Following Nvidia's better-than-expected earnings report last Wednesday, UBS analysts were inundated with investor inquiries, primarily focused on the chipmaker's near-term growth visibility and the durability of its long-term revenue pipeline.

Below, UBS analyst Timothy Arcuri addressed the most frequently asked questions, unpacked key commentary from the earnings call, and provided expanded visibility into a multi-year AI infrastructure boom.

Visibility to data center revenue doubling yet again?

An area where we have received a few investor inbounds, but still seems somewhat overlooked is NVDA's commentary on its pipeline. The company noted on its FQ1:26 earnings call that it has visibility into "tens of gigawatts" of AI infrastructure projects in the "not too distant future". Assuming a "low case" pipeline of 20GW and NVDA's stated range of ~$40-50B per GW, this puts its total revenue opportunity for this pipeline at a minium of ~$1T. While the company did not specify a timeframe for this pipeline, based on our conversations, we believe these projects are likely to be rolled out over a 2-3 year period. Using the average of this timeframe, this suggests the company may effectively have "visibility" to ~$400B/yr in data center revenue, or about 2x our $233B data center revenue estimate for C2026. This is obviously very heady, but we did note in UBS' deep dive on OpenAI's Abilene AI Factory that Crusoe alone has ~20GW in project pipeline and this is just one digital infrastructure project developer. The upshot of this is that we believe investor concerns around growth sustainability should be allayed by some of this commentary from the earnings call.

The math around the rack numbers given on the call

One of the main investor questions we got coming out of the call was what NVDA was trying to imply by the GB200 rack numbers it provided on the call - which were so far above conventional wisdom that it spurred some confusion. The company said "on average major hyperscalers are each deploying nearly 1,000 NVL72 racks or 72,000 Blackwell GPUs per week and are on track to further ramp output this quarter". Taken at face value, this implies a GPU run rate of nearly 1MM/Q for each hyperscaler - so far above most consensus estimates that it was hard to foot. Therefore, we believe the company was not trying to communicate a revenue "run-rate" but simply trying to reassure investors that GB200 rack issues are resolved and a large quantity of racks are moving from the ODMs and OEMs now to customers - consistent with our commentary into the call that investor concerns about supply chain inventory were overblown. We would not try to do anything more with these numbers as we think the company meant this to be more illustrative than quantitative.

NVLink bolsters growth in Networking.

Networking revenue grew to ~$5B in FQ1:26 (+64% Q/Q), $1B of which NVDA attributed to NVLink revenue which was up substantially Q/Q. We believe this is almost entirely tied to the ramp in shipments of GB200 NVL72 rack scale systems, each of which includes a 72-GPU NVLink domain (vs an up to 8-GPU domain for HGX systems). NVDA is recognizing NVLink revenue separately for these NVL72 systems, which is/was not the case for HGX boards where revenue has been consolidated into the Compute sub-segment of Data Center. As such, we would expect Networking revenue to track more closely to NVL72 rack shipments going forward, albeit maybe with a little bit of a lag.

Gaming growth driven by… gamers.

The sharp improvement in Gaming revenue in FQ1 (up nearly 50% Q/Q and well ahead of expectations) has prompted many investors to question whether there was some component of 50-series RTX cards being pulled into China for AI workload purposes. Though this cannot be completely discounted, we suspect any such pull-in was likely very limited due to: 1) availability of Blackwell-based RTX GPUs being still too limited in the gaming channel to enable larger-scale deployment, 2) RTX 50-series GPUs are PCIe based and do not support NVLink for scale-up, and 3) NVDA had to some degree starved the gaming channel for Blackwell out of the gate as it prioritized capacity for data center applications so the FQ1 (April) growth was driven by back-filling the channel following these severe supply shortages.

Gross margin drivers for 2H.

