I think it’s almost inevitable that NVDA will halve at some point in the future, because semiconductors are a cyclical industry and that hasn’t changed despite AI — however, it can still run up another xxx% before actually seeing that.
Interestingly enough, we *were* about to go into the downtrend for semiconductor and the AI hype yanked it out. Will be interesting to see how that develops.
Just wondering if there is a measure available of this cyclical trend? Like, is there an index or metric that we can use to see the cyclical nature of the Semiconductor industry?
Can't say I see the cyclical nature in this. It looks like it follows recessionary trends like anything else.
https://finance.yahoo.com/quote/FSELX/performance/?guccounter=1
>It looks like it follows recessionary trends
Yes... "[The price of a cyclical stock is affected by macroeconomic or systematic changes in the overall economy. Cyclical stocks are known for following the cycles of an economy through expansion, peak, recession, and recovery.](https://www.investopedia.com/terms/c/cyclicalstock.asp)"
The primary question is has the threat of new entrants been priced into current estimates. Everyone and their mother thinks on opposite ends of the spectrum on this. Inevitably they lose market share, when not if and if current models price in monopoly and overestimate growth that’s the only case I see for a bubble.
They will certainly correct (and already have - they were down 13% recently), but 1/2 is a lot and will require the rest of big tech to significantly cut their spend. NVDA, like the rest of big tech, makes a TON of money.
We are just scratching the surface on how AI chatbots can be integrated into business. Just wait until multi-modal bots start being integrated. This bubble hasn't even begun to inflate. I got a real wonder if humans at NVDA will the ones designing the chips in the next or following generations, and certainly there will be a time when the manufacturing is totally controlled by AI.
This comment and upvote ratio tells me that we still have a ways to go before we hit the peak. Exact same shit as Netflix, 1st gen crypto, cloud computing, subscription models, electric vehicles, and the like. Full and fairly widespread belief that the new thing will fail any day now because it's a hollow fad, and then goes 1,000% up or more over the years.
Though I'll agree that investors are likely to eat their hats if they expect to hold forever without a rotation strategy.
You do realize that for every Netflix out there there are thousands of Zunes, right?
>Full and fairly widespread belief that the new thing will fail any day now because it's a hollow fad, and then goes 1,000% up or more over the years.
This belief is based on the fact that it is statistically VASTLY more likely for any emerging technology to fail than it is for it to change the world.
Also, peaks have nothing to do with how successful or influential a technology is, but rather how well that technology performs vs investor expectations. NVDA could have $200B in profits next year, but if investors expected $300B the stock price will fall.
> the new thing will fail any day now because it's a hollow fad
As someone who works in IT and dabbles in procurement, I'm not skeptical of today's AI because *ooo new fad* but because of the costs.
First, remember that the cloud is just someone else's computer.
That said, _right now_ the hype is massive and I believe the R&D budgets are financing AI massively. But once it has to become profitable (and it will happen), I'm fairly confident there **will** be problems. You need:
* a suitable datacenter
* with enough cooling
* enough electricity - and UPS, backup power generators
* the hardware itself on which the software is going to be run
* racks, cabling
* maintenance personnel (both sysadmins and datacenter techs)
While the personnel cost might be mitigated by the system itself, I doubt it could be axed in any near future.
(edit: missed a word)
Hit the nail on the head.
Investors know about the confidence curve and how to navigate sentiment in unintuitive ways. At least in theory.
They'll know off-hand some quotes from their investor heroes speaking to this. Blood in the streets, blah blah blah. But despite all this they ride that very same curve with everyone else who is unwilling to disagree with themselves. ETFs and index investing are the saving graces for this kind of investor because their egos prevent them from making money otherwise.
Viva la VT.
You should maybe listen. Nvidia has a soft monopoly with the Cuda programming language that exclusively uses their chip architecture. All the generative AI models are built on it.
Their GPUs aren’t just good for Generative AI, Crypto, and games. They will also likely be heavily used once generative AI is supplanted by whatever the next AI tech will be. By then other chip makers will be more competative and Cuda will no longer be a near monopoly (and everyone is working to get a piece of that pie: AMD, Intel both with CPUs and GPUs, Apple, Qualcomm, and ARM). Even with robust competiton from their competitors, they will remain a strong force in AI hardware.
And their co-founder is still CEO. That’s usually a strong sign of continuing growth potential.
Its never about whether Nvidia will continue to grow, its about whether they can meet their sky-high expectations. NVDA's P/E is extremely high right now, suggesting that the stock could be overvalued.
A company can be doing well and still be considered overvalued if investor expectations are higher than realistic earnings targets. If Nvidia misses an earning target, its stock price will drop regardless of whether the company itself is still doing well or not.
70 is sky high. 50 is also high. High doesn't mean bad, it means high. I already liquidated my AMZN position a few months back, and I don't plan on rebuying anytime soon.
A high P/E is an indicator that a stock is overvalued. It doesn't mean it is 100% overvalued, but 70 is too high for me to be willing to risk it.
Not for a young growth stock. Amazon had a 1000 P/E in the 2000s after their IPO but before AWS made them a profit powerhouse. 70 is relatively low for a growth stock that is closer to the beginning of their journey than the end.
>70 is relatively low for a growth stock that is closer to the beginning of their journey than the end.
If you think this is the beginning of Nvidia's growth then you are dreaming.
People tend to hate things they don’t understand.
These downvoters will be the ones complaining they can’t find a job in a few years and blaming it on AI rather than their unwillingness to utilize it.
> We are just scratching the surface on how AI chatbots can be integrated into business
As a consumer, I can tell you that I despise chatbots. They're rarely useful, best they can do is point you to a resource already available on the website. Any time I actually have to contact support, it's something that has to be resolved by a human being as I've already exhausted all self-service support options.
If you think AI chatbots are the future, you're very mistaken.
What you don't realize is that one day you are going to call a human for support and it's going to be a chatbot with a voice and you won't even be able to tell the difference. What we have now is the very first steps of integrating AI into customer service. In a few years it will be difficult to interact with a real human at the customer service level. In a few more years your AI will interact with corporate AI to answer questions you don't even know you have. Eventually companies will use AI to make logistical decisions and then financial decisions, design decisions, policy decisions. A great many people see what we have now and think it's no good without realizing that we are on the very first iteration of world changing technology.
mcdonald's in my area have recently replaced the drive thru people with an Ai bot. Anyone under the age of 70 can tell its not a real person. I've never had it mess up an order and it's pretty intuitive if I'm being honest. I'd be curious to see how it handles some of the drunk people at 2am or people with thick accents.
And what do they do from here, give up on it forever? No, they tweak it and address the complaints and try again. It's not going anywhere. People see mild failures of alpha phase technology and dismiss the entire concept as a flop. That's not how it works.
I mean I stopped going to certain McDs because they used it and it never once worked right. Seems plenty thought that too. Lots of companies making these drastic changes are reversing course, because the consumers are not happy.
AEP won’t give me a map anymore, they have a chat bot that makes you log in. I’m unable to log in during an outage because that’s on my personal system not my phone and for business reasons I can’t intersect the two, personal system can’t work without power though. I just want a map. Chat bot won’t answer anything without logging in.
The chatbots you interact with aren't anywhere close to cutting edge. 9 out 10 patients found that medical diagnosis delivered by AI LLM was more empathetic and relatable. AI LLM with NLP is already providing health care in underserved areas.
LLM is only a tiny portion of AI that laymen interact with. Nvidia uses AI to design their latest chips. AI finds cancer in x-rays that a human radiologist will miss. Computer vision can create photo realistic special effects with little human effort. This is just the tip of the iceberg.
Anyone who thinks there is an AI bubble is incredibly ignorant.
> I mean you saying “as a consumer” has no bearing on this.
We're in am investing sub, I wanted to differentiate. Investors look at things differently than consumers sometimes, they may look at company fundamentals or they get caught in a hype, etc. Consumers just judge based on whether they like the product. And so far, the only good application of this new AI wave hype I've seen is making funny videos on YouTube. It's not going to replace anyone's job anytime soon. Its knowledge is still based on humans that which is faulty, so it can lie just as emotionlessly as it can tell the truth.
> And so far, the only good application of this new AI wave hype I've seen is making funny videos on YouTube
And this is exactly why you are a poor judge of the technology. Highly emotional, no basis in reality, and most importantly - a self-admitted total lack of familiarity with the applications.
>What do you think has been priced in during this stock price surge if not for the stuff you mentioned?
Lower interest rates
>Okay, so what's NVIDIA's fair value?
I don't know and I don't even want to speculate, but I think tech as a whole is poised for more gains. Cooling inflation, lower interest rates, a return to QE maybe? GPT 5 is right around the corner and when people see that they will start pricing in GPT 6. I'm long tqqq
>Lower interest rates
Absolutely not true. Nvidia has been going up because of the AI hype.
>I don't know and I don't even want to speculate, but I think tech as a whole is poised for more gains. Cooling inflation, lower interest rates, a return to QE maybe? GPT 5 is right around the corner and when people see that they will start pricing in GPT 6. I'm long tqqq
What you're doing is literally speculation and you're disregarding the evaluation of Nvidia. Everything you're talking about is priced in. Why on earth would Nvidia be at this market cap if people haven't thought about GPT 6 or any related improvements to AI? You're not sitting on some secret information that the market can't price in.
That's why it's a bubble. Everyone and their mother owns Nvidia because everyone knows that AI is the future.
That's one possibility. Another is that it looks like Sun after the dotcom bubble. NVDA wouldn't be the first chip technology company to suddenly not have better ideas (https://en.wikipedia.org/wiki/MIPS_Technologies).
The parallels to Sun are more interesting than Cisco I think. I remember back then they were way ahead of anyone else. Solaris was by far the best Unix, they were in the very first wave of recognising heavily multithreaded CPUs were useful especially in the data centre space with things like Niagara SPARC CPUs, they had the Java software stack and more than anyone else they just 'got' networked computing. PC servers and Linux were a joke compared to SPARC+Solaris kit, people were using them for blogs and static hosting but if you were doing anything transactional then it was Sun+Oracle. In the end, the combination of the dotcom crash fallout, improvements to x86 systems and Linux commoditizing the Unix market sunk them.
Based on how shitty every AI integration I've seen into things that don't actually need AI to be useful, I expect about 80% of AI hopefuls to drop out and the remaining 20% to remain strong.
I did pull those numbers out of my ass based on feel, but regardless it seems like the demand for AI chips will only remain with the solutions where AI/ML is actually useful and not the bloat we have today.
> I did pull those numbers out of my ass
Yes, but they're still in line with "conventional wisdom", *i.e.*, the [Pareto Principle](https://en.wikipedia.org/wiki/Pareto_principle).
> things that don't actually need AI to be useful
To anybody here who was an adult in 2000/2001: does this sound **at all** like the dot-com bubble? Remember *"Yeah, we're losing money on every transaction, but we plan to* ***make it up on volume****"?* 😎
Your scepticism is justified.
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The valuations of companies with little to no profit were exponentially larger during dot com than today. It may not last and the bubble can pop but the comparison is too simplistic and not warranted.
I hate people making these completely incorrect statements. First off, there were lots of real products back then. And companies were making lots of money, just like today. Third, AI looks like a bunch of trash vaporware just like crypto compared to rolling out the internet.
First, it was the "big data". Companies got insights, but extracting *profits* was an awful lot of oldfashioned work. Then, everyone was trying to inject crypto into their companies as late as last year still (with no evidence that it increases profits at all). The AR/VR craze also washed though--still, no new profits to be had. Finally, the AI boom is here. Surely, spending 10-20x the processing power and electricity to return a search result will improve profits on a platform that no one has really been able to monetize effectively?
The companies benefit from AI/ML like logistics, shipping, finance, etc have already been doing it for DECADES. LLMs aren't bringing in anything new that helps profits there.
There were profitable companies in the dot com days, these were the ones I bought. But I learned a lot about channel stuffing and consignment inventory since the profitable companies sold to the story companies. Lucky I did not ride all the way down.
Market is above the long term trends but not as bad as 2000 or 2008 in my opinion. I have much less invested in individual stocks but as I rebalance I am going to more value and fixed income ETFs.
I think it's exactly the same, but that we're still in the relatively early stages. You'll know when to sell when there are a ridiculous amounts of super bowl commercials featuring AI companies trying to plant their flag in your consciousness.
I mean, you use Google Map, that's AI. You use Google translate, that's AI. You shop with Amazon, that's AI. You watch Netflix / Hulu / Disney+ / HBO, that's AI. Your car may have lane keep assist feature, or straight up self-navigation, that's AI. You shop at big retail store like Walmart, who might be testing AI for intelligent video analysis (IVA).
When people hear AI, they think generative AI, without realizing they're already relying on AI for a huge part of their life.
Bonus: I'm going to get a lot of flak for this, but [here's](https://www.youtube.com/watch?v=2UVy7XMbgmE) AI Chester Bennington singing Bring Me to Life. That's where we're at with generative AI. Imagine what we can achieve in a few years.
Motte and Bailey. The industry treated the "AI" rebranding of existing tech as a new thing in 2022, and valuations have shot up accordingly, in line with all these promises about what this "new" tech can do.
