With Amazon’s report this afternoon, we are now through the big tech earnings, with the exception of Nvidia, which will come later this month.
So, the big question has been, given the DeepSeek news of the past two weeks: Would the hyperscalers balk on the massive AI infrastructure spending plans?
For a clue, on the earnings call this after, Andy Jassy (Amazon CEO) called AI a “once in a lifetime business opportunity” when asked about AI capex plans.
So, the answer is no.
They are not pulling back.
Rather, they are all pressing the accelerator. If we combine the planned capex spending for 2025, guided by Microsoft, Meta, Google, Tesla, Apple and Amazon — it’s over $300 billion. It’s huge growth in spend from 2024 — about $100 billion more.
And they all credit it to “signals of demand.” And Jassy admitted that they could be growing faster if not for supply constraints, namely “third party chips.”
So, that’s Nvidia.
On that note, over the past few quarters, we’ve been watching what is a rhythm at Nvidia, of consistently adding around $4 billion a quarter in new revenue.
That meant huge growth when applied against the low quarterly revenue base of four to six quarters ago. But as the “new” revenue has proven to stagnate, the growth rate has been falling.
And as we discussed following the November report, if this trend of $4 billion per quarter in new revenue continues, the year-over-year Nvidia revenue growth rate will plunge to a rate closer to 50% by the third quarter of this year (from what has been triple-digit growth).
We know demand is insatiable, so we can deduce that the ability to grow new revenue is a manufacturing capacity issue, and that’s Taiwan Semiconductor.
And if we consider that American hyperscalers will take as much supply as Nvidia can offer, the export controls shouldn’t be a negative drag for Nvidia.
For Nvidia, it’s about this manufacturing capacity growth constraint.
And as we discussed following the November earnings, this presented some “resistance for the speed of change in the technology revolution, which should start to weigh on Nvidia shares.”
As you can see in the chart below, the November earnings was indeed a top. A new top was just barely printed earlier this month after Jensen’s keynote at the CES conference in Las Vegas — and it’s been lower since. They report on the 26th.