NVDA Hikes Prices 17%, Bears Claim It's Bad for Neoclouds! Sector Impacts: NVDA MU SKHY NBIS & IREN.

0:00 Hello everybody. So I want to provide a quick update on the Nvidia price hikes and the many bare takes bare faces out there both on iron and inv and nibbius. and both of these stakes are like oh well this is actually so bad for the neoclouds. The neoclouds are going to get squeezed. Look there's a price hike. And it seems like the algorithm is only amplifying the negative takes because if it bleeds, it leads. But in my view, this Nvidia news is actually very very bullish for AI in general. It means that the demand is insensitive to pricing. It means that Nvidia saw it fit to increase the price again. And Nvidia probably doesn't think there's going to be that much of a difference in the demand. And so the news is this. Of course, Nvidia raising the prices of the servers and the AI chips containing the AI chips, right? So the main source of revenue for Nvidia raising the prices by 15%, memory cost being a factor here. First of all, one thing I I want to say if you see the original report on this, the original report on this set 17%. So I have no idea how this turned into 15 from 17% they rounded it down but this is actually more than 15%. this is a quite meaningful increase and so this should obviously be very very bullish for Nvidia. but the narrative is going crazy and so you have a bunch of takes that are very viral on next talking about Iron and Nebius crashing over this because somehow the margins will get squeezed and this this is the problem with this type of stock is that that narrative may very well make the stocks crash but at the end of the day it is a narrative right this is the same thing as as delution news we we saw was it white fiber last week where delution stock drop 30% % or 20% Baba is going to drop tomorrow. Same on delution. How many times do I say that dilution is technically neutral? Like dilution is technically neutral. It's it's always been neutral. When a business dilutes, it it dilutes at that valuation. It's just that the market at this as this perception that delution is a bad thing and so it drops the stock. And so you have this narrative circulating which may may make these stocks drop. But how how much cheaper are we going to go?

2:34 Don't get me wrong, if Nibbius drops, I'll be a little happy because I think I think Nibius ran ran too far too fast. I think Nibbius could drop a little bit. Iron, I'm not so sure needs to drop cuz iron is already pretty dirt cheap at 41 bucks. On my spreadsheet, iron is the cheapest out of the three Neoclouds. and right now it looks like the most attractive, at least in my view. Now, I often try to look at Hyperlid, as you know on the channel. And I've covered the token as an investment, but there's another use for Hyperlquid, which which is to see what assets are trading on the weekend on Hyperlid. And if you look at all of these free assets on Hyperlquid right now, you have iron up one half%, you have Nibbius up 2%. And you have Nvidia up 1.5%. Now, technically, this this this is not that meaningful, right? Because all of the volume starts on on Sunday night in the US and then of course tomorrow market open. That's when the meaningful moves happen. But nonetheless, this is all we got. And so when I look at all we got despite the low volume, I see the sector up as a whole. And I think this is what it should be. I think the sector should be up as a whole. It means the demand is so big that we can raise prices and we're we're not fearful that raising prices will lead to a meaningful drop in demand, which is not the case for other industries. In most other industries, if you raise prices, the demand pretty much drops, right? It's it's elasticity. We don't see much elasticity on Nvidia's product. The demand is inflexible and people are going to pay what they need to pay. But unfortunately, this is not the news that you see amplified right now because social media works. If it bleeds, it leads. Just like if I wrote my my video, if my thumbnail I had bad for AI, I probably would get more views than if I write good for AI. But how could Nvidia's ability to pass on such huge price hikes, 17%. How could how could not that be bullish for the whole space? And you know, even if you were to think this is bullish for just Nvidia, well, guess what? There's a lot of people who own Nvidia as part of a basket, as part of an AI basket. So, the tide lifts all boats. The Nvidia tide should lift the sector as a whole. To me, this is a very bullish news. The market just doesn't want to believe it.

4:49 Now, of course, as you know, I've called Nvidia undervalued for yeah, just about a year in a row. I mean I mean it moved from 180 to like 214 in a year. It's really it it really hasn't moved compared to the leadership position. And even compared to the to the revenue growth, right? The the revenue has moved three times as fast. The revenue growth has moved three times as fast for Nvidia as the stock price has moved. The the stock price has been stuck in a little bit of a value of despair. Even though we have a slight up, it's slightly up, but really not that much. And and you know, a lot of other Mac 7 did run more.