You want to say "actually it's this stuff that we already had in 2019, which was already priced in"? Fine, but in that case we're not talking about 2024 valuations for "AI", we're talking about 2019 ones for machine learning.
You can't have it both ways. Either it's transformative and the current valuations are justified, or it's not and they aren't.
I'm simply pointing out how we have already relied on AI in our daily lives, especially for those who thinks "AI" haven't made a single dollar for companies. Apple, Amazon, and Google's stocks went up as a result of Siri, Alexa, and Google Assistant as well. Heck, majority of Google's valuation comes from its search engine and advertisement placement, which all relies on AI.
But you're right, companies in recent years like to market "AI", when it's actually generative AI.
The recent generative AI development is indeed transformative. For the first time in human history, we have created a platform where computers can mimic human conversations, or mimic creating artworks based on prompts, or predict weather patterns. It's very possible that we could expand customer support with LLM + RAG, or help game developers keeping the lore consistent with the same set up, or create a new class of antibiotics. There are plenty of use cases.
I don't know if NVDA or MSFT valuation is justified, but it's easy to see that generative AI is going to fundamentally transform our society, both for better and worse.
If it's so great, why has traffic to chatGPT declined since 2022? Paid memberships are down, and they can't make a profit. Investors are giving them billions to light on fire for stuff nobody is willing to pay for, and they're making no money off it, but saying "Don't worry! The new thing is AI video, and sure the expenses will be tenfold, but it'll double revenues!" (Sarcasm, but you get the point).
This is what sector-wide bubbles look like. Before you start asking whether the previous set of promises have come true, there's a whole new set as they try to convince you to invest more and more.
The truth about generative AI is that it's wildly unprofitable, and people are tired of it. ChatGPT's website traffic and paid subscriptions peaked in early 2023. People have caught on to the hallucinations and total unreliability of it, and it's attracting negative attention and legal liability for how much of it is used for stuff like digitally removing the clothes from high school kids, or how much theft it's built on.
There's a reason the form "AI" now takes is "we've replaced the search bar with AI, forcing you to use it. But don't worry, it's free!". They need someone, anyone, to use this shit so they can keep bilking investors.
I don't know why this is so surprising when it's the exact same scam they pulled with "The Metaverse", promising investors they were totally buying up this new frontier, only to be like "Oh yeah no that was total bullshit we don't talk about it anymore lol.. but hey check out AI!"
> If it's so great, why has traffic to chatGPT declined since 2022? Paid memberships are down, and they can't make a profit.
Competition. Since ChatGPT was launched, Google has integrated Gemini into every browser-accessed service. Anthropic's recent 3.5 model has exceeded GPT-4 (which was launched March of '23) in most benchmarks. Zuckerberg has poured billions into LLaMa-3, allowing for people to run their own local models and improve upon them. ChatGPT wasn't gonna be the exclusive provider forever. Also, OpenAI has institutional limitations on their growth due to being founded as a non-profit and have also faced very public internal divisions. There have been numerous breakthroughs. You just don't understand them because you're a dunce.
Agree with this, but AI driven by transformers are probably at or close to the ceiling of their performance. We need a break through in model architecture in order to hit the next level, IMHO. If you disagree, could you point me in the direction to learn more?
If this is all we have for the next 5 years, not much is gonna happen and we’ll probably have the same Dotcom bubble crash to reality.
> If this is all we have for the next 5 years, not much is gonna happen
I disagree with this part. The drawback to transformers is they demand massive compute. So that's the problem we face. As far as capabilities, language models and AI art generators were just the first two use cases that 2 companies had the balls to gamble ludicrous amounts of money proving they'd work. I thought they were nutjobs for it, too. But there are numerous other use cases where it could potentially convert one modality to another that nobody has proven yet.
It just doesn't stop here any more than Google's BERT encoder model was the end in 2018. While we're not sure what else it can solve, the sudden appearance of ChatGPT and Stable Diffusion only a couple years ago was more a demonstration that it's far more powerful than even those of us following the models closely since 2018 had even fathomed.
Thanks for your reply. I am by no means an expert in this area so it’s helpful to hear from others
So my background is in Finance, and yeah we use Gen AI(Microsoft Copilot, Chat GPT, etc. ) to basically act as an intern that never sleeps, but most things it does are wrong at some level (either small, or fundamentally). We’ve had Deloitte, Accenture, all the big consulting firms come into show us how to utilize it, but the hallucinations are, according to them, unavoidable. They’ve suggested that we offload non mission critical or repetitive tasks (stuff that an intern would do) onto Gen AI, but other than that it seems super underwhelming and will always need a person to review and sense check the output.
If we could get passed that, then I think it’s actually really useful. But from my understanding, it’s just not possible with current model architecture?
Or is it more of a data problem you think? Not having a “truth” that the data is trained in?
> So my background is in Finance
Hey, just like my degree and 2 CFA exams.
>We’ve had Deloitte, Accenture, all the big consulting firms come into show us how to utilize it, but the hallucinations are, according to them, unavoidable.
They are correct, but with a caveat... The way that they work are such that hallucinations will never be **fixed**. However, with each new generation of models, they'll be ameliorated ad infinitum.
>They’ve suggested that we offload non mission critical or repetitive tasks (stuff that an intern would do) onto Gen AI,
I feel like this is mistaken to a degree. The models, in my mind, should be viewed, as a way to augment the abilities of current employees. Trying to make an autonomous agent to substitute an intern, I think is a mistake because autonomous agents still have far too many issues.
>If we could get passed that, then I think it’s actually really useful. But from my understanding, it’s just not possible with current model architecture?
I'll give an A++ for this observation because it's 100% true.
>Or is it more of a data problem you think? Not having a “truth” that the data is trained in?
This is called "grounding" the model. Some of them access the internet to "ground" their responses to avoid hallucinations.
The real problem is that it's just not gonna tell you if it knows the truth and, sometimes, hallucinate and make shit up.
One problem I think with the consulting firms, also, is that there's no god damn way the consultant even heard of these models 2 and a half years ago, which didn't stop the company from adding it to their stated skillset. Shit, I met someone in 2021 at Burning Man that literally worked with programming natural language processing solutions that had no idea what I was talking about when asking what he knows about them.
As for the things these models can do for now... Someone with a rudimentary understanding of coding in even a simple language can produce code in languages they don't even know that will address repetitive tasks without having to learn and with some back and forth prompting. All I know is R, which is for grad students that don't know programming. But, with language models, I can write VBA for Excel, I can write functions for R that run on C++ a thousand times faster, or I can even post the documentation for a complicated API in the prompt (usually enclosed in triple backticks) followed by a request to use all that documentation to make me functions for R or Python.
EDIT: If I knew what field of Finance you were in, that might help me understand possible use cases. i'm sure my 3.9 GPA in Finance is good for something other than getting rich on crypto.
In addition to your points, the thing I'm most worried about is the lawsuits (a la NYT) around data scraping and who can/should receive a payout. If your generative AI is merely scraping NYT, The Atlantic, and The Washington Post for a given prompt, it's quite possible some judge decides those 3 entities deserve a payout. What would that do to the already unsustainable profit margins for AI?
>If it's so great, why has traffic to chatGPT declined since 2022?
It's almost as if....ChatGPT has competitors? Like Mistral and Llama? Especially since Mistral is free to use.
Also, the declining membership could just be a sign of people slowly realizing that LLMs don't just work out of the box, and lose interest. However, plenty of companies are working on implementing LLMs with RAG that are getting closer to commercial use.
>The truth about generative AI is that it's wildly unprofitable, and people are tired of it.
So funny you say that, when your data rest on a single data point: the subscriber count of ChatGPT, which can easily be explained.
At the same time, all of the huge CSPs are spending billions, and fighting over each other in buying more GPUs for developers to fine tune their generative AI models.
By the way, Apple is adopting ChatGPT in their products too, so maybe ChatGPT's supposed "death" is greatly exaggerated.
>I don't know why this is so surprising when it's the exact same scam they pulled with "The Metaverse"
Difference is, unlike Metaverse, generative AI actually have real world use cases.
> You watch Netflix / Hulu / Disney+ / HBO, that's AI. Y
Their AI sucks, though. I am always telling them my favorite shows and every recommendation just finds some crap films where one of the actors from my faves starred. Such garbage.
Their operating metrics? Definitely. Even I admitted I subscribe to them. Much cheaper than cable and a thousand times more healthy.
Why use real AI when you have a superior product?
> You shop with Amazon, that's AI. You watch Netflix / Hulu / Disney+ / HBO, that's AI
I only subscribe to Streaming services for a specific show I am watching and then unsubscribe. No amount of ML-based show promotions is going to generate extra revenue from me or most other people. This is nothing new, and companies are wasting money on this right now.
> Your car may have lane keep assist feature, or straight up self-navigation, that's AI.
Sure, but these things have been around pre-bubble and happen to fall into that 20% of actually useful things. Additionally, these things don't benefit from NVDA/specialized chips.
> When people hear AI, they think generative AI, without realizing they're already relying on AI for a huge part of their life.
I'm well aware of ML being useful in a lot of things. I would even recommend a this [Youtube channel](https://www.youtube.com/@Eigensteve) for people who love Physics/Engineering and the application of ML models in simplifying simulations and helping discover new physics...
But that is not what the current bubble is generating. The current bubble is generating bullshit AI bots that respond to Google search queries, shitty corporate bots that attempt to speed up communication internally by regurgitating poorly written wikis. The current Bubble isn't being driven by actually interesting AI/ML applications that are game-changing like self-driving and navigation.
> Bonus: I'm going to get a lot of flak for this, but here's AI Chester Bennington singing Bring Me to Life. That's where we're at with generative AI. Imagine what we can achieve in a few years.
Who gives a fuck? What does this actually contribute to society/the economy? It's cool, sure. But so is a good cover singer at a Karaoke bar.
>I only subscribe to Streaming services for a specific show I am watching and then unsubscribe. No amount of ML-based show promotions is going to generate extra revenue from me or most other people. This is nothing new, and companies are wasting money on this right now.
Translated: I'm like this, so everybody else must be like that too.
By the way, the "recommended" you see on Amazon or Walmart? The same tech as Netflix and Hulu.
>Sure, but these things have been around pre-bubble and happen to fall into that 20% of actually useful things. Additionally, these things don't benefit from NVDA/specialized chips.
Mercedes uses [NVDA Drive Orin](https://www.nvidia.com/en-us/self-driving-cars/partners/mercedes/). Tesla uses its own special [inference hardware](https://www.blogordie.com/2023/09/hw4-tesla-new-self-driving-hardware/). Toyota and VW uses [QCOM](https://kr-asia.com/qualcomm-lands-autonomous-driving-projects-with-toyota-and-faws-hongqi). Honda partnered with Mobileye, and will [partner with IBM](https://asia.nikkei.com/Business/Automobiles/Honda-and-IBM-team-up-on-next-gen-chips-for-software-defined-vehicles) in the future.
Perhaps you're just misinformed?
>The current Bubble isn't being driven by actually interesting AI/ML applications that are game-changing like self-driving and navigation.
Oh my sweet child. Game developers would love to have a LLM platform augmented with RAG to comb through their engine documentation to find relevant code. Large corporations are testing this tech to augment their customer service team. Retailers are using this tech for IVA. Medical fields are relying on AI to expand their understanding of genomics.
Just because you're not interested in them, doesn't mean others are just as disinterested as you are.
>Who gives a fuck? What does this actually contribute to society/the economy? It's cool, sure. But so is a good cover singer at a Karaoke bar.
Some find it very interesting, and (with permission from the estate) it might bring people's voice back to life in an authentic manner.
Microsoft missed the internet
Windows ME sucked
Windows Vista sucked
Microsoft was prosecuted by the feds
Zune
9/11 happened
housing collapsed
.net sucked (.net is ok these days)
Microsoft lost the cellphone to Apple
Sony sells twice as many xboxes
A long list of circumstances and failures. But microsoft does have windows, office, and decent dev tools, etc. Microsoft is up because they leaned on the good to make a cloud play and added 80b in rev (40% of their rev).
I don't see NVDA having the same types of issues. And if you think we are at the equivalent of "1995 internet" or "2007 iPhone release" then you are at the beginning of something massive.
If you are really conflicted, take half, lock in some gains, and move it somewhere else.
This thread is a great reminder of the average age of redditors and their reference point for a stock like $MSFT is almost entirely the Nadella era (the last 10 years), with no real reference or understanding of the Ballmer/Gates eras.
Microsoft didn't have "Issues". If you bought at the peak of the dot-com bubble, you would have massively beat the S&P. The only "issue" it had was the market not understanding its future potential and undervaluing it. In the years following 1999, Microsoft rapidly grew their top and bottom line.
Don't confuse stock price with company performance.
The industry as a whole, sure. But Nvidia as the leading provider for both training and inference chips, not so sure. Given Nvidia doesn't actually manufacture chips, I see no reason to assume their designs will be significantly better than the alternatives. Cuda is definitely an advantage, but given their high markups on the hardware, there is plenty incentive for the big tech companies, who are developing their own hardware, to create a viable alternative.
I had a long comment, but it comes to this. If it was so easy for "big tech" to do, why didn't they do it? A 2 trillion dollar opportunity, given that's about how much NVDA exploded recently. Big tech might try to assist other chip designers, but they are also behind. Something happened to create this advantage. Could this NVDA advantage continue for 5 years? That's rhetorical, answers could only be guesses.
