[Live Economy] Nvidia's 'Fall' Market Stabilization Factors Despite 122% Revenue Growth

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun

■ Air date: August 29, 2024 (Thursday)
■ Talk: Cha Young-joo, Director of the Institute of i-Asset Economics, Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): It's the story of the economy that moves the world. We're going to expand your economic horizons around the world. <월드 이코노미> It's time. The two of you are here again today. Director Cha Young-joo has come to the I Asset Economic Research Institute. Please come in.

◇ Cha Young-joo, Director of the Ai Asset Economic Research Institute (hereinafter referred to as Cha Young-joo): Yes, hello.

◆ Cho Tae-hyun: Professor Lee Jung-hwan from Hanyang University's School of Economics and Finance is also here. Please come in.

◈ Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance (hereinafter referred to as Lee Jung-hwan): Yes, how are you?

◆ [Jo Tae-hyun] Let's go back to the world to fit today's topic. It's a world economy. NVIDIA. Nvidia, which was said to be the world's most important stock. The performance came out, but the stock price wasn't very good. Was the expectation too high?

◇ Cha Young-joo: Maybe it was a little bit. We have to look at a lot of things. Nvidia's performance was announced after the regular season.

◆ Cho Tae-hyun: That's right.

◇ Cha Young-joo: What we're seeing right now is that we're moving in time. The regular season hasn't opened yet, so I think we need to see how it will move this evening.

◆ Cho Tae-hyun: It once fell nearly 8% in after-hours trading and still about 7%?

◇ Cha Young-joo: Even now, it's going back and forth by 6-7%, but there are not many transactions that need to be distinguished a little outside of time. Most people in the U.S. are sleeping now, so I have to take this into account and I'll organize my performance first. But you have to look at one more thing here. If we say the second quarter, it's April, May, and June in Korea. But Nvidia's second quarter is May, June, and July. I'll tell you that the quarterly results are for May, June, and July because each company is autonomous. First of all, the revenue forecast was $28.7 billion, which was $30 billion, and the earnings per share was $0.64, which was very good, especially YoY, which was up 120% compared to the same period last year. Another important thing is the outlook for the future. This is the forecast for the third quarter. The third quarter is August, September, and October. It's in August, September, and October, and the guidance here is $32.5 billion. The market expected $31.7 billion, but it's $32.5 billion, and some analysts say now that the stock price is slightly adjusted because of the gross margin of sales. Overall, the gross margin of sales is roughly 75%. However, if you look at the performance this time, you have achieved a total profit margin of 75.7%. The market estimate is 75.5 so it's 0.2 percentage points higher. But I'll tell you a little bit later on the guidance for the third quarter, but the market also expected 75.5 in the third quarter.What Nvidia revealed on its own is 75. 0. Five flew away. As a result, there are explanations that the market is undergoing a little adjustment as things like, "Hey, isn't the growth rate slowing down now." Let me tell you this.

◆ Cho Tae-hyun: But you did a good job. In any case, the market certainly seems to be overreacting. Before we continue, let me ask you one thing. In Korea, most companies have similar accounting standards except for finance. But why is it so different from company to company in the US?

◈ Lee Jung-hwan: The difference is that it's different to understand the fiscal year. In Korea, as of December. The settlement of accounts is in December, there are February and May in the United States. December isn't that much, and there are a lot of February and May. This is actually the autonomy of American companies, so it's not a big problem, but autonomously

◆ Cho Tae-hyun: I'm just confused.

◈ Lee Jung-hwan: You can think of it as maintaining that system, and companies that settle their accounts in May change their annual unit in May, and their fiscal year calculations are different at each settlement point, so it's a little difficult for researchers to manage. It's a situation where you have to have a quota, but this quarter is a little bit more manual to connect with macroeconomic data.

◇ Cha Young-joo: So that's confusing.

