Nvidia Says $1T Is Coming — The Market Isn’t Buying It

Support for the show comes from VCX, the public ticker for private tech.

The US stock market started history's greatest wave of wealth creation.

From factory workers in Detroit to farmers in Omaha,

anyone could own a piece of the great American companies.

But today, our most innovative companies are saying private longer,

which means every day Americans are missing out until now.

Introducing VCX, a public ticker for private tech.

Visit GetVCX.com for more info.

That's GetVCX.com.

Carefully consider the investment materials before investing,

including objectives, risk, charges, and expenses.

This is another information to be found in the funds

perspective at GetVCX.com.

This is a paid sponsorship.

This episode is brought to you by Indeed.

Stop waiting around for the perfect candidate.

Instead, use Indeed sponsor jobs to find the right people

with the right skills fast.

It's a simple way to make sure your listing is the first candidate see.

According to Indeed data, sponsor jobs

have four times more applicants than non-sponsored jobs.

So go build your dream team today.

With Indeed, get a $75 sponsor job credit

at Indeed.com slash podcast, Terms and Conditions Apply.

This episode is brought to you by Nespresso.

Introducing Virtuo Up, the latest and a long line of innovation

from Nespresso.

It's innovation you can touch, sense, and taste in every single cup.

With a three-second start, easy open lever,

and dedicated brew over ice button,

it's even easier to enjoy your coffee your way.

Zip for yourself.

Shop Virtuo Up exclusively at nespresso.com.

Today's number, $887 million.

That's how many dollars Warner Brothers Discovery CEO David

Zazloff is expected to receive when he sells the company

to Paramount.

During his tenure, Zazloff was responsible for instant classics

such as Magic Mike's last dance and Joker part two.

But he will always be remembered for his true crowning

achievement.

Re-re-branding to HBO Max.

Welcome to Profty Markets.

I'm Ed Elson.

It is March 18th.

Let's check in on yesterday's market vitals.

The major indices posted modest gains.

The price of oil climbed higher as President Trump slammed

allies for not helping him fight the war in Iran and reopen

the straight of Hormuz.

And finally, Bond Yields fell ahead of the Federal Reserve's

interest rate decision due later today.

OK.

What else is happening?

Nvidia expects at least $1 trillion in revenue from Blackwell

and Ruben Chips through 2027.

That is the headline news out of the company's GTC conference,

also known as the Super Bowl of AI, which kicked off this week.

In his keynote on Monday, CEO Jensen Huang pitched a future

where Nvidia powers not just chatbots and data centers,

but also robots, factories, and autonomous machines

in the physical world.

Nvidia's stock is up nearly 1.5% since his speech.

Lots more to unpack from this conference.

So here to discuss all of it,

we're speaking with our friend Gil Luria,

head of technology research at DA Davidson.

Gil, good to have you on the show.

I think we have to start with this $1 trillion number

that is making all the headlines.

$1 trillion in chip sales through 2027.

And that's what Jensen Huang believes.

Give us your views on that number.

Is that a real number or is that just a headline?

No, it's a real number.

What's really surprising is that investors shrugged it off

is unimpressive.

It really added a half a trillion dollars of revenue

in really in a year.

And you would think investors would jump all over that,

considering it implies upside to next calendar years numbers

for Nvidia.

And yet, investors shrugged it off,

which tells us something really interesting.

Investors don't believe the great data center bill

that will continue into next year.

The market is now telling us that it is expecting

2026 to be the peak year in the data center billed out.

Now, that's indicating a little bit of split personality

for the market, because as you discussed

and we've discussed, the market is also saying

mass unemployment is coming,

software companies are worthless,

so AI is going to happen,

it's going to have a huge transformational effect,

and yet at the same time, the market's not believing

that the great data center bill that will continue

into next year.

So somewhere along there, there's an inconsistency.

I guess something that I would empathize

with the market's reaction here.

I mean, when we hear Elon Musk, for example,

talk about optimist robots and sort of talk about these big numbers

in the future, he'll often say something like,

I think this is going to generate

trillions of dollars worth of revenue.

