NVIDIA plummets, investors feel that Jensen Huang's CES speech had issues? It was all "fluff" with no substance

This week, NVIDIA CEO Jensen Huang delivered a keynote speech at CES, but stock market investors were not impressed. On the first trading day after Huang's speech, Tuesday, NVIDIA's stock price fell over 6%, marking its worst single-day performance in four months.

According to a report by The Wall Street Journal, although Huang's speech excited the thousands of attendees, he attracted the wrong audience; NVIDIA needs to appeal to a broader group. To put it bluntly, the flattery was directed at the wrong people.

Why is it said that Huang's speech missed the mark for stock market investors? The report states that while Huang showcased NVIDIA's efforts in gaming, autonomous driving, and robotics, investors are currently very focused on NVIDIA's data center business, and in this regard, NVIDIA did not provide any updates at CES.

No wonder Benchmark analyst Cody Acree later commented that Huang's speech was "a solid but somewhat low-key CES keynote," and noted that many investors were hoping for more specific updates on the production increase of the Blackwell chips, as well as some information on the progress of the next-generation data center product, Rubin.

Wall Street has already begun to speculate that NVIDIA's Rubin series data center chips are not expected to ship until 2026. Huang's speech did not provide any clues. Wall Street Journal previously mentioned that some commentators noted that Huang's speech provided relatively few details about the most profitable business for NVIDIA—chips used for training and running AI models—only pointing out that its Blackwell AI chips have been fully put into production.

The Wall Street Journal's report pointed out that before the significant drop on Monday, NVIDIA was on track to become the first publicly traded company with a market value of $4 trillion, up from only one-third of that a year ago. NVIDIA's market value growth has been driven by explosive sales and profit growth, making its stock price highly sensitive to any bumps, and investors are closely watching the AI chip business adopted by data centers.

How important is the data center to NVIDIA? A set of numbers tells the story.

• For the fiscal year ending January 2025, NVIDIA's data center business revenue is expected to be around $113 billion. According to FactSet data, the annual revenue of other chip companies does not match the revenue generated by this segment for NVIDIA. Visible Alpha estimates that analysts expect data center sales to exceed $200 billion in the next fiscal year ending January 2027.
• NVIDIA's second-largest business—gaming PC GPUs—is expected to generate slightly less than $12 billion in revenue this fiscal year, which is less than 11% of data center revenue. NVIDIA's automotive business revenue is expected to grow to about $2 billion in the next fiscal year, and if you include the data centers required for autonomous vehicles, the total revenue from the automotive business will exceed $5 billion, which is still less than half of this fiscal year's gaming business revenueThe above report believes that NVIDIA's current value largely stems from its ability to continuously persuade giants like Microsoft, Amazon, Google, and Meta to invest billions of dollars annually in AI systems. NVIDIA has long been extensively involved in other industries such as automotive, gaming, and high-end design, many of which are about to or have already been influenced by generative AI, presenting significant future development opportunities for NVIDIA. However, gaining recognition is a much longer and slower process. Data centers will remain the dominant factor influencing NVIDIA's stock price for a long time.

In summary, under the current circumstances, it is not easy to convince investors that NVIDIA's business outside of data centers is not just a gimmick