Replace Internet with AI in the following quote from the New York Times, November 11, 1996[0]:
"For many people, AI could replace the functions of a broker, whose stock in trade is information, advice and execution of transactions, all of which may be cheap and easy to find on line. AI also is prompting some business executives to wonder whether they really need a high-priced Wall Street investment bank to find backers for their companies when they may now be able to reach so many potential investors directly over the Net. And ultimately, AI's ability to bring buyers and sellers together directly may change the very nature of American financial markets."
It's a cautionary tale. Obviously, the Internet did live up to the hype. Just after it wiped out millions of retail investors...
It is fairly different though in scope. NVidia clearly is making tons of money from AI. Probably after OpenAI they are the company most directly impacted by AI.
The .com boom of the late 90s was different. Companies who had very little to do with the internet were adding ".com" to their name. I was a penny stock trader and that was one of the fastest ways companies would increase value -- add ".com" and issue a press release about how they plan to be "internet enabled" or "create a web presence".
Today most companies aren't getting a bump by talking about AI. You don't see Spotify changing their name to Spotify.AI. Companies are dabbling in offering AI, e.g., SnapChat, but they aren't shifting their whole focus to AI.
Now there is an industry of small companies building on AI, and I think that's healthy. A handful will find something of value. Going back to the early .com days -- I remember companies doing video/movie streaming over the web and voice chats. None of those early companies, AFAIK, still exist. But the market for this technology is bigger than its ever been.
I did the same s/ai/internet thing yesterday when I asked Bard to give me analyst ratings for cisco stock before the dot-com crash:
"The highest analyst price target for Cisco stock before the dot-com crash was $125 per share. This target was set by Merrill Lynch analyst Henry Blodget in April 2000, just as the dot-com bubble was beginning to burst. Blodget's target was based on his belief that Cisco was well-positioned to benefit from the continued growth of the Internet."
I was looking to compare with analyst targets set for NVDA yesterday. Analysts now are saying the exact thing about Nvidia being able to capture the continued growth of AI:
"JPMorgan set its price target to $500 Wednesday, double its previous estimate and among the highest out of the big banks. Analyst Harlan Sur said this is the “first massive wave of demand in generative AI,” with more gains to follow. He reiterated his overweight rating on the stock."
The ironic bit of course is that my own research here is powered by Bard which probably used an NVDA gpu to train it. But even those dot-com analyst calls were probably emailed around on equipment sold by Cisco.
If I were holding that stock right now, regardless of how right these analysts end up being over the next year or so. I would sell today
I don't think this is just another bubble about to burst. I mean, the bubble bears have been talking about the imminently bursting bubble since 2016. The past couple years are what that burst bubble looks like. Hype-driven companies going out of business, disappearing unicorns, pullback on VC, massive layoffs, bank implosions, tons of tech stocks pulled back by 70-90%, consequences on the likes of Theranos, SBF, etc.
The current AI wave is 95% hype (ultimately useless/broken crap invoking LLM APIs or AI art app du jour) but some of the companies are clearly useful (transcription, summarization, categorization, code generation, next-gen search engine, etc.) and will disrupt traditional services and scale large.
And AI infra companies (AI hardware, AI software on top of hardware, and generic AI model SaaS) will make tons of money as those app companies scale.
‘At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?’— Scott McNealy, Business Week, 2002
> …2 years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?
Whether are not AI will follow the same destiny as the dot com bubble, doesn't really matter: In contrast to fancy AI startups, Nvidia is already making money (in fact it is highly profitable). They are basically adhering to the principle "During a goldrush, sell shovels."
As someone who has persistently laughed off the "it's different this time" idiocy from "revolutionary" technology, and as someone who has called 10 out of the last 4 bubbles, I would like to say that it really is different this time.
We're on the precipice of obviating 80% of white collar work, and 99% of Graeber's Bullshit Jobs.
