Gene MunsterTonight for $Alphabet - C(GOOG.US), the key number is Cloud growth.
Streets expecting Google Cloud growth of 63% yy, unchanged from 63% in March. I think it will be above 65% with language that they’re supply constrained. For comps: AWS is expected to be 32% vs. 28% in March. Azure is expected to be 40% vs 39%. Bottom line is Google cloud is gaining share in a growth market.Source: Gene Munster
The second most important topic for $Alphabet - C(GOOG.US) earnings is Search growth.
Streets expecting it to up 17% YY compared to up 19% in March. One reason for the step down is the growth comp in June 25 was 12%, slightly higher than the 10% in March. Bottom line is Google is doing a great job of converting AI Overview and AI Mode traffic into Search revenue. More Google use, more shots on goal, more search revenue.Source: Gene Munster
$Tesla(TSLA.US) earnings tonight. Here's the cheat sheet:
1. Auto Margins ex Credits: I expect auto gross margin ex-credits to be slightly above the Street's 18.5% because volumes were so strong. It was 19.2% in March. In theory, it should be flat quarter over quarter.2. Deliveries: Key question is what drove the surge in June deliveries, up 25% y/y compared to up 6% in March? I believe high gas prices is a sustainable tailwind.3. Capex. Here’s the negative wildcard. Last quarter, when the company guided capex to increase this year from $20B to $25B, it triggered a sell-off in after-hours trading, underscoring that the topic matters. I expect the company to guide to a number above $25B this year and give hints that 2027 should be above the Street’s $21B level.4. Robotaxi. In July they added 3 cities and now operate small fleets in 7 cities. They’ve said two more cities coming, Las Vegas and Phoenix. I expect 3 more by year end, getting us to 10 in total. Street is expecting 2-3 more this year.5. FSD. In March active paid subs grew 51% YY to 1.28m. In June I expect growth of 40%. The strong June delivery number should result in an acceleration in active sub growth in September because sales in the US come with one month free that acts as a top of funnel. FSD is approved in the Netherlands (April) and waiting for approval in the EU and China.6. Cybercab: I expect Elon to move the target for production ramp from late 2026 to first half of 2027. My take: Investors are already expecting the slip.7. Optimus. I’m not expecting much substance. Long term, 2040, this should be more than half of sales.Toy department: SpaceX acquiring Tesla: We won’t get anything tonight on the topic. I put the odds at 80% that Tesla will be acquired by SpaceX within the next five years.Source: Gene Munster
$Apple(AAPL.US) closed up 4% vs the Nasdaq up 0.5%.
The new Siri AI in iOS 27 public beta released yesterday gives investors concrete evidence that Apple finally has the AI chops it’s long been missing. This is the same setup that fueled Google’s sharp rerating in April 2025. After using the beta for a day, I can attest it’s like having a new phone .Source: Gene Munster
The college GPA is dead.
My eyes have been opened to how AI is reshaping college learning. Based on a conversation today with 5 Deepwater interns (all rising juniors), here are 7 takeaways.Bottom line: Employers hiring college grads should flat out ignore the GPA. Actually, they should hire the low GPA student because they likely invested more into strengthening their critical thinking. 1. College isn’t really about learning anymore. AI frees up time for life experiences, friends, working out, the pool, partying, and extracurriculars. It’s about the fun and the experience.2. The prevailing mindset is simple: You need a degree to get the job, so the goal is getting the degree as easy as possible, maximize the fun, and figure out the rest later.3. The entire system is built around grades. GPA is everything, and students will do whatever it takes to protect it.4. Even students who were initially morally opposed to using AI eventually give in, they have to stay competitive with everyone else who is.5. It doesn’t seem to bother them that most are completely indistinguishable from one another. No one stands out. The reason is grades matter.6. The majority of their homework, all writing, math, accounting, reading reflections, and summaries, is completed with AI.7. Cheating on tests in class room is widespread. While most tests are still in-class, on paper, and multiple choice, students in bigger lecture halls (50+ people) quietly pull up an LLM on their phone and snap a photo of the question whenever the professor isn’t looking.Source: Gene Munster
In CY27 I expect the Hyperscalers to grow capex by +40% vs the Street at 23%. AMZN's debt raise is the latest evidence.
Source: Gene Munster
The TSLA stock reaction to deliveries (down 6%) buries the lede. The EV winter is ending and deliveries still matter.
Source: Gene Munster
CFO of $Micron Tech(MU.US) says they will be supply constrained in FY28, and he doesn't have line of sight to when they will be in equilibrium.
My take: This is a significant positive for the AI trade, and evidence that the demand could outpace supply into late CY28 or even CY29. Hard to believe.Stock now up 12% in after hours based on that supply comment, and likely going higher.Source: Gene Munster
If you missed Google I/O this week because it got buried under NVIDIA earnings, SpaceX S-1, and OpenAI verdict, you’re not alone.
All you need to know is $Alphabet - C(GOOG.US) Search is continuing to evolve. They’ll be adding agents into basic search, that means in the future Search will working for you even when you’re not searching.Second, custom silicon is lower costs and increasing Cloud market share.Source: Gene Munster
I have a bad habit of trying to guess what a stock will do the day after earnings.