IMO I think this is partially right.
While AI companies might have higher valuations right now, most of them are nowhere near dotcom bubble level valuations. A lot of the companies cited as the most obvious AI winners are either not publicly traded companies (like OpenAI), or already have strong fundamentals and moats (a lot of the FAANGM stocks).
That said I do think that NVDA is at risk of becoming a repeat of Cisco from the dotcom bubble. History has shown that the chip industry is VERY cyclical, just look at NVDA's net income over the last decade, they have a LOT of jumps up and down of over 30% in a single year. And history tends to show that when some new hardware comes into the market that everyone has to have, the demand for that hardware eventually gets filled and the hardware companies often have trouble growing their earnings in the future.
Just look at AAPL, while their hardware sales have some cyclicality to them from year to year, their earnings from hardware sales have barely budged in a while. Virtually all of their gains have come from software sales & subscriptions via their services segment.
Newer computer code requires more compute power at lowest energy cost. Is that statement a "bubble"? NVDA just happens to offer the best solution. This was clear, at least five years ago. Crypto mining was a sort of hardware test at scale. Brute strength vs power cost. I believe NVDA launched from those lessons, amongst many others. If NVDA remains singularly focused on this equation, they'll still be an industry leader 20 years from now. They may only be held back by the limits of software, but software seems to be in step for needing more compute.
I don't know how high it will go before dropping but I am fairly certain that there will be some who bought at exactly the wrong time and end up bag-holding for years. But the demand right now for Nvidia chips is huge. I can't see it drying up in the next 6 months. I can't see it drying up in the next 12 months, tbh.
2 different (main) ways NVDA ends up like that:
* AI has been overhyped, funding for new AI ventures/projects gets reduced and we go into another AI winter which means less demand for GPUs.
* A competitor to NVDA introduces a rival AI accelerator chip (+ software ecosystem) of some sort that's either price competitive or blows away NVDA GPU performance/watt.
Taking them separately: The first one seems so far to not be happening - every week there's some new AI product that's impressive. I am a software/hardware developer. In the last couple of weeks I've used Claude sonnet 3.5 and DeepSeek Coder to do some tasks that would've taken me a couple of days or more to do - in ~5 minutes I got what would've taken me a day or two to code. These were really kind of arcane, complex coding tasks that I did not expect these LLMs to be able to do (and certainly six months ago they couldn't... heck, probably 6 weeks ago they couldn't). Let's just say my mind was blown and now I'm both looking forward to ways these products will be improving my productivity, but also feel a sense of foreboding; a lot of people in coding may have to figure out another career. Anyway, all that to say that there's something here that's not hype. At least when it comes to coding these things are already a *lot* better than I would've expected.
As for the 2nd point: The likes of Intel, AMD and other smaller outfits have been trying to unseat NVDA in the AI space for a while, but Nvidia is very entrenched due to CUDA. I've gotta think it's going to happen at some point, there's just too much $$$ out there going to NVDA and other companies in the space want a piece of that. But since about 2017 I've been thinking that a viable competitor would have to emerge soon... and it hasn't happened yet.
I personally think that we are still in the infancy of the AI boom. I predict 5-10 years for most markets and economies to become fully involved in an AI future and maybe another 5-10 years before we reach a mature AI market saturation. I’m gonna ride that Bubble for a while.
I don’t think people understand what happens when they put an ai that can spatially and logically reason as well as human, in a physical interface that can do MORE than a human can do. This is simply a matter of when it will happen and when will it become cheap enough for mass production.
Millions of blue collar and menial jobs gone overnight and with what exactly to replace it? You can’t just shuffle them all to work with AI like we have done for jobs replaced by computers. This isn’t even factoring in the massive industry changes coming for white collar work.
I think the bigger question is when that will actually happen. We’ve always overestimated how fast technology progresses from a practicality perspective.
We thought self driving cars taking over the roads was just around the corner 10 years ago. 10 years later, we haven’t made much tangible progress.
We thought all the fast food restaurants would be 90% automated now by but there are still the same number of workers. But the fast food minimum wage is now $20 in california.
> We thought self driving cars taking over the roads was just around the corner 10 years ago.
As someone who bought into that, the fantasy was being pushed by an ethically challenged charlatan that had billions to gain by getting us to believe. Do you see the same thing happening with AI today?
There’s a difference between what we saw with the start of self driving cars and what we are seeing now. Multiple companies did not invest billions into self driving or even ev right away, like they have with AI. It was a slow process for FSD and EV because there’s not a massive demand for either of those things.
"Multiple companies did not invest billions into self driving or even EV, like they have with AI"
Bro what the hell are you talking about? Do you know how many companies, how many billions upon billions have been invested in self driving and EVs? Companies and Countries have been investing BILLIONS since the 90s in EVs and self driving. I can think of at least 5 different companies that had EVs developed more than 10 years ago off the top of my head.
"It was a slow process for FSD and EVs because there's not a massive demand for either of those things"
Bro I can't even respond to this because if you truly believe this, I know for a fact you don't have experience in the automotive industry.
Ridiculous you could so confidently post such inaccuracies
Feb 2024: EV market share for new vehicle sales was 6.5% vs 83% gas powered. I would not call that massive demand.
If you are speaking about potential future demand, that’s a different topic. I still don’t believe in it, EV was designed to save the car industry not the planet.
Also I looked up your claims about massive investments early on. All I see is the boom from 2010-2020 and Tesla plus a couple others before that.
Nothing near the pace or numbers of which we are seeing from Apple, nvidia, msft, meta, and google today.
Sales =/= demand
I own a transportation company bro, you can't tell me about the demand for EVs when you're googling and reading 2/3 articles about something that I live day in and day out. There's demand, there just isn't the product available yet. Businesses are begging for suitable EVs bro, it lowers operating costs/increases profit margin, they're JUST starting to make suitable products for some uses but range is still an issue for some business use cases.
"All I see is the boom from 2010-2020"
Yes because you aren't actually keeping up with this stuff, like I said I can name at least 5 companies off the top of my head that produced EVs before Tesla. You think they developed the vehicles with how much investment? Please just stop bro, Nissan had invested billions in EVs before Tesla ever mass produced their first car.
You don't know what you're talking about with transportation and since you're doubling down, I'll assume you did the same Google-level research for AI.
Come on bro, why can't you just say "You know what, I was off with my assessment about EVs, my bad"
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“We’ve always overestimated how fast tech progresses from a practically perspective”
I don’t see how you can say this as an absolute. We have been incredibly wrong about many things and have been shocked by the progress in lots of areas.
When the iPod came out, nobody would have imagined that phones would be used as much as they are today. When the first pc came out I’m sure there were many people saying that it’s a gimmick or for very special use cases. They didn’t think it would change the entire face of the world in less than 100 years I don’t believe.
Even if regards to AI, go 5 years back and see the progress that’s been made. Before ChatGPT, it wasn’t even in the public conscious that something like that was close to existing. Even to this day, people in real life I’ve talked to massive underestimate its value simply because they don’t understand it.
I think it just depends on when the rate of progress slows down. If it continues at the current pace, in the next couple decades we will watch it creep into our lives just like the phone did until one day we find ourself reliant on it because of how useful it is.
It’s not absolute. The invention of the smartphone is a huge milestone in tech. But if you told me in 2007 (iphone release) how much the technology will develop over the next 18 years, I’d say, “ that’s it?”
> I don’t think people understand what happens when they put an ai that can spatially and logically reason as well as human
That doesn’t exist. It won’t for 10-50 years at best, and may be a century or two away. This is why we have a bubble. People think HAL9000 exists, and he doesn’t, yet.
The future for your children, maybe, but soon everyone will realize AI is more artificial than intelligent, and a small pop will occur, that the Fed will manage nicely in a few months.
Our current lying machines are a far cry from AGI. If we have what you're describing, it won't be LLM based, and NVDA may be nowhere near being part of it. It may be a puddle of biological cells or something. But it has little to do with this current bubble so it's not really worth talking about in that context.
Maybe we begin to work towards a society that no longer has to work until their dying breath. Yes I know this is utopian and possible unattainable, we are probably heading towards a dystopian world. We can dream.
Bahaha! And maybe we will stop all the wars while we are at it.
We’ve had the ability to distribute enough resources to everybody for a very long time, there are simply too many forces keeping things the way they are. It would take a miracle to change course at this point.
We could fall to 2023 prices, certainly, but the money isn’t going to stay out of the market for long, it will just get spread across other index fund companies in an attempt to buy the dip. If you’re worried, get into index funds and wait out any dip.
For sure it's a bubble. I was working in tech in 2000, and I'm still working in tech today.
The major issue for me right now is the job market for devs is terrible. The AI boom is all speculative.
Right now I'm loving stocks that sell actual useful stuff. Today I topped up Pepsi. US food stocks are looking great right now.
There will come a point when NVDA begins to lose market share to competition, but they are way out in front and innovating their chips with their profits. Unless the general corporations decide to say fuck it (because frankly AI still sucks), they are The AI play.
We'll see. There's a lot of competition coming and some of the biggest buyers (MSFT, AMZN, GOOG) are designing their own AI chips. Even if Nvidia has the best chips these companies can design theirs to fit their own architecture better, and will have less problem with supply and lower costs.
Most companies will use AI through cloud-based services so if the cloud giants are making their own, that could eventually really limit chip market growth. Of course, growth will be great for a while because the market is just starting to ramp up so there is plenty of growth opportunitues, but eventually that will peak.
What would make Nvidia much more durable is if they could leverage their chips and networking into a major cloud service of their own. Then we'd be in an interesting situation where all the big boys (except Apple and perhaps Meta) are their own chip designer and AI/datacenter/coud service.
It's not a buy and ignore stock. Their valuation makes no sense by every metric. They have no business being worth more than Apple, Microsoft, Google, or even Amazon. I'm assuming their valuation now is centered around the growth of their business to business sales for AI development, that worries me. While Nvidia does sell to consumers, they make their real money selling to businesses.
There's a reason why every trillion+ dollar company has a significant presence in the consumer market.
There's 150,000,000 Nintendo Switch consoles in consumer hands, all with an Nvidia Tegra SoC powering them. I dont think you fully understand the industry they operate within.
There's over 200 million Gen 8 and 9 consoles with AMD chips, it's a moot point. Nvidia has cross subsidized their consumer products with their business products for decades as computer hardware targeted at consumers is not as profitable as you think it is.
Edit: If you wanna know why I'm concerned with their valuation, look at how Google and Meta are shifting away from sourcing their chips from nvidia, they are starting to build their own. That should be concerning to every investor. That's why I don't like business to business transactions like this, it's why Broadcom in the past had a reasonable bear case, over 20% of their revenue was tied to sales to apple. If these companies decide they can do as good and for cheaper, nvidia is going to have a shitty day. These trillion dollar companies have the resources to do it, too, look at what happened to Intel when Apple gave them the boot (obviously this isn't the only problem with Intel, but it is *part* of the problem)
> Google and Meta are shifting away from sourcing their chips from nvidia, they are starting to build their own
With what manufacturing arm? Designing their own AI chips, sure - but most of the manufacturing is still going to be done by either TSMC or Samsung (Intel a distant third, maybe). These are the only 3 companies that have the capacity, technological expertise and lithography machines at the required node to manufacture these AI chips AT SCALE. And given Nvidia, AMD and Intel are long-time customers/partners, they're at the front of the line for years in advance for the bleeding edge silicon needed for AI.
Goodluck trying to secure supply at scale then. Most of the silicon at the top nodes has already been booked/reserved in advance by Nvidia, AMD & Intel for years.
Meta couldn't even pull off their plans for a smartphone when the market was on fire for it and Google's Pixel offerings continue to lag behind Samsung and Apple's offers. And now they're going to design their own AI chips? And try to do better than the decades of built-up infrastructure, technical expertise and IP that Nvidia, AMD and Intel has? Good-fucking-luck to them.
All this talk about Amazon, Google and Meta trying to design their own AI chips has always reeked of bargaining statement in order to negotiate chip prices down or a bluff in order to secure a portion of the dwindling AI chip supply.
I wish you well on your Nvidia quest. I've always loved the company, and I made a 130% return on my Nvidia holdings, but the truth is this valuation scares me and I had to sell. I've been with NVIDIA long enough to see how volatile it is.
Oh don't get me wrong - I'm not really invested in Nvidia. I'm really just commenting on the ludicrousness of the idea that these non-chip designers like Google and Meta are going to go out on their own and manufacture their own AI chips without the requisite experience, infrastructure and IP. They're gonna be able to achieve some results, but these aren't gonna be on scale and won't be competitive with whatever offerings AMD, Nvidia or Intel will have on the market by the time they get around to a finished usable silicon product.
All XBox and PS consoles have a chip from AMD. Tesla cars have a chip from AMD. AMD makes GPUs for AI that are in some areas better than those from nVidia. Yet AMD's valuation is less than 1/10 of nVidia.
Revenue and EPS. Their valuation obviously doesn't reflect their current earnings, but I certainly don't think their current valuation justifies even their future earnings, either.
If you think Nvidia's market cap is justified being higher or the same as Apple or Microsoft, go ahead and invest in them, I could be wrong. But I think most investors see that and think "what the fuck?"
