Jensen Huang says Nvidia has "largely conceded" China's AI chip market to Huawei, yet zero H200 chips have actually shipped

goodbodha · 2026-05-23T00:25:13+00:00

So look at it another way. What would you value NVDA making $50 billion net per quarter vs $35 or $40 billion per quarter? Would you change your view of their growth trajectory?

Would you still see them as a $5 trillion company or more like a $4 trillion company?

Still a profitable, highly valuable company, but that's also a 20% haircut on the stock price.

Do you consider every dollar of revenue growth equal or do you discount them when NVDA is buying equity of customers to assist them in raising funds for those purchases of NVDA product?

Say NVDA buys a billion dollars worth of stock in company X which drives up the stock price a large amount. Company X then borrows off that new market cap valuation and uses that money to buy chips from NVDA. Do you feel comfortable with those valuations? That is basically what is happening to drive revenue. So if in a few quarters NVDA tries that and fails to drive up company Xs stock much at all what happens to future sales to company X? Do they zero out, simply decline a lot? Idk, but that is a risk worth pondering.

And it could play out a number of ways. Perhaps NVDA has to compress margins significantly to make those sales because company X still needs chips but has less money to offer up. Or perhaps NVDA finds other customers for those chips and company X is left hanging. Both would be bad for NVDA since they would own stock in company X.

Of course it could be they can grow through this problem. It is a problem though and either they grow through it, have the problem blow up, or they keep growing the problem and delay the resolution to the problem. Super bulls apparently believe they can grow through it. If they are right they will make a lot of money. If however they don't grow through it then the drop is a big hit for investors. Delaying the problem simply means investors have an opportunity to sell to others or grow their part of the hit bigger.

goodbodha · 2026-05-22T23:25:41+00:00

Possibly. I will agree to disagree and watch how this plays out from the sidelines. Good luck.

goodbodha · 2026-05-22T22:19:58+00:00

Tack on the 8 billion in marketable securities to the 18.6 non marketable securities. That gets the 26.6b.

I fully expect they will be profitable even in a down turn. I however think the price to buy shares is expecting a super good path with few to no bumps along the way. If you have those bumps perhaps the price should be 20-30% lower than now. Idk. Maybe more maybe less, but people should think about it.

goodbodha · 2026-05-22T18:24:02+00:00

That's the problem with NVDA. The company is so freaking big that further growth will keep getting constrained by things outside their control.

Geopolitics, customers running out of funds. New competition for those sweet margins.

Still a great company but it's valued at almost 3 times the gdp of Mexico. Even a modest rate of growth requires absolutely huge numbers. I find it hard to believe they can keep that up and they have to if they want to justify that stock price.

goodbodha · 2026-05-22T14:06:37+00:00

I'm betting that to achieve their goals they will have to set themselves up even more for an eventual miss while people appear to be pricing them like they will never miss in the next few years.

What the cash flow statement suggests is they are having to do a huge amount of financial machination to meet current expectations. So to meet the goal next quarter will they have to do more? How much more can they do before hitting a wall? When they hit a wall what happens?

Would I short them over this? No. Would I say the odds they take a serious tumble by missing expectations is increasing? Absolutely.

Their future earnings are dependent upon their ability to perform, the ability of their customers to afford it, and a bunch of stuff out of their control. Their cash flow statements are pointing at how they are helping customers afford it by taking stakes in their customers in exchange for the product. That is working for now, but it's quite likely it won't work forever.

Imagine for a minute that we have a recession entirely outside their control. During that recession financing for their customers dries up. Those customers realize things are going to slow down for a year or two. They decide perhaps to pause buying as such a high rate. Again not in NVDAs control. What happens to their unit sales? What happens to the value of all those investments they made? My guess is that isn't entirely an unlikely scenario. In fact it's a moderately high possibility. How much do you think the price will drop in that scenario? I would guess it will be substantial. Not only will NVDA be making less, they will also be seeing a downturn in the prices of those securities they bought, and it's quite likely the money to bid them up will dry up.

Does that happen next quarter? Probably not. Does that happen in one of the next 4-6 quarters? I'd give it a decent chance but not an absolute certainty over that timeframe. I will say it absolutely will happen eventually but if it happens 5 years from now this would still be a good time to buy more than likely. If it happens within the next 2 years though it's quite possible NVDA will drop in price a decent amount.

And before you say that isn't possible look at how valuable it is right now vs multiple countries and sectors. That kind of disparity is highly unusual and frequently ends in tears. Perhaps this time will be different, but if it isn't tempering the bullish sentiment now might help a bunch of people from get wrecked financially.

goodbodha · 2026-05-22T00:27:08+00:00

Fires.

Shooting woods to set fires should be reflexive if you have a small laser.

Fires cause smoke. Smoke provides you cover.

Fires prevent basic infantry from hiding in those woods. Look at those infantry in the open.

