They wrote off $4.5 billion in inventory, lost their second-biggest market, and still guided margins up.
Thesis: The street is mispricing the inference cycle. Reasoning models (100x tokens) are creating a second, steeper demand curve just as training matures. China is a known variable ($8B hit/qtr) that is already priced in and overwhelmed by Sovereign/Enterprise demand. Margins expanding during a major product ramp (Blackwell) proves pricing power is absolute.
Verdict: LONG — Conviction: HIGH
Catalyst: GB300 production shipments later this quarter; Blackwell Ultra roadmap acceleration.
Key Risk: Hyperscaler CapEx pause. If Microsoft/Meta stop digging, the hole collapses. Concentration is the only real threat.
The Tell: Jensen's resignation on China: 'The president has a plan. I trust him.' He admitted total lack of control and zero current product strategy for the $50B TAM. No corporate spin, just an admission that the $8B/quarter hole is permanent for now.
Friction Level: MODERATE_FRICTION — Bears see a capacity ceiling and peak training; Bulls see a reasoning inference explosion that resets the demand curve.
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