3 ms·

It will take a minimum of 5-10 years to see a meaningful change, if it's not already too late. Absolutely nothing will change about the context in two years, o

It will take a minimum of 5-10 years to see a meaningful change, if it's not already too late. Absolutely nothing will change about the context in two years, other than Nvidia will be far stronger at that point with $50+ billion per year in operating income (formally joining the hyper profitable US tech giants). It's going to be extraordinarily expensive to build in the GPU data center space at scale. Nvidia will have the money to do it and most of their smaller competitors will not (that includes AMD, which doesn't generate anywhere near enough cash to outlay billions of dollars in a single high risk capital investment pointed at the GPU data center space; AMD's operating income over the last four quarters is negative, and they have a mere $3b in cash). Nvidia will use their new cash spigot to build infrastructure moats in the space. Large governments, Microsoft, Apple, Meta, Google, TSMC are the only entities capable of keeping up on spending.

latchkey 3y ago
> It will take a minimum of 5-10 years to see a meaningful change, if it's not already too late. It isn't too late and I'm betting it will be closer to 5 than 10. > It's going to be extraordinarily expensive to build in the GPU data center space at scale. It already is expensive. But it isn't just NVIDIA doing it. CoreWeave is the largest and certainly backed by NVIDIA, but they are a separate business. AMD doesn't have to do it on their own either.
qwytw 3y ago
There is a lot of space for competing on price though. AMD or even Intel could release a datacenter GPU that's 3x slower than the H100 while using 2x more power and still sell it with a very decent margin. Of course that will likely mean that Nvidia will just cut prices to stay competitive and maintain 90%+ market share but their obscene margins will have to come down.
AnthonyMouse 3y ago
Investments have diminishing returns. Once you've spent a threshold amount of money, more is just incremental gains, until you're not even getting more out of it than you could by sticking the money in the S&P 500. It's also weird that you're looking at operating income, which already has R&D expenses subtracted out of it. A company spending more of its revenue on R&D will have a lower operating income, but that hardly implies they can't spend on R&D -- because they are. And customers hate moats. In many cases they get stuck with them, but most often this is individual consumers with no resources to do anything about it. Data center customers are large institutions, often with their own R&D budgets. Three of the companies that each have a larger market cap than Nvidia are Amazon, Google and Microsoft, the three largest cloud providers. Is any of them interested in letting Nvidia have a moat?

latchkey 3y ago

> It will take a minimum of 5-10 years to see a meaningful change, if it's not already too late. It isn't too late and I'm betting it will be closer to 5 than 10. > It's going to be extraordinarily expensive to build in the GPU data center space at scale. It already is expensive. But it isn't just NVIDIA doing it. CoreWeave is the largest and certainly backed by NVIDIA, but they are a separate business. AMD doesn't have to do it on their own either.

qwytw 3y ago

There is a lot of space for competing on price though. AMD or even Intel could release a datacenter GPU that's 3x slower than the H100 while using 2x more power and still sell it with a very decent margin. Of course that will likely mean that Nvidia will just cut prices to stay competitive and maintain 90%+ market share but their obscene margins will have to come down.

AnthonyMouse 3y ago

Investments have diminishing returns. Once you've spent a threshold amount of money, more is just incremental gains, until you're not even getting more out of it than you could by sticking the money in the S&P 500. It's also weird that you're looking at operating income, which already has R&D expenses subtracted out of it. A company spending more of its revenue on R&D will have a lower operating income, but that hardly implies they can't spend on R&D -- because they are. And customers hate moats. In many cases they get stuck with them, but most often this is individual consumers with no resources to do anything about it. Data center customers are large institutions, often with their own R&D budgets. Three of the companies that each have a larger market cap than Nvidia are Amazon, Google and Microsoft, the three largest cloud providers. Is any of them interested in letting Nvidia have a moat?