◈ Lee Jung-hwan: Confusing things is inevitable and you have to admit that it's different. So, as you said, this month is different, and the reason I emphasized the moon this time was because of the Blackwell story. In the case of the United States, as you said, even if we simply set the moon, we use the international accounting standard called KIFRS, which is the structure from sales to operating profit. Because the U.S. uses an accounting standard called gap, this itself is different. Anyway, I have to study a lot. It's not just different, but it's only possible to make an accurate comparison by acknowledging it. I'll tell you this much.

◆ It's not that I don't admit it. It's uncomfortable to admit. I'm saying that it's annoying.

◈ Lee Jung-hwan: The United States is one of the only countries that has its own standards of writing yards and miles.

◆ Cho Tae-hyun: I think we need to know the problem and change it in the United States, but some say that it's too expensive to do it, and it's not uncomfortable for them.

◇ Cha Young-joo: That's why only others are uncomfortable.

◈ Lee Jung-hwan: So international cooperation is a little difficult that some say that an accident occurred during a robot rocket launch at NASA in the past because the unit of inches and centimeters was wrong. I think you can understand this.

◆ Cho Tae-hyun: There was a lot of talk. Let's go somewhere else. Back to the point, did you hear the Jensen Huang conference call? Was there anything notable?

◈ Lee Jung-hwan: I think there are a lot of complaints about the conference call. In the end, there are talks about whether they gave less guidance on chips and Blackwell chips. They said that depending on what happens to Blackwell chips, it will be realized and that they want our future AI plans to proceed sequentially, but I think there are some people who evaluate whether it has affected the decline in stock prices, along with the margin ratio.

◆ Cho Tae-hyun: In your opinion, the conference call was not good?

◇ Cha Young-joo: I think the market right now is that we're not seeing a decline in Nvidia's performance. I'm continuing to move forward. I'm on my way, but it looks like it's shaking.

◆ Cho Tae-hyun: It's triple-digit growth, well.

◇ Cha Young-joo: And the counterargument that comes out of it is, 'You've grown like this, can you go like this next year? ' That's what I'm looking at. "Isn't the tone a little bent?" ' "Isn't the tilt going to go down?" ' This is how I look at it. The second is whether Jensen Huang met the guidance in the market this time. The second is when Blackwell will be released.

◆ Cho Tae-hyun: That's right.

◇ Cha Young-joo: This was a top-notch concern, and here I want to say that the market is misunderstanding. What the market is misunderstanding is that Jensen Huang will launch Blackwell in Q3. When do you say the third quarter I mentioned earlier? It's in August, September, and October. But Jensen Huang has sales in the fourth quarter. Then it's only possible at the end of this year. It's the same fourth quarter as early as early next year, so the important thing here is that Blackwell will come out someday.

◆ Yes,

◇ Cha Young-joo: It's not that Blackwell isn't coming out. But it comes out later than I thought, and if I'm paying attention here, as I mentioned earlier, the market estimate for the third quarter was that the company said 32.5 billion. The market expected 31.7 billion won, but the important thing is that the market has 31.7 billion won of Blackwell. The market expected Blackwell to come out in the third quarter, but Jensen Huang said, "It's coming out in the fourth quarter of Blackwell. But we're going to do $32.5 billion. " There's no interpretation of this part yet. So I think I have to watch that. Then, if we do it without Blackwell, won't the growth curve mentioned earlier in the fourth quarter be bent? A new growth curve is coming in. If that happens, if my performance is not shaky and the stock price is adjusted due to differences in interpretation, it is rather good timing for value investors. Rather, as Benjamin Graham said, isn't it bipolar and depression depending on the interpretation of the market?

◆ Cho Tae-hyun: Yes

◇ Cha Young-joo: The phenomenon is not changing. Then shouldn't we think the other way around? I'm speaking for the first time today on YTN.

◆ Cho Tae-hyun: It's coming out late. So why don't you buy this? It just becomes a waiting demand. I don't think you have to worry that much. Actually, there is another company that has recently become an issue on Wall Street. NVIDIA's artificial intelligence alliance, 'super microcomputer'. There was a manipulation of accounting when I saw this house coming out of a house. That's why it's a short selling house. They revealed that they made it public and did a short selling shopping position, what's the problem?

