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After losing half its value, Nvidia faces reckoning

220 points by mmq 8y ago

mahgnous 8y ago
I've been trying to buy a couple specific 2080 TI's now for the past few months but nobody has em.
Dirlewanger 8y ago
Good time to buy them for someone who missed them a couple years ago?
- collias 8y ago
  If you're planning on holding it long-term, absolutely. If you're planning on holding it short-term, good luck catching the falling knife.
leowoo91 8y ago
Others are designing their own chips right? How about Nvidia up their game and provide an IaaS or design a decent mobile product? That could be a move.
- KaoruAoiShiho 8y ago
  Their customers are IaaS providers. That would be extremely dangerous for them and a step too far probably. I have hope they'll get back into mobile eventually with the advent of Windows-on-ARM. Their focus right now is rightly on the AI software stack. That's where the value is going to be generated in the future decade and NVDIA needs to make sure all that value is generated using their platform. There are so many verticals that will be buying products, so much money to be made. They're also heavily investing in autos, but tbh that's just 1 vertical and imo not even the most exciting one. Verticals like healthcare, restaurants, home robot servants, logistics, photography, constructions, are even more exciting and lucrative.
  - RantyDave 8y ago
    Photography? You fancy taking on Apple?
dahart 8y ago
> It takes a lot for a company to lose nearly half its value in such a short period of time, but Nvidia is proving that an otherwise strong technology business can disappear in a blink of an eye. Conflating the stock price with the company's business/book value multiple times seems like probably not an accident for a financial reporter. Is there some agenda here to frame/spin the story this way?
- asdff 8y ago
  Tech crunch is not financial news, its no surprise they fix on stock price as if it was the end all, be all metric for a business.
21 8y ago
When bitcoin loses 50% of it's value, people say that's the proof it was an obvious scam and people woke up. When Nvidia does that, it's just markets...
- rconti 8y ago
  The difference is, in the Nvidia example, it IS just the markets, valuing a company that produces actual physical products, and sells them for billions of dollars. The market is a vague guesstimate of what the actual company will do in the future. When it's bitcoin, the product's value is literally equal to the market price.
  - chrisco255 8y ago
    Technically, the value of ANYTHING is its market price RIGHT NOW. Everything else is speculation.
    - rconti 8y ago
      Cool, then check the market price of an Nvidia video card rather than their stock price.
rsp1984 8y ago
When it comes to owning next-generation application workflows, Nvidia is facing robust competition from startups and established players who want access to this potentially gigantic market. Am I the only one who cringes when someone says or writes "application" but actually means "datacenter" or "internet service"? The author is clearly not talking about Mobile or Desktop Apps here. And even with that term cleared up, WTF are "next-generation application workflows"?
- rconti 8y ago
  If they had just pluralized applications and left off the word 'workflows', it would be a perfectly cromulent statement.
- stonogo 8y ago
  Regardless of your preferred terms of art, Tensorflow (as an example) is an application, and a deployment that uses Tensorflow to intuit product recommendations (as an example) is an application workflow. It doesn't really matter what kind of device the program runs on. It's running in userspace: it's an application. It does not function in a vacuum: it's part of a workflow.
  - rsp1984 8y ago
    Can you point me to any references for this definition of application? I have never heard TF being called an application. I'd call it a library or a toolkit but maybe these terms aren't en vogue these days. (Software) Application to me means quite literally any (software) work that "applies" technology to solve a concrete end-user problem. But I guess you're just proving my point: If we use your definition of application the quoted article text is essentially meaningless since "application workflows" could mean almost anything and NVIDIA certainly isn't in the business of competing for almost anything. If we use my definition the author has just misused the term.
    - stonogo 8y ago
      I'm agreeing with you that 'application workflow' can mean almost anything. I'm strongly disagreeing that nVIDIA isn't in the business of competing for almost anything -- that's exactly what they're doing. It doesn't really matter what your use case is, the nVIDIA sales team has a CUDA (or NVLink, or Tegra, etc) story for you.
esharte 8y ago
If I was Techcrunch writer I'd be more concerned about what is going on at Oath than Nvidia having a few bumper years.
markc 8y ago
The future of crypto mining is in ASICs. GPUs can't compete.
ineedasername 8y ago
I'd argue they didn't really lose half their value, they lost half their stock price. This may seem like a distinction without a difference, but remember stock price isn't really THE value, it's a valuation, and in this case that valuation was inflated, incorrect. Their value is still there, it doesn't appear that they lost any significant market share, and in fact there's plenty of growth to be had in emerging AI and autonomous driving applications in the long term.
- yitchelle 8y ago
  I think that most commentators are getting lost in the chaos that is cryptocurrency. For me, cryptocurrency is an accidental fad that will dissipate. Nvidia is still growing in AI applications.
stdplaceholder 8y ago
For employees this is a real roller coaster ride. If you had a industry-standard $500k RSU component over four years, four years ago, you were recently walking around with 7 million dollars, depending on your sell or hold preferences. Whereas now you merely have 4 million. On the other hand if you started a month ago with the same deal, now you have much less than the industry standard deal.