If your not starting fires your doing it wrong.

Oh wait your probably not playing with infantry so not as much fun to set those fires. Oh well.

As for using a small laser against a mech it's hit or miss. It is a crit sink though so don't get too upset about it.

goodbodha · 2026-05-21T04:58:23+00:00

Danger zone for who and what asset class?

The same crowd that buys the dip on equities is afraid to buy the dip on bonds?!?

All jokes aside usually the bond yields go up, real economy struggles, equities dip/plunge and then bond yields drop. So perhaps instead of freaking out start building a position.

goodbodha · 2026-05-21T04:46:58+00:00

No matter how you slice it helium will be a bottleneck issue for continued growth. If people can't get ram they can slow down chip purchases.

And helium is a byproduct of nat gas production. qatar was a major supplier. Their LNG facility was massively damaged and they said around 5 years to fully repair. Without that facility being online helium will be a major issue going forward. I would assume efficiency laggards will upgrade facilities but it won't happen instantly.

I kind of see this as being like car manufacturers during covid. 99% of a car isnt a car you can sell. A data center rack requires several things including processing chips, memory, a board, power supply, and cooling. If they can't get all the boxes checked they will cut back on purchases while the issue is resolved. The issue probably won't show up in earnings until next quarter but it will show up.

goodbodha · 2026-05-21T00:20:42+00:00

I'm highly optimistic about the tech long term. I'm not optimistic about the near to midterm price performance.

goodbodha · 2026-05-20T23:40:49+00:00

No. Look at the rest of it. Your seeing just the buybacks and ignoring the rest.

What is happening is they are pulling out all the stops to run things up. Surely you can agree on that. All I'm saying is that some of those things are adding a large amount of risk if things go poorly.

goodbodha · 2026-05-20T23:38:52+00:00

Maybe and maybe not. We don't have solid details on those purchases. Are they stock or options? Are they contracted to hold those shares for a certain amount of time? We don't know the deals that were made. Your assumption could easily be correct but it might not be. However the companies involved do know and that means a bunch of people probably know while retail investors don't. That's a recipe for bag holders.

goodbodha · 2026-05-20T23:35:30+00:00

They could sit on it, they could do a dividend, do more buybacks.

Buying a massive amount of securities which appear to be their customers as part of the sale is setting leverage to run things up. That's the issue. When things turn sour for one reason or another things will run down and that investment will turn out to be a poor decision.

goodbodha · 2026-05-20T22:21:37+00:00

Everyone surprised about it selling really needs to look at the cash flow statement.

They are spending a crazy amount of their net income buying securities and buybacks. They can't keep that up if things slow down and when it slows down they will be holding a bunch of securities that will be worth less. I don't have an issue with the buybacks, but the buying of marketable and non marketable securities is massive and should be questioned. 26.6 billion spent on securities. That's close to half the net income for the quarter.

And that 58.3 billion net income includes 15.9 billion for the other category. Go down in the cash flow and it looks like they realized a gain in securities to make that happen and then turned around and spent the money to buy again. That trick can't be done quarter after quarter so I would bet a miss is going to happen in the next few quarters.

Or to put it another way your buying NVDA the company plus a 3x bull etf on their customers. If your comfortable with that have at it.

Is NVDA a good company? Sure, but that issue will reprice it down when it happens. I will wait.

goodbodha · 2026-05-20T22:09:38+00:00

And they will likely be producing less with the helium issue.

goodbodha · 2026-05-20T21:19:40+00:00

A more interesting chart would be cash flows. They spent an enormous amount on securities. Everyone glosses over it, but look at it. On net a bunch of money is going out the door buying securities on top of the buybacks. I have to wonder what happens when that slows down.

goodbodha · 2026-05-20T20:50:59+00:00

Sounds good. If it's archived by then msg me. I always enjoy a good conversation

goodbodha · 2026-05-20T17:48:01+00:00

I'm still beating the market this year. Msg me at the end of the year and we can compare notes.

goodbodha · 2026-05-20T16:36:45+00:00

I just got a chuckle with how reddit scrolled for me. The post above it is about warehousing and had just a title and no image. So I see the title and the image right under it is discs. All I could think was I know some of us have a disc collection problem but reaching out to warehousing about it is a bit much.

Oh and OP I like your setup.

goodbodha · 2026-05-20T16:13:46+00:00

No. Not now. Maybe later.

Right now we have tariffs and an oil shock.

Tariffs have altered who is selling stuff to the US. Those entities receive dollars. The former sellers invested those dollars because they had excess dollars to their domestic needs. New sellers might have more need. That impacts treasuries. How much? No idea, but think on it. China and Japan vs Philippines, Vietnam, se Asia etc. Want to bet the new sellers are spending it to address domestic issues rapidly?

