Editor's note: The markets and our offices are closed Friday, June 19, for Juneteenth. Because of this, we won't publish Altimetry Daily Authority. Please look for your next edition on Monday, June 22.
The Chip King's Next MoveBy Joel Litman, chief investment officer, Altimetry
 If you've followed Jensen Huang this far, your patience has paid off...
Chip giant Nvidia (NVDA) spent decades proving graphics processing units ("GPUs") were useful far beyond their original purpose of video games and visual rendering. A GPU is built to do a huge number of similar calculations at the same time. That made it perfect for training AI models... where systems chew through mountains of data and repeat mathematical operations over and over. Nvidia's GPU chips became the workhorses of AI. They've helped train the AI models that are dominating the headlines this year. Shares are up more than 1,100% since the launch of ChatGPT. Huang isn't done, though. He's now looking backward... to the central processing unit ("CPU"). CPUs have long been called the "brains" of the computer. They handle broader, more complex tasks. CPUs can manage instructions and coordinate the rest of the parts within a computer. Nvidia announced at the end of May that its AI-focused CPU was in full production. And in a word, the market seems... underwhelmed. CPUs have been considered far less exciting than GPUs for years...Training the biggest AI models requires brute-force parallel processing – running the same simple calculations millions of times. Nvidia owned that market through its top-of-the-line GPUs. It's what made the software giant the biggest company in the world. But there are tons of AI models out there now. And that brings Nvidia to the next logical challenge... using those models. That means running agents and coordinating tools across millions of users. In that world, CPUs become more important.
Last month, Nvidia launched Vera – a CPU designed for AI. Nvidia says Vera is twice as efficient and 50% faster than traditional CPUs. Customers and partners already include Facebook owner Meta Platforms (META), software giant Oracle (ORCL), cloud-computing company CoreWeave (CRWV), and computer maker Dell Technologies (DELL). The CPU market used to be a two-horse race, controlled by Advanced Micro Devices (AMD) and Intel (INTC). But based on what we're seeing, Nvidia isn't content to stay in its lane. In short, Vera could be a huge growth opportunity for the biggest company on Earth...Nvidia minted roughly $216 billion in revenue for fiscal 2026. Analyst consensus is for revenue to grow 32% per year to $861 billion in the next five years. So Wall Street seems to understand how the CPU market could turbocharge revenue. The problem lies – as it so often does – with investors... To get a sense of what the market is thinking, we turn to our Embedded Expectations Analysis ("EEA") framework. The EEA works a lot like a betting line in a sports bet... We use Nvidia's current share price to calculate what investors expect from future performance and compare those forecasts with our own. It tells us how well our "team" (the company) has to perform to justify the market's "bet" (the current price). Let's assume Wall Street's estimate is accurate. If Nvidia's stock stays where it is right now, at roughly $207 per share... and assets grow 32% per year... we're looking at a Uniform return on assets (ROA") around 68%. That's a steep drop from last year's 129% returns. It's also lower than what Nvidia has generated in each of the past three years...
Much of the market is treating this business as though it will give up most of the profitability it has earned in the AI boom. If and when those folks proved wrong, Nvidia investors are in for some serious upside. Nvidia's GPU dominance created one of the most profitable supply bottlenecks in history...AI hyperscalers had to go through Nvidia to run their models. There was no other option. And the next great bottleneck could very well form around CPUs. AMD and Intel have room to benefit here. And so does Nvidia. We expect it to keep expanding even after the GPU boom. Regards, Joel Litman
June 18, 2026 P.S. Folks who bet on Nvidia in the coming years should make a sizeable profit. But another opportunity could send a select set of stocks soaring – and you only have days to take advantage... On June 26, a predictable market event will impact $10 trillion worth of stocks. It has to take place every year. And my research shows that last year, it led to 21 separate chances to double your money... in under six months. You have a small window of time to make your move. I explain it all in detail in my latest presentation – but it's only available through tomorrow. Full story here.
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