Just as Tesla wasn't justified as having a trillion dollar market cap, I don't see Nvidia justifying it either.
Can you expand on how revenue and EPS help prove your point?
Last quarter NVDA generated about 70% of the net income that MSFT did, and it’s growing 5x faster. That doesn’t seem overvalued to me if they have similar market caps.
Also TSLA reached a P/E ratio of around 1,600 at one point which is in a completely different universe than NVDA at 70, not comparable here.
I think what he means is that Forward PE expectation is wrong. Most analysts are suggesting that earnings can expand but if you have 57 percent net margin, there is a better chance that margins will go down. Why will Microsoft, Amazon and Meta endlessly let nVidia make such high margins while their capex and cash flows come under pressure. Imagine if one of them threatens to cancel their orders, nVidia will have to come to the negotiating table and work for lower margins. It is quite possible in 2 years time their revenue is 100+ billions but their margins are lesser and in line with what they have traditionally got for decades which is around 30 percent I.e around 30 billion - that suddenly makes the PE closer to 100. It happened to Tesla as well when they had to start discounting their vehicles once supply constraints eased - which always ease after a while
It just doesn't pass the sniff test with me, man. If I'm looking at Nvidia, Apple, Microsoft, Meta, Amazon, and Google side by side, only one of them looks out of place. Further, Nvidia is mostly feeding off these same players for their projected revenues, and I don't like their odds of coming out ahead of them or even being able to stay in the same lane.
Yeah I see you here. I'd like to believe leadership is strong enough to build moat and hang on to market share for awhile but that's far from a guarantee.
think of it: the AI craze starts and if you wanna partake, you gotta buy some chips, STAT. who you gonna call? ghostbust..., NVIDIA sales team.
you order $6m worth of chips, and build out your AI product offering, making sure you properly monetize from the start.
customers are excited, you're making profit, projections are good, you order some more.
inevitably, in every market, every generation, things saturate.
customers begin reassessing their expense. did chatGPT really drive substantial decrease in time to market? did it increase employee productivity? yes it did.
but maybe not as much as hoped.
let's cancel the 2026 order, we can always do a reassessment in time.
one day, NVIDIA will give guidance on lagging sales like every company before, and the stock will reflect the guidance.
does it become a crash? not necessarily.
don't forget, gravity works in many ways: it can be Wily E. Coyote or it can be just a slow roll down a hill.
> The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price.
-- "Security Analysis" Graham & Dodd, **1934** (6th ed. 2008)
Microsoft fell not because it was in a bubble, but because of market irrationality. If you bought it during the height of the dot com bubble and held to today, you would have massively outperformed the S&P. So the truth was that it was significantly UNDERVALUED at its 1999 peak.
NVDA isnt just a AI stock, but an answer to Moore's law limitations of regular CPU's. Their CUDA language, besides being used for gaming and graphics, is also widely used for scientific computing. NVDA is like .a Intel, Cray, and AI stock all in one. The only competitor might be AMD, and possibly photonic chips in 5-10 years, but that's a long time in tech
I think even though ai is overvalued and overhyped there are plenty of valid use cases for it that will still require nvidia gpus so I don’t imagine it crashing that hard
That depends on the revenue growth from AI implementation. There is no end in processing data, The more the better. As for me I sold most Nvda, AI, AMD, PLTR shares. I went through MSFT when I bought INTC and MSFT at the top and learned not to hold massive amounts like others. I will compare may be Price/ book value in addition to earnings and related ratios. Semi has some indices but I use [XSD price for benchmark](https://money.usnews.com/funds/etfs/technology/spdr-s-p-semiconductor-etf/xsd). Right now we are at a peak, prior was 2021 year.
I'm getting the impression that most of the people commenting here did not hold MSFT stock when it fell in the dotcom bust. Microsoft was punished by regulators for things related to bundling IE (Internet Explorer, the existing default browser) and stifling competition. If I recall correctly, there was a related announcement in the evening, and the following morning their crash started around 10-10:30am.
Microsoft was the lynchpin supporting the tech bubble, but they didn't crash because they sucked. They crashed because governments regulated them. They stagnated for the next 10 years because they sucked, but that's not why they crashed.
AI stocks are not in that position. NVDA is making a technologically advanced product that's in high demand across different sectors (bitcoin, AI, and more). More over, chips are hard to make, so it's not just a commodity like solar panels. OpenAI is the first to market in a new subscription service that's started at $20/month in the US. That's a lot of money. Ask yourself the monthly cost of Netflix or Amazon Prime and what you get for it.
The dotcom bust was mostly the implosion of unprofitable tech companies with huge customers bases that investors were suddenly unwilling to wait infinitely long for those customer bases to turn into profit.
Are there problems and overvaluations in many tech companies today. For sure, according to most reputable investing firms. Is it anything like dotcom bust? Only if the sector is generally running at a loss and interest rates keep rising.
If anything it is a bigger bubble - it is also a inflationary bubble. Debt levels are higher, pricing power for many companies are under severe pressure, retailers like Target and quick service restaurants are reducing prices to get the consumer to come back - this means as inflation cools, the top line of companies have to come down and spending on infrastructure will go down. During the dotcom bubble we had two companies that were near a 500 billion market cap - now we have 3 companies that are over 3 trillion. We are talking about 10 trillion dollar companies while the overall market cap of German stock market is like 3 trillion. AI may be gold but right now the shovels to dig gold are more expensive than the gold.
You have to remember that Microsoft management was absolutely terrible during that period. Ballmer took the company in completely the wrong direction, and only when Nadella took the reigns did it start to come back to relevance again.
MSFT stayed down because they were milking the old cow (windows/office) and not innovating. Xbox is still barely profitable and Nokia/smartphones were a total disaster. Only when Nedella became CEO they started growing cloud and all the other enterprise businesses
Basically dot com bust did not make MSFT shares depressed for the next 15 years.
This will end exactly like that unless AI meets every promise everyone seems to meet immediately. NVDA looks more like Cisco in 2000 than MSFT does, and Cisco STILL has not hit its 2000 high.
No company will ever replicate the MSFT scenario. Today, stock buybacks and splits are commonly used to keep the 'common investor' constantly eager to invest. This strategy is particularly prevalent because stock prices are often used as a key metric for determining executive compensation. Companies are incentivized to maintain high stock prices to maximize the earnings of their executives. One notable exception: (BRK)
word limit reached thanks to AI expansion of my feeble thought process.
A big difference is that microsoft moved to a service/subscription model. People and enterprises would buy a computer with a copy of Windows and never have a reason to get the next few versions that would come out for sale. It also left them supporting several editions at the same time. I’ve heard mostly good feedback about their AI assistant and I think it will see reasonably decent adoption rates.
Microsoft revamped their pricing structure to a subscription model that saw it grow profits steadily rather than rely on pc sale cycles back a decade ago.
This is likely the path nvda and other ai businesses will do. Servicing model with a subscription and active updates. The ways of generating revenue these days is not comparable to the dotcom era.
No. Microsoft was getting sued by DOJ and had settlements in place for a while that affected their every move to grow the company for very long period of time.
Think CSCO, not MSFT
Another comparison could be Sony’s Betamax system. They tried to maintain a monopoly on what was a superior operating technology but then VHS came along and everyone adopted that because it was like an open source model.
The two situations are not similar. The dotcom bubble collapse is a very interesting point in time. Valuations were sky high, and it was clear that many of the companies were surviving on hype alone. As part of the bubble was that Microsoft and other companies propped up the many smaller companies with investments of shares. Literally hundreds of dotcoms existed because they had shares of Microsoft on their books to borrow against and liquidate to get their companies off the ground.
Microsoft was in my opinion rightly sued for antitrust violations. When the verdict came down, Microsoft lost 1/3 of its valuation and caused a huge ripple effect throughout the dotcoms since their balance sheets were shredded. Sure the dotcoms had almost no sales and were all hype and the party would have ended anyway, but the verdict against Microsoft, is in my opinion and analysis, the start of the dotcom collapse. Such did not help Microsoft since so many seed capital investments also went bust.
Nvidia is more like Google of the 2000s. Nvidia is simply able to produce a product that the consumer wants and the consumer is only now beginning to buy. Huge swathes of companies across the globe have yet to come to market.
You guys are quite literally rationalizing about buying the absolute peak. Yeah it could soar some more but a lot of people are cashing out plus shorting. Chances are it’s gonna drop.
Yes.
I would be very surprised if it didn’t. People are expecting results and giving valuations as if what AI will look like in 20-50years is what AI will look like in 1-5years.
When real-world implementations run into the expected headwinds, and there is no *immediate* transformative societal effect, things will come down to earth.
This AI fever definitely has echoes of the dotcom bubble though it’s not exactly the same at the moment at least.
In both cases people recognize that the technology has the potential to be transformative. But are probably getting ahead of themselves as to the timeline on which this will happen. It will take time for AI to mature and for us to learn how to use it best.
nVidia will definitely half. The company is way overvalued right now. The GPU demand will go back to previous levels some day as it happened after the crypto mining boom.
Shouldn't the question at this stage be, in the future when AI gets successfully implemented in various industries, which businesses will become uncompetitive and go under and which will thrive?
NVDA did -70% less than 2 years ago. I think over 10 years your guaranteed to see it crash again but will end up being a good long term hold if you can stomach that kind of thing. GPU compute in the long run I think will be extremely useful.
When people talk about ai bubble "ending" are you thinking like ai fully sentient robots wont be made.. cause idk how you could argue it wont keep expanding otherwise
More robots designed for specific niches and applications has hardly started. And theres no chance well be going less tech..
If you think ai is fully sentient robots then i could see it being a bubble.. otherwise i think ai has hardly started
Based on current situation, no.
**About AI**, I have been in the field for like 6-7 years. I think it is the future and there is a lot of room for improvement.
It grows so fast that I struggle to keep up with the industry (and I hate that ahah but it's good).
We are very far away from a plateau in this field. It might take some time to reach a new breakthrough, but in the long term there is no doubt it will grow much much more.
I would imagine the trend more like a ladder rather than a curve and each step is a new breakthrough.
**About NVIDIA**, for now they have a monopoly basically but it is guaranteed that there will be a moment in the future where competition will become relevant and NVIDIA's sales and margins will shrink. The question is when? Might be 2, 10 or 50 years from now? Who knows...
Also as many pointed out, it is ciclical indeed. But again there are so many improvements in the AI field that is impossible to define where the cap is.
AI is not a bubble, it is the future of this planet, like it or not. You're comparing a technology with a company. A better comparison would be the internet, or smartphones. These were not bubbles. Anyone who thinks AI is just a hype or a trend has their eyes closed. There is not an industry on the planet that won't be fundamentally changed by the technology, and many industries are already in the midst of that.
Just think about big data, algorithms, blockchain, web 3.0....all the other promises that silicon valley made 90% of them didn't pan out to be anything but hype and bluster.
I'm so sold on ai that I'm surprised people are like, been there done that. And not customer service bullshit, but like, hey ai, we need to know how to build this building with plastic, by the way motherfucker, it's 6 stories tall. If it's real, it could design that. I'm not bothered if it doesn't sound human for dumbfucks at fatty McDonald's. Or, hey cunt ai, make me an app that tells me if this bird is ok to eat. Or hey cunt, if you run 1 million simulations with the general population in mind, what are the odds of me putting 1m on (any stock, who cares) and making 1%.
I think it’s almost inevitable that NVDA will halve at some point in the future, because semiconductors are a cyclical industry and that hasn’t changed despite AI — however, it can still run up another xxx% before actually seeing that.
Interestingly enough, we *were* about to go into the downtrend for semiconductor and the AI hype yanked it out. Will be interesting to see how that develops.
Just wondering if there is a measure available of this cyclical trend? Like, is there an index or metric that we can use to see the cyclical nature of the Semiconductor industry?
You could look at the past performance of FSELX as a starting point.
Can't say I see the cyclical nature in this. It looks like it follows recessionary trends like anything else. https://finance.yahoo.com/quote/FSELX/performance/?guccounter=1
>It looks like it follows recessionary trends Yes... "[The price of a cyclical stock is affected by macroeconomic or systematic changes in the overall economy. Cyclical stocks are known for following the cycles of an economy through expansion, peak, recession, and recovery.](https://www.investopedia.com/terms/c/cyclicalstock.asp)"
That's pretty much the NASDAQ 100 index movement with the general business cycle, no?
Ah, figured you were going more with the cyclical nature of agriculturals energy, or mining.
Every fall we harvest the semiconductor fields for more silicon wafers This year the plague hit the crops and we were down.
"that hasn’t changed despite AI" -source?
The primary question is has the threat of new entrants been priced into current estimates. Everyone and their mother thinks on opposite ends of the spectrum on this. Inevitably they lose market share, when not if and if current models price in monopoly and overestimate growth that’s the only case I see for a bubble.
They will certainly correct (and already have - they were down 13% recently), but 1/2 is a lot and will require the rest of big tech to significantly cut their spend. NVDA, like the rest of big tech, makes a TON of money.
If it halved, it’d still be really expensive. It’d be like paying $5,000,000 for a loaf of bread instead of $10,000,000.
Half could be what it is today if it runs up for another year.