This is the only time in my entire life that I accurately predicted the stock market.
About two months ago, I bought three shares of Nvidia stock. I noticed that no one appears to be doing serious AI/ML research with AMD hardware, and I also noticed that Nvidia's stock hadn't spiked yet with the rise of ChatGPT and Stable Diffusion.
For once I was actually right about something in the stock market...About a dozen more accurate predictions and I'll finally make up the money I lost from cryptocurrency.
Of course, even after it's massive decline, it was still up big due to the crypto market. I think crypto shows how mountains can be moved and worlds terraformed via distributed processing power, and AI is just another set of problems to be solved. There's likely many applications that we haven't even dreamed up yet (likely in the biotech space)
I’d also make a bet on the underdogs - for instance amd is only a devent software update away from snatching market share away from nvidia. I am surprised they are not hiring devs like crazy right now to beef up their ai gpu capability.
What's funny is that we on HN know there's no magic inside these chips, a sufficiently smart foundry could easily cripple Nvidia overnight... yet where's the nearest VC fund for ASICs??
NVDA is pretty hyped at this point. If you wanted to buy it, then fall of last year after it fell 60% was the time.
NVDA has a trailing twelve months (TTM) Price to earnings (P/E) ratio of 175x. Based on the latest quarter and forward guidance they have a forward-looking P/E ratio of 50x - So the market is already expecting (and has priced in) even higher expectations of growth than what the stock is already at.
NVDA is expected to at least double their already great growth (to get to P/E of 25x) according to the market. I have my doubts.
One thing that Nvidia has going for it is the stickiness of CUDA. Developers don't have a preference for GPUs, they have a preference for the programming stacks that are associated with them. Why is Google's Tenserflow not as popular?, probably because everyone has deep experience with CUDA and it would be a pain to migrate.
Microsoft Office rode the same type of paradigm to dominate the desktop app market.
The stock price makes absolutely no sense, but the AI hype is real so I won't be shorting.
Just give you a crude metaphor - buying NVDA is like buying a $10 million dollar house to collect $10,000 in rent a year. The price to earnings is bonkers. This valuation only makes sense if somehow Nvidia is using alien technology that couldn't possible by reproduced in the next two decades by any other company.
CUDA is a success because 1) it works on all NVIDIA GPUs made since 2006 2) it works on both Windows and Linux.
This may seem like a very low bar to clear, but AMD continues to struggle with it. I don't understand it. They act as if GPU compute was a fad not worth investing in.
CUDA works, ROCm doesn't work well. Very few people want to run stable diffusion inference, fine tune LLaMA, train a large foundation model on AMD cards.
OpenAI has put in some work on Triton, Modular is working on Mojo, and tiny corp is working on their alternative.
Until some of those alternatives work as well as CUDA, people will mostly choose to buy Nvidia cards.
The monopoly is under attack from multiple angles, but they'll be able to print some good cash in the (potentially long) meantime.
Oh, and still significant supply shortages at many cloud providers. And now Nvidia's making more moves to renting GPUs directly. It'll be interesting to see how long it takes them to be able to have their supply meet demand.
I had a meme joke about how AI would come to be by making people mine for crypto but now we're seeing LLMs take the fore-front of AI and causing us to reach for more and more parameters.
It reminds me of when the YOLOv3 model came out and every single upgrade just gave us more and more features and capabilities (the v8 has auto segmentation).
AMD dropped the ball on this, just like Intel when Ryzen dropped, I just don't see a way for them to bring it around.
I think this 20%+ stock move is mostly a combination of:
1) Heavy short option interest going into earnings
2) A large beat announced in after hours
Major market players can take advantage of large earnings surprises by manipulating a stock in after hours. It is possible to trigger very large movements with very little volume because most participants don't have access to after hours trading.
When the market opens the next day the "false" gains should typically be wiped out unless the move is large enough to force the closing of certain positions. In this case, it looks like there was a clamor to escape long puts and short calls.
