Nvidia (NVDA) lost over $278 billion in its market cap from the latest sell-off on Wall Street as the company gets hit with concerns from the US Department of Justice and more.
Moor Insights & Strategy Founder, CEO & Chief Analyst Patrick Moorhead joins Morning Brief to discuss Nvidia’s recent performance and what challenges are ahead for the company.
Moorhead feels that headwinds for the stock price right now are more macro-economically driven, “but when you look at the growth, the 100, 200% growth, this is all about delivering Blackwell on time. Like Jensen said on the call, doing that with the highest level of compatibility with the best yields that has a positive impact on on costs and hence margins.”
Looking ahead at which stock may be a great alternative to Nvidia, Moorhead claims: “AMD (AMD) is the next best replacement, particularly because they both have GPUs followed very closely by Broadcom (AVGO), the counter to a GPU is what’s called an ASIC and those are primarily, built by Broadcom.”
Read more about Nvidia’s plunge here.
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This post was written by Nicholas Jacobino
Video Transcript
So Patrick, you would say that the headwinds for NVIDIA are more focused on the macro economic challenges than even say Wall Street’s expectations or the valuations around the stock.
I would say the stock prices.
Uh Absolutely.
But when you look at the growth, the 102 100% growth, you know, this is all about delivering Blackwell uh on time, like Jensen said, uh on the call uh doing that with the highest level of compatibility with the best yields that has a positive impact on, on costs and, and, and hence uh margins.
It might be an unfair analogy, Patrick, but I mean, this gives me the, the vibes of what Microsoft went through in the late nineties, early two thousands, especially as there was so much rapid innovation within software.
And Microsoft was trying to make sure that it could stave off comp petition and, and grow out its business.
Now, we saw what happened in the stock.
Thereafter, we saw the legal proceedings that played out how much of what happened.
What’s happening with NVIDIA right now is analogous to what took place with Microsoft and for investors to, to try and draw comparisons right now when Microsoft was put under the microscope over two decades ago.
Um it was like putting gasoline uh in sorry sand in a gas tank.
It slowed the company down.
It slows every company down.
You literally have to get legal approval for pricing.
Uh You have to put it in writing everything you say is going to be uh captured it.
It fundamentally slows a a company down.
I don’t believe like Microsoft, that the Department of Justice would try to break up uh in video like it tried to do.
And by the way, it did get a ruling that it did need to get broken up, but uh that was reversed uh on, on appeal, but NVIDIA needs to watch very much watch uh what it’s doing.
And what’s interesting is you always have complaints and I, I think the complaints that I we will see later who came forward is more than just direct competition.
I also believe these are likely some of Nvidia’s largest hyper scale or uh customers uh out there.
But frankly, nobody uh is comfortable out there with NVIDIA having 90% market share out there.
And, and so with that in mind just briefly, uh I, is it an A MD that perhaps is, is best positioned to be one of the other companies that both investors and, and customers start to look towards as an alternative to NVIDIA.
A MD is the next best replacement particularly because they both have GP us uh followed very closely by Broadcom.
Uh The, you know, the, the counter to a GP U is what’s called an Asic and those are primarily uh built uh by Broadcom and they supply Amazon Microsoft Meta uh Google across that.
And Asic is is more efficient than a GP U but not as as programmable in 25 and 26.
I would say Intel will likely be a factor with their uh GP U based designs.
Patrick, always a pleasure to grab some of your insights here with us this morning.
Thanks for joining us ahead of the opening bell as we’re all tracking NVD A this morning, it’s Patrick Moorhead, founder CEO and chief analyst over at more insights and strategy.
Thanks Patrick.