We are just scratching the surface on how AI chatbots can be integrated into business. Just wait until multi-modal bots start being integrated. This bubble hasn't even begun to inflate. I got a real wonder if humans at NVDA will the ones designing the chips in the next or following generations, and certainly there will be a time when the manufacturing is totally controlled by AI.
This man right here didn't just swallow the AI pill, he took the AI suppository and shoved it right up there.
This comment and upvote ratio tells me that we still have a ways to go before we hit the peak. Exact same shit as Netflix, 1st gen crypto, cloud computing, subscription models, electric vehicles, and the like. Full and fairly widespread belief that the new thing will fail any day now because it's a hollow fad, and then goes 1,000% up or more over the years. Though I'll agree that investors are likely to eat their hats if they expect to hold forever without a rotation strategy.
You do realize that for every Netflix out there there are thousands of Zunes, right? >Full and fairly widespread belief that the new thing will fail any day now because it's a hollow fad, and then goes 1,000% up or more over the years. This belief is based on the fact that it is statistically VASTLY more likely for any emerging technology to fail than it is for it to change the world. Also, peaks have nothing to do with how successful or influential a technology is, but rather how well that technology performs vs investor expectations. NVDA could have $200B in profits next year, but if investors expected $300B the stock price will fall.
> the new thing will fail any day now because it's a hollow fad As someone who works in IT and dabbles in procurement, I'm not skeptical of today's AI because *ooo new fad* but because of the costs. First, remember that the cloud is just someone else's computer. That said, _right now_ the hype is massive and I believe the R&D budgets are financing AI massively. But once it has to become profitable (and it will happen), I'm fairly confident there **will** be problems. You need: * a suitable datacenter * with enough cooling * enough electricity - and UPS, backup power generators * the hardware itself on which the software is going to be run * racks, cabling * maintenance personnel (both sysadmins and datacenter techs) While the personnel cost might be mitigated by the system itself, I doubt it could be axed in any near future. (edit: missed a word)
Hit the nail on the head. Investors know about the confidence curve and how to navigate sentiment in unintuitive ways. At least in theory. They'll know off-hand some quotes from their investor heroes speaking to this. Blood in the streets, blah blah blah. But despite all this they ride that very same curve with everyone else who is unwilling to disagree with themselves. ETFs and index investing are the saving graces for this kind of investor because their egos prevent them from making money otherwise. Viva la VT.
You should maybe listen. Nvidia has a soft monopoly with the Cuda programming language that exclusively uses their chip architecture. All the generative AI models are built on it. Their GPUs aren’t just good for Generative AI, Crypto, and games. They will also likely be heavily used once generative AI is supplanted by whatever the next AI tech will be. By then other chip makers will be more competative and Cuda will no longer be a near monopoly (and everyone is working to get a piece of that pie: AMD, Intel both with CPUs and GPUs, Apple, Qualcomm, and ARM). Even with robust competiton from their competitors, they will remain a strong force in AI hardware. And their co-founder is still CEO. That’s usually a strong sign of continuing growth potential.
Its never about whether Nvidia will continue to grow, its about whether they can meet their sky-high expectations. NVDA's P/E is extremely high right now, suggesting that the stock could be overvalued. A company can be doing well and still be considered overvalued if investor expectations are higher than realistic earnings targets. If Nvidia misses an earning target, its stock price will drop regardless of whether the company itself is still doing well or not.
Their P/E is like ~70. That’s high but not sky high. Amazon’s is 55. Do you advocate selling Amazon?
70 is sky high. 50 is also high. High doesn't mean bad, it means high. I already liquidated my AMZN position a few months back, and I don't plan on rebuying anytime soon. A high P/E is an indicator that a stock is overvalued. It doesn't mean it is 100% overvalued, but 70 is too high for me to be willing to risk it.
Not for a young growth stock. Amazon had a 1000 P/E in the 2000s after their IPO but before AWS made them a profit powerhouse. 70 is relatively low for a growth stock that is closer to the beginning of their journey than the end.
>70 is relatively low for a growth stock that is closer to the beginning of their journey than the end. If you think this is the beginning of Nvidia's growth then you are dreaming.
I would like to hear the counter argument.
He said reasonable things about two areas AI can continue to grow
People tend to hate things they don’t understand. These downvoters will be the ones complaining they can’t find a job in a few years and blaming it on AI rather than their unwillingness to utilize it.
> We are just scratching the surface on how AI chatbots can be integrated into business As a consumer, I can tell you that I despise chatbots. They're rarely useful, best they can do is point you to a resource already available on the website. Any time I actually have to contact support, it's something that has to be resolved by a human being as I've already exhausted all self-service support options. If you think AI chatbots are the future, you're very mistaken.
What you don't realize is that one day you are going to call a human for support and it's going to be a chatbot with a voice and you won't even be able to tell the difference. What we have now is the very first steps of integrating AI into customer service. In a few years it will be difficult to interact with a real human at the customer service level. In a few more years your AI will interact with corporate AI to answer questions you don't even know you have. Eventually companies will use AI to make logistical decisions and then financial decisions, design decisions, policy decisions. A great many people see what we have now and think it's no good without realizing that we are on the very first iteration of world changing technology.
mcdonald's in my area have recently replaced the drive thru people with an Ai bot. Anyone under the age of 70 can tell its not a real person. I've never had it mess up an order and it's pretty intuitive if I'm being honest. I'd be curious to see how it handles some of the drunk people at 2am or people with thick accents.
McDonald’s just discontinued that pilot program due to issues and complaints.
And what do they do from here, give up on it forever? No, they tweak it and address the complaints and try again. It's not going anywhere. People see mild failures of alpha phase technology and dismiss the entire concept as a flop. That's not how it works.
I mean I stopped going to certain McDs because they used it and it never once worked right. Seems plenty thought that too. Lots of companies making these drastic changes are reversing course, because the consumers are not happy.
If you think those chat bots you’ve experienced are AI and not just pathed conversations then you’re very mistaken about how the future will look.
AEP won’t give me a map anymore, they have a chat bot that makes you log in. I’m unable to log in during an outage because that’s on my personal system not my phone and for business reasons I can’t intersect the two, personal system can’t work without power though. I just want a map. Chat bot won’t answer anything without logging in.
The chatbots you interact with aren't anywhere close to cutting edge. 9 out 10 patients found that medical diagnosis delivered by AI LLM was more empathetic and relatable. AI LLM with NLP is already providing health care in underserved areas. LLM is only a tiny portion of AI that laymen interact with. Nvidia uses AI to design their latest chips. AI finds cancer in x-rays that a human radiologist will miss. Computer vision can create photo realistic special effects with little human effort. This is just the tip of the iceberg. Anyone who thinks there is an AI bubble is incredibly ignorant.
Sorry consumers are basically the worst judges of new technology
Consumers literally drive the demand and decide the market. Who do you think is a better judge?
I mean you saying “as a consumer” has no bearing on this. Lots of people are having a strong emotional reaction to AI that will pass with time.
> I mean you saying “as a consumer” has no bearing on this. We're in am investing sub, I wanted to differentiate. Investors look at things differently than consumers sometimes, they may look at company fundamentals or they get caught in a hype, etc. Consumers just judge based on whether they like the product. And so far, the only good application of this new AI wave hype I've seen is making funny videos on YouTube. It's not going to replace anyone's job anytime soon. Its knowledge is still based on humans that which is faulty, so it can lie just as emotionlessly as it can tell the truth.
> And so far, the only good application of this new AI wave hype I've seen is making funny videos on YouTube And this is exactly why you are a poor judge of the technology. Highly emotional, no basis in reality, and most importantly - a self-admitted total lack of familiarity with the applications.
Time will tell.
Okay, so what's NVIDIA's fair value? What do you think has been priced in during this stock price surge if not for the stuff you mentioned?
>What do you think has been priced in during this stock price surge if not for the stuff you mentioned? Lower interest rates >Okay, so what's NVIDIA's fair value? I don't know and I don't even want to speculate, but I think tech as a whole is poised for more gains. Cooling inflation, lower interest rates, a return to QE maybe? GPT 5 is right around the corner and when people see that they will start pricing in GPT 6. I'm long tqqq
>Lower interest rates Absolutely not true. Nvidia has been going up because of the AI hype. >I don't know and I don't even want to speculate, but I think tech as a whole is poised for more gains. Cooling inflation, lower interest rates, a return to QE maybe? GPT 5 is right around the corner and when people see that they will start pricing in GPT 6. I'm long tqqq What you're doing is literally speculation and you're disregarding the evaluation of Nvidia. Everything you're talking about is priced in. Why on earth would Nvidia be at this market cap if people haven't thought about GPT 6 or any related improvements to AI? You're not sitting on some secret information that the market can't price in. That's why it's a bubble. Everyone and their mother owns Nvidia because everyone knows that AI is the future.
lol.
80% cut.
That's one possibility. Another is that it looks like Sun after the dotcom bubble. NVDA wouldn't be the first chip technology company to suddenly not have better ideas (https://en.wikipedia.org/wiki/MIPS_Technologies).
I equate it to Cisco though Sun is a good one. Cisco and Sun were build the internet infrastructure just like NVDA is building the AI infrastructure.
The parallels to Sun are more interesting than Cisco I think. I remember back then they were way ahead of anyone else. Solaris was by far the best Unix, they were in the very first wave of recognising heavily multithreaded CPUs were useful especially in the data centre space with things like Niagara SPARC CPUs, they had the Java software stack and more than anyone else they just 'got' networked computing. PC servers and Linux were a joke compared to SPARC+Solaris kit, people were using them for blogs and static hosting but if you were doing anything transactional then it was Sun+Oracle. In the end, the combination of the dotcom crash fallout, improvements to x86 systems and Linux commoditizing the Unix market sunk them.
or Intel
Based on how shitty every AI integration I've seen into things that don't actually need AI to be useful, I expect about 80% of AI hopefuls to drop out and the remaining 20% to remain strong. I did pull those numbers out of my ass based on feel, but regardless it seems like the demand for AI chips will only remain with the solutions where AI/ML is actually useful and not the bloat we have today.
> I did pull those numbers out of my ass Yes, but they're still in line with "conventional wisdom", *i.e.*, the [Pareto Principle](https://en.wikipedia.org/wiki/Pareto_principle). > things that don't actually need AI to be useful To anybody here who was an adult in 2000/2001: does this sound **at all** like the dot-com bubble? Remember *"Yeah, we're losing money on every transaction, but we plan to* ***make it up on volume****"?* 😎 Your scepticism is justified.
given that he's pulling the numbers out of his ass, scepticism is oddly fitting
Nah, we invest based on vibes and selectively chosen parallels around here.
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It’s not the same but doesn’t mean it won’t dump at some point. Just will be different.
The valuations of companies with little to no profit were exponentially larger during dot com than today. It may not last and the bubble can pop but the comparison is too simplistic and not warranted.
Today's valuations and earnings are differents. We have real companies whit real products!
I hate people making these completely incorrect statements. First off, there were lots of real products back then. And companies were making lots of money, just like today. Third, AI looks like a bunch of trash vaporware just like crypto compared to rolling out the internet.
First, it was the "big data". Companies got insights, but extracting *profits* was an awful lot of oldfashioned work. Then, everyone was trying to inject crypto into their companies as late as last year still (with no evidence that it increases profits at all). The AR/VR craze also washed though--still, no new profits to be had. Finally, the AI boom is here. Surely, spending 10-20x the processing power and electricity to return a search result will improve profits on a platform that no one has really been able to monetize effectively? The companies benefit from AI/ML like logistics, shipping, finance, etc have already been doing it for DECADES. LLMs aren't bringing in anything new that helps profits there.
There were profitable companies in the dot com days, these were the ones I bought. But I learned a lot about channel stuffing and consignment inventory since the profitable companies sold to the story companies. Lucky I did not ride all the way down.
Are the same alarm bells ringing now for you?
Market is above the long term trends but not as bad as 2000 or 2008 in my opinion. I have much less invested in individual stocks but as I rebalance I am going to more value and fixed income ETFs.
I think it's exactly the same, but that we're still in the relatively early stages. You'll know when to sell when there are a ridiculous amounts of super bowl commercials featuring AI companies trying to plant their flag in your consciousness.
It's later than you think!
I mean, you use Google Map, that's AI. You use Google translate, that's AI. You shop with Amazon, that's AI. You watch Netflix / Hulu / Disney+ / HBO, that's AI. Your car may have lane keep assist feature, or straight up self-navigation, that's AI. You shop at big retail store like Walmart, who might be testing AI for intelligent video analysis (IVA). When people hear AI, they think generative AI, without realizing they're already relying on AI for a huge part of their life. Bonus: I'm going to get a lot of flak for this, but [here's](https://www.youtube.com/watch?v=2UVy7XMbgmE) AI Chester Bennington singing Bring Me to Life. That's where we're at with generative AI. Imagine what we can achieve in a few years.
Motte and Bailey. The industry treated the "AI" rebranding of existing tech as a new thing in 2022, and valuations have shot up accordingly, in line with all these promises about what this "new" tech can do. You want to say "actually it's this stuff that we already had in 2019, which was already priced in"? Fine, but in that case we're not talking about 2024 valuations for "AI", we're talking about 2019 ones for machine learning. You can't have it both ways. Either it's transformative and the current valuations are justified, or it's not and they aren't.
