11 ms·
I don't understand ai valuations right now. NVDA has market cap of 1.8T and all they're doing is the middle part of the value chain. OpenAI is doing all the a
by adverbly 3y ago
I don't understand ai valuations right now.
NVDA has market cap of 1.8T and all they're doing is the middle part of the value chain.
OpenAI is doing all the actual productization and they get a valuation of 20x less?
- marvin 3y agoI think everyone just disbelieves the stated goals of the AI startups as a matter of convention. OpenAI wants to create machines that are more capable at almost all economically valuable labor than humans. Such technology would be incredibly valuable. If it seems likely they’ll achieve it and actually return a significant part of the created value to investors, valuations that are crazy by old metrics will follow.
- fastasucan 3y agoOpenAI needs OpenAI to succeed. Nvidia just needs AI in general to remain in the spotlight, no matter what company.
- nabla9 3y agoOpenAI Global LLC was projecting $200 million of revenue in 2023 and $1 billion in revenue in 2024. Nvidia made revenue 45B in revenue 2023 and much more this year. OpenAI P/E is 415 Nvidia P/E is 95. OpenAI is valued over 4 times Nvidia based on revenue.
- tuyiown 3y agoNVDA controls production and distribution of a limited resource. OpenAI has no definitive control on the service they provide, eg any one that can provide more value or cheaper on Nvidia hardware is a direct competitor that may be able to afford to pay more for hardware, limiting OpenAI access to its critical ressource. Hence nvidia is the elephant that structurally takes the money, the ones that make the safest big returns on long term.
- thefounder 3y agoOpenAI is not public so there is less pump. You could say both are overvalued. Take the ride or wait the dump. It curious that even with the current rates we still have a lot of pump in the market.
- jeffbee 3y agoThere's going to be an insane rug-pull at the end of this. Nvidia funds coreweave who buys gpus and sells them to Microsoft. Microsoft invested in openai who rents the gpus from Microsoft.
- gibsonf1 3y agoThe problem with OpenAI is that their products have no actual intelligence. They are radically over-valued for the statistical products they make that are entirely unreliable in terms of correspondence with reality. Nvidia is making chips and selling them and they work.
- andsoitis 3y ago> The problem with OpenAI is that their products have no actual intelligence. While what they sell isn’t intelligent, it has utility and that’s worth something. Since their product seems to be at the forefront and they’re really the trendsetter with others playing catchup, they can command a premium.
- strikelaserclaw 3y agoOpenAI doesn't seem to have a moat as big as Nvidia (I believe AI tech company valuations are in the hype phase)
- MuffinFlavored 3y agoHow long do hype phases usually last on average?
- strikelaserclaw 3y agountil ML stops producing cool new things, i'm pretty bullish on ML, to me even the hype feels justified (as opposed to crypto and NFTs which i always thought would fail eventually)
- dchftcs 3y agoThe catch is that there are >10 startups and big-tech teams trying to do what OpenAIs is doing, and at least a few of them appear to be competitive. One or two of them may emerge as a winner. But there's only one Nvidia. With that said, I do believe Nvidia is overvalued - if it triples profit its PE ratio would still be 30 (i.e. 30 years to return on investment), while there's a fairly good chance someone would catch up to them in 10-20 years.
- baq 3y agoNotably, software is the moat. There’s more hardware than nvidia but it takes some time to unwrap the proverbial matmul from CUDA. Much more hardware is in the pipeline, it just (ahem) has to be much better than nvidia to make migration from CUDA worth it. groq is one such limited but extremely impressive example IMHO.
- 8organicbits 3y ago> fairly good chance someone would catch up to them in 10-20 years. I think that's the bet. Maybe someone could catch up, but what are the chances incumbents buy new entrants or otherwise defeat them? What's the chance regulators will get involved? If you rate those favorably for NVIDIA, you'll price it higher.
- danpalmer 3y ago> But there's only one Nvidia. I disagree. Google have their tensor chips – whether they work well enough for those outside of Google is somewhat irrelevant, they clearly work for Google who are going to be one of the major players in serving AI for the forseeable future (I'm biased, but seems clear to me). Microsoft have their own chips on the way, rumoured to be this year. Amazon have their own chips on the way, rumoured to have been in development for a number of years. All 3 of these companies sell Nvidia hardware on their cloud offerings because it's what buyers want, but with Nvidia's pricing and resource constraints there is a huge pressure on the cloud providers to push customers into their own offerings. I don't expect any to stop offering Nvidia chips directly, but I'd bet that in the next few years all of their hosted value-add services will be on alternatives (i.e. hosted AI, inference, training, etc where customers don't need to know the hardware). Nvidia have more of a moat than OpenAI for sure, but I think Nvidia's best days are 2023/4, and that things will look very different soon.
- kristjansson 3y agoI think the logic is roughly: _some_ people that want to deploy LLMs for things will pay OpenAI. _everyone_ that wants to deploy LLMs for things will pay NVDA.
- baq 3y agoThis is what makes the the big players seriously pissed and has been since the first convnet revolution. NVIDIA’s customers are dying to see worthwhile competition.
- mistercheph 3y agoWho is more replaceable? The eventual winner will almost surely be worth more than Nvidia when the rubble clears, but they, and all the losers and midfielders won't get to that day without forking over billions of their dollars to....
- ctrw 3y agoNvidia has a monopoly on Cuda. If they decided to sell cards for x10 what they are now no one will have a choice but to pay up for the next year.
