Nvidia surges about $500B in 6 wks, nearly much as Tesla is worth
markets.businessinsider.com
markets.businessinsider.com
If you have real data, reference that instead. It'd actually be useful.
I'd be surprised to learn anyone has a large Nvidia short position. It's not absurd since it speculates on when the AI bubble will pop. I suppose that's really up to the fed.
It's really crazy how things are moving since the end of lockdowns, more or less everybody agrees the economy is in a bad spot, layoffs, inflation, recession risks, fertility issues, climate change issues, energy issues, wars, people can't afford housing, the end of "cheap" money, &c. Meanwhile my stocks pumped 50% over 6 months for seemingly no reasons, more than half of my gains happened in the last year
idk what's cooking but I'm starting to smell smoke
It's not a perfect analogy (what analogy is?) but it is the kind of thing that should make you go "hmm".
What makes more sense is to compare the company revenues or profits against a country GDP.
When a farmer produces wheat the value created is equal to the value of the wheat. When a barber cuts somebodies hair the value created is again more or less equal to the price charged. A barber shop doesn't make anything that accumulates in value. This is true for most the economy. It trades at about 1x revenue.
Tech is different. Write software once, sell it many times. Design a chip once, sell millions of copies. Tech companies are the outliers. The rest of the world doesn't work like this.
Also tech is not that special. You could say the same about a factory, which you build once and it churns out cars, or a mine which churns out minerals. And to the extent this is not true, for example factories needing upgrades and labour, the same is true of tech. Software gets old, needs support, and the labour of well paid technologists.
I.e. if everyone just bought stuff back and forth from each other constantly (assuming no taxes on the transactions) the GDP would shoot up.
Edit: I.e. how does "it" know if people just bought a ton of used cars, or if people were simply selling them back and forth to each other constantly?
(and if sales between private persons wouldn't register, imagine dealers being in between every transaction)
Instead of thinking in terms of speculation think in terms of money flows. A lot of money flowing into a handful of stocks results in an explosive move up. There is plenty of speculation as well, of course, but that isn't why AI stocks are up.
When will NVDA and SMCI go down? When all the big funds become sellers. But what else can they buy? INTC and AMD don't have competitive chips or software.
Why?
The more people shorting something, the better chance for short to succeed. It's in the best self-interest of all people shorting something to be as loud as possible about that.
You think the stock market is filled with "rational" actors? It has always ALWAYS been a vibe check since its existence. The Tesla stock is obviously overvalued, not because there is some grand conspiracy to prop up the stock by a bunch of retail investors but because Elon is a hype man and he hypes up his own stocks. Tesla being overvalued is not a new phenomenon
Mania's have been a thing since the start of markets.
It's so funny to see HN readers who know absolutely nothing about finance or capital markets have "houlier-than-thou" attitudes towards institutional money.
> why would I do something rational in a broken market
Why do you think you're the rational one?
That's the entire point of how markets work. No one thinks markets are fully efficient and the way you make money by trading is through exploiting inefficiencies.
The market was in a panic mode around Facebook a year and a half ago and if you were smart enough to see that and take advantage then you'd have 4x'd your investment.
But I guess you're "too rational" to make money off that sort of thing?
As popularized in "The Big Short": https://en.wikipedia.org/wiki/Michael_Burry
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million. Scion Capital ultimately recorded returns of 489.34% (net of fees and expenses) between its November 1, 2000, inception and June 2008. The S&P 500, widely regarded as the benchmark for the US market, returned just under 3%, including dividends over the same period.
But we could be in a bubble, the key is bubbles can last for years.
Tesla owns its dealership / sales network; what's the value of those "dealerships"? Similarly tesla runs a huge charging network and has convinced every other manufacturer to switch to their network (in North America). And tesla makes a bunch of power generation / distribution stuff. So "a car company" is incomplete. They also have tons of willing beta testers / AI trainers to go out and train their self driving model -- any tesla out there is collecting driving data and is getting trained by observing the driver's driving and comparing it to "what I'd have done" driving; not sure they'll ever get to "self driving" but there's some value there.
