Dolphin Research
2025.09.01 03:54

Nvidia (small meeting): The target for 2026 is relatively cautious, with the market reaching 3-4 trillion by 2030.

Dolphin Research has organized the content of the $NVIDIA(NVDA.US) IR small meeting. For financial report data, please refer to the commentary "NVIDIA: The Number One Stock in the Universe, Is Not Explosive Enough a Crime?"

Core Information:

1) China Market: Some H20 licenses have been obtained. H20 has no backdoor, and normal delivery requires geopolitical issues to subside;

2) Next Year's Target: The market target for 2026 is relatively cautious, and the supply shortage will continue;

3) Long-term Target: Annual expenditure (non-cumulative) in the data center-related market by 2030 is expected to be $3-4 trillion, with the reason for the increase being "AI factories," where the company's products can account for 60-70%;

4) Rubin: Design and tape-out have been completed, visibility extends to next year, and mass production and shipment are planned for next year;

The following is the specific content of NVIDIA's small meeting:

I. Financial and Operational Data

1. Gross Margin Target:

  • The company's target is to achieve over 75%, unaffected by the situation in the China market.
  • The gross margin of H20 products is approximately at the company's average gross margin level.
  • Regarding the potential "15%" impact in the China market, there is currently no formal regulation. It may be interpreted as revenue sharing or may affect the cost of goods sold (COGS), the company currently assumes it affects COGS. However, regardless, the company still expects the gross margin to return to over 75%.

2. Operating Expenses (Opex):

  • The recent decline in operating expenses is merely a timing issue, with no special interpretation needed.
  • The annual operating expense rate is expected to remain in the 35-40% range (High 30s), reflecting the rapid growth of the company's revenue.

3. Capital Expenditure (Capex) and Market Size:

  • The total capital expenditure scale of the market is $600 billion, which not only refers to the top four hyperscale cloud service providers but also includes the broader market, encompassing both computing and networking equipment expenditures.

4. Inventory and Finished Goods:

  • The structure of inventory/finished goods on the balance sheet is more inclined towards Blackwell Ultra. This reflects confidence in strong prospects for the third quarter and beyond.
  • Current demand exceeds supply capacity, and inventory levels are consistent with production ramp-up and confidence in future demand, with no cause for concern.

II. Market Size and Growth Expectations

1. Overall Market Size:

  • The $3-4 trillion figure mentioned by Jensen Huang refers to annual expenditure on data center infrastructure by 2030 (non-cumulative), with the forecast being raised due to the inclusion of growing "AI factory" construction expenditures.
  • The construction of "AI factories" has limited overlap with cloud service providers (CSPs), with market drivers coming from enterprises, national security centers (NSC), new clouds (Neoclouds), and sovereign clouds.

2. NVIDIA's Market Opportunity:

  • Each 1 gigawatt (GW) of AI factory construction expenditure corresponds to approximately $50 billion in total AI infrastructure expenditure.
  • NVIDIA (NVDA) products can cover about $35 billion of this, accounting for 60-70% of the total market.

3. Growth Confidence:

  • The company is cautious about setting specific market targets for 2026, but is confident in achieving healthy growth (50% compound growth) to reach a market size of $3-4 trillion by the end of 2030.
  • Excluding the impact of H20 products, data center business revenue has achieved sequential growth.

III. Products and Technology

1. Product Demand and Selection:

  • GB200 (Blackwell): Capacity is ramping up very aggressively, with extremely strong demand. Its performance improvement is significant (50% increase in generated tokens), driven by reasoning, agentic AI, and inference.
  • H100/H200: There is still strong demand currently (as evidenced by this quarter's performance). Some customers choose them over the newer B100/GB200 because they are easier to certify, enabling faster time-to-market and reducing certification delays. In fact, connecting Blackwell with Hopper infrastructure is not ideal.
  • Rubin: The product roadmap has been shown to customers, who are very interested. The chip design and tape-out have been completed, visibility extends to next year, and mass production and shipment are planned for next year.

2. GPU vs. ASIC:

  • The debate over whether ASIC or GPU is superior in training and inference is losing its persuasive power.
  • The inference market is huge, but the training market is equally large, with many next-generation foundational models being trained using Blackwell or even Hopper. In the development of inference models, both training and inference are very important.
  • The company sees a large demand for training now and in the future.

3. Computing, Networking, and NVLink:

  • The growth rate of computing and networking/NVLink may fluctuate each quarter, but in the long term, they should be comparable.
  • The ramp-up of NVLink capacity is closely related to rack-scale systems. Computing and networking components are shipped separately.
  • Rack output is expected to accelerate in the third quarter, and there is great optimism about NVLink's development momentum.
  • Rack-scale systems will become the backbone of future data centers, and there are huge opportunities for NVLink in the near and medium term.

IV. Supply Chain and Capacity

1. Supply Constraints:

  • Demand continues to exceed supply. The company needs more supply and will continue to push for capacity ramp-up in the supply chain. The readiness of data centers (including land and power) is one of the factors.
  • The company is satisfied with the progress but must actively collaborate with the supply chain given the growth demand.

Demand is expected to continue exceeding supply throughout next year, and it is currently unclear when supply and demand will reach equilibrium.

V. China Market

1. H20 Products: Licenses have been obtained to export H20 to some customers in China, and there is market demand.

2. Shipment Expectations: It is believed that once geopolitical tensions ease, $2 billion to $5 billion worth of products can be shipped in the third quarter. If demand increases, shipment volume can be further increased.

3. Policy and Investigation: There is currently no formal regulation on the implied "15%" level. It is emphasized that H20 products have no "backdoor," and the company is investigating this. Geopolitical issues need to subside for normal delivery.

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