◈ Lee Jung-hwan: It's hard for me to figure it out exactly, so the fact that there was an accounting manipulation means that this report should actually be reported to the SEC, but there seems to be a little problem. Strictly speaking, the short selling reports should be understood, but since this doesn't work, I can tell you that these are situations where stock prices are falling a lot. In the end, there are various ways to manipulate sales and manipulate accounting, but isn't this a situation that we have to wait and see? There will be legal reviews and opinions, and there are things like this that are often sent back and forth, so I think we have to wait and see. I think I can tell you this.

◆ Cho Tae-hyun: There seems to be a lot of disagreement. It's not a fabrication. A report came out today.

◇ Cha Young-joo: That's right. But the super-super-microcomputer provided an excuse. In August 2020, I was partially sanctioned and fined once in this regard. We are suspects because we have a history. I'm not a sure offender, but I think he made the conditions to become a suspect.

◆ Cho Tae-hyun: And I saw that it came out last night, so I didn't even submit it because I didn't get to submit it yet.

◇ Cha Young-joo: I know, I don't know exactly how these contents will be identified in the background, but to summarize the situation, it is true that the first one did not submit it. As a second example of the past, he has done something that is sufficiently suspicious. The third decisive blow was that the short selling fund did this by promoting the media on a large scale.

◆ Cho Tae-hyun: That's how short selling is supposed to be.

◇ Cha Young-joo: So if you look at it like this, first of all, there's a lot of volatility in the stock price of super microcomputers because the facts and brain personalities are applied. In the end, the most important thing is that this noise will continue until they submit their report.

◆ Cho Tae-hyun: Actually, let me tell you a little bit so that there's no misunderstanding about this part. Short selling forces seek profits by informing the market of these things, but the atmosphere is also verified that there is a market monitoring function that monitors certain agents in the process, so please don't misunderstand. Anyway, then we need to check how this will affect our country. Shares of Samsung Electronics and SK Hynix are falling out a lot today. As a result, I don't think it would have been better if Nvidia went like this, but it wouldn't be bad for us, what do you think?

◈ Lee Jung-hwan: In fact, Nvidia's sales itself keep increasing. In fact, there seems to be a part where people have a lot of expectations as they continue to come up at historical wonders last quarter. But as you said earlier, this slope is important, and I'm curious about how fast it will increase and the demand for memory semiconductors, especially HBM3E semiconductors, that Korea produces a lot. And in fact, Hynix is very related to Nvidia. Because there are no reports that Samsung Electronics passed, it plays a role as the only, very strong supplier, so the stock price is falling out a lot. So, if the speed decreases, the demand for high-performance memory semiconductors called HBM3E will decrease, and there are these channels that may affect Hynix's sales. Of course, Samsung Electronics has a mobile phone field that is commonly mentioned, and the home field is different, but it seems to be affected by that. In the end, it's a matter of profit. It is necessary to look at these things carefully because it can be interpreted as how fast sales occur, that is, when the slope falls, the rate at which sales increase decreases. I think I can tell you this much.

◆ Cho Tae-hyun: Samsung Electronics' stock price has fallen to 74,000 won and SK Hynix has fallen to the early 170,000 won, can I go in the position you mentioned earlier about the value investment?

◇ Cha Young-joo: Yes. Should I buy it or not? So, we ask you straightforwardly without any explanation, but of course, not everything is this schematically, but I would like to tell you to buy it without hesitation if you have to buy it now or not. I can tell you it's an opportunity. The reason I'm telling you this is because on other shows, when Hynix paid 150,000 won and went up 200,000 won. From then on, I saw that people were starting again. While I was talking about a few things at the time, one is the gap, which fills the gap. In a way, this is the detail of the stock. The one that fell into the gap is to fill it in with the gap. It's coming up right now. It means beekeeping is appearing. The second is, as I mentioned earlier, is the era of artificial intelligence for Nvidia over now or not. The era of artificial intelligence is becoming more prominent, and one more thing was mentioned in a conference call about Jensen Hwang. Companies that buy other chips and sell software, what do you think about profitability improvement, and that's more about this condition than about Jensen Huang. But in the end, Jensen Huang didn't specifically mention how they would make money, but he said that because the capacity of the server is now at its limit, we can't do anything new without this. So, if you think a lot of investment should be made, if you think about whether Hynix and Samsung Electronics are being pushed by fundamentals or fear, when Hynix went to 230,000 won, we have a report of 330,000 won from 300,000 won in securities to Korean securities companies. However, when it fell, 240,000 won came out of domestic securities in Korea, but for me, the fund mentality of foreign reports that are 330,000 won now and Hynix's fund mentality have not changed at all. Let me tell you this.

