They're not commodities at all, by definition. No one but NVIDIA can make their GPUs, no one but TSMC can make the silicon, and no one can compete with CUDA on the software side. It's one of the most differentiated products on the market.
If Nvidia can truly print money as long as TSMC can make chips, as claimed above, I'd argue that's at least in a gray area for commodities. The chip is effectively a raw material as far as Nvidia is concerned, and it acts much like gold or oil in that scenario as the argument is that there is an unlimited market willing to buy any GPU that Nvidia can create.
Having a monopoly doesn't mean the product itself isn't a commodity. De Beers has a monopoly on diamonds, but I'd expect diamonds to fit into most people's definition of a commodity.
That's the definition everyone in economics uses and NVIDIA has never fit that definition. NVIDIA GPUs are not fungible. Intel and ATI GPUs are not replacements as far as AI is concerned. There are zero substitutions. They are not commodities, they are differentiated goods that no one else can produce.
> Having a monopoly doesn't mean the product itself isn't a commodity. De Beers has a monopoly on diamonds, but I'd expect diamonds to fit into most people's definition of a commodity.
Yes because the definition of a commodity is fungibility not the number of vendors. You can go online to Alibaba now and buy a bag of synthetic diamonds that are perfect replacement for mined diamonds. De Beers never really had a monopoly, they just controlled the market for consumer diamonds until the 80s.
NVIDIA has a monopoly because its product is not a commodity.
NVIDIA’s products can colloquially be described as commodities in some contexts, as GPUs from NVIDIA can be interchangeable with GPUs from other manufacturers like AMD. For specific tasks like gaming or basic computing, the brand may not matter as much as the specifications, making them somewhat commodity-like in those scenarios
Whilst this isn’t the traditional economic definition of commodity, speaking loosely, I think it’s fair enough to describe GPUs as a form of commodity. The important thing is what’s being communicated, not the semantic definition. The above comment’s point was pretty clear IMO
But the argument is, that Nvidia should follow a standard valuation model, since their product is a commodity.
Those claims are both incorrect. This either rests on a misunderstanding of what a commodity is, or on a misunderstanding of Nvidias Position in the AI segment.
As it stands at the moment, they are not a commodity in this field, they can not be replaced, and thus you cannot apply a more standard valuation model.
Nvidia is not valued as a commodity because now and in near future people expect them to keep their superiority that allows them to charge 30000+ for one card.
For AI workloads I'm pretty sure they aren't, which is why everyone is trying to buy NVIDIA GPUs.
If they were a commodity there would not be such intense competition for NVIDIA GPU allocations, because they would be easily interchangeable with GPUs from another source.