Nvidia (Nasdaq: NVDA) Organized last month its conference on GPU technology (GTC) 2025 in San Jose, California. The annual evolution of the chief of the chip for artificial intelligence (AI) is largely considered to be the first world event in AI.
I looked at the two-hour opening address of the CEO Jensen Huang in real time, I caught some of his interviews and I saw several group discussions on AI and Humanoid robots. Excellent information was shared during all these events, in particular the opening of Huang. It was a full launches and promising partnerships of new products, strengthening my upward vision of Nvidia shares as a long -term investment.
But there was an incredibly optimistic thing he said during the GTC week that most investors probably did not know. He was not delivered during his speech or an interview, but to the financial analyst GTC Q&R on March 19.
A Wall Street analyst asked this question during the event and answers: “If there is a recession, what does that do to your business? At the request of AI?”
Huang’s response: “If there is a recession, I think that companies working on AI will move even more investment to AI because it is the fastest growth (zone / space). Each CEO will be able to move to what is developing.”
I think that a reasonable interpretation of his answer is that he suggests that a recession should increase, or at least not decrease, the demand for the company’s demand IA-Modes of products. These products, collectively, collected at least 87% of the company’s total income during its last quarter, which ended in late January. (Products in the data centers segment are essentially all the results of the AI, and this segment carried out around 87% of the company’s income in the last quarter.)
Huang’s response may seem counter-intuitive, but it makes sense to reflection. CEOs, especially in certain industries, realize that AI investments are now so essential that they are a necessity. Innovations in AI occur so quickly that companies that reduce IA investments, even for a relatively brief time, will probably take a delay in their competitors in AI capabilities. This could lead to an existential crisis from which they could never recover.
Let’s say that Apple decided to reduce its investments in AI during the next economic slowdown or the full -fledged recession. It could potentially risk permanently Losing some of its iPhone customers to competitors, namely mobile phone manufacturers who use AlphabetAndroid operating system. It would be a risky decision because the iPhone is its product of bread and butter.
As Palantant CEO Alex Karp has constantly submitted it in the version of the results of the data analysis company fueled by AI, “the world will be divided between wealthy and non -.” Indeed, it seems likely that Haves, which could be businesses or countries, will be winners, and non-perceives will be losers.
Data by ycharts. Data from the most recently in the quarter of each company. The available cash flow numbers relate to the end period at 12 months.
What happens if Huang’s Declaration is inaccurate and the request for Habilitation products and services of the AI - including NVIDIA – decreases during the next economic slowdown or the recession?
Investors should not fear because the Nvidia’s assessment is robust. The company is in better position than most of its peers and competitors to resist a slowdown in demand resulting in a drop in income, profits and cash flows.
As the graph shows, Nvidia’s cash position and long -term debt are about $ 8.5 billion at $ 8.6 billion. Flea manufacturer Advanced micro-apparents (AMD) has more money than long -term debt, so it is also in good shape in this regard. But flea manufacturers Broadcom And Intel Have a lot more long -term debts than money, so they use a lot of money to serve their debt. This is a situation OK for Broadcom because it has solid cash flows, at least today, but Intel bleeds money. In the past year, the available cash flows from Intel (FCF) were negative – $ 15.7 billion, almost double his money in hand.
Nvidia is an FCF machine. In the past year, he produced $ 60.9 billion in FCF. He could easily use his cash flows to reimburse, or even pay fully, his long -term debt. But it makes sense that it does not do it. The company’s major treasury position, associated with its massive FCF, offers it many options to invest in long -term growth initiatives.
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Suzanne Frey, director of Alphabet, is a member of the board of directors of Motley Fool’s. Beth McKenna has positions in Nvidia. The Motley Fool has positions and recommends advanced technologies of micro devices, alphabet, Apple, Intel, Nvidia and Palantant. The Motley Fool recommends Broadcom and recommends the following options: Court-circuit in May 2025 30 $ calls Intel. The Word’s madman has a Disclosure policy.
