision. There's a very real possibility that Huang's own ambitious GPU innovation timeline acts as his company's own worst enemy in the years to come.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!*
Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of June 2, 2025

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Updated Briefing and Discovery Schedule for CITGO Sale Hearing
Updated Briefing and Discovery Schedule for CITGO Sale Hearing

National Post

time36 minutes ago

  • National Post

Updated Briefing and Discovery Schedule for CITGO Sale Hearing

Article content PEMBROKE, Bermuda — Gold Reserve Ltd. (TSX.V: GRZ) (OTCQX: GDRZF) (' Gold Reserve ' or the ' Company ') announces that the U.S. District Court for the District of Delaware (the ' Court ') issued an order adopting the following revised schedule for briefing and discovery deadlines proposed by the Special Master given the expiration of the Topping Period on June 18, 2025 and rescheduled start date for the Sale Hearing to August 18, 2025, as previously announced here. Article content Event Deadline Deadline for the Special Master to submit his Final Recommendation July 2 Deadline to serve written discovery on the party (or parties) whose bid is selected as the Final Recommendation July 7 Opening expert reports due July 7 Deadline for the filing of any objections to the Special Master's Final Recommendation July 9 Deadline for any Competing Objector to disclose its own bid materials (such materials to be commensurate with those disclosed by the Special Master of the recommended bid) July 9 Deadline to serve written discovery on a Competing Objector July 11 Deadline to serve responses and objections for discovery requests served after the Final Recommendation July 15 Deadline to meet and confer regarding the scope of discovery to be produced in response to discovery requests served after submission of the Final Recommendation July 16 Deadline to serve witness disclosures pursuant to FRCP 26(a)(3) July 18 Deadline to notice witness depositions July 21 Deadline to serve responsive expert reports July 21 Deadline to complete document productions in response to discovery requests served before the submission of the Final Recommendation and substantially complete document productions in response to discovery requests served after the submission of the Final Recommendation July 22 Deadline to serve reply expert reports, if any July 25 Conclusion of the discovery period July 31 Deadline for the filing of responses to objections to the Special Master's Final Recommendation August 1 Deadline for the filing of replies regarding any objections to the Special Master's Final Recommendation August 8 Deadline for the filing of sur-replies to replies regarding any objections to the Special Master's Final Recommendation (only to the extent new arguments are raised in reply briefing) August 12 Deadline for the Special Master to submit Joint Status Report August 13 Deadline to disclose exhibits pursuant to FRCP 26(a)(3) August 13 Deadline to serve objections to FRCP 26(a)(3) exhibit disclosures August 15 Commencement of the Sale Hearing August 18 Article content Article content A copy of the Court's complete order can be found here. Article content A complete description of the Delaware sale proceedings can be found on the Public Access to Court Electronic Records system in Crystallex International Corporation v. Bolivarian Republic of Venezuela, 1:17-mc-00151-LPS (D. Del.) and its related proceedings. Article content This release contains 'forward-looking statements' within the meaning of applicable U.S. federal securities laws and 'forward-looking information' within the meaning of applicable Canadian provincial and territorial securities laws and state Gold Reserve's and its management's intentions, hopes, beliefs, expectations or predictions for the future. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. They are frequently characterized by words such as 'anticipates', 'plan', 'continue', 'expect', 'project', 'intend', 'believe', 'anticipate', 'estimate', 'may', 'will', 'potential', 'proposed', 'positioned' and other similar words, or statements that certain events or conditions 'may' or 'will' occur. Forward-looking statements contained in this press release include, but are not limited to, statements relating to any bid submitted by the Company for the purchase of the PDVH shares (the 'Bid'). Article content We caution that such forward-looking statements involve known and unknown risks, uncertainties and other risks that may cause the actual events, outcomes or results of Gold Reserve to be materially different from our estimated outcomes, results, performance, or achievements expressed or implied by those forward-looking statements, including but not limited to: the discretion of the Special Master to consider the Bid, to enter into any discussions or negotiation with respect thereto and that the Special Master may reject the Bid at any time; the Special Master may choose not to recommend a Base Bid or Final Bid to the Court; the failure of the Company to negotiate the Bid, including as a result of failing to obtain sufficient equity and/or debt financing; that Bid submitted by the Company will not be selected as the 'Base Bid' or the 'Final Recommend Bid' under the Bidding Procedures, and if selected may not close due to the Sale Process not being completed, including as a result of not obtaining necessary regulatory approval to close on the purchase of the PDVH shares, including but not limited to any necessary approvals from the U.S. Office of Foreign Asset Control ('OFAC'), the U.S. Committee on Foreign Investment in the United States, the U.S. Federal Trade Commission or the TSX Venture Exchange; failure of the Company or any other party to obtain any required shareholders approvals for, or satisfy other conditions to effect, any transaction resulting from the Bid; that the Company forfeit any cash amount deposit made due to failing to complete the Bid or otherwise; that the making of the Bid or any transaction resulting therefrom may involve unexpected costs, liabilities or delays; that, prior to or as a result of the completion of any transaction contemplated by the Bid, the business of the Company may experience significant disruptions due to transaction related uncertainty, industry conditions, tariff wars or other factors; the ability to enforce the writ of attachment granted to the Company; the timing set for various reports and/or other matters with respect to the Sale Process may not be met; the ability of the Company to otherwise participate in the Sale Process (and related costs associated therewith); the amount, if any, of proceeds associated with the Sale Process; the competing claims of other creditors of Venezuela, PDVSA and the Company, including any interest on such creditors' judgements and any priority afforded thereto; uncertainties with respect to possible settlements between Venezuela and other creditors and the impact of any such settlements on the amount of funds that may be available under the Sale Process; and the proceeds from the Sale Process may not be sufficient to satisfy the amounts outstanding under the Company's September 2014 arbitral award and/or corresponding November 15, 2015 U.S. judgement in full; and the ramifications of bankruptcy with respect to the Sale Process and/or the Company's claims, including as a result of the priority of other claims. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. For a more detailed discussion of the risk factors affecting the Company's business, see the Company's Management's Discussion & Analysis for the year ended December 31, 2024 and other reports that have been filed on SEDAR+ and are available under the Company's profile at Article content Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to Gold Reserve or persons acting on its behalf are expressly qualified in their entirety by this notice. Gold Reserve disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, subject to its disclosure obligations under applicable rules promulgated by applicable Canadian provincial and territorial securities laws. Article content Article content Article content Article content

