Wall Street Lunch: 'Insane' Nvidia Demand

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CEO Jensen Huang says the new Blackwells for AI are on track. (0:16) Tesla chief information officer out. (2:57) Lilly weight-loss drug shortage ends. (4:03)

The following is an abridged transcript:

Nvidia (NASDAQ:NVDA) CEO Jensen Huang says the demand for its latest GPU, Blackwell, remains on track.

"Blackwell is in full production … and demand for Blackwell is insane. Everybody wants to have the most, and everybody wants to be first," he said on CNBC TV.

The Blackwell GPUs are already being released to data centers and industrial customers for artificial intelligence applications. They will be available for consumers in 2025.

He added: "The thing that we have done with Blackwell, and what we have announced, is there is new AI infrastructure generation every year. So, we're updating our platform every single year. If we can increase the performance, like we've done for Hopper and Blackwell ... we're effectively increasing the revenue or throughput for our customers on these infrastructures by a couple to three times each year."

Hyperscalers are expected to spend about $160 billion in 2024 on AI infrastructure. Every frontier large language model requires many times more computing power than the one prior.

"At a time when technology is moving so fast, it gives us an opportunity to triple down and to really drive the innovation cycle so that we can increase capabilities, increase our throughput, decrease our costs, decrease our energy consumption," Huang added.

In today’s trading, crude oil futures (CL1:COM) are rallying more than 5% as President Joe Biden, when asked by a reporter if he would support Israel striking Iran's oil facilities, said the option is being discussed.

Citi analysts said Wednesday that a major strike by Israel on Iran's export capacity could take 1.5 million barrels/day of supply off the market, and an attack on relatively minor infrastructure such as downstream assets could take out 300,000-450,000.

Rates are higher, with the 10-year Treasury yield (US10Y) up to 3.85% Stocks are slightly lower but hanging tough with strength in growth names.

On the economic front, the ISM U.S. Services PMI clocked in at 54.9 in September, topping the 51.5 consensus and rising from 51.5 prior.

It's the highest reading since February 2023 and indicates that the service economy expanded for the 49th time in the past 52 months.

And weekly initial jobless claims rose to 225,000 vs. 221,000 consensus.

Economist Joseph Brusuelas says: "I expect first time claims to climb toward the 13-week moving average of 235k in coming weeks but no major increase in the pace of firings. Job security for Americans is remarkably strong."

Among active stocks today, just a week before the company’s highly anticipated robotaxi event, Tesla (TSLA) is losing its chief information officer.

Bloomberg says Nagesh Saldi, who oversaw the development of Tesla’s data centers in Texas and New York and reported directly to CEO Elon Musk, is leaving the company. Saldi has been with Tesla since 2012 when he joined the automaker as Vice President of Engineering and was promoted to CIO in 2018.

Constellation Brands (STZ) issued a mixed fiscal Q2 earnings report. Revenue was up 2.8% year-over-year for the quarter that ended on August 31 to miss the consensus estimate by $30 million. Management said the current macroeconomic backdrop has weighed on booze broadly.

Looking ahead, Constellation Brands reaffirmed 2025 net revenue growth of +4% to +6% and EPS of $13.60 to $13.80 (midpoint $13.70) vs. $13.71 consensus. The Beer Business is expected to see net sales growth of 6% to 8% and operating income growth of 11% to 12%.

And RTX (RTX) was upgraded to Hold from Sell at Deutsche Bank. Analysts said the U.S. aerospace and defense company is poised to grow faster than defense-industry peers because of its significant aviation business.

In other news of note, Eli Lilly’s (LLY) blockbuster GLP-1 medication tirzepatide is no longer facing a shortage in the U.S., according to the FDA

Tirzepatide, currently marketed as Mounjaro and Zepbound for diabetes and weight loss, has been in shortage since 2022 due to increased demand.

The FDA said it confirmed with Lilly that their stated product availability and manufacturing capacity can meet the present and projected national demand. But as the products move through the supply chain, patients and prescribers may still see intermittent localized supply disruptions.

And in the Wall Street Research Corner, UBS took a look at the restaurant sector for the most crowded shorts and longs.

The crowding score is based on prime brokerage data, stock loan data, 13F regulatory filing, and proprietary data. Also, “when evaluating risk, a high crowding score in either direction increases the upside/downside risk of a position,” analysts said.

Among the most crowded longs are Texas Roadhouse (TXRH), Chipotle (CMG), Wingstop (WING) and Dave & Buster’s (PLAY).

Most crowded short names include Kara Sushi (KRUS), Sweetgreen (SG), Krispy Kreme (DNUT) and Starbucks (SBUX).