- reso 3y ago20x is roughly the revenue multiple between nvidia and open ai and they are businesses with similar margins.
- chemmail 3y agoThey are the prime example of selling shovels in a gold rush.
- hughesjj 3y agoWhen there's a gold rush, do you become a prospector or do you start selling shovels, pickaxes, and hotel rooms?
- ggm 3y agoCame for this. Shovel sellers have a guaranteed ROI which is lower than the speculative high but far higher than the vast majority of returns to find gold. NVIDIA make bank for every single failed AI venture, if they buy their chips.
- paulddraper 3y agoNVIDIA doesn't have competition
- MuffinFlavored 3y agoat the moment I would be curious when an educated-on-the-matter person's opinion was best guess on when NVIDIA's competition will catch up
- a6 3y agoAMD already released their MI300X which is objectively better than NVIDIA's offerings. Just a matter of time for adoption and integration.
- datadrivenangel 3y agoProbably ~3-4 years as Apple, AMD, and Google/AWS ramp up their GPUs/custom accelerators.
- Temporary_31337 3y agoAnd groq
- UncleOxidant 3y agoI'm going to guess that groq gets bought soon. oh, and don't forget Graphcore (also rumored to be bought soon): https://www.tomshardware.com/tech-industry/artificial-intelligence/graphcore-reportedly-explores-sale-arm-openai-and-softbank-named-as-potential-buyers https://www.tomshardware.com/tech-industry/artificial-intell...
- rvz 3y agoI wouldn't guess, I am definitely certain that both Groq and Graphcore will be bought out soon.
- 3y ago
- _heimdall 3y agoForget the multiplier compared to OpenAI, Nvidia's valuation compared to their own financials are completely insane. I'm not sure where we lost the road, but valuations are completely disconnected from profits and total revenue.
- nabla9 3y agoOpenAI P/E is 415 Nvidia P/E is 95. OpenAI's valuation is 4 times more insane.
- _heimdall 3y agoI wasn't meaning to say OpenAI's was better, only that we can remove the complexity of comparing thr two companies and Nvidia valuation is still insane.
- overstay8930 3y agoNVIDIA can print money as long as TSMC can make their chips
- _heimdall 3y agoThe chips are a commodity at that point, why shouldn't investors follow a fairly standard valuation method based on revenue or profits?
- throwup238 3y agoThey're not commodities at all, by definition. No one but NVIDIA can make their GPUs, no one but TSMC can make the silicon, and no one can compete with CUDA on the software side. It's one of the most differentiated products on the market.
- _heimdall 3y agoThat depends on your definition of a commodity, dome definitions effectively limit it to raw materials while others define it as any economic good [1]. If Nvidia can truly print money as long as TSMC can make chips, as claimed above, I'd argue that's at least in a gray area for commodities. The chip is effectively a raw material as far as Nvidia is concerned, and it acts much like gold or oil in that scenario as the argument is that there is an unlimited market willing to buy any GPU that Nvidia can create. Having a monopoly doesn't mean the product itself isn't a commodity. De Beers has a monopoly on diamonds, but I'd expect diamonds to fit into most people's definition of a commodity. [1] https://en.m.wikipedia.org/wiki/Commodity https://en.m.wikipedia.org/wiki/Commodity
- thepasswordis 3y agoNVidia does a whole lot more than make GPUs for AI.
- toasterlovin 3y agoRemember Wintel and how the combinations of software and hardware lock-in created incredible shareholder returns? Well Nvidia is like if Wintel was a single company.
- HWR_14 3y agoOpenAI is supplying the software underlying the productization. I would consider it far more likely that Meta or Google releases free software that becomes the new standard than that AMD/ARM/Intel manage to steal a significant amount of NVidia's business. And even if AMD came out with something just as good tomorrow, it's not like 2x the production capabilities would significantly hurt the price point for AI hardware.
- summerlight 3y agoNVDA has established effectively a monopoly status in the ML training hardware business and you cannot get into there without putting billions of upfront costs. OpenAI is far from there and we're seeing lots of competitors rapidly rising from both big techs and startup scenes.
- deleted 3y ago[deleted]
- deleted 3y ago[deleted]
- ambicapter 3y agoNVDA can make things that no one else can. It's not clear that OpenAI is doing things that no one else can (seems to be more directly related to your ability to wield compute).
- HarHarVeryFunny 3y ago> NVDA can make things that no one else can What about AMD (MI3000), Google (TPU - actually designed by Broadcom). It's really TSMC (who actually make NVIDIA's chips, as well as those for AMD, Google, Apple ...) who are close to making things that no-one else can, although afaik Samsung are close.
- dogcomplex 3y agoReminder that a specialized AI chip designed to just maximize the transformer architecture would only require decades-old tech that's well spread out at this point and far simpler to manufacture. Basically as many XOR matrix multiplications as you can squeeze in on a chip. NVDA may yet see some competition, as we drop our complexity standards and embrace a one-size-fits-all general MLLM architecture.
- 6gvONxR4sf7o 3y agoFor the last five years or so, openai’s thesis has been that scaling really really big models pays off. That is, that throwing massive amounts of hardware at the problem parts off. Chips are the whole thing that enables scaling.
- mthoms 3y agoNVDA has a wee bit more of a moat around their business than OpenAI does. It’s not even comparable.