Episode 95: QCOM Financial Investor Day, and NVIDA Earnings (age of Nvidia is over)
Nov 25, 2024
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The discussion begins with Qualcomm's pivot to automotive and IoT markets, addressing challenges in the saturated smartphone sector. The hosts analyze Qualcomm's growth strategy and its potential in electric vehicles. Moving on to NVIDIA, they contemplate the company's transition to steady growth amid a competitive landscape. Highlights include technical issues with the Blackwell product and the changing dynamics in the data center processor market. The humorous take on investor relations adds a lighthearted touch to the serious tech talk.
Qualcomm is shifting its focus towards IoT and automotive sectors, aiming to become a compute-centric company amidst smartphone market challenges.
NVIDIA's growth phase is perceived to be ending, raising concerns about sustaining revenue increases and competitive pressures in inference technology.
Deep dives
Qualcomm's Diversification Strategy
Qualcomm is actively pursuing a diversification strategy away from its traditional communications and mobile markets by focusing on Internet of Things (IoT) and automotive sectors. The company emphasized its transition towards becoming more of a compute-centric organization, targeting areas such as edge IoT devices and automotive solutions for growth. Despite presenting optimistic revenue forecasts for 2029, concerns were raised about the challenges of predicting growth in these new markets, particularly given the stagnation in the smartphone sector. Investors expressed skepticism about the feasibility of these long-term forecasts, emphasizing the uncertainty associated with IoT predictions and the slow sales cycle in the automotive industry.
Challenges in Growth Forecasting
Qualcomm's revenue forecasts for its automotive and IoT segments, projected over a five-year timeline, were viewed with caution. While the company highlighted several design wins and partnerships that reflect potential growth, analysts pointed out the inherent difficulties in creating reliable forecasts for the evolving IoT landscape, citing historical inaccuracies in such predictions. Concerns were also raised regarding the gradual nature of growth expected in the automotive sector, which does not match the explosive growth Qualcomm experienced in mobile communications. The modest projected growth rates for these new initiatives further highlight the significant hurdles companies face as they attempt to navigate new market demands.
NVIDIA's Shift in Market Dynamics
The podcast discussed a perceived end to NVIDIA's extraordinary growth phase, suggesting that while the company is likely to continue seeing revenue growth, it will no longer experience the triple-digit year-over-year increases that characterized its past. Speculation arose regarding the company's new product line, Blackwell, and its potential to drive future revenues, albeit with a more stable growth outlook. The discussion also touched on NVIDIA's dominant market position in the data center segment, raising questions about sustainability as the company approaches market saturation. Analysts noted that the hype surrounding NVIDIA might soon level off, leading to questions about its ability to sustain its momentum in the face of emerging competition.
The Future of Inference Technology
NVIDIA placed significant emphasis on its role in the inference market during the earnings call, asserting its dominance and the advantages of using its GPUs for both training and inference processes. The company's strategic argument centers around the compatibility of its trained models with the inference performed on their hardware, claiming it minimizes costs and enhances efficiency. However, skepticism remains regarding the long-term viability of maintaining such a dominant position amidst the competition from hyperscalers developing their own custom ASICs for inference. The potential shift in demand for inference technologies raises concerns about NVIDIA's future market share and operational strategies in a rapidly evolving landscape.
In this episode, Ben Bajarin and Jay Goldberg discuss Qualcomm's recent Analyst Day and NVIDIA's earnings report. They analyze Qualcomm's shift towards becoming a compute-centric company, the challenges in the smartphone market, and the potential growth in automotive and IoT sectors. The conversation then shifts to NVIDIA, where they explore the implications of its recent earnings, the end of its rapid growth phase, and the competitive landscape in inference technology. The hosts emphasize the importance of execution for Qualcomm and the evolving dynamics in the semiconductor industry.
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