KaoruAoiShiho 8y ago
It's up 50% over 2 years and 400% over 3. Idiot article. Ignore the crypto bubble/pump and NVDA is growing quickly - both the business and the stock.
- bunnycorn 8y ago
  This. Also, their P/E is at an healthy 19.99, reasonable. The article says that Apple is making their own GPUs, that doesn't matter, because Apple is not a nVidia client for a very very long time, and was never a big client. The others are even less suitable comparasion as those companies aren't making GPUs and they are not just going to walk in that market.
- Animats 8y ago
  Yes, their stock price is now back to June 2017. Not too bad. NVidia may have focused on the high end too much. They have a card for the machine learning crowd that costs $16,000.[1] The product they're now pushing to gamers, the 2080, is about $1000. It has some ray tracing hardware used by nothing. On existing games it's about the same speed as their 2-year old 1080, which NVidia just discontinued. [1] https://www.dell.com/en-us/shop/accessories/apd/490-bens https://www.dell.com/en-us/shop/accessories/apd/490-bens
  - sigstoat 8y ago
    > NVidia may have focused on the high end too much. seems to me like they're making products available at all sorts of price points. i'm not an mba, but that strikes me as a good idea. not making quite enough mid-level products is unfortunate, but since that was temporary, it wouldn't have made sense for them to invest in increased production. (they should've abandoned the MSRP and just reverse auctioned inventory to the retailers, so that they could capture the value of their products, instead of letting folks selling on ebay get it.) > They have a card for the machine learning crowd that costs $16,000 they have hardware that costs way more than that. https://www.nvidia.com/en-us/data-center/dgx-systems/ https://www.nvidia.com/en-us/data-center/dgx-systems/
  - cat199 8y ago
    well.. Yhe ML quote is from dell and looks to be 'appropriately' dell priced at ~50% markup vs mass retail.. but yes $8-10k is still alot. That said, if you need this stuff and your super fast $5k workstation is basically an otherwise 'worthless' I/O pump to the GPU, it's still worth the price tag.
deleted 8y ago
[deleted]
onetimemanytime 8y ago
Should have never been valued that much to begin with. Losers are those that gambled
- didibus 8y ago
  Or they're winners? If they sold in time. They might also be winners if they hold it longer.
empath75 8y ago
I bought a lot of nvidia at $30 for three reasons — machine learning, VR, and cryptocurrency. I sold most of it around $180-$200, but I’m still holding some shares.
- aphextron 8y ago
  It's still a great buy in my opinion, especially after this correction. People were piling on for the crypto craze, but the fundamentals for $NVDA are still really good. They've got a mountain of cash, very little debt, and an unmatched product line.
  - empath75 8y ago
    I wouldn’t call it a great buy at this price but I’d definitely say to hold it.
- nomel 8y ago
  In the long run, I've hoped that they would get into commodity AI/ML compute bricks for self driving cars.
  - sjg007 8y ago
    The have a solution in that market. It's still more a dev box but your line of thinking is probably correct.
avar 8y ago
They got swept up in the crypto bubble, are at $150 now after a high of $300-ish, but were $20-30 in 2015 before all that. So with the "crypto depression" this is to be expected. But the question I find more interesting is what this does to a company. Is it even plausible for them to go back to just running the company as though it were worth $20-30 and pretend it never happened? Or are they going to have investors who bought in at 2-3x that price at best screaming for them to inflate their stock by whatever means necessary?
- adventured 8y ago
  > Is it even plausible for them to go back to just running the company as though it were worth $20-30 and pretend it never happened? Your math is way off, they don't need to pretend nothing happened and go back to $30 / share. The crypto bubble (now imploded) isn't why they're still generating $4 billion in annual profit ($1 billion in operating income last quarter). It's not a critical part of their business; in actual numbers it was a modest party on the side for several quarters and some investors had hoped it would be more than that. The removal of the crypto boom from expectations, is causing a let-down in the projected upside in the stock and their business. Crypto wasn't 3/4 of their business, or the last quarter results would have shown that type of destruction. Your $20-$30 share price would peg them at a $12 to $18 billion market cap. They could justify that with just the earnings from their latest quarter.
- shortoncash 8y ago
  I think the market gave too much weight to crypto with regard to Nvidia. The growth story for the company is still there. The article is talking about other companies designing for their own custom needs, but I think the mindshare has largely already been captured by Nvidia. Why? Because their software stack, even with its quirks, is still better than a lot of what else is out there. In the current marketplace, deploying custom GPU solutions without Nvidia products is really painful and something only someone who enjoys pain would undertake.
- josephpmay 8y ago
  Nvidia made strategic decisions when the crypto craze was beginning not to play into it, anticipating that exactly what happened was going to happen. I doubt this recent jump and fall of the stock has had much of an effect internally.
claudiawerner 8y ago
It's interesting to me how "value" seems to work - nothing has been physically destroyed, the products still exist and in fact they are still being made; the already purchased capital (fixed and variable) is still there - so what's been lost? Is it a purely speculative quantity? If so, shouldn't we ask why we are attaching so much significance to something which has very little bearing on what we, as humans, do: production?
