Should we buy Nvidia stock then?
The greatest technological advancement in recent years critically depends on the hardware from a single company with no competition. yet Nvidia stock is still below its 2021 peak. How so?
The greatest technological advancement in recent years critically depends on the hardware from a single company with no competition. yet Nvidia stock is still below its 2021 peak. How so?
In a way, it feels like Nvidia is embarrassingly aware of this. They were the reluctant shovel salesman during the cryptocurrency gold rush, and they're rightfully wary of going all-in on AI. If I was an investor, I'd also be quantifying just how much of a "greatest technological advancement" modern machine learning really is.
The cryptomarket was less favorable to Nvidia because it harmed the loyal customers (gamers, AI) for a temporary market (crypto) that indeed largely declined.
https://www.cerebras.net/andromeda/ https://tenstorrent.com/grayskull/
And yet none of them seem to have made any dent in Nvidia’s dominance. None of them have any real presence on industry-standard MLPerf benchmarks (not even TPU releases all benchmarks and they started the damn benchmark).
The truth is that making an AI chip isn’t as simple as putting a bunch of matmuls together in a custom ASIC and pointing a driver at it; there’s hard work and optimization the entire stack down, many of which aren’t even focused on the math part.
So while I don’t doubt that some competitors (AMD?) will gain decent market share eventually, Nvidia’s probably not going to be displaced so easily.
Investments should be based on the actual value of the company relative to its price, as well as relative to other investment oppertunities. Trying to making a profit by trading based on historical stock prices will get you whipped by quants who are already doing a much better job of that sort of thing than you could ever hope to do.
It's also not necessarily about the 2021 peak but why isn't Nvidia bigger? allegedly it's a necessary component to a technology that can replace hundreds of millions of people (worth trillions in economic output). And unlike OpenAI, Nvidia wins no matter which company wins the model competition.
As far as stock prices, there was a hype cycle paired with government handouts to the people, these combined to push tech stocks to unreasonable valuations.
Perhaps someone like OpenAI has both the expertise and incentive to do so, but not many others.
I'm not saying you are wrong or right, btw
OpenAI is more of a "one-(very impressive)-trick-pony", so they have a stronger incentive.
Thinking about it, it’s hard to believe how fast the hype cycle moved on from crypto. Only 1-2 years ago every media person, influencer, YouTuber, tweeter etc. were talking about/selling/shilling some kind of crypto, and now all of it seems to have moved on to AGI doomsaying.
Generative AI is used by millions, has very low barrier for entry (it's even free!) and most importantly does not require a network effect so can be valuable immediately.
Surprisingly, they left that out of their sales pitch.
With LLMs everyone+dog is coming out of the woodwork to let people know that it will lead to the extinction of the species.
Not that I don’t think generative AI is a lot more useful than crypto and deserves (some of) the hype. The problem is the hucksters jumping on the hypetrain to continue their $new_hotness grift.
Interesting, the more they warn about it, the more people are eager to invest in it. Kind of a Streisand effect.