◆ Cho Tae-hyun: Okay. Let me make it clear that Cha's opinion, which you told me to buy now, is not my official opinion, which is a personal opinion. Since we had a lot of fun in the U.S., we'll go to Russia this time. It's Russia, right? Telegram CEO arrested in France Telegram, which means telegram. The CEO of this Telegram personality, Pavel Durov, has been arrested, so please explain who this person is.

◈ Lee Jung-hwan: You can think of it as the most widely known founder of Telegram. Then, I have a Facebook business in Russia, so I have a lot of money. After earning a lot of money, Pavel Durov was originally from Russia. My mother says she's from Ukraine and she's originally from Russia. Since I'm doing business in Russia, Facebook comes out from the United States, so they said they should try a similar business, so they created Facebook in Russia, and they say that various issues, especially information issues, are liberal. What liberalism means is that the blockchain can be connected similarly to coins.

◆ Cho Tae-hyun: It suddenly reminds me of Musk.

◈ Lee Jung-hwan: In the end, we can think of personal freedom as freedom for a centralized system, and the government doesn't have to know or know what we're doing, so the technology to strengthen the security of things like cryptography is actually like cryptography technology. So, in a similar context, Telegram is also very secure. They don't give out the information they have. You can think of it as a libertarian who operates with this basic stance of not giving it to the government. I used to do Facebook in Russia, but I quit my business and started to concentrate on Telegram in 2015. Oh, Telegram is rather weird to use it a lot by the government, but government officials use it a lot. Because the secret security is very strong. And the things we talked about here are that belief that Telegram doesn't provide anywhere else. And with these things that are difficult to hack easily, you can understand that many people are developing such apps in the security and liberal areas, and that's their tendency. And he's very handsome on the outside, and in a way, he's got a great body.

◆ Cho Tae-hyun: Well, they said 'buy a pavilion' too.

◈ Lee Jung-hwan: He's a handsome man with super genes that sells sperms just because he's selling them for 5 million won in Russia, and in a way, he's a great business person.

◆ Cho Tae-hyun: There were some embarrassing words to say on the show, but I ask for your understanding. Telegram is a situation where a lot of politicians use it and a lot of people who do bad things in Korea. What made you arrested?

◇ Professor Cha Young-joo: Yes, you said good things, but I think I need to say some embarrassing things on the show.

◈ I think I passed it over.

◇ Cha Young-joo: In a way, because it's anonymous and supplemented, it's easy for people who develop their brains to use it. That's right. So things like drug trafficking, illegal money laundering, and sex crimes started circulating here.

◆ Cho Tae-hyun: Yeah. When I signed up after not using Telegram, Professor Lee texted me and said, 'What bad thing did you want to do on Telegram?'

◇ Cha Young-joo: I hate to think about it, but the case of Room N was also done on Telegram. This time, deepfakes also happened here on Telegram. Of course, Obi-rak has caused a deepfake problem in Korea, and as it became a problem in France, it became a Telegram, and paradoxically, the number of Telegram downloads increased by 4% on the same day after this person was arrested. But what I see in the media is why it has increased, and in a way, it has become a paradoxical advertisement. There's something illegal if you go in here. There are things that can stimulate my curiosity. There are things like this. Anyway, in the age of artificial intelligence and platform, there is definitely light and shade. In particular, from France's point of view, of course, it is said that it is Biden's role because he is a Russian national, but in France, he was arrested at the airport because of illegal charges.