And he seems to sort of just say it on the fly,

he said similar things about robotaxies as well,

and then it never materialized or if it did,

it materialized in a much more insignificant way

than a lot of people expected.

And I guess the question remains here for Jensen Huang too.

I mean, why is this one real when it seems to be also

a little bit of a projection out into the future?

Why is it something that we should really be taking seriously?

That's a fair question,

because these numbers are fantastical.

So we do have to always be skeptical

when people give us fantastical numbers like that.

But to be fair, two different people,

Elon Musk has a long, illustrious track record

of over-promising and compressing timelines

even when he knows it's going to take a lot longer.

Even though he usually delivers on the promises eventually,

the timeline gets extended a lot.

Right.

Jensen Huang has actually been pretty consistent.

He's actually been cautious not to guide too far

into the future up until just six months ago.

In video, it was only guiding one quarter at a time.

Six months ago, he took a departure to say,

I think there's going to be half a trillion dollars

of Blackwell and Ruben by the end of 26,

or in the next 18 months,

which is slightly past 26.

And he pointed to that and said,

look, here I am, five months later,

I'm telling you that number's too low.

I need to take that to a trillion dollars

if I extend it to 2027.

So he's being thoughtful.

And he, at least in the way he's communicated

and clarified that statement,

feels like he's under-promising.

He clarified, this doesn't include CPUs or the GROC chips

or the networking equipment or Ruben Ultra.

So he actually said it's more than a trillion.

So from his perspective,

this is a number that he has high visibility into

because he has these orders

from his largest customers,

Microsoft, Amazon, Google, Meta, et cetera.

So he feels like that's actually under-promising,

which is probably why he's a little surprised

by the under-reaction to such a high number.

So I guess what then do we make of the fact

that the market doesn't seem to be so hyped

about the next couple of years in data center buildout?

Why do investors believe this?

Why do they, it seems like you're saying,

think that we've kind of reached peak data center?

Well, I don't think we've reached peak data center.

I'm saying the evaluations for these stock imply that.

And it's not an unreasonable thing to say, look,

these big companies are investing hundreds of billions of dollars.

They do not yet have the revenue and their returns

to justify that.

Until we see those returns come in,

we're going to be skeptical about these companies

continuing to invest in these rates

because these companies are using all their cash flow

and then some to build out data centers.

So they can't keep doing this forever.

So we, the investors, the market as a collective,

as view is, let's wait until we see the returns come in

a little better, then we'll be able to make that leap of faith

that the data center construction is going to continue

with these rates.

It is our opinion.

It is my opinion that we will get these returns,

that the growth rates were seeing it open AI and anthropic

and in usage of AI by consumers and enterprises

is so significant and the technology is still developing

that we will actually need a lot more data centers.

But the skepticism is always warranted.

It just creates opportunities for investments.

Right.

One of the big themes in his keynote was physical AI.

So robots, factories, autonomous systems, et cetera.

Does that play a big role in your view

on how this AI build out will unfold?

Are you thinking about physical AI?

Was that story compelling to you?

It's compelling, but the timeline is different.

You pointed earlier to Elon Musk and his promises about

optimists and rolling millions of optimists into every home

and we know that's a few years away.

I would think of that as extending the AI cycle.

If the AI cycle is about increasing productivity

of white collar workers, physical AI and robotics

are about extending the productivity of blue collar workers.

For those of you that didn't see the keynote,

they even animated Olaf from Frozen

and had him come on stage to talk to Jensen Wong.

It is coming and we've seen some demos of optimists

and figure robots, et cetera.

We just know that that's several years out.

So that's probably behind the big AI wave.

We're going to have a big humanoid robot wave.

They'll help automate the other types of jobs

from white collar jobs to blue collar jobs.

What would you say was the single most important takeaway

from GTC so far?

The incorporation of the GROC technology

that Nvidia acquired.

So if we've been talking about Broadcom and AMD

trying to catch up to Nvidia, AMD has a new generation of GPUs.

Some custom GPUs they're doing from Meta for OpenAI.

Broadcom does the A6, which is custom accelerator chips

that they do for other large companies like Google, et cetera.

And those companies appeared to be catching up to Nvidia

by incorporating GROC technology

into their data center systems

and Nvidia is extending its lead from those companies.

