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Is Nvidia dead to China?
Podcast 23 minutes to read
Summary: Today we focus on possible correction targets for this drawdown, should it continue, and welcome Saxo Equity Strategist Ruben Dalfovo to the pod, who leads us through his assessment of Nvidia going into next Wednesday's critical earnings call. The China angle for Nvidia is picking up interest of late - will China try to "go it alone" entirely on AI silicon and systems? Also on the pod, a reminder to keep an eye on the JGB market, which continues to pressurize, a look at the Jackson Hole speech incoming later, a preview of other earnings and the economic calendar and much more. Today's pod hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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Today's slide deck.
Today’s links
Our Jakob Falkencrone’s preview of Nvidia’s earnings call next week
The latest Felder report on neglected small caps as the market goes all in on the big market cap names, with one of the sub-links (paywall: FT) sharing my assessment that what is happening now rhymes a bit with the 2000 stock market, the final phase of the bubble of the time. Even in bubble markets, long term opportunities can lurk due to the neglect of the “boring” stuff that hasn’t been performing.
A Telegraph op-ed (paywall unless you’re clever…shhh) shreds UK Energy Secretary Ed Milliband for possibly being set for “failing heroically on every front at once” if he continue to stick to the self-destructive Net Zero hobby horse. So fascinating that UK government is out of synch with the themes and the trends (populism) - how long can this government last?
A Fortune piece following up on the MIT study showing that 95% of AI projects have failed - first pointing out that the very nervousness of the market to a story like this suggests a bubble-like response function (as we noted on the SMC podcast), but also noting that it is how AI is being employed, not the tech itself, that is the problem.
A must read (I still haven’t yet, but the author and title make me 100% sure this one is worth reading several times this weekend and considering the consequences), Izabella Kaminska on Redollarization and Digital Statecraft: How Stablecoins are Rewiring Global Power. This as China is apparently considering launching its own yuan stablecoin.
Clear that Ether is as important to track these days as Bitcoin as none other than Peter Thiel is piling into Ether as “proponents see Ethereum becoming the platform of choice for the financial world” (WSJ paywall, or becomes a Saxo client and read all WSJ stuff for free on platform.)
Ruben’s podcast picks include the Invest Like the Best, as well as Business Breakdowns and We Study Billionaires, his favorite among the Investor Podcast Network’s podcasts.
Another Fortune piece on the release of a new Chinese DeepSeek model, one that is both open source and optimized for Chinse silicon, but also priced to undercut OpenAI.
Chart of the Day - Snowflake (SNOW)
Snowflake reports next Wednesday after the close while most of the focus will be on Nvidia reporting the same day. The company timed its IPO to perfection during the pandemic, when the company’s market cap reached above USD 120 billion in late 2021 or about 100 times sales - Palantir-esque valuation territory, though without the profits at the time. Since then, revenue is up many multiples as growth has decelerated, if still impressive at a 25% clip last quarter . Next week, the company is expected to report its first quarter with positive earnings, though it has been free cash flow positive since 2021. We discuss Snowflake’s valuation on the podcast.
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