Tesla's also run by a drug addled risk addicted narcissist. He's pretty smart and has made a bunch of terrifying large bets that have consistently (cough except solar city and maxwell's dry cell battery stuff, and that eggs / stormfront thing) paid off pretty good.
At this point, AIs are being embedded into existing apps as new way to interact with users. Also, you need a decent GPU to run most LLMs, so there is demand in the market for GPUs for all kinds of devices, aside servers at cloud services.
Doesn't Google mostly not rely on NVIDIA?
Are intel & amd really just sitting by and allowing nvidia to scoop this market?
Yes, because unlike AMD and Intel, NVIDIA really is a software company with a hardware division, like Apple and Microsoft.
And does Google use Nvidia hardware on Gemini?
If you're right, you'll likely be tempted to short again.
Making 11bn on a 19bn revenue is, prima fascie, evidence of a very uncompetitive market where this player has some extraordinary anti-competitive market power.
Hopefully competitors can take this boom and use it to bring this down.
I'm downvoted no doubt by double-thinkers who think 2x on the cost of a graphics card is a bad thing, and would prefer not to pay it.
nvidia in the rent-seeker position over all graphics compute is a terrible position to be in, for everyone but a handful of nvidia shareholders
For them, this has been a 10+ year long bet that’s now paying off extraordinarily.
Check your privilege.
Now, they're extracting 50% of what people are paying in profit. Great!
And, what, you're their defender? I hope you have shares, or else, you've been hoodwinked.
In the "free" market, be assured, you're the loser not the winner. /We/ only win when there's sufficient competition, and clearly, there isnt.
It is not in your interest for an nvidia ransom to exist on all AI tech.
Their only competition ATI is also trying to fight Intel in the CPU single vendor market. And I don’t think they are even trying that hard in gfx.
They developed an expertise and they are temporarily profiting extraordinarily from it.
They're practically the only player for now but it's different from a harmful monopoly enforced by force from the state
Prima facie, we should be suspicious that nvidia is able to keep $11bn out of $19bn -- why is no investor on the planet not chasing after at least half that?
In the end what we want is a free market where competition drives down prices by limiting profits, and where the power of capitalists is limited by their need to compete, and where the power of labour is improved likewise (and so on).
Given just why we even have a free market in the first place, companies like nvidia cropping up should be a cause for concern.
My hope is, exactly, that this is a transitiory effect where they're able to exploit their market position only in the very short term.
For a sense of perspective, Nvidia’s operating margins as a company (including enterprise) are normally about the same as AMD’s gaming division (ie Radeon group). And Radeon is not exactly rolling in the cash…
This includes Ada, which had lower operating margins than any year since about 2012. https://i.imgur.com/KP6fClJ.png
They are making bank right now because they have a good product that has touched off a computing revolution. Just the same way AMD found themselves in a shower of money for having epyc ready to go at the moment intel stalled out on 10nm. This is transitory and won’t be a competitionless shower of money forever, but it will evolve into another large segment where nvidia is a player. But it's also an extremely deserved win for NVIDIA being in the right place at the right time (and that's hugely underselling NVIDIA's place in starting that revolution).
It’s super weird that people somehow begrudge nvidia their win from what is clearly a 20+ year bet on programmable shaders, gpgpu, and software ecosystem. Jensen bet the company over and over on shit that everyone else at the time said was lunacy, and utterly deserves the success he's earned. It is hard to overstate how much the "NVIDIA is a software company now" was mocked in the 2009-2014 era, it was a joke and a meme on tech forums in the same way "just buy it" or "the more you buy the more you save" is today. I'm sure there are some real choice SemiAccurate articles you can mine for laughs, Charlie is always great at that.
A large number of people cannot emotionally process the fact that electronics are just getting more expensive in the post-Moore's Law era and that GPUs are particularly exposed to this due to the nature of the product. But nobody else in the industry can do any better - MCM was a bust for AMD at driving down GPU costs, Intel is running negative margins to grow the product, etc. Even AMD is telling you the same thing - product costs are up, R&D costs are up, and the price anchors you knew in 2012 aren't going to hold forever.