They're talking about the fact that they can generate

more tokens faster and cheaper

than any of those alternatives.

And it was very important for them

to bring the GROC technology in in order to accomplish that.

So it's Nvidia extending its lead over the competition

and making the argument that the total cost of ownership

even for inference is lower with Nvidia systems

and the key to that was adding the GROC technology.

One other thing that has struck me about this conference

is just how big it is.

I mean, people are going at Super Bowl of AI,

Woodstock of AI.

I mean, you see these images of these gigantic crowds,

literally filling out a stadium.

I saw someone online saying that Jensen Huang

is the Taylor Swift of men,

which I think is weirdly actually not that inaccurate.

That's right.

What do you make of just how big of an event

this has become?

And I guess the stadium of Jensen Huang in 2026,

what does that say about society

and where we are as a market right now?

Yeah, this is the big event of the year for AI.

And it's not a coincidence.

Jensen Huang foresaw the future of AI

before anybody else did, right?

He was meeting Sam Augman in 2017 to give him chips.

So he saw this coming.

He's anticipated several steps forward.

So this is really well deserved in the sense

that he is very much an Nvidia.

He's very much responsible for the AI revolution.

And it's not a coincidence that they also capture

most of the profit dollars in AI.

And we'll continue to do so for a while.

So it's his vision that's been responsible

for a lot of the progress.

It's made in video GTC, the main event for AI right now.

And that's why it's such a big celebration.

And plus he has the iconic black leather jacket.

That always helps that you have something like that.

It looks pretty good.

I think we need to get one ourselves.

Final question, $181 a share.

That is what Nvidia is talking about right now.

What do you make of the valuation over at DA Davidson?

It's very attractive.

That's a market multiple.

So they're trading at 21 times earnings on a number

that's probably too low.

A market multiple for a company that's

going to grow more than 50% this year

and probably more than 30% this year.

That's a lot more than market growth.

So as long as you believe that we're going to continue

to need more AI and build more data centers next year,

Nvidia is probably the most attractive mega cap out there.

All right.

Gail Luria, DA Davidson.

Gail, always appreciate your time.

Thank you.

Thank you.

Off to the break.

China's role in the Iran War.

For even more markets insights,

you can subscribe to my weekly newsletter,

Simply Putt at simplyputt.proftymedia.com.

Support for today's show comes from Grinola.

The struggle of having back-to-back meetings

throughout the day is a painful one.

You're nodding along, contributing, trying to stay present.

But in the back of your mind,

you're secretly stress-rolling your memory

for what was just said

or who's supposed to follow up on what.

Meetings are a mess.

Grinola wants to fix that.

Grinola is an AI-powered notepad

built for the way real people actually meet.

You simply take rough notes like you normally would.

And in the background,

Grinola securely transcribes the meeting.

Then it turns everything into clean,

structured, actually useful notes when the meeting ends.

And you want to know the best part?

Grinola works through your devices audio,

which means it integrates seamlessly

into the video conferencing tools you already used.

No setup, no awkward bots.

It's just your normal meeting

with superpowers you need to do your job better.

So if meetings are eating up your day,

Grinola is a no-brainer.

You can try it totally free for three months

just head to grinola.ai slash markets.

That's grinola.ai slash markets

to get your time back.

Get three months free

at grinola.ai slash markets.

America leads the world in medicine development.

It matters.

We get new medicines first,

nearly three years faster.

Five million Americans go to work

because we make medicines here at home.

And not relying on other countries keeps us safe.

But China is racing to overtake us.

Will we let them?

Or will we choose to stay ahead?

When America leads, America cures.

Let's tell Washington to keep us in the lead.

Learn how at americacures.com.

Pay for by Farma.

The all new 2026 Toyota RAV4 is here,

building on everything drivers know and love about Toyota.

With a redesigned look and modern tech

that makes life behind the wheel easier than ever,

the new RAV4 comes standard as a hybrid,

providing smooth, efficient performance

for both city streets and longer journeys.

Enjoy the legendary reliability Toyota is known for

in the all new 2026 RAV4.

Learn and shop more at toyota.com.

Toyota, let's go places.