◆ Cho Tae-hyun: Okay. But basically, after the news of the arrest is announced, the price of virtual assets is bad. Is it connected to the centralization?

◈ Lee Jung-hwan: Telegram is in the position of eventually preventing a centralized system and maintaining self-security, and maintaining personal security. In the end, coins and virtual assets are commonly referred to as systems that suffer from the financial crisis in 2008 and centralized systems undermine the value of our assets, so we can create a system that allows individuals to check information and make transactions while making reliability. That's why Telegram and coin are bound to be connected well, and Telegram is the most popular app for coin users. They say that information is shared, or that there are more than 15 connected things that are linked to the Telegram itself. After all, it's an economic system. In fact, after the 2008 financial crisis, the system that some people or engineers are pursuing rejects centralized things.

◆ Cho Tae-hyun: That's right, that's right.

◈ Lee Jung-hwan: Telegram is a system that can secure reliability within its system, and in a way, Telegram is a messenger, and in a way, virtual assets are commonly referred to as financial instruments, so it's kind of linked together. So you can think of it as having the same philosophical orientation and thinking that we will grow together when the economic system, that is, a decentralized economic system, is introduced.

◆ Cho Tae-hyun: So it affects the price of virtual assets in the end, but it's a difficult question for the director. In fact, it is impossible to calculate the price of a virtual asset. That's why it's hard to forecast this price, but do you think there's a chance to rebound?

◇ Cha Young-joo: First of all, we need to divide it into good and bad news in virtual assets. When it's this confusing, what we usually do is to distinguish between good news and bad news. I don't know what the good news is. Wouldn't there be more bad news than good news? First of all, right now, this Telegram is used a lot by stockholders.

◆ Cho Tae-hyun: That's right.

◇ Cha Young-joo: But the nature of this platform is that the three of us need to create a platform, and you two have good personalities, but even if you're a villain, don't you have to come on Telegram to communicate with me? That's how it expands.

◆ Cho Tae-hyun: I won't deny it.

◇ Cha Young-joo: Yes, don't deny it, and then there are people who do stocks, people who do virtual assets, so they have no choice but to do this. And then secondly, there's a traffic jam. Then I can't share information. This is the second time. If we see virtual assets, we also talk about Ncarry trade funds. So the last time we heard that Japan was raising interest rates, the stock market crashed, but the virtual asset market also crashed. That's where the fluidity goes out. And lastly, because of the U.S. interest rate cut and the fluctuations in government bond prices, if it's a situation that's been raised based on abundant liquidity and rich information, I'll carefully predict that it's become a market that's becoming a little difficult as it becomes a little half-life.

◆ Cho Tae-hyun: There are good news, but he even said that there seem to be more bad news. Lastly, I'll ask the professor briefly about this. Durov's arrest could eventually go beyond Telegram and affect the entire online platform. There is also a prospect like this, so what do you think of it, professor?

◈ Lee Jung-hwan: This means that the government intervened in the online platform system. One of the biggest features of online platforms is globalization. Globalization Globalization is facing various regulations such as EU regulations, Russian regulations, and Korean regulations. Their advantages by properly adjusting the regulations or violating them through some lawsuits. Telegram is operating beyond very strong privacy regulations in the EU. Privacy regulations mean that platform companies should not control personal information too much to some extent. Some say that it was operated beyond that, but in the end, the platform is global, and the global government has to respond to regulations, but such arrests in certain countries are bound to become sensitive to the growing market for foot platforms in the platform industry. In other words, the platform also needs to strengthen legal compliance much, and as a result, the business itself tends to shrink a little. I think I can say this.

◆ Cho Tae-hyun: Okay. Someone who wrote No. 9497 said, "If you look around me, acquaintances who used Telegram for pure purposes go out to the room because they are reluctant or delete the app." It is also necessary to foster the platform industry, but it seems clear that it is necessary to keep and restrain these standards. So far, we have talked about Nvidia and Telegram with Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance and Cha Young-joo, director of the I Asset Economic Research Institute. Thank you for talking today.

◈ Lee Jung-hwan, ◇ Cha Young-joo: Thank you.