(For that matter, there's no more $85 1600AF or $160 3600 deals anymore either - the era of "get last year's processor for, idk, does 75% off sound fair?" is completely dead in the CPU world too. And ASPs are up too - "mainstream" CPU is $300-350 now too. But people just don't have the narrative fed to them on CPUs, there is nobody telling them to be mad about it, so they aren't...)
https://www.pcgamer.com/amd-moores-law-aint-dead-its-just-a-...
https://www.tomshardware.com/tech-industry/newer-chips-are-r...
This is actually the precise leap that Jensen made that internet commentators pooh-pooh'd: he has always understood the impact that Moore's Law has on his business, he is only there to find efficient ways to shovel out the transistors that TSMC mines for him. And if the treadmill of free transistors stops (or slows to a crawl) then where do the product gains come from? It has to be software, and accelerators, and other stuff. DLSS, for example. That's another leap where he was 10+ years ahead of the public, and was in a position of having to tell people what they wanted, because they didn't know it themselves yet.
I take it that they are however, since their pricing seems extraordinarily out of keeping with the cost of manufacture.
But if the article is wrong, or misleading, so be it. I don't see signs of a undue market power at 10-20% profit, just a little inefficient in the competitive landscape
The 2022 numbers are before AI kicked in, and those numbers are roughly comparable to what Radeon Group makes - and that's with NVIDIA mixing in an already-decent amount of enterprise sales (which pushes margins up).
Their pricing is pretty much in-line with the way costs have risen in the industry. GTX 670 launched at $399 for a 300mm2 cutdown in 2012, GTX 1070 launched at $449 (the "non-founders MSRP" was widely decried as fake at the time since partners didn't follow it) for a 300mm2 cutdown in 2016. $599 for 4070 is really about on the overall cost-trend curve for a product that's launched on a leading node.
https://old.reddit.com/r/Amd/comments/4navtq/amd_this_is_how...
https://hardforum.com/threads/geforce-gtx-1080-most-bizarre-...
https://forums.anandtech.com/threads/hardocp-geforce-gtx-108...
Ampere and Turing both were trailing-node products - NVIDIA was trying to keep the cost down at a moment when TSMC was cranking prices and 7nm capacity was scarce. But once they moved back to the leading edge, prices "snapped back" from under-market to at-market. And I think you can certainly argue that this was a mistake, because it mis-calibrates people's expectations and the snap-back feels much worse all at once than as a gradual 3-gen increase.
This isn't to say stuff like 4080 weren't obscene, 4070 Ti and 4060 Ti were only good by comparison. But by the time we are getting to 4060 and 4070 launches NVIDIA is pretty much following the historical cost trends, and AMD is not able to drastically undercut these prices (because they're not particularly out-of-line).
That is the problem - people look at trailing-node products like Ampere and Turing and Maxwell and say "well, these dies were bigger and cost less" and yeah, if you are accepting something that's 2 nodes behind leading-edge it will cost less. You also don't get a 4090 or GTX Titan-class product that towers 50% above the 4080/680, and you get much worse efficiency, etc. And of course the dies will inherently be bigger, because they're lower density... 2060 being 440mm2 or whatever is absolutely not the norm for a x60 class card, it's a massive outlier cherrypicked to make a point.
And remember - it's not like AMD is giving you a 440mm2 die on a x60 class product either, historically or presently. For some reason the expectation of 440mm2 dies on x60 being a perpetual thing only applies to NVIDIA. Nobody made a 2-part video essay series about how the RX 5700XT was a "midrange product being sold at flagship prices" or whatever - and it's significantly smaller than 1080! Literally half the size of a 2060 - surely that’s a low-end card? https://www.youtube.com/watch?v=Jd1bp9eSfwo
RX 5700 XT was $399 for a 251mm die in 2019. 6700XT was $479 for a 335mm2 die in 2021 - and while yes, "mining prices", it probably wasn't inflated as much as people want it to be (the "it was mining" has become a Rorschach test for people to project whatever prices they want to imagine it should have been). And historically AMD has had to come in underneath NVIDIA anyway: if AMD was charging $480 then NVIDIA would have been charging $550 or $600 for the same "silicon tier".