It's a bad habit because post-earnings trading has so much noise, it tells us almost nothing about the actual fundamentals.Now that the disclaimers are out of the way: I expect $NVIDIA(NVDA.US) to be up 1-2% today. It’s currently down 0.4% in the premarket (8:15a ET).Source: Gene Munster
$NVIDIA(NVDA.US) call just ended. Stock drifted down an additional 1% in the final minutes (now down 1.5%) as investors were hoping for some new nugget on growth.
The $20B CPU nugget just wasn't enough.Source: Gene Munster
Question from the call: Does the $20B in CPU guide (that’s Vera) this year cannibalize GPU revenue?
Jensen says no, and the way to think about this is they’re building out a computing platform and don’t think about CPU vs GPU, just more compute.My take: Makes sense.Source: Gene Munster
Physical AI & $NVIDIA(NVDA.US)
As in each of the past five quarters, Jensen reminds investors that physical AI will become a major driver in the next several years, but it has not yet started.My take: Investors are under appreciating the impact of physical AI. This year, FSD will account for about 0.3% of total passenger miles driven in the U.S., and autonomous ride-hailing will account for about 2% of rideshare. Cars are one part of physical AI.Source: Gene Munster
Jensen says "they should grow faster than hyperscaler capex"
My take: This year, those hyperscalers are expecting to grow capex at around 80%. That means Jensen thinks they'll grow more like at 90% this year (CY26). The Street is at 72% growth for $NVIDIA(NVDA.US) this year.Source: Gene Munster
Jensen keeps talking about Anthropic.
My take: Anthropic's business continues to be on fire, and for the first time meaningfully moving the growth needle for $NVIDIA(NVDA.US)Source: Gene Munster
Jensen says they will be supply constrained for the life of Vera Rubin. Shipments started in March.
My take: that’s a positive, because it opens the door that demand is actually better than what we see. $NVIDIA(NVDA.US) shares had little reaction to the comment.Source: Gene Munster
Colette Kress only comment in prepared remarks on China is that they got approval and they're not expecting any revenue in July.
* Best case is China could account for 10% of sales. * More likely case is it adds back 5%. * That said, investors will back it out given its risky revenue. My take: China doesn't matter.Source: Gene Munster
Hyperscaler revenue was essentially half of Data Center $NVIDIA(NVDA.US) overall revenue. My math is that’s consistent with the Jan 26’ quarter.
My take: GOOG, MSFT, META and AMZN capex guide is still the easiest way to get a sense of how things are going to Nvidia.Source: Gene Munster
CFO says they have sight to $20B of CPU revenue this year. That means it will be about 5% of revenue from basically zero last year.
My take: The CPU story is nice but doesn't move the needle. $NVIDIA(NVDA.US)Source: Gene Munster
To get a better sense about the underlying $NVIDIA(NVDA.US) revenue growth, we need to adjusting for China revenue over the past two quarters. Here's what we find.
Jan 26: 89%Apr 26: 109%Jul 26: 95%Guidance for July doesn't need an adjustment (there was no China revenue in July 25'). Take away: Keeping growth rates at similar rates despite the law of large numbers is a sign we're still early. These numbers are so good that it makes Apple's beating the law of large numbers in the sweet spot of the iPhone growth look JV.Source: Gene Munster
Getting ready for $NVIDIA(NVDA.US).
➡️ Numbers will be great. ➡️Outlook will be better. ➡️ Thats likely priced into shares because fears about slowdown next year will remain. ➡️More importantly, if they keep CY26 revenue at 72% (Street) or better, the AI trade is intact. ➡️In March at GTC, Jensen gave the $1T cumulative revenue by end of CY27, which implies 40% plus growth for CY27. The Street is at 34%. I expect the Street to land around 40% growth following earnings tonight. ➡️China doesn’t matter. If it turns back on, investors will likely back it out because they fear it will go away again. More to come.Source: Gene Munster
Shares of $NVIDIA(NVDA.US) will finish the week up ~15%, compared to the Nasdaq up ~10%, given newfound confidence in the China opportunity. I've come to the conclusion that China doesn't matter because it's unpredictable and Nvidia is doing just fine without it.
Source: Gene Munster
T-minus 7 days until $NVIDIA(NVDA.US) reports. The numbers are going ~10% higher. I'm expecting shares to have a muted response because investors will likely still be worried about next year.
Source: Gene Munster
AI impact on jobs update: ADP Private payrolls rose by 109k in April vs expectations of 84k and 61k in March.
While this may suggest AI is not impacting jobs, a closer look shows job growth coming from areas where the human touch matters, education and health (added 61k), trade and transportation (added 25k) and construction (added 10k). Those knowledge workers (including myself) are still at a fork in the road: embrace the tools or risk being replaced.Source: Gene Munster
Last night Anthropic announced a multi year $200B commitment to $Alphabet - C(GOOG.US) Cloud.
The debate about can Anthropic make good on the deal misses the point. The big picture is this announcement underscores how early we are in AI, with the need for compute taking off on the heels of last Novembers step function improvement in many of the models utility. That’s good news for the entire AI model and infrastructure stack.Source: Gene Munster
