4 ms·

Forget 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 va

Forget 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 ago
OpenAI P/E is 415 Nvidia P/E is 95. OpenAI's valuation is 4 times more insane.
- _heimdall 3y ago
  I 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 ago
NVIDIA can print money as long as TSMC can make their chips
- _heimdall 3y ago
  The chips are a commodity at that point, why shouldn't investors follow a fairly standard valuation method based on revenue or profits?
  - throwup238 3y ago
    They'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 ago
      That 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
      - throwup238 3y ago
        It's not "any" economic good, it's any "fungible" economic good. The first line of your linked wikipedia article: In economics, a commodity is an economic good, usually a resource, that specifically has full or substantial _fungibility_: that is, the market treats instances of the good as equivalent or nearly so with _no regard to who produced them_. (Emphasis mine) That's the definition everyone in economics uses and NVIDIA has never fit that definition. NVIDIA GPUs are not fungible. Intel and ATI GPUs are not replacements as far as AI is concerned. There are zero substitutions. They are not commodities, they are differentiated goods that no one else can produce. > 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. Yes because the definition of a commodity is fungibility not the number of vendors. You can go online to Alibaba now and buy a bag of synthetic diamonds that are perfect replacement for mined diamonds. De Beers never really had a monopoly, they just controlled the market for consumer diamonds until the 80s. NVIDIA has a monopoly because its product is not a commodity.
        chottocharaii 3y ago
        This is such a boring, semantic argument NVIDIA’s products can colloquially be described as commodities in some contexts, as GPUs from NVIDIA can be interchangeable with GPUs from other manufacturers like AMD. For specific tasks like gaming or basic computing, the brand may not matter as much as the specifications, making them somewhat commodity-like in those scenarios Whilst this isn’t the traditional economic definition of commodity, speaking loosely, I think it’s fair enough to describe GPUs as a form of commodity. The important thing is what’s being communicated, not the semantic definition. The above comment’s point was pretty clear IMO

nabla9 3y ago

OpenAI P/E is 415 Nvidia P/E is 95. OpenAI's valuation is 4 times more insane.

_heimdall 3y ago
I 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 ago

NVIDIA can print money as long as TSMC can make their chips

_heimdall 3y ago
The chips are a commodity at that point, why shouldn't investors follow a fairly standard valuation method based on revenue or profits?
- throwup238 3y ago
  They'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 ago
    That 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
    - throwup238 3y ago
      It's not "any" economic good, it's any "fungible" economic good. The first line of your linked wikipedia article: In economics, a commodity is an economic good, usually a resource, that specifically has full or substantial _fungibility_: that is, the market treats instances of the good as equivalent or nearly so with _no regard to who produced them_. (Emphasis mine) That's the definition everyone in economics uses and NVIDIA has never fit that definition. NVIDIA GPUs are not fungible. Intel and ATI GPUs are not replacements as far as AI is concerned. There are zero substitutions. They are not commodities, they are differentiated goods that no one else can produce. > 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. Yes because the definition of a commodity is fungibility not the number of vendors. You can go online to Alibaba now and buy a bag of synthetic diamonds that are perfect replacement for mined diamonds. De Beers never really had a monopoly, they just controlled the market for consumer diamonds until the 80s. NVIDIA has a monopoly because its product is not a commodity.
      - chottocharaii 3y ago
        This is such a boring, semantic argument NVIDIA’s products can colloquially be described as commodities in some contexts, as GPUs from NVIDIA can be interchangeable with GPUs from other manufacturers like AMD. For specific tasks like gaming or basic computing, the brand may not matter as much as the specifications, making them somewhat commodity-like in those scenarios Whilst this isn’t the traditional economic definition of commodity, speaking loosely, I think it’s fair enough to describe GPUs as a form of commodity. The important thing is what’s being communicated, not the semantic definition. The above comment’s point was pretty clear IMO