- SolarNet 8y ago
  I hear you. But the point of the stock market is not to produce things, it's to oversee the allocation of resources to other market sectors (which actually do produce things). To make a computer analogy it's sort of like an operating system scheduler, it uses economic resources to better allocate economic resources. Value here is a proxy for predicted success which then translates to access to resources. Not directly, but markets with lots of predicted success then have access to investor capital. Also companies can own their own shares, and often do use those shares to get access to new capital, and companies can be purchased by larger companies, giving them more capital to work with. I agree it's pretty stupid, but it works. Check out prediction markets for example. That's not to say that it's efficient by any stretch, but allocation of resources is NP hard, and this algorithm works well with humans.
  - rosser 8y ago
    > I agree it's pretty stupid, but it works. As capricious as markets are, that's a pretty loose definition of "works". All too often, equity markets are just a force multiplier for herd mentality, and end up being actively antithetical to actual value and resource allocation.
    - Matticus_Rex 8y ago
      Antithetical as compared to what? Markets are imperfect, but consistently drive innovation and improvement that benefits consumers. What's your better alternative?
wlesieutre 8y ago
The GTX 1070 launched in June 2016 with an MSRP of $379. Typical prices at the end of 2018 for that same product are above $400 even after the newer RTX 2000 series has launched. I and pretty much every other PC gamer I know have been holding off buying upgrades until prices come back to some level of sanity. I don't understand how Nvidia (and EVGA, XFX, MSI, Zotac, Gigabyte, etc) can keep trying to sell at these absurd prices then turn around and complain about how not enough people are buying them or they don't make enough money. Have their costs unexpectedly shot up on their two-year-old manufacturing processes? Or did they just bank on the crypto bubble to prop up inflating GPU prices forever and were surprised when it didn't happen? Going forward they've doubled down on even higher prices for next generation, with versions of the RTX 2070 currently at $500 to $600. https://pcpartpicker.com/trends/price/video-card/#gpu.chipset.geforce-gtx-1070 https://pcpartpicker.com/trends/price/video-card/#gpu.chipse... EDIT - I should add, my first thought on this was that gamers are no longer a market that Nvidia cares about, and they're hoping that high prices will still sell to the machine learning (where people are frequently spending someone else's money on a large quantity of cards) and cryptocurrency markets. Then crypto dropped out, and ML are considering other options even if Nvidia are the top performers. But the RTX series is pitched for realtime raytracing effects in upcoming games, which sends the message that they do take gaming seriously. But I think they're out of touch with how much people are willing to spend on it.
- km3k 8y ago
  Agreed. I'm sticking with my GTX 960 that I got for under $200 new three years ago. I haven't seen anything with a better performance per dollar ratio than I got at that time. Anything I buy would be a downgrade by that metric.
  - algon33 8y ago
    What? You can get GTX 1070's for $200-$250 right now off ebay. Admittedly used, but crypto mining doesn't harm a card that much. If you want new, GTX 1060s are going for under $200$. Then again, AMD's making pretty bold claims about their pricing for next year, so you could hang on.
syntaxing 8y ago
They still make about 9 Billion a year...I think CUDA/CUDANN is probably one of their highest "money making" product. Seriously locks down so many applications that needs to use their card exclusively. OpenGL development seems slow too so I guess Nvidia has a little bit of time before they have to worry too much.
- adventured 8y ago
  $12.4 billion in sales the last four quarters, $4.5 billion in operating income. Their business situation is fine, entirely without the crypto market. Intel saw little growth for many years, while generating immense profit, and while the multiple that investors were willing to give them compressed. Intel will soon have a 10-12 PE ratio. The entire semiconductor industry saw a dumping in the stock market, blamed on an industry down cycle. Micron is trading for three times earnings as another example. nVidia was up at ~43 times earnings before the drop, very rich for the industry. Now they're down closer to ~22, which is a lot closer to fair value based on their reduced growth expectations. The issue that the article entirely ignores, is valuation compression with a stock market that decided to dump some rich multiple stocks (Netflix is down ~35%) and particularly semiconductor stocks. That's how you lose half your valuation in a few months.
Townley 8y ago
As a non-crypto-mining consumer, I've been frustrated by the price increase for video cards, and perhaps that frustration impacts Nvidia in the long run. But really, when crypto was booming, what was Nvidia supposed to do? They were the guys selling shovels and pickaxes when the gold rush was in full swing. They rode the bubble and reaped the benefits when they could. So the price drop doesn't necessarily reflect a failure of strategy on their part. What I'll be curious to see going forward is what Nvidia does with the cash from their bumper year. If the end result of this saga is that Nvidia lined their coffers and invested in R&D for the next generation of of video cards, that bodes extremely well for the company.
- ianlevesque 8y ago
  They did openly tell investors the cryptocurrency decline was coming too.
  - r00fus 8y ago
    They should’ve had a plan in place to transition maybe?
    - danhak 8y ago
      What sort of transition, exactly? Their core business is intact and they're strongly positioned in AI and autonomous driving. It seems like you're blaming management for the fact that the stock market mispriced the long-term value of crypto mining.