(Oh, and of course that's all pre-inflation, etc - $399 in 2012 is $539 in 2024. $399 in 2019 is $477 in 2024. And wafer prices have risen a lot since even 7nm!)
That's the problem - Ada prices are not really "extraordinarily out of keeping with the cost of manufacture". People don't see that prices have already been creeping up over time (people don't even bother adjusting for CPI let alone the trends of silicon cost), and the cost trend has very much accelerated in the finFET era (post-28nm). Everyone is like "what if moore's law ends" and doesn't realize that it's ended 10 years ago already, and vendors are out of tricks to avoid the cost spiral. Yeah, 4080 was a gouge, but 4090/4070/4060 prices are pretty much just what a leading-edge product looks like/costs now. And it's almost exactly the same price and size as GTX 670, for example, 10 years later.
It is the same problem as climate change - a large amount of people are blind-faith believers that moore's law will never end, and vendors devote a significant amount of effort to keep prices down (see: turing, ampere) which further allows people to continue believing this. Then we run out of runway and have a "snap-back to reality" moment - we're blowing past the worst-case estimates for transistors-per-$ gains and you have a large group of the population that still doesn't realize it's happening at all.
And of course there is a marketing machine devoted to the whole "maybe moore's law is dead for them, but not for us!!!" type shit (not just AMD but they're a convenient and credible example), but once you get past the headline, even AMD is saying that costs are ballooning and future products won't meet the cost trends that define moore's law. They just mean performance will keep scaling - but so will prices.
https://www.pcgamer.com/amd-moores-law-aint-dead-its-just-a-...
> "It's not that there's not going to be exciting new transistor technologies. Actually, I can see exciting new transistor technology for the next—as far as you can really plot these things out, is about six to eight years, and it's very, very clear to me the advances that we're going to make to keep improving the transistor technology, but they're more expensive."
> The difference now, Papermaster explains, is that where you used to get double the transistor density every same year while costs remained largely the same for a given chip size, the cost per area of silicon is increasing with each successive production node. Computer chips of a given size are becoming much more expensive.
That is the blunt reality: cost-per-transistor is no longer coming down much at all. Shrinking increases density, but also increases cost at almost the same rate. Packaging can fix yields and reduce power, but it doesn't fix rising wafer costs entirely. Even if you yield at 100%, adding more silicon still costs more. So in the long term you won't be able to get higher performance levels unless you raise performance-per-transistor. And that's literally been a 10+ year effort for NVIDIA - Kepler and Maxwell deconstructed the entire accelerator down to barebones, really too far (and some of the ways they stripped it down had to be backed out in Pascal). Turing brought in DLSS and tensor to try and provide a "general-purpose accelerator". Ada brought in framegen. And in fact gamers have generally pissed and moaned about how none of this was good enough, and NVIDIA needed to just keep scaling raw raster. But the low-hanging fruit has already been picked from 2014-2016, you can't squeeze infinite performance gains year after year from a fixed number of transistors.
https://www.anandtech.com/show/5699/nvidia-geforce-gtx-680-r...
https://www.anandtech.com/show/8526/nvidia-geforce-gtx-980-r...
Anyway: yeah they're making bank on the AI craze. Rightly so - they've led the way on bringing GPGPU to the masses, pushed GPGPU as a concept and built the software ecosystem, and bet heavily on AI at a time (2014-ish) when it was not an obvious call at all. They weren't just in the right place at the right time with the right product, it's not even that they innovated some hardware advancements to make it happen, they literally built the entire segment from scratch so yeah, they're the defacto leader when there suddenly is a killer app and their decades of work pays off. They're making bank in the short term because of that.
https://news.ycombinator.com/item?id=32983297
But this generally has nothing to do with your GeForce prices. Nor are they particularly out of line anymore - you're just miscalibrated on what things cost in 2024.
There's no more 1600AF for $85 either. Things cost more now. Electronics cost a lot more now. Some of it is TSMC, some of it is physics. And the market is generally efficient enough that AMD can't afford to drastically sweep in under NVIDIA pricing.