General improvement in Blackwell profitability and cost downs remain the primary driver to get margins back to the mid-70%s target by FYE26. Part of this, we believe, is GB300 - for which NVDA may actually recognise a small amount of revenue inside of FQ2 with the real ramp being FQ3. Longer-term, we believe pricing to value remains the key function for NVDA's margins - this comes down to both hardware and the software overlay of which the release of Dynamo at GTC is a prime example (accelerates inference on NVDA hardware by >30x).

Taken together, Nvidia's earnings, along with expanding visibility into a multi-year AI infrastructure boom via UBS, suggest that this boom is less about product cycles and more about exponential infrastructure scaling. 

Last week, UBS analysts Steven Fisher, Amit Mehrotra, and others noted that the construction boom of AI data centers is not expected to show up in the real economy or provide structural tailwinds until the second quarter of 2026.

"More slowing before reacceleration in 2026," Fisher wrote in a note, adding, "We expect stimulus and structural forces to drive the rebound, while cyclical factors remain weak."

Another UBS note outlined the bullish outlook on data center-driven power demand, particularly for natural gas-linked utilities and midstream names.

The AI data center buildout could be viewed as the digital-age cousin of the 1930s "New Deal"—but instead of highways and dams, it's GPUs and megawatts. It's reshaping American infrastructure but with Big Tech at the helm. 

The number of zombie homes - vacant properties abandoned by owners during the foreclosure process - rose in 30 U.S. states and the District of Columbia in the second quarter of this year from the previous quarter, real estate data analytics company ATTOM said in a May 29 statement.

Zombie homes, which can fall into disrepair and negatively impact the value of other properties in the neighborhood, are a sign of distress in the housing market and the broader economy.

As Naveen Athrappully reports for The Epoch Times, among states with at least 50 zombie homes, North Carolina saw the largest percentage increase in these properties year-over-year, with their numbers rising by 52.5 percent during this period.

This was followed by Iowa and Texas, both seeing an over 50 percent jump in zombie properties. South Carolina and Kansas were the next on the list.

According to ATTOM’s analysis, Peoria County in Illinois ranked at the top in the list of U.S. counties with the highest zombie foreclosure rates.

Broome County in New York came in second, followed by Cuyahoga County in Ohio, Baltimore City County in Maryland, and Indiana’s Marion County.

On a positive note, things looked better from a nationwide perspective, with only one out of every 14,207 being zombie properties in Q2, which ATTOM said was a low rate, indicating the strength of the post-pandemic U.S. housing market.

“Thankfully, we’re not seeing a lot of homes sitting vacant due to pending foreclosures, which is good for families, neighborhoods, and the market,” said Rob Barber, CEO of ATTOM. “However, foreclosure filings have shown a recent uptick—with April seeing a 14 percent increase compared to the same month last year.”

“So far, buyers seem to be scooping up these repossessed homes relatively quickly, so they aren’t sitting empty,” he added. “Nobody wants to see a return to the days of the 2008 housing crisis when vacant, blighted homes were common in many parts of the country.”

Meanwhile, the number of property foreclosures had risen by 11 percent in the first quarter of this year from the previous quarter, breaking away from the trend of three consecutive quarterly declines, ATTOM said in an April 11 statement.

“While levels remain below historical averages, the quarterly growth suggests that some homeowners may be starting to feel the pressure of ongoing economic challenges,” Barber said.

“However, strong home equity positions in many markets continue to help buffer against a more significant spike in distress.”

Consequences of Zombie Properties

According to a June 18 post by financial services company Rocket Mortgage, zombie homes can negatively affect homeowners even after they abandon the properties.

For instance, the owner may continue to owe property taxes that could end up becoming a tax lien. Similarly, the zombie property may continue accruing homeowners’ association fees, which, if unpaid, could result in a lawsuit.

“These consequences can result in a major hit to your credit score, among other financial and legal implications. This could prevent you from moving on with your life and regaining your financial footing,” said the post.

“Abandoned homes can fall into disrepair and affect the surrounding property values. A vacant property can become a shelter for squatters and attract vandalism or other crimes. This could drive away potential new residents and force current ones to reconsider whether their neighborhood is still safe to live in.”

