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How durable do we think their Revenue is? To remind us all, they're selling capitalized assets, not contracts or services. Is the marginal demand for GPU chip

by gen220 3y ago

How durable do we think their Revenue is? To remind us all, they're selling capitalized assets, not contracts or services. Is the marginal demand for GPU chips over the next 3 years enough to sustain (or grow?) current revenues and keep this valuation afloat? To me, it feels like a comparatively fragile situation to find themselves in, to convince the world of 2025 that they need even more chips, unless "everybody needs to train their own LLM" is a secular trend. I'm not sure if investors fully appreciate the nuances of this boom, or if I'm not fully appreciating how many GPUs "need" to be held by different companies (and sovereign entities, if you've read the headlines in the last couple weeks) to train LLMs in the coming decade.

gmm1990 3y ago
It seems pretty similar to Tesla’s valuation with a product that won’t be as sticky as electric cars
- redox99 3y ago
  They are not similar at all. Tesla P/E is 67, Nvidia's P/E is 244.
  - Gareth321 3y ago
    Which is - excuse my French - fucking insane. The current PE ratio of 244 is pants on head ridiculous. That's 244 years worth of exceptionally high profit just to break even. Your great great great great great great great great grandchildren could take over your shares at the same value as today and the company would still be overpriced. That's centuries worth of technological change and high volatility baked into the price. There is no way on Earth the company is worth anywhere near that. No one can impute that kind of extraordinary risk effectively. This is now officially a meme stock. Nvidia is proof positive we currently have an equities bubble. Not even Tesla was this overpriced, and they're still down 40% since their all time high.
    - redox99 3y ago
      Also Tesla a lot more room to grow in term of revenue (they're still a small % of cars solds) than nvidia (already dominates gaming and datacenter). I admit I'm biased in favor of Tesla however.
      - Gareth321 3y ago
        No I agree. Tesla still has a realistic path to fairly significant increase in revenue. I still think it's too high, but compared to Nvidia, it's downright reasonable.
  - gmm1990 3y ago
    I meant the sudden increase seems to be similar to what happened to Teslas valuation in the past. Both have products/profits/valuation that have a lot of hype and huge margin partially driven by shortages.
deleted 3y ago
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xiphias2 3y ago
I think it's more interesting to see how undervalued AMD is instead of focusing on NVIDIA which seems reasonably priced. AI is not showing any sign of slowing down so far.
paulmd 3y ago
it will be sticky as long as there's a cambrian explosion of AI innovations happening. NVIDIA built the best swiss-army-knife for handling GPGPU problems in general, spent 15 years building the ecosystem and adoption around it, and then tailored it to AI specifically. Once the tech settles down a bit, Google and Amazon and others can absolutely snipe the revenue at a lower cost, just like they did with the previous TPUs/gravitons. But then some new innovation comes out that the ASICs (or, ARM+accelerator) don't do, and everyone's back to using NVIDIA because it just works. AMD potentially has a swiss-army knife too, but, they also have a crap software stack that segfaults just running demos in the supported OS/ROCm configurations, and a runtime with a lot of paper features and feature gaps. And NVIDIA's just works and has a massive ecosystem of libraries and tools available. And moreover they just have a mindshare advantage. Innovation happens on NVIDIA's platform (because NVIDIA spent billions of dollars building the ecosystem to make sure it happens on their platform). And it actually does just work and has a massive codebase etc. Sure it's a cage but it's got golden bars and room service. https://github.com/RadeonOpenCompute/ROCm/issues/2198 https://github.com/RadeonOpenCompute/ROCm/issues/2198 So I guess I'd say it's sticky until the technology settles. Steady-state, I think competitors will capture a lot of that revenue. But during the periods of innovation everyone flocks back to NVIDIA. AMD could maybe break that trend but they'll have to actually do the work first, they have tried the "do nothing and let the community write it" strategy for the last 15 years and it hasn't worked. You gotta get the community to the starting line, at least. Writing a software ecosystem is one thing, writing runtime/drivers is another.

by gen220 3y ago

gmm1990 3y ago

It seems pretty similar to Tesla’s valuation with a product that won’t be as sticky as electric cars

redox99 3y ago
They are not similar at all. Tesla P/E is 67, Nvidia's P/E is 244.
- Gareth321 3y ago
  Which is - excuse my French - fucking insane. The current PE ratio of 244 is pants on head ridiculous. That's 244 years worth of exceptionally high profit just to break even. Your great great great great great great great great grandchildren could take over your shares at the same value as today and the company would still be overpriced. That's centuries worth of technological change and high volatility baked into the price. There is no way on Earth the company is worth anywhere near that. No one can impute that kind of extraordinary risk effectively. This is now officially a meme stock. Nvidia is proof positive we currently have an equities bubble. Not even Tesla was this overpriced, and they're still down 40% since their all time high.
  - redox99 3y ago
    Also Tesla a lot more room to grow in term of revenue (they're still a small % of cars solds) than nvidia (already dominates gaming and datacenter). I admit I'm biased in favor of Tesla however.
    - Gareth321 3y ago
      No I agree. Tesla still has a realistic path to fairly significant increase in revenue. I still think it's too high, but compared to Nvidia, it's downright reasonable.
- gmm1990 3y ago
  I meant the sudden increase seems to be similar to what happened to Teslas valuation in the past. Both have products/profits/valuation that have a lot of hype and huge margin partially driven by shortages.

deleted 3y ago

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xiphias2 3y ago

I think it's more interesting to see how undervalued AMD is instead of focusing on NVIDIA which seems reasonably priced. AI is not showing any sign of slowing down so far.

paulmd 3y ago

it will be sticky as long as there's a cambrian explosion of AI innovations happening. NVIDIA built the best swiss-army-knife for handling GPGPU problems in general, spent 15 years building the ecosystem and adoption around it, and then tailored it to AI specifically. Once the tech settles down a bit, Google and Amazon and others can absolutely snipe the revenue at a lower cost, just like they did with the previous TPUs/gravitons. But then some new innovation comes out that the ASICs (or, ARM+accelerator) don't do, and everyone's back to using NVIDIA because it just works. AMD potentially has a swiss-army knife too, but, they also have a crap software stack that segfaults just running demos in the supported OS/ROCm configurations, and a runtime with a lot of paper features and feature gaps. And NVIDIA's just works and has a massive ecosystem of libraries and tools available. And moreover they just have a mindshare advantage. Innovation happens on NVIDIA's platform (because NVIDIA spent billions of dollars building the ecosystem to make sure it happens on their platform). And it actually does just work and has a massive codebase etc. Sure it's a cage but it's got golden bars and room service. https://github.com/RadeonOpenCompute/ROCm/issues/2198 https://github.com/RadeonOpenCompute/ROCm/issues/2198 So I guess I'd say it's sticky until the technology settles. Steady-state, I think competitors will capture a lot of that revenue. But during the periods of innovation everyone flocks back to NVIDIA. AMD could maybe break that trend but they'll have to actually do the work first, they have tried the "do nothing and let the community write it" strategy for the last 15 years and it hasn't worked. You gotta get the community to the starting line, at least. Writing a software ecosystem is one thing, writing runtime/drivers is another.