Gerstner forecasts 5-7 good-sized IPOs in Q4 2023 and closer to 10 in Q1 2024.
“I think we're gonna see five, six, seven IPOs, good sized IPOs in q four. We'll probably see closer to 10 in q one,”
Gerstner says professional analysts predicted NVIDIA data center revenue would decline 6 percent, highlighting how wrong forecasts were.
“The consensus estimate for NVIDIA this year was that data center growth revenue growth was gonna be negative 6%. Right? That's the pros. They got it that wrong.”
Gerstner cites Fed forecast of 1.5% GDP, two to three rate cuts, and 2% inflation next year.
“But if you look at the Fed's own forecast for next year, one and a half percent GDP, two to three rate cuts, ending the year with a two two handle on inflation.”
Gerstner notes consensus forecasts Uber reaching almost $10B in free cash flow in a few years.
“if you look at the consensus forecast for the business, which is pretty mind boggling, it's estimated by the consensus that it'll reach almost 10,000,000,000 in free cash flow, just a few years from now.”
Gerstner notes consensus forecasts assume Nvidia's share of global compute buildout drops from 55% today to 26% by 2028.
“The line running through the center that starts at 55% and goes down to 26%. That is Nvidia's share of that global compute build out based on current consensus numbers for Nvidia.”
Gerstner's Nvidia estimate is closer to $5 per share, ahead of consensus since fall 2022.
“we're we're closer to $5 a share. We've been ahead of the consensus estimate since the fall of twenty two.”
Gerstner states consensus Nvidia estimate for next year is around $3.50 per share.
“the consensus estimate for next year for Nvidia, I think is around $3.50 per share.”
Gerstner frames NVIDIA debate as 6 million GPUs versus bearish 4.5 million estimate for next year.
“We're kind of at 6,000,000 GPUs for next year. The bearish people are at like 4,500,000. The numbers will ultimately tell.”
Gerstner claims 30% annual infrastructure expense growth requires comparable inference revenue growth on both sides.
“So, you know, if you think that infrastructure expenses are going to grow at 30% a year, then I think you have to believe that the underlying inference revenues, right, both on the consumer side and the enterprise side are gonna grow somewhere in that range as well.”
Gerstner posits 30% annual infrastructure expense growth requires matching inference revenue growth from enterprises and consumers.
“if you think that infrastructure expenses are going to grow at 30% a year, then I think you have to believe that the underlying inference revenues, right, both on the consumer side and the enterprise side are gonna grow somewhere in that range as well.”
Gerstner now forecasts $300 billion in tariffs, 4x last year's $77 billion revenue.
“Okay? I just told you that last year tariffs were 77,000,000,000. So that's still a four x increase in tariff revenue,”
Gerstner calculates Microsoft could reach $7 trillion market cap in ten years growing at just 7% annually.
“the largest company, Microsoft, today is like 3 and onetwo trillion. Let's say that Microsoft, I don't know, doubles in ten years. It would only be growing at 7% per year.”
Gerstner predicts a major US-China deal will be completed before end of 2025.
“I think that there's gonna be a big Chinese deal done before the year's out.”
Gerstner calculates 50% growth would bring NVIDIA to $300 billion datacenter revenue, about $8 per share.
“So the consensus for next year is 250,000,000,000 of data center revenue. If they grow up 50%, that's gonna be closer to 300,000,000,000 or closer to $8 a share.”
Gerstner notes Jensen raised compute buildout forecast from $2 trillion to $3-4 trillion through decade end.
“Jensen said, you know, when he was on our pod last year, he said, we think the build out between now and the end of the decade's $2,000,000,000,000 of total compute.”
Gerstner cites NVIDIA forecast of $200B revenue this year growing to $350B in five years, equating to specific gigawatts.
“This is the NVIDIA sell side forecast. Okay? Forecast this year is for about 200,000,000,000 in revenues, growing to about 350,000,000,000 in revenues over the next five years.”
Gerstner clarifies Sam Altman expects OpenAI to exceed $100 billion revenue in 2027 or 2028.
“What Sam said multiple times on the pod and since is that he expects that they'll do over 100,000,000,000 in revenues in twenty seven or twenty eight.”
Gerstner notes Altman tweeted OpenAI will exit the year at $20 billion in revenue.
“And he just said in his tweet that they're gonna exit the year at $20,000,000,000 in revenue.”
Gerstner reports Altman expects OpenAI to exceed $100 billion in revenue in 2027 or 2028.
“What Sam said multiple times on the pod and since is that he expects that they'll do over 100,000,000,000 in revenues in twenty seven or '28.”
Gerstner says NVIDIA indicated a $100 billion run rate expected by end of next year.
“And they just told us that we should expect a run rate by the end of next year of a $100,000,000,000.”
Gerstner says the major tech companies will spend over $500 billion on AI capex this year.
“The spending, the CapEx from that group alone is gonna be over $500,000,000,000 this year.”
Gerstner cites a trillion dollars in Nvidia orders over the next six to eight quarters.
“But I think if you just look at the numbers, a trillion dollars over the course of the next, you know, six to eight quarters, I think speaks for itself.”
Gerstner warns the market could see a 10 to 20% consolidation after recent gains.
“But the bigger risk right now is simply that we've come a long way quickly. Right? We could have a 10 to 20% consolidation in the socks or these other technology and AI markets,”
Gerstner predicts AI companies ending the year over $100B could triple to quintuple revenue next year.
“If these guys end the year over 100,000,000,000, I think that they're on a revenue trajectory that they could three to five x again next year.”