NextDC Deep Dive: When a REIT Wears Tech Clothing
Nvidia's Earnings:
Why the Dip Is a Golden Opportunity in Disguise
I've never hidden my enthusiasm for Nvidia and its pivotal role in the Artificial Intelligence (AI) revolution reshaping our world. So naturally, I was laser-focused on Nvidia's latest earnings report - and it didn't disappoint. I believe Jensen Huang, Nvidia's Co-Founder and CEO, is a brilliant capital allocator and strategist who will keep Nvidia positioned ahead of the pack for many years to come.
The Wall Street Paradox: 114% Surge vs 8% Drop
A 114% surge in revenue and 147% jump in net profit would thrill investors in any company, especially one of Nvidia's stature. Yet, the stock dropped 8% in the next trading session. What gives?
Wall Street’s Myopia Strikes Again
In my view, this dip reflects Wall Street’s chronic obsession with short-term noise—quarterly reporting—while ignoring the monumental value, Super Compounders like Nvidia are creating for the long haul.
The Street fixated on a slight dip in gross profit margin, which fell to 73% in Q4, down 1.6% from the prior quarter and 3% year-over-year.
Nvidia CFO Colette Kress explained this was due to the accelerated ramp-up of Blackwell, the fastest product rollout in the company’s history. Context matters: this 73% margin still puts Nvidia in the same gross profit league as software giants like Microsoft, Adobe, and Salesforce. Management expects margins to rebound to ~75% later this year post-investment.
I’m not sweating it—are you?
Nvidia’s grip on the Data Center GPU market remains ironclad, with over 90% share. Its nearest rival, AMD, limps along at 3%. Blackwell will only widen that gap.
ASICs: A Threat? Not Quite.
Some investors fretted about Application-Specific Integrated Circuits (ASICs) gaining traction among big customers like Amazon, Microsoft, and Alphabet. Could this erode Nvidia’s GPU dominance?
GPU Supremacy
90%+ Data Center market share
56¢ After-tax profit per revenue dollar
(AMD comparison: 3% market share)
ASICs Reality Check
"We build different things than ASICs... Nvidia's architecture is general - optimized for language models, vision-based models, multimodal models, you name it. ASICs are niche; we're universal."
- Jensen Huang
Still the Decade’s Champion
Yes, Nvidia’s stock is down ~25% from its peak, battered by fears of tariff, export controls, and whispers of future slowing growth. But let’s be clear: I believe Nvidia remains one of the best stocks of the decade.
The AI narrative is shifting toward reasoning models—think ChatGPT on steroids—which Huang says will demand 100x more computing power. That’s not a headwind; it’s a tailwind for Nvidia’s long-term dominance. Blackwell, outpacing its predecessor Hopper, is tailor-made for this era of large language models (LLMs) and generative AI.
I see AI as the greatest economic shift in history—spawning new industries and turbocharging everything from tech to healthcare. Huang’s vision breaks it down into three layers.
Agentic AI
Autonomous agents boosting productivity in automotive, finance, and beyond
Physical AI
Training systems for self-driving cars and robotic warehouses
Robotic AI
Machines interacting with the physical world through industrial bots to humanoids
How Big Is This Opportunity?
Grand View Research pegs the global AI market’s growth at a 36.6% CAGR through 2039. As the undisputed leader, Nvidia could soar past a $10 trillion valuation by 2030. That’s not hype—it’s math. Currently its market cap is ~$2.87 trillion, Nvidia only needs to average 28.4% EPS growth (less than its long term average) for the next 5 years, at its current PE ratio, to be a $10T company in 2030.
Still the Decade’s Champion
- Nvidia’s trading at ~30x forward earnings, near its 5-year low. The last time it hit this level was October 2022, when shares were under $12. Today’s price, even after a ~25% drop from its peak, screams opportunity.
Since its 1999 IPO, Nvidia’s been a rollercoaster—drawdowns of 20% and 50% aren’t rare. Yet, a $10,000 investment back then would be worth nearly $30 million today. Even later entrants who bought the dips have reaped massive rewards. I see this pullback as one of those moments.
I’ve held Nvidia since 2023 and added to my position in January after China’s DeepSeek spooked the market.
I've attached our V3Val financial analysis summary, showing why we rate Nvidia a “Buy” based on a conservative 30% EPS growth rate over the next five years—yielding a 29% annual compounding return.
Check out the short video from our brilliant financial specialist Bruce Carmichael explaining the report.
Join My Live Value3 Webinar + Q&A
📅 Thursday, 20th March | 6:30PM – 7:30PM Sydney Time
We'll discuss:
- Nvidia's Economic Moats
- 7 Powers Analysis
- V3Val Financial Model (Attached)
- Bruce Carmichael's Video Analysis
First webinar: 938 attendees
Can't attend live? Recording available for registrants:
PS. Remember that missing opportunity is always more expensive than trying to avoid risks you can't control - like export controls, rates, tariffs...
In the long run these are just noise.
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