We're back with Broccoli Markets.

Trump is pressuring China to help him win the Iran war.

On Monday, Trump asked to push his planned summit

with Xi Jinping back by quote a month or so.

The meeting was set for March 31st

and would have been the first US presidential visit

to China since 2017.

This delay is widely seen as a tactic

to push China to help reopen the street of Hormuz.

And China is uniquely positioned to help do that.

It buys roughly 91% of Iran's oil exports,

making it the only country with real financial leverage over Iran.

So here to help us unpack China's involvement

in the Iran war.

We're speaking with Alice Hahn, director at Green Mantle

and co-host of the China decode podcast.

Alice, thank you for joining us.

I want to ask you about China's role in all of this,

but we should probably start with Trump maybe trying

to send a message to China trying to get them

to reopen the street of Hormuz.

Is that the message he's sending?

And can they do that?

Can they really make it happen?

Well, thanks for having me back on the show Ed.

Really interesting stuff.

We've got a collision of what's happening

on the US China front with what's happening in Iran.

So let me take it sequentially.

I would say what Trump is trying to do is soft requesting

the Chinese to help out, not just the Chinese by the way,

the Europeans, other actors in the region as well,

because he clearly doesn't feel that he can do this alone.

Now, my own sense, and this is a sense amongst my colleagues here

at my firm is that there actually is growing risk of boots

on the ground of a US operation to eliminate Iranian miners

that opposing a risk to the straight of Hormuz.

That could happen.

But certainly, I think in the weeks leading up

to the current moment, there has been this sort of soft signaling

from Washington that they would like to have the Chinese come in

and contribute, collaborate in the way that the Soviets

did with the Americans back in the 80s during the Iraq-Aran War.

But what is clear to me and what was clear from the readout

of Wang Yi, the Chinese Foreign Minister's press conference

back on March 8 during the two sessions,

is that China doesn't want to get involved.

Wang Yi made it very clear that China is abiding

by the quote-unquote five principles of peace and stability

and non-interference in foreign affairs.

What that means concretely is that the Chinese are playing

a wait and see game.

They are not directly aiding the Iranians as of yet

and so far as I understand.

But they are also not willing to commit convoys

or collaborate with the Americans to really

securitize the straight of Hormuz.

And last but not least, I would say that they

I think benefit in the short term,

or even the medium term if this becomes a more prolonged conflict

from the US being bogged down in the Middle East,

you know, moving away from the Indo-Pacific

as its core area of strategic concern.

And really, I think the Chinese believe that this could

in the short medium term push the Gulf countries,

which I think already is doing, closer towards Beijing

because the Gulf countries are very upset

with what has been happening in terms of the US

and Israeli's mismanagement from their perspective

of the Iran issue.

It seems like leverage in power is really the big question here.

And based on what Trump is doing with this sort of soft

ask as you put it, it seems to suggest that China has the power

to make things okay in the straight of Hormuz

because they buy so much of Iran's oil.

At the same time, I also know that China depends on Iran

for a lot of the oil that they import to their own nations.

So in a lot of ways, maybe they don't have the leverage there.

Maybe they actually need Iran in a lot of ways too.

So I guess, give us the lay of the land

when it comes to power and leverage.

Who is the real power player from a geopolitical perspective

when it comes to the Iran war right now?

Well, I think about it from a national security framework

of capabilities and intentions.

Your first point, Ed, is do they have the power

and the leverage of around 100% yes?

They have bought just over 90% of all Iranian oil exports,

China imports around 15% of its oil,

prior to this from Iran.

So this is an asymmetric relationship

in which the Iranians are highly reliant.

This is because of sanctions on Chinese demand,

Chinese imports.

And by the way, over the last four decades,

the CCP Beijing has had really close strategic ties

with the Islamic Republic

because they see them as a key asset in the region

and giving them an advantage in the Middle East.

But does China have the intent to really get involved?

And this is where I'm skeptical.

They could, in theory, say to the Iranians,

hey, you should stop mining,

putting miners in the region to obstruct trade.

That may be on the table at some later date

and some kind of diplomatic piece process.