Lawmakers are taking action to tackle the issue of zombie properties putting unnecessary burdens on people.

In mid-May, the Connecticut Senate passed SB 1336, a bill seeking to protect homeowners having “zombie mortgages,” the Connecticut Senate Democrats said in a May 15 statement.

The bill, co-sponsored by state Sen. Pat Billie Miller, places a statute of limitations on lenders regarding the collection of long-dormant second loans on properties, also known as zombie mortgages.

It prohibits lenders from starting foreclosure proceedings on secondary mortgages 10 years after the scheduled final loan payment date or 10 years after the lender stopped communicating with the borrower.

“This bill protects our homeowners from foreclosure threats based on debt that’s been dormant for more than a decade,” Miller said. “The change puts Connecticut in alignment with national trends as states across the country move to shield consumers from the delayed impact of predatory lending practices.”

“No one making reliable payments on their primary mortgage should face foreclosure because someone made an opportunistic decision to resurrect a secondary loan, years after deciding that collection wasn’t worth the effort when property values plummeted in the aftermath of the 2008 financial crisis.”

The bill passed the House and Senate, and now needs to be signed by the state governor.

NATO aims for its members to spend at least 3.5% of their GDP on defense, but those dreams of NATO expansion - at a moment the proxy war in Ukraine is becoming dangerously close to entering hot war between the West and nuclear-armed Russia - are dying.

Dutch parliament on Tuesday slapped down a proposal to increase defense spending to 3.5% of gross domestic product (GDP), key to NATO's capability targets, in a non-binding motion.

While it doesn't have legal force at this point, this makes clear parliament's opinion, unleashing deeper tensions among NATO allies, and as the Trump White House exerts pressure to rapidly raise collective defense.

This comes at an ultra-sensitive political moment, given that as we reported earlier Dutch far-right leader Geert Wilders pulled his Party for Freedom (PVV) out of the coalition that governs the Netherlands.

This sets up the likelihood of new elections after the man dubbed the "Dutch Donald Trump", withdrew the PVV, related to immigration policy failure. 

According to the latest developments, Prime Minister Dick Schoof has just announced that he would offer his resignation from the Netherlands’ ruling coalition while continuing in a caretaker government, setting the stage for a likely snap election:

"Wilders has plunged the Netherlands into another round of political chaos," said Mujtaba Rahman, managing director for Europe at the Eurasia Group.

"The Dutch parliament can try to find a new majority or else there will be early elections. But the immediate outlook is one of chaos and uncertainty."

The country has been in turmoil since Rutte resigned in 2023 after his coalition failed to pass comprehensive immigration legislation.

Critically, the air war over Ukraine and Russia is heating up, also in the wake of Ukraine's 'Operation Spider's Web'. Funding for air defenses, particularly among 'eastern flank' NATO members is seen as paramount, from Brussels' perspective.

"NATO is asking European member states to expand ground-based air-defense capabilities fivefold as the alliance races to fill a key gap in response to the threat of Russian aggression, people familiar with the matter said," Bloomberg reports separately on Teusday.

"The ramp-up will be discussed at a gathering of North Atlantic Treaty Organization defense ministers in Brussels on Thursday, the people said on condition of anonymity as deliberations take place," the report underscores.

And who will magically step forward to fill this massive funding gap?

Dutch Lawmakers Oppose 3.5% NATO Spending Target (Dutch need to spend up to €19 Billion more to meet NATO target)

And just like that Europe's defense budget dreams go up in flames.

Certainly, the United Sates under the Trump administration, which has called for the bar to be raised to a whopping 5% of GDP, won't.

In the background is the fact that Western populations are 'war weary' and don't want to see escalation of NATO force strength in Ukraine. Trump himself is facing a revolt among conservative pundits on the American domestic front, as some European leaders, particularly Hungary's Orban, are warning of a protracted conflict in Eastern Europe if the West and warring parties don't climb down the escalation ladder soon.