- Truist analyst William Stein reiterated a Buy rating on Nvidia Corp (NASDAQ:NVDA).
- Based on his multiple follow-up calls with Nvidia and investors, he believed nobody anticipated the 53% above-consensus second quarter revenue guidance.
- For a company that sells chips, boards and computers, in addition to software and services, such a revenue guidance beat is challenging to hide in the supply chain.
- He believes a mix of the following factors supports the significant guide.
- Stein questioned NVDA passing higher prices from the foundry to its end customers, boosting revenue and supporting margins.
- He expected NVDA to ramp revenue in a wide variety of products and form factors, pushing revenue higher and making the visibility of such builds in the supply chain somewhat more obscure. These include an early ramp of H100, L4 and L40 inference platforms, a potential mix shift to DGX and HGX from PCI form factor, early revenue from Grace CPU, Grace Hopper super chip, and Bluefield 3 DPU.
- The analyst suspected some of what's going on is that NVDA's supply chain partners (EMS companies) received inventory over the last year from other component suppliers and are currently sitting on highly bloated inventory.
- Now that demand for NVDA's systems is ramping significantly, NVDA's other component suppliers might not need to ship as much material into the supply chain to satisfy near-term demand.
- The analyst followed his comments heading into NVDA's first quarter, highlighting elevated near-term demand for lagging-edge (A100 / A800) GPUs. Nevertheless, NVDA's 10Q filing reflects more new inventory write-downs than sales of previously written-off inventory.
- Price Action: NVDA shares traded higher by 4.98% at $397.20 on the last check Thursday.
- Read Next: Nvidia CEO Calls For Urgent Action: Embrace AI Or Risk Being Left Behind
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