Skepticism is why momentum works in stocks. People tend to be afraid to buy, or even want to short, stocks that have just risen a lot. That's why it may take a while for a stock to rise to its true price after new information comes out.
The momentum behind NVDA as well as some other tech stocks right now (SMCI, META, NFLX) is frankly stunning. Nary a dip for 6 months. There is so much FOMO in the AI trade that I don't think it crashes back down to earth very soon. Still I'm way too scared to try to get in late.
And in this case the F in FOMO is real. Not just a feeling of missing out, but fear that all your other investments are going to zero as AI replaces entire industries, for example.
The result of this optimism in big cap tech companies is that many smaller cap shares in industries such as financial services, insurance or industrial distribution are trading for historically cheap valuations. It appears there is very little investor interest in them. I think it's a wonderful time to be a long-term investor.
Not sure how much inference on the edge will impact things unless you think we’ll hit “peak training” in the near future. I would safely wager that most H100 nodes will be used for training rather than inference.
Genuine question to all concerned about PE ratios. Why is PE not subject to 'new normals'? A lot of people seem to reject stocks because they're 'expensive' which to me seems like a relative term. There are a lot more retail investors out there now.
I mean the 5yr licensed that come bundled with H100 just because you technically aren't supposed to use consumer class GPU in a data center... whoever came up with this is definitely following in the footsteps of Adobe's licensing shenanigans
This post from Fullstack Deeplearing analyzed cloud GPUs, seems pertinent to discussions here about NVIDIA, competitors, and determining true value of related AI/chip stocks: https://fullstackdeeplearning.com/cloud-gpus/
Good. nvidia deserves what they're getting, imho, because they started early and continued to invest in graphics and then GPUs, with support for both Windows and Linux.
[+] [-] impish9208|2 years ago|reply
[+] [-] 11thEarlOfMar|2 years ago|reply
Replace Internet with AI in the following quote from the New York Times, November 11, 1996[0]:
"For many people, AI could replace the functions of a broker, whose stock in trade is information, advice and execution of transactions, all of which may be cheap and easy to find on line. AI also is prompting some business executives to wonder whether they really need a high-priced Wall Street investment bank to find backers for their companies when they may now be able to reach so many potential investors directly over the Net. And ultimately, AI's ability to bring buyers and sellers together directly may change the very nature of American financial markets."
It's a cautionary tale. Obviously, the Internet did live up to the hype. Just after it wiped out millions of retail investors...
[0]https://www.nytimes.com/1996/11/11/business/slow-transition-...
[+] [-] kenjackson|2 years ago|reply
The .com boom of the late 90s was different. Companies who had very little to do with the internet were adding ".com" to their name. I was a penny stock trader and that was one of the fastest ways companies would increase value -- add ".com" and issue a press release about how they plan to be "internet enabled" or "create a web presence".
Today most companies aren't getting a bump by talking about AI. You don't see Spotify changing their name to Spotify.AI. Companies are dabbling in offering AI, e.g., SnapChat, but they aren't shifting their whole focus to AI.
Now there is an industry of small companies building on AI, and I think that's healthy. A handful will find something of value. Going back to the early .com days -- I remember companies doing video/movie streaming over the web and voice chats. None of those early companies, AFAIK, still exist. But the market for this technology is bigger than its ever been.
[+] [-] enos_feedler|2 years ago|reply
"The highest analyst price target for Cisco stock before the dot-com crash was $125 per share. This target was set by Merrill Lynch analyst Henry Blodget in April 2000, just as the dot-com bubble was beginning to burst. Blodget's target was based on his belief that Cisco was well-positioned to benefit from the continued growth of the Internet."
I was looking to compare with analyst targets set for NVDA yesterday. Analysts now are saying the exact thing about Nvidia being able to capture the continued growth of AI:
"JPMorgan set its price target to $500 Wednesday, double its previous estimate and among the highest out of the big banks. Analyst Harlan Sur said this is the “first massive wave of demand in generative AI,” with more gains to follow. He reiterated his overweight rating on the stock."