But right now, I think China is in the advantage seat

primarily because from what I'm hearing in the Gulf region,

Iran will probably put China at the top of the list

as it starts to open up the street.

And already we see indications in the last day or so

that there are tankers that are coming from India, Pakistan,

one that's Guiana flagged, but going ultimately to China.

This suggests to me that the pattern moving forward

from the Iranians will be tanker by tanker case by case.

They will decide based on what they consider

to be friendly regimes and what is clear to me,

given the relationship of the last four decades,

is that China will probably be the top of the list

in terms of preferential treatment

in terms of access through the street.

That immediately reduces China's strategic incentive

to help the Americans.

Because if they can still get access to the street,

why would they want to help the Americans in securitizing it?

And obviously suffer blood and treasure loss

if they do get involved.

You mentioned how China is in kind of a comfortable position

here at SEMS.

And the markets, that's exactly what the markets are reflecting.

I mean, Asian markets are getting pretty much

clobbered across the board except for China

where stocks seem to be barely moving

or at least the impact is far less significant in China.

So we've got this dynamic where we're kind of distracted,

slash highly involved in the region.

It seems to be affecting Europe too.

It seems to be affecting emerging markets.

China's kind of okay.

Does this mean that China may have more of an incentive

to invade Taiwan at this point

because we're all so distracted?

There is an argument that is going around,

which is some except persuasive.

The U.S. being bogged down and distracted in the Middle East,

you know, using down its precision missiles,

its ammunition gives China from a military balance

of power perspective some key advantages

if it decides to go for Taiwan.

But I think that that argument

understates the domestic challenges

or the domestic changes in China.

Two of them, I think, are worth citing.

Number one is we've had a complete wipeout

of the highest party and state organ

that oversees the PLA, the People's Liberation Army.

This is the Armed Forces combined military of China.

And, you know, the fact that we've gotten rid of five of the seven members,

the two remaining members just being Xi Jinping,

the president and his anti-graphed minister,

suggest to me that they have not put their house in order

to really engage in what would be a risky strategic gamble

even at this point, even when the advantages

are probably more occurring to the side of the Chinese.

Second, what I have suspected for the last, I would say, year or so,

is that there has been a transition in the leadership,

elite leadership in China to really do

a political influence campaign to try to get the KMT.

This is the Guangming Deng that tends to be more pro-manland

back in power in the next election cycle,

which will be in 2028, you know, May 2028.

Now, I think that it is in Xi Jinping's interest

to see if he can achieve that without even firing a shot,

because there is an argument to be had,

which I find persuasive, that if they can install a KMT party

in the leadership position in Taipei,

then they may not even have to do the quarantine or the invasion.

They may come to a political settlement

where there is some version of a special autonomous region,

some kind of Hong Kong outcome.

Now, I'm still skeptical that that will happen,

but I think it's important to flag

because I think this is a thinking

within the elite leadership in Beijing.

And that is why I think in the short term,

the next year or so, I'm very doubtful

that there will be a quarantine

or even an invasion of Taiwan.

I guess the reason that our minds go there

is because we're all distracted,

we're all worried about what's happening in the Middle East.

As you say, China is in a more comfortable, stable position,

which makes you think,

well, they're going to take advantage

of these circumstances somehow.

And Taiwan is probably the first thing

that comes to mind, at least it was for me,

I think it was for many others.

But then the follow-up question is,

how might they take advantage of these circumstances?

Where we're all in pain, we're all distracted,

we're all focused on what's happening in Iran,

and they're in a more safe and secure position.

I'm still skeptical because ultimately,

they do not have, I think, the military experience

and preparedness in the PLA elite general top-brass level

to really oversee such an ambitious move and endeavor.

And I think the military capabilities

are extremely important.

The military personnel are extremely important.

So until we see key changes in the leadership,

which I don't think will happen until the next party Congress

in October of 2027, I still remain skeptical.

I think the one area where I think China

is going to take advantage as the US gets quagmired again

in the Middle East is to really try

to deepen its trading relationships

and strategic relationships with these other Gulf states.

There are some indications that Saudi Arabia, in particular,

is really unhappy with what is happening,

and that there could be more strategic ties with Beijing

on the back of this.