      - twblalock 8y ago
        It's not like Nvidia was trying to hold down expectations and the market went crazy anyway. Nvidia based their own revenue guidance on the same assumptions about crypto mining that market analysts made. They missed their guidance in November because of that.
      - Nelson69 8y ago
        Not just is it intact, but is there really an alternative ML/AI platform out there? They're still the best (only?) game in town with the full stack. And you can go buy or lease access to their parts right now and get radical performance improvements for your model training.
ydufucucuc 8y ago
Is this actually a problem for Nvidia? I'm sure they knew that the buttobitcoin craze wouldn't last forever and would eventually result in a stock price fall. They made vast improvements in their technology and raked in money. That that ride wasn't sustainable isn't a big deal if they didn't make investments that depended on the bubble never popping. If I was an investor I'd be pissed, but only because investors want prices to rise regardless of any underlying physical reality, but the executives should be laughing all the way to the bank. It's just a post bubble correction.
- usrusr 8y ago
  It can be a problem if ownership changed a lot during the craze and new owners can't stand the idea of being the ones left holding the bag. Suddenly there will be pressure to do insane bets and suicidal short term magic that would not be there if the hype had never happened. Call it residual irrationality of you like.
waddlesworth 8y ago
I'd like to see Nvidia embrace open source and developer relations a bit better. Similar to what Microsoft is doing. I definitely think it's in their best interests to open up RTX capabilities as much as possible, and it's not like developers aren't interested.
- steve_musk 8y ago
  At NeurIPS Nvidia said they were working on adding an RTX api to CUDA
- bni 8y ago
  Why would they do that, when they are the market leader
lkdjjdjjjdskjd 8y ago
So actually having a couple of years of extremely good sales is bad for companies, if they are registered on the stock market? I have trouble processing that information.
- ryanlol 8y ago
  >So actually having a couple of years of extremely good sales is bad for companies Why would that be bad? What does bad even mean here? Bad for the stock price? Sales slowing down is obviously undesirable.
  - lkdjjdjjjdskjd 8y ago
    But why should a couple of good years get a company into trouble? It is inevitable that sales can not always stay as high. I could understand if NVidia would have done some kind of investment that was only sustainable if the good times would continue the same way for a while. But it seems to me they will just continue to make good graphics cards, as they did before. So why should they be in trouble?
    - ryanlol 8y ago
      I'm not sure Nvidia is in trouble. Investors who overestimated their future performance might be.
      - j1vms 8y ago
        > I'm not sure Nvidia is in trouble. Investors who overestimated their future performance. The problem is that management did not do enough (as far as investors were concerned) to temper market expectations. It may have been they truly did not know who was buying their product, and they believed most of their clients were coming from ML and gaming, when instead it was heavy, heavy crypto. Other than that, as the article mentions, it was trade tensions that turned the quarter miss into a perfect storm for a sell-off.
ryanlol 8y ago
crypto is not cryptocurrency
aurizon 8y ago
As long as they can cut back orders to fit the market without coin mining, then they will drop back to a higher point on the growth curce after the crypto surge has been trimmed. So they whould be fine. The fantasy growth from crypto is vaporware...
mxschumacher 8y ago
the 50% drop has to be seen in the context of the overall market: Apple, Google, Amazon etc are all ~25% off their peak valuation.
- jedberg 8y ago
  Netflix is also down about 30% from its peak in June.
- j1vms 8y ago
  True, though MSFT is at their all-time peak.
  - nodesocket 8y ago
    MSFT keeps on surprising me, since nearly everybody I've talked with who's on or tried Azure says it is a complete dumpster fire. The acquisition of GitHub was super smart though, and I am willing to bet as we look back it be hailed as a great move.
Spooky23 8y ago
This more of a statement of the idiocy of assuming that Wall St valuations are particularly meaningful. They were overvalued based on a specific event.
mudil 8y ago
Interesting fact is that CEO of Nvidia Jensen Huang is a cousin of AMD CEO, Lisa Su. https://en.wikipedia.org/wiki/Jensen_Huang#Personal_life https://en.wikipedia.org/wiki/Jensen_Huang#Personal_life
pmoriarty 8y ago
Only one comment in this thread mentioned VR in passing. Some years back it seemed to be a decent possibility that GPU manufacturers could benefit from VR's huge appetite for GPU performance. How does HN feel about that now? Has VR turned out to be just a flash in the pan, and not a serious market for GPU manufacturers after all? Or is there still hope?
sytelus 8y ago
I Google decides to sell TPU as consumer product you can expect yet another halving.
akhilb 8y ago
If Nvidia are to get back in the game they need to price their product right. Having products that cost as much as the rest of the rig is simply idiotic. Their mobile chips have always been problematic. Remember the MacBook Pro failures a few years ago? Those were Nvidia's GPUs.
omilu 8y ago
The explosive rise of Fortnite last year coupled with the popularity of streamers like Ninja to elementary school kids, had me convinced that a boom in gaming pc market was coming and that it would more than make up for the loss due to crypto mining. I know exactly zero people that crypto mine, Yet I know several kids who lack machines to play fortnite properly but watch everything related to the game and lust after there own machine.

