Nvidia Says Customers Are Racing to Invest in AI Compute
Speakers
Summary
- Nvidia provided a strong revenue outlook (transcript states "$78 billion" though likely a transcription error for ~$24B range based on context of "beating consensus") and explicitly removed China compute revenue from guidance, effectively de-risking the geopolitical overhang.
- Gross margins remain elite at ~75%, driven by Nvidia selling complete server solutions (CPUs + GPUs) rather than standalone chips.
- Hyperscalers accounted for >50% of Data Center revenue, but Nvidia is actively cultivating "Neo Clouds" (like CoreWeave) to diversify its customer base and reduce reliance on the Magnificent Seven.
Trade Ideas
"The fiscal first quarter... does not assume any compute revenue from China in the outlook... gap and non-GAAP gross margins expected to be 74.9% and 75%." Nvidia has successfully decoupled its forward guidance from geopolitical risk (China). By removing China from the outlook, any future sales there become pure upside. Furthermore, the shift to selling "standalone products" like CPUs (Grace) allows them to own more of the server rack, maintaining high margins despite hardware commoditization risks. The beat-and-raise cadence continues, and the quality of earnings is higher with the China risk removed from the baseline. Regulatory tightening on AI exports expands beyond China to other regions (Middle East).
"Hyperscalers were just over 50% of four Q datacenter revenue." The largest tech companies are aggressively spending on Capex to build "AI Factories." While this is an expense for them, it confirms they are securing the necessary infrastructure to dominate the application layer. They are the primary capital conduit for the AI boom. Continued massive investment signals that the AI infrastructure build-out is nowhere near finished. Capex spend begins to compress their own margins without immediate ROI from AI applications.
Jay Goldberg
CEO, Seaport Global
"Nvidia would much rather have 100 neo cloud customers... trying to reshape the cloud computing industry... support from NVIDIA... like the CoreWeaves." Nvidia is engaging in "Second-Order" strategy by funding and supplying smaller "Neo Clouds" (CoreWeave, etc.). This prevents the Hyperscalers (Amazon/Microsoft) from becoming a monopsony (single buyer) that could squeeze Nvidia on price. This creates a new sub-sector of specialized AI cloud providers. Watch for IPOs or acquisitions in the "Neo Cloud" space, or publicly traded data center REITs that host these smaller players. Neo Clouds may lack the balance sheets to sustain spending if AI demand cools.
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This Bloomberg Markets video, published February 25, 2026, features Jay Goldberg, Ed Ludlow discussing NVDA, GOOGL, META, AMZN, MSFT, SKYY, BOTZ. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Jay Goldberg, Ed Ludlow · Tickers: NVDA, GOOGL, META, AMZN, MSFT, SKYY, BOTZ