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Comment by allenrb | Hacker News Reader

We all understand that this cannot and will not continue, right? One of two things happens:

1. The AI boom goes bust. Nvidia sales and/or margins crater. The stock craters with it.

2. The AI boom is the real deal. Companies aren’t stupid and won’t keep paying Nvidia these prices forever. Pretty soon hardware and software architectures are standardized enough that anyone who can get onboard with TSMC, Samsung, or Intel can churn out hardware optimized for the right few functions and sell for a faction of the price. Nvidia can still be an innovator but they won’t be able to sell “bread and butter” products at these prices. Sales and/or margins crater, as does the stock.

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NVIDIA got lucky that modern computer architecture happens to favor GPUs for AI workloads. They won't be able to milk it for long, but they for sure have the money to pivot. Question is whether they will put that money to good use or not.

You know, you can make money with predictions if you have the conviction.

Not GP, but that's exactly what I'm doing. Sold NVIDIA recently at 869 USD (having bought it at 453 USD), and invested profits in Intel :) We'll see how that plays out in a year or two.

really? intel a sideways stock from the 70s is the best long you found in the entire planet? out of all the financial instruments and all the markets and all the categories u actually believe that’s the best pain to gain ratio play

They have their own fabs, a new GPU line, and they're national security critical. they also make pretty good CPUs even if they aren't the best value/$.

Intel literally cant fail because of national security. The government will continuously bail them out which I think is a pretty big advantage, giving them time to figure something out. Theyre cheap as fuck too so tons of upside

MSFT went sideways for like a decade too. Who knows... Intel is doing something the others aren't with building its own fabs. Which arguably carries a lot of risk but it could pay off.

Well, I'm betting on Gelsinger's plan to launch Intel 18A process, and regaining process lead - this should bring Intel's stock price from current $31 to at least $70. Also, it's a hedge against China invading Taiwan and blowing up TSMC, in which case it would probably skyrocket to $100+. In the meantime Intel pays nice dividends.

$869 sale means you sold between March 2024 and last week. Let’s game this out:

100 shares of NVDA at 453 pared down to just profits from 869 sale would mean holding about 48 shares and selling 52 shares. After today’s after hours movement your invested profit would be worth about $48k, or about $6300 more than when you cashed out your initial investment ($41712).

You take that same $41712 and buy INTC between March and now. If it was bought in March then you’re in for something like $43/share or 970 shares. Intel has been sliding since April and is now at $31. Your profit from NVDA has shrunk by nearly 30%. In the worst case (you bought in March rather than April), you’ve given up near $19k in profit by following your convictions. Your gains have gone from 115% (had you held) to potentially as low as 70%. I guess it’s all house money anyways though, right?

I have a 6 figure profit in NVDA shares right now. Cost basis is something like $100. I have considered selling( or at what price I would sell). The problem I have is what could I possibly buy with that profit? Intel hasn't shown that they have a real plan. The move in META seems to have already happened. I don't trust that Alphabet has any idea what they're doing. I could buy more Microsoft or Amazon shares I guess. I wouldn't throw money at these software stocks like Snowflake or the SNOWs of the world. AAPL might be a play if I have the conviction that Tim Cook has an AI plan in place.

In the end I'd probably just take the easy way out and go buy VTSAX and chill.

Your last paragraph: I would recommend this instead: VOO-Vanguard S&P 500 ETF

You're talking about this with benefit of hindsight. When I was selling at $869 I would not know how it will go. And, as a matter of fact, a week or two after I sold NVDA dipped to $700, although temporarily. So, it's just a matter of personal risk tolerance, I guess.

I also think NVDA is overvalued, but timing is everything. They could stay overvalued for years before coming back down. "The market can remain irrational longer than you can remain solvent" and all that.

3. To justify current valuation revenues must continue to grow next 4-5 years until plateauing while Nvidia profit margin gradually declines to something normal, like 30%.

High growth is fragile. The value of Nvidia has dropped 50% multiple times in the past. Recression, or temporary oversupply, anything can mess it.

You mean the same companies who are paying AWS, Azure and GCP a lot of money for decades despite there being cheap alternatives? Or which customers do you talk about?

My company uses Azure for years. I don't expect them to change that anytime soon, I mean we're a SAP customer for 40+ years and SAP is Germany's No. 1 price gouging company. We use MS products for decades as well despite them being more expensive every year and I still do more or less the same in Excel today as I did years ago.

I think you have a misunderstanding of how B2C works and especially when we talk about enterprise level SW solutions. No CEO in their mind is switching business operation SW if a competitor is on sale lol.

This thought is strange. This very moment is the moment of success. Perhaps it can grow more, who knows, but a maximum declines on either side, that's literally what a maximum is.

Saying it won't last should not be profound because that fact should be self-evident. The only reason it becomes profound is because a lot of people are just that stupid.

What is happening is that every government on the planet is forced to procure local DC compute capacity to protect national sovereignty. The US ensured this with SWIFT deplatforming Russia.

And there is nobody else they can buy from on their timelines.

I noticed that your post failed to include important details such as when option 1 or 2 will happen or how option 2 will be implemented. I don’t disagree, I’m just pointing out that your post is worse than useless blathering, it’s useless noise.

A significant question is what "pretty soon" means. Nvidia also owns other parts of the stack (cuda) that makes them more difficult to replace.

The hard question is "when". I agree with you, yet I'd rather be long NVDA than short NVDA. (I am neither).

There is also third option - which I'm not saying I think happens, but if AGI was to happen then there is possibility of just few winners taking it all. Whoever gets there first would simply snowball away. It would be end game of capitalism.

lol, so short the stock...?

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