Nvidia Supply Chain Investment Pushes Beyond GPUs

Nvidia supply chain investment is moving beyond chips and into the AI plumbing around them. The company is using its cash to push deeper into CPUs and optics, while its first-quarter results arrive Wednesday, May 20.

Art Hogan Sees A Broader Push

Art Hogan, B. Riley Wealth chief market strategist, said Nvidia is using its cash to make itself much more a part of the AI infrastructure. He also said the company is investing in all the right places, a shift that reaches beyond its core GPU business and into the parts of the buildout that sit around it.

$1.4 billion in revenue upside is what Atif Malik is looking for in the quarter versus Wall Street estimates, with $2 billion in sales upside seen for the July-ended quarter. That sets up Wednesday's report as a test of whether Nvidia's expanding footprint can keep adding to numbers that are already running at 71% gross margins.

CPU And Corning Moves

53% is the expected revenue growth rate, though the figure could be closer to 60% if the higher end of forecasts proves right. Nvidia has announced its own CPU to compete with Intel and AMD, and it has a partnership with Corning in the optics industry.

Optics is another bottleneck of the AI trade, and Brooke DiPalma said the street still has 76 buy recommendations on the stock. Nvidia also trades below 25 times, while the SOXX trades at 35 times and is up 70% year to date, leaving the stock lagging a broader semiconductor move even as demand for related hardware has stayed hot.

Why The Setup Matters

76 buy recommendations and a valuation below 25 times leave room for debate over whether Nvidia is being priced like a pure GPU maker or a broader AI infrastructure company. If the CPU push and the Corning optics tie-up keep widening the company's reach, the next earnings print will show whether cash deployment is changing how the market values the business.