And certainly, I think that this plays well with the Europeans too,

who, again, are very unhappy with the way

in which Trump and Washington have conducted this whole Iran campaign.

And I think last but not least, you mentioned Asia

and emerging markets.

They are going to be the biggest losers

because they're so dependent countries like India, for instance,

on oil imports from the rest of the world,

including notably the Gulf.

I think these weakened countries will look to China more

as a stable bedrock and a stable power in the region.

Again, I think raising China's relative strategic influence

and power in the region and beyond.

It's a very, very big implication.

Alice Hahn, director of Green Mantle Co.

is the China D-Code podcast.

Us, always appreciate your time.

Thanks, Emma Jed.

Before we end, a quick update on the Iran war.

So yesterday, we learned that Israeli's military

had killed Ali Larajani, one of Iran's top security

chiefs in an air strike.

In fact, this was someone who was so high up,

he at one point had a 30% chance

of becoming the next supreme leader of Iran,

according to Kalshi.

Meanwhile, the death count is growing.

13 American soldiers have lost their lives.

15 are dead in Israel, 850 in Lebanon, 1500 in Iran.

And it appears that despite what we were initially told

by this administration, this will not end anytime soon.

Which means that Americans at home will also be affected

mostly from an economic perspective.

And yes, that doesn't compare to the immense suffering

that is happening abroad.

But it is getting to the point now where we do need to take

these economic impacts quite seriously,

because they are actually beginning to matter a lot.

So here is a quick update on how the war has affected

inflation in America, how it has affected prices.

So we will start with obviously crude oil,

the price of which has risen nearly 40% since this conflict began.

This is now trickling down to gas prices, prices at the pump,

which have risen more than 30% since the conflict began.

The price of a gallon of regular unleaded

is now at its highest level in several years.

Diesel prices are also soaring up more than 30%

since we struck Iran.

This is a problem for people who drive cars obviously,

but it's also a problem for many other people as well.

For example, diesel is essential to the freight industry,

which is why freight prices have also risen nearly 30%.

It's also critical for the agriculture industry,

which is why fertilizer costs have risen around 25%.

It is also essential for construction,

which is why construction material prices have risen

by about 30% and remember, this is just the beginning,

because most of these items are input costs.

So the real travel will come when it all trickles down

to the consumer in the form of things like higher food prices

or higher appliance costs or more expensive air travel,

which we are beginning to see too.

Perhaps even more expensive housing, oil and gas,

like it or not, are essentially the basis

of our entire economy.

So when they get more expensive,

what that means is that everything else gets more expensive too.

And that is just in America, over in Europe, over in Asia,

it is even worse, which means that anything we import

from those regions will also be expensive.

In fact, it'll be even more expensive.

In other words, with this round of inflation,

there is essentially no place to hide.

Now the Fed meets today and it's widely expected

that they will keep interest rates steady,

they won't change them, but to be clear,

more inflation is on the way.

And as we just saw in Australia,

whose central bank decided on Monday to raise rates,

there is now an incentive in place

to slow down the economy and fight inflation,

which means we are now battling

with the two-headed monster of rising prices

and also declining growth.

There is an economic word for this

and that word is stagflation.

We are not there yet, but with every day this war goes on,

we get just a little bit closer.

Okay, that's it for today.

This episode was produced by Claire Miller,

an Alison Weiss, edited by Joel Patterson,

and engineered by Benjamin Spencer.

Our video editor is Brad Williams.

Our research team is Dan Shalan,

Isabella Kensel, Chris Snowdonahue, and Mia Silverio.

And our social producer is Jake McPherson.

Thank you for listening to Profty Markets.

From Profty Media, if you like what you heard,

give us a follow.

I'm Ed Elson, I will see you tomorrow.

Rinse knows that greatness takes time,

but so does laundry.

So rinse will take your laundry and hand-deliver it

to your door, expertly cleaned.

And you can take the time pursuing your passions.

Time one spent sorting and waiting, folding and queuing,

now spent challenging and innovating

and pushing your way to greatness.

So pick up the Irish flute or those calligraphy pens

or that daunting beef Wellington recipe card

and leave the laundry to us.

Rinse, it's time to be great.