220 points by mmq 8y ago

mahgnous 8y ago

I've been trying to buy a couple specific 2080 TI's now for the past few months but nobody has em.

Dirlewanger 8y ago

Good time to buy them for someone who missed them a couple years ago?

collias 8y ago
If you're planning on holding it long-term, absolutely. If you're planning on holding it short-term, good luck catching the falling knife.

leowoo91 8y ago

Others are designing their own chips right? How about Nvidia up their game and provide an IaaS or design a decent mobile product? That could be a move.

KaoruAoiShiho 8y ago
Their customers are IaaS providers. That would be extremely dangerous for them and a step too far probably. I have hope they'll get back into mobile eventually with the advent of Windows-on-ARM. Their focus right now is rightly on the AI software stack. That's where the value is going to be generated in the future decade and NVDIA needs to make sure all that value is generated using their platform. There are so many verticals that will be buying products, so much money to be made. They're also heavily investing in autos, but tbh that's just 1 vertical and imo not even the most exciting one. Verticals like healthcare, restaurants, home robot servants, logistics, photography, constructions, are even more exciting and lucrative.
- RantyDave 8y ago
  Photography? You fancy taking on Apple?

dahart 8y ago

> It takes a lot for a company to lose nearly half its value in such a short period of time, but Nvidia is proving that an otherwise strong technology business can disappear in a blink of an eye. Conflating the stock price with the company's business/book value multiple times seems like probably not an accident for a financial reporter. Is there some agenda here to frame/spin the story this way?

asdff 8y ago
Tech crunch is not financial news, its no surprise they fix on stock price as if it was the end all, be all metric for a business.

21 8y ago

When bitcoin loses 50% of it's value, people say that's the proof it was an obvious scam and people woke up. When Nvidia does that, it's just markets...

rconti 8y ago
The difference is, in the Nvidia example, it IS just the markets, valuing a company that produces actual physical products, and sells them for billions of dollars. The market is a vague guesstimate of what the actual company will do in the future. When it's bitcoin, the product's value is literally equal to the market price.
- chrisco255 8y ago
  Technically, the value of ANYTHING is its market price RIGHT NOW. Everything else is speculation.
  - rconti 8y ago
    Cool, then check the market price of an Nvidia video card rather than their stock price.

rsp1984 8y ago

When it comes to owning next-generation application workflows, Nvidia is facing robust competition from startups and established players who want access to this potentially gigantic market. Am I the only one who cringes when someone says or writes "application" but actually means "datacenter" or "internet service"? The author is clearly not talking about Mobile or Desktop Apps here. And even with that term cleared up, WTF are "next-generation application workflows"?

rconti 8y ago
If they had just pluralized applications and left off the word 'workflows', it would be a perfectly cromulent statement.
stonogo 8y ago
Regardless of your preferred terms of art, Tensorflow (as an example) is an application, and a deployment that uses Tensorflow to intuit product recommendations (as an example) is an application workflow. It doesn't really matter what kind of device the program runs on. It's running in userspace: it's an application. It does not function in a vacuum: it's part of a workflow.
- rsp1984 8y ago
  Can you point me to any references for this definition of application? I have never heard TF being called an application. I'd call it a library or a toolkit but maybe these terms aren't en vogue these days. (Software) Application to me means quite literally any (software) work that "applies" technology to solve a concrete end-user problem. But I guess you're just proving my point: If we use your definition of application the quoted article text is essentially meaningless since "application workflows" could mean almost anything and NVIDIA certainly isn't in the business of competing for almost anything. If we use my definition the author has just misused the term.
  - stonogo 8y ago
    I'm agreeing with you that 'application workflow' can mean almost anything. I'm strongly disagreeing that nVIDIA isn't in the business of competing for almost anything -- that's exactly what they're doing. It doesn't really matter what your use case is, the nVIDIA sales team has a CUDA (or NVLink, or Tegra, etc) story for you.

esharte 8y ago

If I was Techcrunch writer I'd be more concerned about what is going on at Oath than Nvidia having a few bumper years.

markc 8y ago

The future of crypto mining is in ASICs. GPUs can't compete.

ineedasername 8y ago

I'd argue they didn't really lose half their value, they lost half their stock price. This may seem like a distinction without a difference, but remember stock price isn't really THE value, it's a valuation, and in this case that valuation was inflated, incorrect. Their value is still there, it doesn't appear that they lost any significant market share, and in fact there's plenty of growth to be had in emerging AI and autonomous driving applications in the long term.

yitchelle 8y ago
I think that most commentators are getting lost in the chaos that is cryptocurrency. For me, cryptocurrency is an accidental fad that will dissipate. Nvidia is still growing in AI applications.

stdplaceholder 8y ago

For employees this is a real roller coaster ride. If you had a industry-standard $500k RSU component over four years, four years ago, you were recently walking around with 7 million dollars, depending on your sell or hold preferences. Whereas now you merely have 4 million. On the other hand if you started a month ago with the same deal, now you have much less than the industry standard deal.