GME Earnings: GameStop Reports Mixed Financial Results and 4,710 Bitcoin
GME Earnings: GameStop Reports Mixed Financial Results and 4,710 Bitcoin

Globe and Mail

time36 minutes ago

  • Globe and Mail

GME Earnings: GameStop Reports Mixed Financial Results and 4,710 Bitcoin

GameStop's (GME) share price is down about 5% after the video game retailer reported mixed first-quarter financial results. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter The Texas-based company announced earnings per share (EPS) of $0.09, which topped the $0.04 consensus expectation of analysts. However, revenue for the quarter came in at $732.4 million, which was below the consensus Wall Street estimate of $754.2 million. The company also reported an improved operating margin of -1.5%, which was up from -5.7% in the same quarter of 2024. GameStop's free cash flow at the end of the quarter totaled $189.6 million, which was a big improvement from negative -$114.7 million a year earlier. GameStop's profitability. Source: Main Street Data Bitcoin Purchases Along with its financial results, GameStop disclosed that it bought 4,710 Bitcoins (BTC) between May 3 and June 10 of this year. It's not known what the average purchase price of the Bitcoin was. However, GameStop's BTC holdings are currently worth $516.6 million based on the current price of Bitcoin. GameStop announced previously that it planned to begin buying and holding cryptocurrencies, adopting a similar playbook to that of software developer turned serial BTC acquirer Strategy (MSTR). GameStop has said it plans to use its excess cash to make investments in risk assets such as crypto and stocks. The company made its first Bitcoin investment in May of this year. Is GME Stock a Buy? Currently, only one Wall Street analysts offers a rating and price target on GME stock. So instead, we'll look at the stock's three-month performance. As one can see in the chart below, GameStop's share price has gained 33% over the last 12 weeks.

Why Intel Stock Sank Today
Why Intel Stock Sank Today

Globe and Mail

timean hour ago

  • Globe and Mail

Why Intel Stock Sank Today

Intel (NASDAQ: INTC) stock saw a day of big sell-offs in Wednesday's daily session. The chip company's share price closed out the day down 6.3% due to concerns that competitive pressures are mounting. Intel's valuation sank today following news about a product that Nvidia is readying that could compete with Intel in the central processing unit (CPU) space. Meanwhile, another report suggested that Advanced Micro Devices will continue gaining market share from Intel in the server CPU market. Is Intel's outlook in the CPU market about to get much worse? According to recent leaks, Nvidia is gearing up to launch two accelerated processing unites (APUs) for the consumer market that would combine a CPU and a graphics processing unit (GPU) into single products. Based on some limited perimeters, some leaked benchmark scores for the more advanced of Nvidia's rumored APUs point to performance that tops a comparable offering from Intel. Real-world performance may be more favorable in Intel in many situations, but moves from Nvidia to play a bigger role in the CPU space could still create significant competitive pressures. Making matters worse, a new report from Mercury Research suggests that AMD has continued to rapidly increase its market share in the server CPU space. According to Mercury's report, AMD managed to capture 40% of the CPU market for servers in this year's first quarter -- and it's poised to match Intel in market share sometime next year. What's next for Intel? Intel's path forward looks complicated. The company has missed out on the early growth market for artificial intelligence (AI) GPUs, and it's facing pressure in both the consumer and enterprise CPU markets. While the company's chip foundry unit has the potential to be an important national resource for the U.S., it remains to be seen whether its next-gen semiconductor fabrication platform will actually attract substantial interest from third parties seeking manufacturing services for their AI chip designs. Intel stock could surge if there are signs that its turnaround strategy is yielding results, but there's a lot of uncertainty on the table right now. Should you invest $1,000 in Intel right now? Before you buy stock in Intel, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intel wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor 's total average return is996% — a market-crushing outperformance compared to174%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store