The ironic bit of course is that my own research here is powered by Bard which probably used an NVDA gpu to train it. But even those dot-com analyst calls were probably emailed around on equipment sold by Cisco.
If I were holding that stock right now, regardless of how right these analysts end up being over the next year or so. I would sell today
[+] [-] shrimpx|2 years ago|reply
The current AI wave is 95% hype (ultimately useless/broken crap invoking LLM APIs or AI art app du jour) but some of the companies are clearly useful (transcription, summarization, categorization, code generation, next-gen search engine, etc.) and will disrupt traditional services and scale large.
And AI infra companies (AI hardware, AI software on top of hardware, and generic AI model SaaS) will make tons of money as those app companies scale.
[+] [-] kgwgk|2 years ago|reply
https://www.bloomberg.com/news/articles/2002-03-31/a-talk-wi...
[+] [-] 01100011|2 years ago|reply
Sun Microsystems CEO Scott McNealy in 2002 (source https://smeadcap.com/missives/the-mcnealy-problem/#:~:text=A....)
[+] [-] codethief|2 years ago|reply
[+] [-] caeril|2 years ago|reply
We're on the precipice of obviating 80% of white collar work, and 99% of Graeber's Bullshit Jobs.
[+] [-] belter|2 years ago|reply
[+] [-] ldng|2 years ago|reply
[+] [-] tombert|2 years ago|reply
About two months ago, I bought three shares of Nvidia stock. I noticed that no one appears to be doing serious AI/ML research with AMD hardware, and I also noticed that Nvidia's stock hadn't spiked yet with the rise of ChatGPT and Stable Diffusion.
For once I was actually right about something in the stock market...About a dozen more accurate predictions and I'll finally make up the money I lost from cryptocurrency.
[+] [-] ksec|2 years ago|reply
I think plenty have noticed, But cant get heads around investing in a company with 150x PE.
[+] [-] kgwgk|2 years ago|reply
Two months ago the stock was 60% up since ChatGPT was released and 150% up since October’s low.
[+] [-] itsoktocry|2 years ago|reply
The stock is was (and is) extremely expensive. Good luck to all buying this things at 30x sales. It doesn't make any sense.
[+] [-] dpflan|2 years ago|reply
- NVIDIA: https://www.google.com/finance/quote/NVDA:NASDAQ?sa=X&ved=2a...
- AMD: https://www.google.com/finance/quote/AMD:NASDAQ?sa=X&ved=2ah...
[+] [-] jakeinspace|2 years ago|reply
[+] [-] bdcravens|2 years ago|reply
[+] [-] gumballindie|2 years ago|reply
[+] [-] shrimp_emoji|2 years ago|reply
https://youtu.be/y28Diszaoo4
[+] [-] beaned|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] intelVISA|2 years ago|reply
What's funny is that we on HN know there's no magic inside these chips, a sufficiently smart foundry could easily cripple Nvidia overnight... yet where's the nearest VC fund for ASICs??
[+] [-] dmead|2 years ago|reply
[+] [-] the88doctor|2 years ago|reply
[+] [-] rcme|2 years ago|reply
[+] [-] Xeoncross|2 years ago|reply
NVDA has a trailing twelve months (TTM) Price to earnings (P/E) ratio of 175x. Based on the latest quarter and forward guidance they have a forward-looking P/E ratio of 50x - So the market is already expecting (and has priced in) even higher expectations of growth than what the stock is already at.
NVDA is expected to at least double their already great growth (to get to P/E of 25x) according to the market. I have my doubts.
You can compare this to the historical averages of the S&P 500: https://www.multpl.com/s-p-500-pe-ratio
[+] [-] ksec|2 years ago|reply
I may have missed the news. Where did they mention they are going to make 3.5X the profits in their forward guidance or forward looking P/E ?