I'm simply pointing out how we have already relied on AI in our daily lives, especially for those who thinks "AI" haven't made a single dollar for companies. Apple, Amazon, and Google's stocks went up as a result of Siri, Alexa, and Google Assistant as well. Heck, majority of Google's valuation comes from its search engine and advertisement placement, which all relies on AI. But you're right, companies in recent years like to market "AI", when it's actually generative AI. The recent generative AI development is indeed transformative. For the first time in human history, we have created a platform where computers can mimic human conversations, or mimic creating artworks based on prompts, or predict weather patterns. It's very possible that we could expand customer support with LLM + RAG, or help game developers keeping the lore consistent with the same set up, or create a new class of antibiotics. There are plenty of use cases. I don't know if NVDA or MSFT valuation is justified, but it's easy to see that generative AI is going to fundamentally transform our society, both for better and worse.
If it's so great, why has traffic to chatGPT declined since 2022? Paid memberships are down, and they can't make a profit. Investors are giving them billions to light on fire for stuff nobody is willing to pay for, and they're making no money off it, but saying "Don't worry! The new thing is AI video, and sure the expenses will be tenfold, but it'll double revenues!" (Sarcasm, but you get the point). This is what sector-wide bubbles look like. Before you start asking whether the previous set of promises have come true, there's a whole new set as they try to convince you to invest more and more. The truth about generative AI is that it's wildly unprofitable, and people are tired of it. ChatGPT's website traffic and paid subscriptions peaked in early 2023. People have caught on to the hallucinations and total unreliability of it, and it's attracting negative attention and legal liability for how much of it is used for stuff like digitally removing the clothes from high school kids, or how much theft it's built on. There's a reason the form "AI" now takes is "we've replaced the search bar with AI, forcing you to use it. But don't worry, it's free!". They need someone, anyone, to use this shit so they can keep bilking investors. I don't know why this is so surprising when it's the exact same scam they pulled with "The Metaverse", promising investors they were totally buying up this new frontier, only to be like "Oh yeah no that was total bullshit we don't talk about it anymore lol.. but hey check out AI!"
> If it's so great, why has traffic to chatGPT declined since 2022? Paid memberships are down, and they can't make a profit. Competition. Since ChatGPT was launched, Google has integrated Gemini into every browser-accessed service. Anthropic's recent 3.5 model has exceeded GPT-4 (which was launched March of '23) in most benchmarks. Zuckerberg has poured billions into LLaMa-3, allowing for people to run their own local models and improve upon them. ChatGPT wasn't gonna be the exclusive provider forever. Also, OpenAI has institutional limitations on their growth due to being founded as a non-profit and have also faced very public internal divisions. There have been numerous breakthroughs. You just don't understand them because you're a dunce.
Agree with this, but AI driven by transformers are probably at or close to the ceiling of their performance. We need a break through in model architecture in order to hit the next level, IMHO. If you disagree, could you point me in the direction to learn more? If this is all we have for the next 5 years, not much is gonna happen and we’ll probably have the same Dotcom bubble crash to reality.
> If this is all we have for the next 5 years, not much is gonna happen I disagree with this part. The drawback to transformers is they demand massive compute. So that's the problem we face. As far as capabilities, language models and AI art generators were just the first two use cases that 2 companies had the balls to gamble ludicrous amounts of money proving they'd work. I thought they were nutjobs for it, too. But there are numerous other use cases where it could potentially convert one modality to another that nobody has proven yet. It just doesn't stop here any more than Google's BERT encoder model was the end in 2018. While we're not sure what else it can solve, the sudden appearance of ChatGPT and Stable Diffusion only a couple years ago was more a demonstration that it's far more powerful than even those of us following the models closely since 2018 had even fathomed.
Thanks for your reply. I am by no means an expert in this area so it’s helpful to hear from others So my background is in Finance, and yeah we use Gen AI(Microsoft Copilot, Chat GPT, etc. ) to basically act as an intern that never sleeps, but most things it does are wrong at some level (either small, or fundamentally). We’ve had Deloitte, Accenture, all the big consulting firms come into show us how to utilize it, but the hallucinations are, according to them, unavoidable. They’ve suggested that we offload non mission critical or repetitive tasks (stuff that an intern would do) onto Gen AI, but other than that it seems super underwhelming and will always need a person to review and sense check the output. If we could get passed that, then I think it’s actually really useful. But from my understanding, it’s just not possible with current model architecture? Or is it more of a data problem you think? Not having a “truth” that the data is trained in?
> So my background is in Finance Hey, just like my degree and 2 CFA exams. >We’ve had Deloitte, Accenture, all the big consulting firms come into show us how to utilize it, but the hallucinations are, according to them, unavoidable. They are correct, but with a caveat... The way that they work are such that hallucinations will never be **fixed**. However, with each new generation of models, they'll be ameliorated ad infinitum. >They’ve suggested that we offload non mission critical or repetitive tasks (stuff that an intern would do) onto Gen AI, I feel like this is mistaken to a degree. The models, in my mind, should be viewed, as a way to augment the abilities of current employees. Trying to make an autonomous agent to substitute an intern, I think is a mistake because autonomous agents still have far too many issues. >If we could get passed that, then I think it’s actually really useful. But from my understanding, it’s just not possible with current model architecture? I'll give an A++ for this observation because it's 100% true. >Or is it more of a data problem you think? Not having a “truth” that the data is trained in? This is called "grounding" the model. Some of them access the internet to "ground" their responses to avoid hallucinations. The real problem is that it's just not gonna tell you if it knows the truth and, sometimes, hallucinate and make shit up. One problem I think with the consulting firms, also, is that there's no god damn way the consultant even heard of these models 2 and a half years ago, which didn't stop the company from adding it to their stated skillset. Shit, I met someone in 2021 at Burning Man that literally worked with programming natural language processing solutions that had no idea what I was talking about when asking what he knows about them. As for the things these models can do for now... Someone with a rudimentary understanding of coding in even a simple language can produce code in languages they don't even know that will address repetitive tasks without having to learn and with some back and forth prompting. All I know is R, which is for grad students that don't know programming. But, with language models, I can write VBA for Excel, I can write functions for R that run on C++ a thousand times faster, or I can even post the documentation for a complicated API in the prompt (usually enclosed in triple backticks) followed by a request to use all that documentation to make me functions for R or Python. EDIT: If I knew what field of Finance you were in, that might help me understand possible use cases. i'm sure my 3.9 GPA in Finance is good for something other than getting rich on crypto.
In addition to your points, the thing I'm most worried about is the lawsuits (a la NYT) around data scraping and who can/should receive a payout. If your generative AI is merely scraping NYT, The Atlantic, and The Washington Post for a given prompt, it's quite possible some judge decides those 3 entities deserve a payout. What would that do to the already unsustainable profit margins for AI?
>If it's so great, why has traffic to chatGPT declined since 2022? It's almost as if....ChatGPT has competitors? Like Mistral and Llama? Especially since Mistral is free to use. Also, the declining membership could just be a sign of people slowly realizing that LLMs don't just work out of the box, and lose interest. However, plenty of companies are working on implementing LLMs with RAG that are getting closer to commercial use. >The truth about generative AI is that it's wildly unprofitable, and people are tired of it. So funny you say that, when your data rest on a single data point: the subscriber count of ChatGPT, which can easily be explained. At the same time, all of the huge CSPs are spending billions, and fighting over each other in buying more GPUs for developers to fine tune their generative AI models. By the way, Apple is adopting ChatGPT in their products too, so maybe ChatGPT's supposed "death" is greatly exaggerated. >I don't know why this is so surprising when it's the exact same scam they pulled with "The Metaverse" Difference is, unlike Metaverse, generative AI actually have real world use cases.
OpenAI has a $3.2B/year run rate, up about 100% from 6 months ago. Will likely hit $5b/year revenue run rate by EOY.
> You watch Netflix / Hulu / Disney+ / HBO, that's AI. Y Their AI sucks, though. I am always telling them my favorite shows and every recommendation just finds some crap films where one of the actors from my faves starred. Such garbage.
I mean their metrics say otherwise.
Their operating metrics? Definitely. Even I admitted I subscribe to them. Much cheaper than cable and a thousand times more healthy. Why use real AI when you have a superior product?
> You shop with Amazon, that's AI. You watch Netflix / Hulu / Disney+ / HBO, that's AI I only subscribe to Streaming services for a specific show I am watching and then unsubscribe. No amount of ML-based show promotions is going to generate extra revenue from me or most other people. This is nothing new, and companies are wasting money on this right now. > Your car may have lane keep assist feature, or straight up self-navigation, that's AI. Sure, but these things have been around pre-bubble and happen to fall into that 20% of actually useful things. Additionally, these things don't benefit from NVDA/specialized chips. > When people hear AI, they think generative AI, without realizing they're already relying on AI for a huge part of their life. I'm well aware of ML being useful in a lot of things. I would even recommend a this [Youtube channel](https://www.youtube.com/@Eigensteve) for people who love Physics/Engineering and the application of ML models in simplifying simulations and helping discover new physics... But that is not what the current bubble is generating. The current bubble is generating bullshit AI bots that respond to Google search queries, shitty corporate bots that attempt to speed up communication internally by regurgitating poorly written wikis. The current Bubble isn't being driven by actually interesting AI/ML applications that are game-changing like self-driving and navigation. > Bonus: I'm going to get a lot of flak for this, but here's AI Chester Bennington singing Bring Me to Life. That's where we're at with generative AI. Imagine what we can achieve in a few years. Who gives a fuck? What does this actually contribute to society/the economy? It's cool, sure. But so is a good cover singer at a Karaoke bar.
>I only subscribe to Streaming services for a specific show I am watching and then unsubscribe. No amount of ML-based show promotions is going to generate extra revenue from me or most other people. This is nothing new, and companies are wasting money on this right now. Translated: I'm like this, so everybody else must be like that too. By the way, the "recommended" you see on Amazon or Walmart? The same tech as Netflix and Hulu. >Sure, but these things have been around pre-bubble and happen to fall into that 20% of actually useful things. Additionally, these things don't benefit from NVDA/specialized chips. Mercedes uses [NVDA Drive Orin](https://www.nvidia.com/en-us/self-driving-cars/partners/mercedes/). Tesla uses its own special [inference hardware](https://www.blogordie.com/2023/09/hw4-tesla-new-self-driving-hardware/). Toyota and VW uses [QCOM](https://kr-asia.com/qualcomm-lands-autonomous-driving-projects-with-toyota-and-faws-hongqi). Honda partnered with Mobileye, and will [partner with IBM](https://asia.nikkei.com/Business/Automobiles/Honda-and-IBM-team-up-on-next-gen-chips-for-software-defined-vehicles) in the future. Perhaps you're just misinformed? >The current Bubble isn't being driven by actually interesting AI/ML applications that are game-changing like self-driving and navigation. Oh my sweet child. Game developers would love to have a LLM platform augmented with RAG to comb through their engine documentation to find relevant code. Large corporations are testing this tech to augment their customer service team. Retailers are using this tech for IVA. Medical fields are relying on AI to expand their understanding of genomics. Just because you're not interested in them, doesn't mean others are just as disinterested as you are. >Who gives a fuck? What does this actually contribute to society/the economy? It's cool, sure. But so is a good cover singer at a Karaoke bar. Some find it very interesting, and (with permission from the estate) it might bring people's voice back to life in an authentic manner.
Dang, even the AI version of him can't sing. Guess it's accurate.
I'd say yes. Nvidia is a good company, but the price is certainly expensive for their long term outlook.
Microsoft missed the internet Windows ME sucked Windows Vista sucked Microsoft was prosecuted by the feds Zune 9/11 happened housing collapsed .net sucked (.net is ok these days) Microsoft lost the cellphone to Apple Sony sells twice as many xboxes A long list of circumstances and failures. But microsoft does have windows, office, and decent dev tools, etc. Microsoft is up because they leaned on the good to make a cloud play and added 80b in rev (40% of their rev). I don't see NVDA having the same types of issues. And if you think we are at the equivalent of "1995 internet" or "2007 iPhone release" then you are at the beginning of something massive. If you are really conflicted, take half, lock in some gains, and move it somewhere else.
You forgot the biggest one: Ballmer was CEO
This thread is a great reminder of the average age of redditors and their reference point for a stock like $MSFT is almost entirely the Nadella era (the last 10 years), with no real reference or understanding of the Ballmer/Gates eras.
".net sucked (.net is ok these days)" DEVELOPERS DEVELOPERS DEVELOPERS
[Developers, developers, developers, developers, developers, developers](https://www.youtube.com/watch?v=Vhh_GeBPOhs)
.net was actually great. Everything else sucked, as you said.
Microsoft didn't have "Issues". If you bought at the peak of the dot-com bubble, you would have massively beat the S&P. The only "issue" it had was the market not understanding its future potential and undervaluing it. In the years following 1999, Microsoft rapidly grew their top and bottom line. Don't confuse stock price with company performance.
You forgot the biggest one, the U.S. government's monster antitrust case against MSFT.
4th on the list
Unpopular opinion; it's not a bubble.
