Welcome to offtheticker - thanks for following along. This week we are switching things up a bit. Usually, we like to give an analysis of earnings before the beginning of the week for stocks that are set to report that week, but this week we are switching things up, as many companies do not report this week. We will be going over what we originally said about our call on Nvidia earnings from what we posted last week, as well as breaking down the market reaction to this earnings report.

Behind the Numbers:

Nvidia reported INSANE earnings numbers this last Wednesday after hours, delivering $57.0 billion in revenue, up 62% year-over-year and 22% quarter-over-quarter. The data-center segment alone generated about $51.2 billion, up 66% year-over-year and ahead of expectations ($49.3 billion) As we want to remind our readers who recently saw a massive dip in the data center stocks, this news is nothing but bullish in our eyes. We are looking directly at Nebius as a possible beneficiary to the continued build out of data centers. Jensen also made another huge bet on the company and guided Q4 revenue at $65.0 billion, nearly $3 billion above consensus, which is the ultimate bull sign for the company. All of this being said, these numbers have still not factored in any numbers related to China, which the company is currently not able to sell chips to. If you have been following the news you know that this may change in the near future. Bloomberg reported late this week that the Trump Administration is in talks to possibly lift this ban, allowing Nvidia to sell its old chips to China, which could signal a step in the right direction. We are not currently banking on this happening, as we believe that Trump made this call later in the week as the markets took a plummet after earnings.

What Jensen Said:

As any investor in the stock market knows, usually it is not only about the numbers that come from an earnings call but also the news that the CEO gives about the future of the company, which with Nvidia being the largest company in the world, all eyes are on what Jensen has to say.

Jensen opened by saying “there’s been a lot of talk about an AI bubble. From our vantage point, we see something very different.” He argued that Nvidia’s role spans every phase of AI (training, inference, deployment) and that we’re in a structural transformation, not a speculative frenzy. many of us believers in the AI movement already know this to be true and completely agree, but when one of the most powerful men in the world comes out in a record-breaking earnings call, it only strengthens that belief. The more and more we invest, the more we are positioning our portfolio to be in line with this belief that there will be some MAJOR winners in the AI movement.

Jensen also laid out that Nvidia is positioned to capitalize on: (a) the shift from general-purpose computing (CPUs) to accelerated computing (GPUs), (b) the rise of generative AI (transforming data, code, interfaces), and (c) the advent of “agentic and physical AI” (robots, autonomous machines). What’s funny about how Jensen broke this down is that this is exactly how we described in our own words in our newsletter below about the future of the AI movement, and the phases that we think are being formed.

It was also acknowledged that power, land, and data-center infrastructure are bottlenecks for AI build-out but emphasized that Nvidia is working with partners to address them. He said these challenges are “tractable and solvable.” For our readers and investors, we wanted to give everyone a couple partners Nvidia has that will help with the power, land and data center infrastructure bottlenecks that Jensen talks about. We have already talked about how much we love GE Vernova for the long term, but the other two we will most likely be adding to our list of breakdowns.

GE Vernova (GEV)

Navitas Semiconductor (NVTS)

NextEra Energy (NEE)

Additional News Announced:

Right after Nvidia Corporation’s earnings release, the company announced a major expansion in its Middle East push. The U.S. Department of Commerce cleared the export of up to 35,000 of Nvidia’s advanced Blackwell-series AI chips (worth around $1 billion) to two Gulf state-backed entities, which will help produce a major data center in the region. The news that we have been waiting for has always been China, which has the second largest economy in the world, but a deal in Saudi Arabia is a great step in the right direction for the company expanding across the world, and everyone knows that the Saudis have a ton of money to throw around at major AI projects. We are projecting that over the next couple of years we could start to see expansion further into the middle east to countries like Qatar and UAE, which have formed economic alliances with the United States. We think that over the next three years of the Trump administration we will see Nvidia used in massive leveraging over tariff talk, trade wars, as well as an overall bolster to the economy in times of larger pullbacks like the one we saw this week in the market.

Major Speculation on X about Days in Accounts Receivable and our thoughts as Accountants:

Over the last couple of days all of the twitter accountants have come out and expressed concern over the growing accounts recievable balance that the company is seeing. As a company grows, it is expected that accounts recievable will also increass. The number that we like to focus on as accountants is the days number of sales outstanding number, which represents how quickly customers are able to pay back money. Days accounts recievable outstanding is only up one day, to about 60 days, in this massive revenue quarter. Nvidia is also generating very strong operating cash flow, and a high AR coupled with cash generation says that, even if some receivables are outstanding, they’re still converting a lot of sales into cash. Nvidia acknowledges that its business is working-capital intensive and that AR is a principal component of working capital. They also use programs like securitization or sales of receivables to manage working capital and financing needs, which helps them fund growth without letting accounts receivable drag them down. In its 10-K, Nvidia notes that its net days sales outstanding is “generally driven by revenue growth” and can fluctuate, especially in regions where collection is slower, like the middle east. The company is currently audited by PWC, one of the four major accounting firms in the world, and with such a massive balance sheet and a fairly simple audit, as accountants we think that it is safe to assume that PWC has allocated every resource at their disposal to make sure that the companies accounts receivable is being tested for accuracy, and the allowance for bad debt expense is properly calculated to make sure that it is accurately representing the amount of debt they expect to not receive.

What we said in last week’s newsletter:

“We continue to be holders of Nvidia, as it is the leader of this AI boom, and has seen steady growth over the last 10 years, and it’s hard to bet against such a massive company….Overall, we think that it is smart to hold Nvidia stock, which has recently received stock price predictions from Goldman Sachs of $240, which is almost a 50$ gain in the stock price, but we are keeping our eye on where these major banks are reallocating their money to smaller cap companies that could see the next big boom like we have seen from Nvidia. We are not fazed by how the market reacted last week to the combination of the Michael Burry short and the Softbank reallocation, and we are overall still bullish on the market.”

Honestly, we think that our thesis from these earnings call still is applicable, and in this part of the newsletter we want to break down why the market moved so much lower, and why we think this might actually be the perfect buying opportunity for the company and for AI stocks in general.

Right after the earnings call that took place after hours Wednesday the stock SOARED, and it took other stocks with it, mainly being AI companies. The next morning when the market opened the stock saw a massive fall, erasing all after hours gains and falling sharply negative, adding to an already bad week, with the NASDAQ being down almost 8% from all-time highs. This signaled panic in the market, but what really changed?

We think all of this downwards momentum has been due to the hold out of economic data and has little to nothing to do with the actual earnings report of Nvidia, which knocked it out of the park. Due to the government shutdown, we saw the CPI report, October jobs report, as well as other key economic data withheld from Powell and the public. This lowered the chances of a December rate cut, and we believe that many institutions saw this massive spike after hours and decided that it may be time to take our wins ahead of a possible really bad CPI and Jobs report for November, which would be too quick of a turnaround for an early December rate cut. We are expecting that if we do see a December rate cut, or if the jobs reports and CPI reports come out better then expected, we could continue to see this AI boom. The fundamentals have not changed in our eyes, and we think that this boom has only just begun. We are continuing to invest and we are happy to bring you all the stocks we love so you could do your own research and make your own investments.

The information provided in this newsletter is for educational and informational purposes only and should not be considered financial, investment, or legal advice. I am not a licensed financial advisor, and the opinions expressed are my own. Any investments, trades, or financial decisions you make are at your own risk. Always do your own research and consult with a qualified professional before making financial decisions. Past performance is not indicative of future results.

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