Assuming consumer revenue stays roughly the same, ( crypto usage being the largest variable ). Data Center sector has to grown at least 6X in revenue.
[+] [-] seydor|2 years ago|reply
[+] [-] SkipperCat|2 years ago|reply
Microsoft Office rode the same type of paradigm to dominate the desktop app market.
[+] [-] endisneigh|2 years ago|reply
Just give you a crude metaphor - buying NVDA is like buying a $10 million dollar house to collect $10,000 in rent a year. The price to earnings is bonkers. This valuation only makes sense if somehow Nvidia is using alien technology that couldn't possible by reproduced in the next two decades by any other company.
[+] [-] peppermint_gum|2 years ago|reply
This may seem like a very low bar to clear, but AMD continues to struggle with it. I don't understand it. They act as if GPU compute was a fad not worth investing in.
[+] [-] tikkun|2 years ago|reply
https://geohot.github.io//blog/jekyll/update/2023/05/24/the-...
CUDA works, ROCm doesn't work well. Very few people want to run stable diffusion inference, fine tune LLaMA, train a large foundation model on AMD cards.
OpenAI has put in some work on Triton, Modular is working on Mojo, and tiny corp is working on their alternative.
Until some of those alternatives work as well as CUDA, people will mostly choose to buy Nvidia cards.
The monopoly is under attack from multiple angles, but they'll be able to print some good cash in the (potentially long) meantime.
Oh, and still significant supply shortages at many cloud providers. And now Nvidia's making more moves to renting GPUs directly. It'll be interesting to see how long it takes them to be able to have their supply meet demand.
[+] [-] WrtCdEvrydy|2 years ago|reply
It reminds me of when the YOLOv3 model came out and every single upgrade just gave us more and more features and capabilities (the v8 has auto segmentation).
AMD dropped the ball on this, just like Intel when Ryzen dropped, I just don't see a way for them to bring it around.
[+] [-] nixcraft|2 years ago|reply
[+] [-] dbcurtis|2 years ago|reply
[+] [-] rybosworld|2 years ago|reply
1) Heavy short option interest going into earnings
2) A large beat announced in after hours
Major market players can take advantage of large earnings surprises by manipulating a stock in after hours. It is possible to trigger very large movements with very little volume because most participants don't have access to after hours trading.
When the market opens the next day the "false" gains should typically be wiped out unless the move is large enough to force the closing of certain positions. In this case, it looks like there was a clamor to escape long puts and short calls.
[+] [-] bagacrap|2 years ago|reply
The momentum behind NVDA as well as some other tech stocks right now (SMCI, META, NFLX) is frankly stunning. Nary a dip for 6 months. There is so much FOMO in the AI trade that I don't think it crashes back down to earth very soon. Still I'm way too scared to try to get in late.
And in this case the F in FOMO is real. Not just a feeling of missing out, but fear that all your other investments are going to zero as AI replaces entire industries, for example.
[+] [-] cma|2 years ago|reply
[+] [-] dpflan|2 years ago|reply
[+] [-] mbesto|2 years ago|reply
- Crypto
- AI
- Gaming / Entertainment
- Self driving cars
- VR / Metaverse (whatever that is)
I'm very bullish on the company.
[+] [-] madballster|2 years ago|reply
[+] [-] sf4lifer|2 years ago|reply
[+] [-] haldujai|2 years ago|reply
[+] [-] lubesGordi|2 years ago|reply
[+] [-] villgax|2 years ago|reply
[+] [-] dpflan|2 years ago|reply
- HN post: https://news.ycombinator.com/item?id=36025099
[+] [-] dekhn|2 years ago|reply
[+] [-] htrp|2 years ago|reply
And yet another reminder how far behind opencl/AMD is
[+] [-] machdiamonds|2 years ago|reply