KaoruAoiShiho 8y ago

It's up 50% over 2 years and 400% over 3. Idiot article. Ignore the crypto bubble/pump and NVDA is growing quickly - both the business and the stock.

bunnycorn 8y ago
This. Also, their P/E is at an healthy 19.99, reasonable. The article says that Apple is making their own GPUs, that doesn't matter, because Apple is not a nVidia client for a very very long time, and was never a big client. The others are even less suitable comparasion as those companies aren't making GPUs and they are not just going to walk in that market.
Animats 8y ago
Yes, their stock price is now back to June 2017. Not too bad. NVidia may have focused on the high end too much. They have a card for the machine learning crowd that costs $16,000.[1] The product they're now pushing to gamers, the 2080, is about $1000. It has some ray tracing hardware used by nothing. On existing games it's about the same speed as their 2-year old 1080, which NVidia just discontinued. [1] https://www.dell.com/en-us/shop/accessories/apd/490-bens https://www.dell.com/en-us/shop/accessories/apd/490-bens
- sigstoat 8y ago
  > NVidia may have focused on the high end too much. seems to me like they're making products available at all sorts of price points. i'm not an mba, but that strikes me as a good idea. not making quite enough mid-level products is unfortunate, but since that was temporary, it wouldn't have made sense for them to invest in increased production. (they should've abandoned the MSRP and just reverse auctioned inventory to the retailers, so that they could capture the value of their products, instead of letting folks selling on ebay get it.) > They have a card for the machine learning crowd that costs $16,000 they have hardware that costs way more than that. https://www.nvidia.com/en-us/data-center/dgx-systems/ https://www.nvidia.com/en-us/data-center/dgx-systems/
- cat199 8y ago
  well.. Yhe ML quote is from dell and looks to be 'appropriately' dell priced at ~50% markup vs mass retail.. but yes $8-10k is still alot. That said, if you need this stuff and your super fast $5k workstation is basically an otherwise 'worthless' I/O pump to the GPU, it's still worth the price tag.

deleted 8y ago

[deleted]

onetimemanytime 8y ago

Should have never been valued that much to begin with. Losers are those that gambled

didibus 8y ago
Or they're winners? If they sold in time. They might also be winners if they hold it longer.

empath75 8y ago

I bought a lot of nvidia at $30 for three reasons — machine learning, VR, and cryptocurrency. I sold most of it around $180-$200, but I’m still holding some shares.

aphextron 8y ago
It's still a great buy in my opinion, especially after this correction. People were piling on for the crypto craze, but the fundamentals for $NVDA are still really good. They've got a mountain of cash, very little debt, and an unmatched product line.
- empath75 8y ago
  I wouldn’t call it a great buy at this price but I’d definitely say to hold it.
nomel 8y ago
In the long run, I've hoped that they would get into commodity AI/ML compute bricks for self driving cars.
- sjg007 8y ago
  The have a solution in that market. It's still more a dev box but your line of thinking is probably correct.

avar 8y ago

They got swept up in the crypto bubble, are at $150 now after a high of $300-ish, but were $20-30 in 2015 before all that. So with the "crypto depression" this is to be expected. But the question I find more interesting is what this does to a company. Is it even plausible for them to go back to just running the company as though it were worth $20-30 and pretend it never happened? Or are they going to have investors who bought in at 2-3x that price at best screaming for them to inflate their stock by whatever means necessary?

adventured 8y ago
> Is it even plausible for them to go back to just running the company as though it were worth $20-30 and pretend it never happened? Your math is way off, they don't need to pretend nothing happened and go back to $30 / share. The crypto bubble (now imploded) isn't why they're still generating $4 billion in annual profit ($1 billion in operating income last quarter). It's not a critical part of their business; in actual numbers it was a modest party on the side for several quarters and some investors had hoped it would be more than that. The removal of the crypto boom from expectations, is causing a let-down in the projected upside in the stock and their business. Crypto wasn't 3/4 of their business, or the last quarter results would have shown that type of destruction. Your $20-$30 share price would peg them at a $12 to $18 billion market cap. They could justify that with just the earnings from their latest quarter.
shortoncash 8y ago
I think the market gave too much weight to crypto with regard to Nvidia. The growth story for the company is still there. The article is talking about other companies designing for their own custom needs, but I think the mindshare has largely already been captured by Nvidia. Why? Because their software stack, even with its quirks, is still better than a lot of what else is out there. In the current marketplace, deploying custom GPU solutions without Nvidia products is really painful and something only someone who enjoys pain would undertake.
josephpmay 8y ago
Nvidia made strategic decisions when the crypto craze was beginning not to play into it, anticipating that exactly what happened was going to happen. I doubt this recent jump and fall of the stock has had much of an effect internally.

claudiawerner 8y ago

It's interesting to me how "value" seems to work - nothing has been physically destroyed, the products still exist and in fact they are still being made; the already purchased capital (fixed and variable) is still there - so what's been lost? Is it a purely speculative quantity? If so, shouldn't we ask why we are attaching so much significance to something which has very little bearing on what we, as humans, do: production?