5:26 Like if I look at Microsoft or if I look at Apple, their nose bleed valuation. If I look at Nvidia, Nvidia is one of one of the cheapest out there. You you know, absent Meta of course, but Meta has its own idiosyncratic issues with that lawsuit. But Nvidia, you know, short of idiosyncratic problems that these companies may have, Nvidia clearly is the cheapest to me, at least to me. So this is a very bullish news and we'll see what happens on Monday and on you know Wednesday night Thursday morning when they report earnings. another sector that is primed to benefit on this is Micron and SKINX which is high bandwidth memory and memory in general because of course the bottleneck right now is memory is high bandwidth memory.

6:11 these these these multi-layer stacks of memory that that that are packaged with GPUs that come attached with GPUs and actually if you look at the industry more closely SKH is actually the leader in that space much more than Micron Micron is actually neck andneck with Samsung in the space but the leader is actually SKX and when I look at the valuation of SK INX versus Micron I find that SK Inx is actually slightly cheaper than micron. And of course this this is a classic dichotomy that we see whenever we have a US stock and a non US stock.

6:48 The US stock is always more expensive. And I guess we just have to accept that fact that US stocks will always trade at a premium to to foreign stocks. At least that fact has held for a very very long time. but nonetheless the valuation gap is is very real. I I relatively I find skhinix much cheaper than Micron. One of my problems though when I look at memory is that I'm not sure the drop is done. You know, I'm not sure the FUD is done. We have September coming. It's a very volatile week.

7:18 month, sorry. September is is historically a very volatile month. So, I'm not so sure we're not going to get opportunities to add for for the Micron and the SKHixes of the world. To a lesser extent, we could have an opportunity to add to Nibbius too. I I believe you look at Corweave, well core weave a little bit, but you look at iron, you look at Cipher, I believe they're pretty darn low. But if you look at at Nibbius, you know, if if we get a few bad weeks in September, if we get that up upcoming week, if we get some some some macro earthquake, macro turmoil on Friday, I I believe there could be an opportunity to get them cheaper. But anyways, let me conclude this video. My take on Iron and Nimbus.

7:59 so I think Nibius would be a little I mean you could argue that Nibius could be a little bit more impacted by this than than I because because Nibius Nibbius has already signed a lot of contracts already. Iron only only delivered and signed I mean they they signed they signed multiple things but they they only delivered one. They they only did Horizon one at iron, right? Nibbius on the other hand they signed a lot of deals. so so so you could argue that that this news and the price hikes may impact Nibius Mormon iron, but I'm not even sure about that because they I mean when you look at contracts of this size, typically you lock in your pricing before and and given that Nibbius has received a $2 billion investment from Nvidia and given that they are priority for Nvidia, I have a hard time not imagining that there is either orders that have been locked on the one hand or or or maybe some sort of price escalation in case an adverse pricing event happens. You know, I I I would have a hard time digging into these contracts and thinking that they haven't included something to the sort of of of mitigating some raising prices. That's that's for point number one. But because because Nibbius is more advanced in rolling out the Neocloud data centers, I could argue that Nibbius perhaps is a little more impacted than than Iron. but the other the other thing the flip side of the coin to that is that if you look at at Nibbius's latest earnings report, they've moved to more shortterm renting. And so if you if you do short-term renting, if you don't do long-term contracts, if you if you if you do short-term contracts, then that issue is moot because as soon as the prices increase, you can increase your prices. You can renew at higher prices as soon as those prices increase. so I think n just from the fact that they have long term long-term contracts, they may not be able to increase the price of compute, but that does not necessarily mean a loss. That just means that they would stay steady.

10:02 Companies that have short-term contracts or who have not rented out or contracted out their entire capacity yet can update their pricing now that GPU compute is more expensive. You can now charge more. And so so I've said that about Nibbas before. you know the the upside of being being so early is that is that of course you're first in the race and you're far ahead of everybody else. The downside is that you you may have under sold and undernegotiated some of your contracts. Now, as far as iron, I think I think iron to me this this would have to be at least neutral, if not bullish for iron because iron can incorporate the hikes into whatever it has left to sign and it has a lot to sign, right? There's 5 gawatt worth of worth of stuff. I mean, down the road, right? It's going to take until 2032, but they have a lot coming up to sign at iron and my my view is that they'll be able to incorporate these IS. So this this this to me in the grand scheme of things, this is bullish for the entire sector. You could argue that it's a little more bullish for iron than Nibbius, but you know, I'm not I'm not even so sure. And if I look at Hyperlid, I see everything down. Now, the problem is that the market is so narrative driven that all it all it takes is a is is a few powerful tweets on X to get tens of millions of of of views and eyeballs and CNBC picking it up and then there you go. You could have a down day on Monday. But to me, this is overall a very good news for the sector. So, anyways, this was not investment advice.

11:30 This is not financial advice. This is only entertainment on this channel. Always only entertainment. Please like, please subscribe, follow me on Patreon, follow me on X.