Stifel Has Message For Nvidia Investors Before Earnings

Google plans to end Pixel hardware production in China by 2025, shifting to Vietnam. TSMC's stock has surged, with an executive's holdings growing from NT$20M to NT$840M. AI demand is driving capacity expansions at companies like Quanta and Foxconn, but equipment bottlenecks and U.S.-China tensions pose challenges. Nvidia's H200 chips are allowed in limited quantities to China, while Beijing restricts exports of key materials to Taiwan.

Nvidia's Q2 13F filing shows SpaceX as its second-largest holding, valued at $21B. SpaceX's IPO was the largest ever, but the company faces high losses and capital expenditures. Nvidia's stake in SpaceX is now reportable due to the IPO. SpaceX's unique lockup period and Musk's divided attention raise concerns about its future performance.

China approved limited imports of Nvidia's H200 chips, with ByteDance and Tencent each receiving 10,000 units. Nvidia holds 500,000 H200 chips in inventory due to previous sales freezes. Chinese regulators require most chips to remain in Hong Kong, where data center infrastructure is lacking. The move aims to support local AI development amid US export controls and domestic chip shortages.

Nvidia is investing $1.5B in a data center campus in Ohio, leasing to OpenAI for 20 years. The project, with 4.25GW capacity, starts in 2028. Nvidia aims to secure power and sites, extending its reach beyond chips. This move targets AI infrastructure bottlenecks and increases Nvidia's share of AI revenue. The deal reduces Nvidia's exposure to hyperscaler purchase cycles and defends its margins. Nvidia expects $150B-$200B revenue over 20 years.

Nvidia reported strong Q2 results, with revenue up 92% to $75.2 billion and net income tripling. It holds 122.76 million shares of SpaceX (SPCX). SpaceX's Q2 revenue grew 92% to $7.81 billion, but it posted a net loss. Both companies are focused on AI growth, with Nvidia showing less volatility than SpaceX.

Nvidia (NVDA) invested $105 billion in an Ohio data center for OpenAI, a major customer. Critics suggest this is circular financing, where Nvidia funds AI firms to buy its chips. Nvidia's revenue grew 85% YoY in Q1 2027, but some worry about risks similar to Cisco's dot-com era strategy. NVDA's market cap is $5.3T, with a price target range of $164.07-$236.54.