SolarNet 8y ago
I hear you. But the point of the stock market is not to produce things, it's to oversee the allocation of resources to other market sectors (which actually do produce things). To make a computer analogy it's sort of like an operating system scheduler, it uses economic resources to better allocate economic resources. Value here is a proxy for predicted success which then translates to access to resources. Not directly, but markets with lots of predicted success then have access to investor capital. Also companies can own their own shares, and often do use those shares to get access to new capital, and companies can be purchased by larger companies, giving them more capital to work with. I agree it's pretty stupid, but it works. Check out prediction markets for example. That's not to say that it's efficient by any stretch, but allocation of resources is NP hard, and this algorithm works well with humans.
- rosser 8y ago
  > I agree it's pretty stupid, but it works. As capricious as markets are, that's a pretty loose definition of "works". All too often, equity markets are just a force multiplier for herd mentality, and end up being actively antithetical to actual value and resource allocation.
  - Matticus_Rex 8y ago
    Antithetical as compared to what? Markets are imperfect, but consistently drive innovation and improvement that benefits consumers. What's your better alternative?

wlesieutre 8y ago

The GTX 1070 launched in June 2016 with an MSRP of $379. Typical prices at the end of 2018 for that same product are above $400 even after the newer RTX 2000 series has launched. I and pretty much every other PC gamer I know have been holding off buying upgrades until prices come back to some level of sanity. I don't understand how Nvidia (and EVGA, XFX, MSI, Zotac, Gigabyte, etc) can keep trying to sell at these absurd prices then turn around and complain about how not enough people are buying them or they don't make enough money. Have their costs unexpectedly shot up on their two-year-old manufacturing processes? Or did they just bank on the crypto bubble to prop up inflating GPU prices forever and were surprised when it didn't happen? Going forward they've doubled down on even higher prices for next generation, with versions of the RTX 2070 currently at $500 to $600. https://pcpartpicker.com/trends/price/video-card/#gpu.chipset.geforce-gtx-1070 https://pcpartpicker.com/trends/price/video-card/#gpu.chipse... EDIT - I should add, my first thought on this was that gamers are no longer a market that Nvidia cares about, and they're hoping that high prices will still sell to the machine learning (where people are frequently spending someone else's money on a large quantity of cards) and cryptocurrency markets. Then crypto dropped out, and ML are considering other options even if Nvidia are the top performers. But the RTX series is pitched for realtime raytracing effects in upcoming games, which sends the message that they do take gaming seriously. But I think they're out of touch with how much people are willing to spend on it.

km3k 8y ago
Agreed. I'm sticking with my GTX 960 that I got for under $200 new three years ago. I haven't seen anything with a better performance per dollar ratio than I got at that time. Anything I buy would be a downgrade by that metric.
- algon33 8y ago
  What? You can get GTX 1070's for $200-$250 right now off ebay. Admittedly used, but crypto mining doesn't harm a card that much. If you want new, GTX 1060s are going for under $200$. Then again, AMD's making pretty bold claims about their pricing for next year, so you could hang on.

syntaxing 8y ago

They still make about 9 Billion a year...I think CUDA/CUDANN is probably one of their highest "money making" product. Seriously locks down so many applications that needs to use their card exclusively. OpenGL development seems slow too so I guess Nvidia has a little bit of time before they have to worry too much.

adventured 8y ago
$12.4 billion in sales the last four quarters, $4.5 billion in operating income. Their business situation is fine, entirely without the crypto market. Intel saw little growth for many years, while generating immense profit, and while the multiple that investors were willing to give them compressed. Intel will soon have a 10-12 PE ratio. The entire semiconductor industry saw a dumping in the stock market, blamed on an industry down cycle. Micron is trading for three times earnings as another example. nVidia was up at ~43 times earnings before the drop, very rich for the industry. Now they're down closer to ~22, which is a lot closer to fair value based on their reduced growth expectations. The issue that the article entirely ignores, is valuation compression with a stock market that decided to dump some rich multiple stocks (Netflix is down ~35%) and particularly semiconductor stocks. That's how you lose half your valuation in a few months.

Townley 8y ago

As a non-crypto-mining consumer, I've been frustrated by the price increase for video cards, and perhaps that frustration impacts Nvidia in the long run. But really, when crypto was booming, what was Nvidia supposed to do? They were the guys selling shovels and pickaxes when the gold rush was in full swing. They rode the bubble and reaped the benefits when they could. So the price drop doesn't necessarily reflect a failure of strategy on their part. What I'll be curious to see going forward is what Nvidia does with the cash from their bumper year. If the end result of this saga is that Nvidia lined their coffers and invested in R&D for the next generation of of video cards, that bodes extremely well for the company.

