NVIDIA Corp at UBS Global Technology and AI Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Timothy Arcuri - UBS Securities LLC - Analyst : <_ALACRA_META_ABSTRACT>And Colette, it's been an incredible past couple of years. You're still growing very fast. I'm wondering if you can talk about some of the use cases, how they've evolved. We're having enterprises adopt AI widely. How has the demand picture evolved in terms of cloud, consumer internet, enterprise? And maybe if you can talk about some of the use cases that you see that are very exciting as well.

Question: Timothy Arcuri - UBS Securities LLC - Analyst : And I think we all worry that, eventually, we're going to build too much capacity. And I think your view is that we're nowhere close to that. So maybe can you just speak to how much visibility you have and maybe just the demand picture relative to where you're able to supply?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Well, just on that point. So you put up a great quarter. You're shipping Blackwell in January, and you're actually shipping more Blackwell than you thought you would three months ago. And at the same time, we do hear a lot of chop in the supply chain. You hear a lot of articles written and things like that. Can you just speak to how Blackwell is different than prior product cycles?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Great. And there's just a lot going on with the product cadence. And you have B100, you have B200, you have the RAGs with PCB, and you have Blackwell Ultra coming about six months later. So is there a risk that customers wait because you have products coming so quickly?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : And I guess, maybe it's a bit similar to the H100 and H200, where customers didn't wait, and that went all great. So I guess, there is evidence out there where customers did not wait when you had a product come out so quickly after the prior product.

Question: Timothy Arcuri - UBS Securities LLC - Analyst : So I wanted to ask you the cash question. We actually talked about this last night. You've generated about $56 billion in free cash flow over the past four quarters. I heard you generating about $120 billion in calendar '25. And even if I assume that you buy back about $50 billion per year, you're going to end up with $100 billion in cash at the end of next year and potentially $200 billion in cash at the end of 2026. These are obviously massive, massive numbers. Even Apple, which got to $100 billion in cash, ended up working that down. How do you think about what you're going to do with the cash?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Great. Can we talk about gross margin for a minute? You did say the gross margin comes down in the fiscal Q1 of next year. As Blackwell ramps, you said it comes down to low 70s, which you then clarified is 71% to 72.5% on the call. But it comes back up after that, and it comes back up to the mid-70s as you get to the end of the year. Can you talk about sort of how confident you are in that? And with Rubin coming after that, there are some people that think, well, gross margin will be under pressure once again once Rubin begins to ramp. So can you talk about how confident you are that you can maintain mid-70s over time?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : And how have you been able to move gross margin up so much? Because when Hopper launched -- I remember during the early phases of Hopper, gross margin was in the mid-60s. And now you're going to end up in the mid-70s. So how have you moved gross margin up so much?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Got it. Can we talk about your networking business? I get a lot of questions. It was down last quarter. It was expected to be up. And some people think that, well, as you transition from InfiniBand to Ethernet that your position in networking is a little less strong. So can you just talk about the networking business? And should we expect it to grow alongside of the compute business?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Great. Can we talk about scaling of these large language models? There's been some articles written that Google and OpenAI are having a hard time to get better results out of these larger models. But on the other hand, you had Meta on their earnings call and you had others like Anthropic saying that the scaling is alive and well. So can you just speak to that? I know that there's some nuances and post training. And of course, there's the test time inference with the -- some of these new models from OpenAI. Is the scaling question something that investors should be thinking about?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : You talk about a new and emerging piece of the demand picture, which is foreign government-backed projects, sovereign as we call them. You said that you're going to do double-digit billion dollars this year in that -- for those projects as a whole. Can you talk about some of the examples of where that demand is coming from and how to think about how big it could be? I think of it as, well, maybe some of these larger projects in the Middle East could eventually be as large as an US CSP. So this could be a very large piece of demand, and I'm wondering how you sort of think about how big it could get.

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Great. Can you talk about your software business for just a minute or so? You had said that it's going to be crossing over the $2 billion a year run rate exiting this year. If I do some back-of-the-envelope math and I try to figure out how many of your GPUs are you directly monetizing on for your monetization of those, I get something like 10% attach rate, where you're roughly directly licensing 10% of your GPUs. So can you talk about sort of how you think about the attach rate and how successful you are in directly licensing software for your GPUs?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : So we look just the enterprise market, your attach rate could be actually quite a bit higher than 10%.

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Got it. Great. We all talk about data center, but inference at the edge is going to become a much bigger theme. So can you talk about your position at the edge? You have a large installed base in PC. That should play pretty well for you. And you have Omniverse. Robotics is a huge theme. So can you talk about some of your offerings and how we should think of you as a player at the edge? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 2:35PM, NVDA.OQ - NVIDIA Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Great. Can we talk just for a minute about inference versus training? You have been saying that inference is about 40% of your revenue. Can you talk about how you see that evolving?

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Great. And then you talked about some constraints on Blackwell, and it sounds like they're going to go away maybe mid-'25, that they would begin to ease. Can you talk about what some of those are? And maybe is that right to assume that they do begin to go away in the middle of '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 2:35PM, NVDA.OQ - NVIDIA Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS Securities LLC - Analyst : Well, I think it's going to be an amazing year next year for sure. So anyway, thank you, Colette. Really do appreciate it.