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?
It doesn't necessarily depend on Nvidia hardware. Nothing stops you from training an AI on an adequately advanced ASIC or FPGA, in theory. Nvidia does accelerate it though, and they're also offering unparalleled performance-per-dollar to the audience that's in the market.
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.
It's the ecosystem - everyone else is using CUDA, so you need a very good incentive to stray away from that ecosystem. a x2-3 cost of hardware won't justify such move.
The cryptomarket was less favorable to Nvidia because it harmed the loyal customers (gamers, AI) for a temporary market (crypto) that indeed largely declined.
This narrative has been pushed for several years now with the likes of Habana, Cerebras, SambaNova, Graphcore, Tesla Dojo, etc.
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.
Because making decisions on account of an asset's price being higher 2 years ago is just falling victim to price anchoring? Would Nvidia not be worth buying in 2020 because its price was much lower in 2018 and thus must be overvalued in 2020?
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.
But the question isn't "can I do better than teams of quants who do this 100 hrs/wk and are supported by institutions with effectively infinity dollars", but "can I make money on this"? If I buy NVDA at 283, will it go up? There's no guarantee it will, they could lose their edge to AMD and the GPU market could bottom out, but barring some calamity, the answer seems to be yes they well. There maybe other stocks out there that are better buys, but they're part of the SP500 for a reason.
That's a broader question, but in general: it doesn't matter what I think about Nvidia's business. I could be correct all the way, but if other people disagree with me, they won't pay me for the shares.
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.
Why not? They seem to be a lot of leeway before any specific company will find it cheaper to design their own chips, or even to move to AMD (ROCm is not as well supported).
Perhaps someone like OpenAI has both the expertise and incentive to do so, but not many others.
A significant part of the 2021 peak may be explained by the crypto craze from which Nvidia benefited greatly and which has almost completely vanished since.
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.
Cryptocurrencies still had high barriers for entry for the public at large - not really a means of payment, and high risk as an investment.
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.
smoldesu|2 years ago
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.
noogle|2 years ago
The cryptomarket was less favorable to Nvidia because it harmed the loyal customers (gamers, AI) for a temporary market (crypto) that indeed largely declined.
ironbound|2 years ago
https://www.cerebras.net/andromeda/ https://tenstorrent.com/grayskull/
TechnicolorByte|2 years ago
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.
faeriechangling|2 years ago
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.
zamnos|2 years ago
noogle|2 years ago
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.
verdverm|2 years ago
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.
gitfan86|2 years ago
noogle|2 years ago
Perhaps someone like OpenAI has both the expertise and incentive to do so, but not many others.
wmf|2 years ago
agnosticmantis|2 years ago
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.
noogle|2 years ago
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.
ddorian43|2 years ago
taneq|2 years ago