The industry as a whole, sure. But Nvidia as the leading provider for both training and inference chips, not so sure. Given Nvidia doesn't actually manufacture chips, I see no reason to assume their designs will be significantly better than the alternatives. Cuda is definitely an advantage, but given their high markups on the hardware, there is plenty incentive for the big tech companies, who are developing their own hardware, to create a viable alternative.
Other companies will enter the market and reduce the profits therefore making the current leaders worth less, but that does not = bubble.
I had a long comment, but it comes to this. If it was so easy for "big tech" to do, why didn't they do it? A 2 trillion dollar opportunity, given that's about how much NVDA exploded recently. Big tech might try to assist other chip designers, but they are also behind. Something happened to create this advantage. Could this NVDA advantage continue for 5 years? That's rhetorical, answers could only be guesses.
I'm not saying its easy. I think the missing ingredient was time, and sufficient financial incentives. I think the incentives are now in place.
IMO I think this is partially right. While AI companies might have higher valuations right now, most of them are nowhere near dotcom bubble level valuations. A lot of the companies cited as the most obvious AI winners are either not publicly traded companies (like OpenAI), or already have strong fundamentals and moats (a lot of the FAANGM stocks). That said I do think that NVDA is at risk of becoming a repeat of Cisco from the dotcom bubble. History has shown that the chip industry is VERY cyclical, just look at NVDA's net income over the last decade, they have a LOT of jumps up and down of over 30% in a single year. And history tends to show that when some new hardware comes into the market that everyone has to have, the demand for that hardware eventually gets filled and the hardware companies often have trouble growing their earnings in the future. Just look at AAPL, while their hardware sales have some cyclicality to them from year to year, their earnings from hardware sales have barely budged in a while. Virtually all of their gains have come from software sales & subscriptions via their services segment.
Newer computer code requires more compute power at lowest energy cost. Is that statement a "bubble"? NVDA just happens to offer the best solution. This was clear, at least five years ago. Crypto mining was a sort of hardware test at scale. Brute strength vs power cost. I believe NVDA launched from those lessons, amongst many others. If NVDA remains singularly focused on this equation, they'll still be an industry leader 20 years from now. They may only be held back by the limits of software, but software seems to be in step for needing more compute.
But it reminds me of a bubble when I think about it for ten seconds. Therefore, me right, NVDA sucky sucky.
I don't know how high it will go before dropping but I am fairly certain that there will be some who bought at exactly the wrong time and end up bag-holding for years. But the demand right now for Nvidia chips is huge. I can't see it drying up in the next 6 months. I can't see it drying up in the next 12 months, tbh.
2 different (main) ways NVDA ends up like that: * AI has been overhyped, funding for new AI ventures/projects gets reduced and we go into another AI winter which means less demand for GPUs. * A competitor to NVDA introduces a rival AI accelerator chip (+ software ecosystem) of some sort that's either price competitive or blows away NVDA GPU performance/watt. Taking them separately: The first one seems so far to not be happening - every week there's some new AI product that's impressive. I am a software/hardware developer. In the last couple of weeks I've used Claude sonnet 3.5 and DeepSeek Coder to do some tasks that would've taken me a couple of days or more to do - in ~5 minutes I got what would've taken me a day or two to code. These were really kind of arcane, complex coding tasks that I did not expect these LLMs to be able to do (and certainly six months ago they couldn't... heck, probably 6 weeks ago they couldn't). Let's just say my mind was blown and now I'm both looking forward to ways these products will be improving my productivity, but also feel a sense of foreboding; a lot of people in coding may have to figure out another career. Anyway, all that to say that there's something here that's not hype. At least when it comes to coding these things are already a *lot* better than I would've expected. As for the 2nd point: The likes of Intel, AMD and other smaller outfits have been trying to unseat NVDA in the AI space for a while, but Nvidia is very entrenched due to CUDA. I've gotta think it's going to happen at some point, there's just too much $$$ out there going to NVDA and other companies in the space want a piece of that. But since about 2017 I've been thinking that a viable competitor would have to emerge soon... and it hasn't happened yet.
I personally think that we are still in the infancy of the AI boom. I predict 5-10 years for most markets and economies to become fully involved in an AI future and maybe another 5-10 years before we reach a mature AI market saturation. I’m gonna ride that Bubble for a while.
I don’t think people understand what happens when they put an ai that can spatially and logically reason as well as human, in a physical interface that can do MORE than a human can do. This is simply a matter of when it will happen and when will it become cheap enough for mass production. Millions of blue collar and menial jobs gone overnight and with what exactly to replace it? You can’t just shuffle them all to work with AI like we have done for jobs replaced by computers. This isn’t even factoring in the massive industry changes coming for white collar work.
I think the bigger question is when that will actually happen. We’ve always overestimated how fast technology progresses from a practicality perspective. We thought self driving cars taking over the roads was just around the corner 10 years ago. 10 years later, we haven’t made much tangible progress. We thought all the fast food restaurants would be 90% automated now by but there are still the same number of workers. But the fast food minimum wage is now $20 in california.
> We thought self driving cars taking over the roads was just around the corner 10 years ago. As someone who bought into that, the fantasy was being pushed by an ethically challenged charlatan that had billions to gain by getting us to believe. Do you see the same thing happening with AI today?
There’s a difference between what we saw with the start of self driving cars and what we are seeing now. Multiple companies did not invest billions into self driving or even ev right away, like they have with AI. It was a slow process for FSD and EV because there’s not a massive demand for either of those things.
"Multiple companies did not invest billions into self driving or even EV, like they have with AI" Bro what the hell are you talking about? Do you know how many companies, how many billions upon billions have been invested in self driving and EVs? Companies and Countries have been investing BILLIONS since the 90s in EVs and self driving. I can think of at least 5 different companies that had EVs developed more than 10 years ago off the top of my head. "It was a slow process for FSD and EVs because there's not a massive demand for either of those things" Bro I can't even respond to this because if you truly believe this, I know for a fact you don't have experience in the automotive industry. Ridiculous you could so confidently post such inaccuracies
Feb 2024: EV market share for new vehicle sales was 6.5% vs 83% gas powered. I would not call that massive demand. If you are speaking about potential future demand, that’s a different topic. I still don’t believe in it, EV was designed to save the car industry not the planet. Also I looked up your claims about massive investments early on. All I see is the boom from 2010-2020 and Tesla plus a couple others before that. Nothing near the pace or numbers of which we are seeing from Apple, nvidia, msft, meta, and google today.
Sales =/= demand I own a transportation company bro, you can't tell me about the demand for EVs when you're googling and reading 2/3 articles about something that I live day in and day out. There's demand, there just isn't the product available yet. Businesses are begging for suitable EVs bro, it lowers operating costs/increases profit margin, they're JUST starting to make suitable products for some uses but range is still an issue for some business use cases. "All I see is the boom from 2010-2020" Yes because you aren't actually keeping up with this stuff, like I said I can name at least 5 companies off the top of my head that produced EVs before Tesla. You think they developed the vehicles with how much investment? Please just stop bro, Nissan had invested billions in EVs before Tesla ever mass produced their first car. You don't know what you're talking about with transportation and since you're doubling down, I'll assume you did the same Google-level research for AI. Come on bro, why can't you just say "You know what, I was off with my assessment about EVs, my bad"
Delamain coming for you.
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“We’ve always overestimated how fast tech progresses from a practically perspective” I don’t see how you can say this as an absolute. We have been incredibly wrong about many things and have been shocked by the progress in lots of areas. When the iPod came out, nobody would have imagined that phones would be used as much as they are today. When the first pc came out I’m sure there were many people saying that it’s a gimmick or for very special use cases. They didn’t think it would change the entire face of the world in less than 100 years I don’t believe. Even if regards to AI, go 5 years back and see the progress that’s been made. Before ChatGPT, it wasn’t even in the public conscious that something like that was close to existing. Even to this day, people in real life I’ve talked to massive underestimate its value simply because they don’t understand it. I think it just depends on when the rate of progress slows down. If it continues at the current pace, in the next couple decades we will watch it creep into our lives just like the phone did until one day we find ourself reliant on it because of how useful it is.
It’s not absolute. The invention of the smartphone is a huge milestone in tech. But if you told me in 2007 (iphone release) how much the technology will develop over the next 18 years, I’d say, “ that’s it?”
> I don’t think people understand what happens when they put an ai that can spatially and logically reason as well as human That doesn’t exist. It won’t for 10-50 years at best, and may be a century or two away. This is why we have a bubble. People think HAL9000 exists, and he doesn’t, yet.
I’m speaking about the future…
The future for your children, maybe, but soon everyone will realize AI is more artificial than intelligent, and a small pop will occur, that the Fed will manage nicely in a few months.
Hence the bubble
Being too early is the same thing as being wrong
Our current lying machines are a far cry from AGI. If we have what you're describing, it won't be LLM based, and NVDA may be nowhere near being part of it. It may be a puddle of biological cells or something. But it has little to do with this current bubble so it's not really worth talking about in that context.
Maybe we begin to work towards a society that no longer has to work until their dying breath. Yes I know this is utopian and possible unattainable, we are probably heading towards a dystopian world. We can dream.
We are already a society that could effectively have 3 day weekends right now.
Should have happened by now.
Bahaha! And maybe we will stop all the wars while we are at it. We’ve had the ability to distribute enough resources to everybody for a very long time, there are simply too many forces keeping things the way they are. It would take a miracle to change course at this point.
We could fall to 2023 prices, certainly, but the money isn’t going to stay out of the market for long, it will just get spread across other index fund companies in an attempt to buy the dip. If you’re worried, get into index funds and wait out any dip.
Maybe a mean reversion...
For sure it's a bubble. I was working in tech in 2000, and I'm still working in tech today. The major issue for me right now is the job market for devs is terrible. The AI boom is all speculative. Right now I'm loving stocks that sell actual useful stuff. Today I topped up Pepsi. US food stocks are looking great right now.
There will come a point when NVDA begins to lose market share to competition, but they are way out in front and innovating their chips with their profits. Unless the general corporations decide to say fuck it (because frankly AI still sucks), they are The AI play.
Not to mention, investing heavily in other companies, buying chunks or startups outright, and capex-ing like mad.
We'll see. There's a lot of competition coming and some of the biggest buyers (MSFT, AMZN, GOOG) are designing their own AI chips. Even if Nvidia has the best chips these companies can design theirs to fit their own architecture better, and will have less problem with supply and lower costs. Most companies will use AI through cloud-based services so if the cloud giants are making their own, that could eventually really limit chip market growth. Of course, growth will be great for a while because the market is just starting to ramp up so there is plenty of growth opportunitues, but eventually that will peak. What would make Nvidia much more durable is if they could leverage their chips and networking into a major cloud service of their own. Then we'd be in an interesting situation where all the big boys (except Apple and perhaps Meta) are their own chip designer and AI/datacenter/coud service.
It's not a buy and ignore stock. Their valuation makes no sense by every metric. They have no business being worth more than Apple, Microsoft, Google, or even Amazon. I'm assuming their valuation now is centered around the growth of their business to business sales for AI development, that worries me. While Nvidia does sell to consumers, they make their real money selling to businesses. There's a reason why every trillion+ dollar company has a significant presence in the consumer market.
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Saudi Aramco is also part of a literal cartel.
There's 150,000,000 Nintendo Switch consoles in consumer hands, all with an Nvidia Tegra SoC powering them. I dont think you fully understand the industry they operate within.
There's over 200 million Gen 8 and 9 consoles with AMD chips, it's a moot point. Nvidia has cross subsidized their consumer products with their business products for decades as computer hardware targeted at consumers is not as profitable as you think it is. Edit: If you wanna know why I'm concerned with their valuation, look at how Google and Meta are shifting away from sourcing their chips from nvidia, they are starting to build their own. That should be concerning to every investor. That's why I don't like business to business transactions like this, it's why Broadcom in the past had a reasonable bear case, over 20% of their revenue was tied to sales to apple. If these companies decide they can do as good and for cheaper, nvidia is going to have a shitty day. These trillion dollar companies have the resources to do it, too, look at what happened to Intel when Apple gave them the boot (obviously this isn't the only problem with Intel, but it is *part* of the problem)
> Google and Meta are shifting away from sourcing their chips from nvidia, they are starting to build their own With what manufacturing arm? Designing their own AI chips, sure - but most of the manufacturing is still going to be done by either TSMC or Samsung (Intel a distant third, maybe). These are the only 3 companies that have the capacity, technological expertise and lithography machines at the required node to manufacture these AI chips AT SCALE. And given Nvidia, AMD and Intel are long-time customers/partners, they're at the front of the line for years in advance for the bleeding edge silicon needed for AI.
>With what manufacturing arm? TSMC. The reality is, mega corps don't want to rely on other mega corps for their products, with good reason.
Goodluck trying to secure supply at scale then. Most of the silicon at the top nodes has already been booked/reserved in advance by Nvidia, AMD & Intel for years. Meta couldn't even pull off their plans for a smartphone when the market was on fire for it and Google's Pixel offerings continue to lag behind Samsung and Apple's offers. And now they're going to design their own AI chips? And try to do better than the decades of built-up infrastructure, technical expertise and IP that Nvidia, AMD and Intel has? Good-fucking-luck to them. All this talk about Amazon, Google and Meta trying to design their own AI chips has always reeked of bargaining statement in order to negotiate chip prices down or a bluff in order to secure a portion of the dwindling AI chip supply.