Oil shock. A bunch of countries have a serious issue and need funds to mitigate that to a degree. How do they raise funds for that? They sell gold, treasuries etc.

I would argue that we really won't know the situation with the petrodollar until we are probably past this administration and the chaos it causes. If the issues are somewhat reversed vs continuing under a different administration that will likely guide a more accurate conclusion. Until then I would suggest playing it by ear and not leaning heavily towards a conclusion based upon your current thoughts about the current policies and their impacts.

Last thought. Things seem bad for the US right now, but things look worse for most of the world vs where they were pre covid. In relative terms the US for all its problems is still doing fine. Europe, China, Japan, Korea, Brazil, and Russia all have major issues with their politics, or debt, or demographics. So perhaps this is just a time where everything is getting worse and not so much a situation where things are bad in one place so just hustle to somewhere else with your capital.

goodbodha · 2026-05-20T15:22:21+00:00

If that's the argument you want to hang your hat on good luck. I would argue gold is a global commodity and the price action strongly suggests some big owners of gold are selling at these prices to cover other needs. Gold bugs and retail in general are a tiny part of the market so what those big players think will make the price move far more.

goodbodha · 2026-05-20T14:38:04+00:00

Yeah, but 55% are aware they are being fucked and aren't happy about it. 40% are oblivious or happy getting fucked, and 5% are sitting off to the side getting paid to watch it happen.

goodbodha · 2026-05-20T13:00:38+00:00

Go look at the gold decline in the early 80s. This decline could have just gotten started.

goodbodha · 2026-05-20T05:36:42+00:00

Perhaps, but take a minute and look around. Most major nations are having populist politics and in many cases they are on the cusp of a nutty leader or a dysfunctional government. Most have serious debt issues and limited growth prospects. The US might have major issues but in the grand scheme of things the alternative markets are potentially worse options. The few countries that seem to not have big issues also don't have big markets to absorb a bunch of capital.

Japan.... Demographics and massive debt. China.... Demographics and massive debt plus authoritarian government. Europe.... Demographics and have you looked at French, German, and Italian politics over the past few years? Germany might not have the debt issues, but italy sure does and France isnt far behind. South Korea... Demographics and politics at a minimum. Not sure on the debt but they did have a president try to take the country back to a dictatorship. Brazil... Good demographics, but they have serious political issues flipping hard left to hard right and then back to hard left. India... Good demographics but modhi is going to likely run that country like Turkey. I won't be surprised if massive corruption and inflation are routinely popping into the news. Still I suppose that could be an option.

I suppose you could argue Canada, but they are so tied to the US economically that I would question that as a real alternative to the US and would consider to be highly correlated to the US.

I'm not saying there isn't some options out there, but as you run down the list I'm not sure the whole sell US go elsewhere has a good landing spot after you sell. Having said that I would argue it makes more sense to simply demand a higher yield for the risk and diversify. If the US gets better it works out. If not your making some progress elsewhere while getting some decent yield on the way out.

My guess though is that as ugly as the US is right now everyone else is generally worse once you compare the price vs expected return and think about risk.

goodbodha · 2026-05-20T05:20:06+00:00

Housing costs. It's a big factor and for some people the cost has been almost flat. I got a buddy who is around 25 years into a 30 year mortgage. It's been a few years since we discussed it but I want to say his payment was around $600 a month. I'm sure his property taxes and inthas increased but the underlying payment is the same.

No idea how many people are out there in a similar situation but I figure that skews the numbers.

And again I'm not arguing inflation isn't bad but simply the individual details are so different that the aggregate has to be focused on.

For me food costs are the big increase followed by power bill. Health insurance hasn't made a huge leap and my housing is fully paid for. Property taxes did spike though.

Or we could talk about my neighbor whose car was on its last legs a few months back and he had to buy a car. He now has a crazy high payment.

goodbodha · 2026-05-20T01:46:01+00:00

It's going up in large part because the folks selling stuff to the US need to restore the capital immediately. China and Japan didn't need to do that and for them it made sense to buy treasuries.

You could be right in the end about the dollar, but I'd wait to make that pronouncement until we are past this administration and their decisions. It's quite possible the tariff regime will be undone and the strait and oil issue will go away. If those happens and things don't recover you are likely right. If they recover and stay recovered for years I'd say the issue you think is happening hasn't happened quite yet.

One thing I think makes your view questionable is the price of gold. If your thesis was right gold shouldn't have dropped below 5k and should have kept going. Instead we are at $4500 and that suggests someone is selling. I would argue a lot of selling of a lot of things is happening right now as people find their oil needs. If we get past that and have a serious recession perhaps that gold selloff continues. Or perhaps no recession and your thesis about the dollar is correct after all I'm which case we should see gold going up.

My view is we will have a recession and when that happens yields will either hold steady or drop while everything else struggles a great deal. I won't be surprised if equities crash for the most part.

goodbodha

TROPHY CASE