ianlevesque 8y ago
They did openly tell investors the cryptocurrency decline was coming too.
- r00fus 8y ago
  They should’ve had a plan in place to transition maybe?
  - danhak 8y ago
    What sort of transition, exactly? Their core business is intact and they're strongly positioned in AI and autonomous driving. It seems like you're blaming management for the fact that the stock market mispriced the long-term value of crypto mining.
    - twblalock 8y ago
      It's not like Nvidia was trying to hold down expectations and the market went crazy anyway. Nvidia based their own revenue guidance on the same assumptions about crypto mining that market analysts made. They missed their guidance in November because of that.
    - Nelson69 8y ago
      Not just is it intact, but is there really an alternative ML/AI platform out there? They're still the best (only?) game in town with the full stack. And you can go buy or lease access to their parts right now and get radical performance improvements for your model training.

ydufucucuc 8y ago

Is this actually a problem for Nvidia? I'm sure they knew that the buttobitcoin craze wouldn't last forever and would eventually result in a stock price fall. They made vast improvements in their technology and raked in money. That that ride wasn't sustainable isn't a big deal if they didn't make investments that depended on the bubble never popping. If I was an investor I'd be pissed, but only because investors want prices to rise regardless of any underlying physical reality, but the executives should be laughing all the way to the bank. It's just a post bubble correction.

usrusr 8y ago
It can be a problem if ownership changed a lot during the craze and new owners can't stand the idea of being the ones left holding the bag. Suddenly there will be pressure to do insane bets and suicidal short term magic that would not be there if the hype had never happened. Call it residual irrationality of you like.

waddlesworth 8y ago

I'd like to see Nvidia embrace open source and developer relations a bit better. Similar to what Microsoft is doing. I definitely think it's in their best interests to open up RTX capabilities as much as possible, and it's not like developers aren't interested.

steve_musk 8y ago
At NeurIPS Nvidia said they were working on adding an RTX api to CUDA
bni 8y ago
Why would they do that, when they are the market leader

lkdjjdjjjdskjd 8y ago

So actually having a couple of years of extremely good sales is bad for companies, if they are registered on the stock market? I have trouble processing that information.

ryanlol 8y ago
>So actually having a couple of years of extremely good sales is bad for companies Why would that be bad? What does bad even mean here? Bad for the stock price? Sales slowing down is obviously undesirable.
- lkdjjdjjjdskjd 8y ago
  But why should a couple of good years get a company into trouble? It is inevitable that sales can not always stay as high. I could understand if NVidia would have done some kind of investment that was only sustainable if the good times would continue the same way for a while. But it seems to me they will just continue to make good graphics cards, as they did before. So why should they be in trouble?
  - ryanlol 8y ago
    I'm not sure Nvidia is in trouble. Investors who overestimated their future performance might be.
    - j1vms 8y ago
      > I'm not sure Nvidia is in trouble. Investors who overestimated their future performance. The problem is that management did not do enough (as far as investors were concerned) to temper market expectations. It may have been they truly did not know who was buying their product, and they believed most of their clients were coming from ML and gaming, when instead it was heavy, heavy crypto. Other than that, as the article mentions, it was trade tensions that turned the quarter miss into a perfect storm for a sell-off.

ryanlol 8y ago

crypto is not cryptocurrency

aurizon 8y ago

As long as they can cut back orders to fit the market without coin mining, then they will drop back to a higher point on the growth curce after the crypto surge has been trimmed. So they whould be fine. The fantasy growth from crypto is vaporware...

mxschumacher 8y ago

the 50% drop has to be seen in the context of the overall market: Apple, Google, Amazon etc are all ~25% off their peak valuation.

jedberg 8y ago
Netflix is also down about 30% from its peak in June.
j1vms 8y ago
True, though MSFT is at their all-time peak.
- nodesocket 8y ago
  MSFT keeps on surprising me, since nearly everybody I've talked with who's on or tried Azure says it is a complete dumpster fire. The acquisition of GitHub was super smart though, and I am willing to bet as we look back it be hailed as a great move.

Spooky23 8y ago

This more of a statement of the idiocy of assuming that Wall St valuations are particularly meaningful. They were overvalued based on a specific event.

mudil 8y ago

Interesting fact is that CEO of Nvidia Jensen Huang is a cousin of AMD CEO, Lisa Su. https://en.wikipedia.org/wiki/Jensen_Huang#Personal_life https://en.wikipedia.org/wiki/Jensen_Huang#Personal_life

pmoriarty 8y ago

Only one comment in this thread mentioned VR in passing. Some years back it seemed to be a decent possibility that GPU manufacturers could benefit from VR's huge appetite for GPU performance. How does HN feel about that now? Has VR turned out to be just a flash in the pan, and not a serious market for GPU manufacturers after all? Or is there still hope?

sytelus 8y ago

I Google decides to sell TPU as consumer product you can expect yet another halving.

akhilb 8y ago

If Nvidia are to get back in the game they need to price their product right. Having products that cost as much as the rest of the rig is simply idiotic. Their mobile chips have always been problematic. Remember the MacBook Pro failures a few years ago? Those were Nvidia's GPUs.

omilu 8y ago

The explosive rise of Fortnite last year coupled with the popularity of streamers like Ninja to elementary school kids, had me convinced that a boom in gaming pc market was coming and that it would more than make up for the loss due to crypto mining. I know exactly zero people that crypto mine, Yet I know several kids who lack machines to play fortnite properly but watch everything related to the game and lust after there own machine.