Nvidia's Unseen Tailwinds Fueling Exceptional Growth

Hedgeye Asset Management Portfolio Manager Sam Rahman shares his approach to positioning for big benchmark events, like Nvidia's (NVDA) recent print. Unlike some investors who overthink their strategy, Rahman keeps things simple and focused on the fundamentals.

Rahman owns both Nvidia and Marvell (MRVL), but has a relatively small active position in Nvidia due to its size. Instead, he allocates larger weights to software names like Amazon (AMZN) and Microsoft (MSFT). His goal is not to get caught off guard by the news flow, which can be damaging if you're on the wrong side of it.

Rahman points out that Nvidia's data-center business has tremendous growth potential, with a possibility of nearly doubling year-over-year. This exceptional feat for such a large company sets the stage for its quarterly performance.

Looking beyond the print, Rahman highlights three key tailwinds driving Nvidia's success:

Transition to Vera Rubin chip: Nvidia is shifting from the Blackwell chip to the faster and more efficient Vera Rubin chip, with hyperscaler orders already being placed. This upgrade will significantly boost the company's performance.

SpaceX emerging as a large buyer: Following its IPO, SpaceX has become a substantial new customer for Nvidia's data-center infrastructure, marking a significant growth opportunity.

Memory-chip inflation driving revenue: A 15% price increase in chips and servers next year is expected due to memory-chip inflation. This will directly contribute to Nvidia's revenue growth.