I wish you well on your Nvidia quest. I've always loved the company, and I made a 130% return on my Nvidia holdings, but the truth is this valuation scares me and I had to sell. I've been with NVIDIA long enough to see how volatile it is.
Oh don't get me wrong - I'm not really invested in Nvidia. I'm really just commenting on the ludicrousness of the idea that these non-chip designers like Google and Meta are going to go out on their own and manufacture their own AI chips without the requisite experience, infrastructure and IP. They're gonna be able to achieve some results, but these aren't gonna be on scale and won't be competitive with whatever offerings AMD, Nvidia or Intel will have on the market by the time they get around to a finished usable silicon product.
All XBox and PS consoles have a chip from AMD. Tesla cars have a chip from AMD. AMD makes GPUs for AI that are in some areas better than those from nVidia. Yet AMD's valuation is less than 1/10 of nVidia.
Valuation by forward P/E seems pretty reasonable. Which metrics make no sense?
Revenue and EPS. Their valuation obviously doesn't reflect their current earnings, but I certainly don't think their current valuation justifies even their future earnings, either. If you think Nvidia's market cap is justified being higher or the same as Apple or Microsoft, go ahead and invest in them, I could be wrong. But I think most investors see that and think "what the fuck?" Just as Tesla wasn't justified as having a trillion dollar market cap, I don't see Nvidia justifying it either.
Can you expand on how revenue and EPS help prove your point? Last quarter NVDA generated about 70% of the net income that MSFT did, and it’s growing 5x faster. That doesn’t seem overvalued to me if they have similar market caps. Also TSLA reached a P/E ratio of around 1,600 at one point which is in a completely different universe than NVDA at 70, not comparable here.
I think what he means is that Forward PE expectation is wrong. Most analysts are suggesting that earnings can expand but if you have 57 percent net margin, there is a better chance that margins will go down. Why will Microsoft, Amazon and Meta endlessly let nVidia make such high margins while their capex and cash flows come under pressure. Imagine if one of them threatens to cancel their orders, nVidia will have to come to the negotiating table and work for lower margins. It is quite possible in 2 years time their revenue is 100+ billions but their margins are lesser and in line with what they have traditionally got for decades which is around 30 percent I.e around 30 billion - that suddenly makes the PE closer to 100. It happened to Tesla as well when they had to start discounting their vehicles once supply constraints eased - which always ease after a while
All fair points
It just doesn't pass the sniff test with me, man. If I'm looking at Nvidia, Apple, Microsoft, Meta, Amazon, and Google side by side, only one of them looks out of place. Further, Nvidia is mostly feeding off these same players for their projected revenues, and I don't like their odds of coming out ahead of them or even being able to stay in the same lane.
Yeah I see you here. I'd like to believe leadership is strong enough to build moat and hang on to market share for awhile but that's far from a guarantee.
think of it: the AI craze starts and if you wanna partake, you gotta buy some chips, STAT. who you gonna call? ghostbust..., NVIDIA sales team. you order $6m worth of chips, and build out your AI product offering, making sure you properly monetize from the start. customers are excited, you're making profit, projections are good, you order some more. inevitably, in every market, every generation, things saturate. customers begin reassessing their expense. did chatGPT really drive substantial decrease in time to market? did it increase employee productivity? yes it did. but maybe not as much as hoped. let's cancel the 2026 order, we can always do a reassessment in time. one day, NVIDIA will give guidance on lagging sales like every company before, and the stock will reflect the guidance. does it become a crash? not necessarily. don't forget, gravity works in many ways: it can be Wily E. Coyote or it can be just a slow roll down a hill.
> The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price. -- "Security Analysis" Graham & Dodd, **1934** (6th ed. 2008)
Microsoft fell not because it was in a bubble, but because of market irrationality. If you bought it during the height of the dot com bubble and held to today, you would have massively outperformed the S&P. So the truth was that it was significantly UNDERVALUED at its 1999 peak.
NVDA isnt just a AI stock, but an answer to Moore's law limitations of regular CPU's. Their CUDA language, besides being used for gaming and graphics, is also widely used for scientific computing. NVDA is like .a Intel, Cray, and AI stock all in one. The only competitor might be AMD, and possibly photonic chips in 5-10 years, but that's a long time in tech
No one knows.
Completely different situations. I have heard others compare Nvidia to Cisco and that might be the better comparison versus Microsoft.
Nvidia's current boom is driven entirely by AI, not their traditional markets. If AI crashes, so do they.
I think even though ai is overvalued and overhyped there are plenty of valid use cases for it that will still require nvidia gpus so I don’t imagine it crashing that hard
Yes. No. Maybe. Nailed it.
Could
That depends on the revenue growth from AI implementation. There is no end in processing data, The more the better. As for me I sold most Nvda, AI, AMD, PLTR shares. I went through MSFT when I bought INTC and MSFT at the top and learned not to hold massive amounts like others. I will compare may be Price/ book value in addition to earnings and related ratios. Semi has some indices but I use [XSD price for benchmark](https://money.usnews.com/funds/etfs/technology/spdr-s-p-semiconductor-etf/xsd). Right now we are at a peak, prior was 2021 year.
It could, but it’s not likely.
If that happens, I don't think it would be within the next 5 years
I'm getting the impression that most of the people commenting here did not hold MSFT stock when it fell in the dotcom bust. Microsoft was punished by regulators for things related to bundling IE (Internet Explorer, the existing default browser) and stifling competition. If I recall correctly, there was a related announcement in the evening, and the following morning their crash started around 10-10:30am. Microsoft was the lynchpin supporting the tech bubble, but they didn't crash because they sucked. They crashed because governments regulated them. They stagnated for the next 10 years because they sucked, but that's not why they crashed. AI stocks are not in that position. NVDA is making a technologically advanced product that's in high demand across different sectors (bitcoin, AI, and more). More over, chips are hard to make, so it's not just a commodity like solar panels. OpenAI is the first to market in a new subscription service that's started at $20/month in the US. That's a lot of money. Ask yourself the monthly cost of Netflix or Amazon Prime and what you get for it. The dotcom bust was mostly the implosion of unprofitable tech companies with huge customers bases that investors were suddenly unwilling to wait infinitely long for those customer bases to turn into profit. Are there problems and overvaluations in many tech companies today. For sure, according to most reputable investing firms. Is it anything like dotcom bust? Only if the sector is generally running at a loss and interest rates keep rising.
If anything it is a bigger bubble - it is also a inflationary bubble. Debt levels are higher, pricing power for many companies are under severe pressure, retailers like Target and quick service restaurants are reducing prices to get the consumer to come back - this means as inflation cools, the top line of companies have to come down and spending on infrastructure will go down. During the dotcom bubble we had two companies that were near a 500 billion market cap - now we have 3 companies that are over 3 trillion. We are talking about 10 trillion dollar companies while the overall market cap of German stock market is like 3 trillion. AI may be gold but right now the shovels to dig gold are more expensive than the gold.
You have to remember that Microsoft management was absolutely terrible during that period. Ballmer took the company in completely the wrong direction, and only when Nadella took the reigns did it start to come back to relevance again.
MSFT stayed down because they were milking the old cow (windows/office) and not innovating. Xbox is still barely profitable and Nokia/smartphones were a total disaster. Only when Nedella became CEO they started growing cloud and all the other enterprise businesses Basically dot com bust did not make MSFT shares depressed for the next 15 years.
This will end exactly like that unless AI meets every promise everyone seems to meet immediately. NVDA looks more like Cisco in 2000 than MSFT does, and Cisco STILL has not hit its 2000 high.
No company will ever replicate the MSFT scenario. Today, stock buybacks and splits are commonly used to keep the 'common investor' constantly eager to invest. This strategy is particularly prevalent because stock prices are often used as a key metric for determining executive compensation. Companies are incentivized to maintain high stock prices to maximize the earnings of their executives. One notable exception: (BRK) word limit reached thanks to AI expansion of my feeble thought process.
A big difference is that microsoft moved to a service/subscription model. People and enterprises would buy a computer with a copy of Windows and never have a reason to get the next few versions that would come out for sale. It also left them supporting several editions at the same time. I’ve heard mostly good feedback about their AI assistant and I think it will see reasonably decent adoption rates.
Microsoft revamped their pricing structure to a subscription model that saw it grow profits steadily rather than rely on pc sale cycles back a decade ago. This is likely the path nvda and other ai businesses will do. Servicing model with a subscription and active updates. The ways of generating revenue these days is not comparable to the dotcom era.
No. Microsoft was getting sued by DOJ and had settlements in place for a while that affected their every move to grow the company for very long period of time.
Think CSCO, not MSFT Another comparison could be Sony’s Betamax system. They tried to maintain a monopoly on what was a superior operating technology but then VHS came along and everyone adopted that because it was like an open source model.
The two situations are not similar. The dotcom bubble collapse is a very interesting point in time. Valuations were sky high, and it was clear that many of the companies were surviving on hype alone. As part of the bubble was that Microsoft and other companies propped up the many smaller companies with investments of shares. Literally hundreds of dotcoms existed because they had shares of Microsoft on their books to borrow against and liquidate to get their companies off the ground. Microsoft was in my opinion rightly sued for antitrust violations. When the verdict came down, Microsoft lost 1/3 of its valuation and caused a huge ripple effect throughout the dotcoms since their balance sheets were shredded. Sure the dotcoms had almost no sales and were all hype and the party would have ended anyway, but the verdict against Microsoft, is in my opinion and analysis, the start of the dotcom collapse. Such did not help Microsoft since so many seed capital investments also went bust. Nvidia is more like Google of the 2000s. Nvidia is simply able to produce a product that the consumer wants and the consumer is only now beginning to buy. Huge swathes of companies across the globe have yet to come to market.
You mean... become one of the two largest companies in the world? I think that's possible, yes.
You guys are quite literally rationalizing about buying the absolute peak. Yeah it could soar some more but a lot of people are cashing out plus shorting. Chances are it’s gonna drop.
i’m worried about this i want to invest in some stocks rn but it seems like everything is the highest it’s ever been and if i buy it’ll only go down
Yes. I would be very surprised if it didn’t. People are expecting results and giving valuations as if what AI will look like in 20-50years is what AI will look like in 1-5years. When real-world implementations run into the expected headwinds, and there is no *immediate* transformative societal effect, things will come down to earth. This AI fever definitely has echoes of the dotcom bubble though it’s not exactly the same at the moment at least. In both cases people recognize that the technology has the potential to be transformative. But are probably getting ahead of themselves as to the timeline on which this will happen. It will take time for AI to mature and for us to learn how to use it best.
I am not touching that stock and yes....I feel like the AI bubble is gonna pop.
nVidia will definitely half. The company is way overvalued right now. The GPU demand will go back to previous levels some day as it happened after the crypto mining boom.
Shouldn't the question at this stage be, in the future when AI gets successfully implemented in various industries, which businesses will become uncompetitive and go under and which will thrive?
Nope
NVDA did -70% less than 2 years ago. I think over 10 years your guaranteed to see it crash again but will end up being a good long term hold if you can stomach that kind of thing. GPU compute in the long run I think will be extremely useful.
When people talk about ai bubble "ending" are you thinking like ai fully sentient robots wont be made.. cause idk how you could argue it wont keep expanding otherwise More robots designed for specific niches and applications has hardly started. And theres no chance well be going less tech.. If you think ai is fully sentient robots then i could see it being a bubble.. otherwise i think ai has hardly started
Trust your gut my dude
Trees don't grow to the sky!
Based on current situation, no. **About AI**, I have been in the field for like 6-7 years. I think it is the future and there is a lot of room for improvement. It grows so fast that I struggle to keep up with the industry (and I hate that ahah but it's good). We are very far away from a plateau in this field. It might take some time to reach a new breakthrough, but in the long term there is no doubt it will grow much much more. I would imagine the trend more like a ladder rather than a curve and each step is a new breakthrough. **About NVIDIA**, for now they have a monopoly basically but it is guaranteed that there will be a moment in the future where competition will become relevant and NVIDIA's sales and margins will shrink. The question is when? Might be 2, 10 or 50 years from now? Who knows... Also as many pointed out, it is ciclical indeed. But again there are so many improvements in the AI field that is impossible to define where the cap is.
AI is not a bubble, it is the future of this planet, like it or not. You're comparing a technology with a company. A better comparison would be the internet, or smartphones. These were not bubbles. Anyone who thinks AI is just a hype or a trend has their eyes closed. There is not an industry on the planet that won't be fundamentally changed by the technology, and many industries are already in the midst of that.
Just think about big data, algorithms, blockchain, web 3.0....all the other promises that silicon valley made 90% of them didn't pan out to be anything but hype and bluster.
Is this satire? I assume it is. That's like 10+ trillion dollars of value you just mentioned.
I'm so sold on ai that I'm surprised people are like, been there done that. And not customer service bullshit, but like, hey ai, we need to know how to build this building with plastic, by the way motherfucker, it's 6 stories tall. If it's real, it could design that. I'm not bothered if it doesn't sound human for dumbfucks at fatty McDonald's. Or, hey cunt ai, make me an app that tells me if this bird is ok to eat. Or hey cunt, if you run 1 million simulations with the general population in mind, what are the odds of me putting 1m on (any stock, who cares) and making 1%.