5 ms·

Nvidia adds $277B in market value, Wall Street's largest one-day gain in history

91 points by mfiguiere 3y ago

hu3 3y ago
I wonder what are they pricing? Some leapfrogging in energy efficiency? Just more CUDA monopoly?
- rkagerer 3y ago
  AI hype
  - anthk 3y ago
    Something Something Dot Com Crash 2.0
  - bamboozled 3y ago
    I think you're right because yes they make the hardware behind the products, but they're not making the products, which is where you'd think the actual money should be. On the other hand, it will be interesting to see how much money there is in "intelligence" the more abundant it becomes.
    - I_AM_A_SMURF 3y ago
      Who is competing with Nvidia right now? if nobody is then they can basically dictate their own price with the kind of demand there is right now for GPUs.
    - nothercastle 3y ago
      There is not that much product to be made just like there wasn’t that much gold to be mined
      - blagie 3y ago
        This is dot-com rush all over again, but it's worth keeping in mind the dot-com rush (with some poetic license) gave us Google, Amazon, Meta, and much of the value of modern Apple+Microsoft. Those are five of the top ten companies in the world by market cap. Not many more dot-coms on the list of top 100 though: https://companiesmarketcap.com/ https://companiesmarketcap.com/ It was a winner-takes-all market with a few big winners and a lot of losers. There's a lot of product to be made. AI is already transforming a lot of businesses. It's too early to tell who the big winners will be, how the market will be structured, or what will happen. I suspect, in the metaphor, NVidia is the Cisco or the Sun Microsystems. They power the gold rush. Cisco is #60 on biggest companies, and Sun died 14 years ago. I suspect NVidia is now overvalued, but I suspect it should still be highly-valued. I suspect things will self-correct if AMD, Intel, or one of the startups gets software in shape. The problem is that as much as NVidia can maintain competitive advantage, competition is likely to cap profit margin. If Intel is 30% less efficient than NVidia in compute-per-dollar, than NVidia's profit margin can be at most 30% more than Intel.
    - tareqak 3y ago
      The way I see it right now, the situation with NVIDIA and AI companies is like shovel sellers and gold miners. Picking which gold miner is going to strike gold and which ones will go bust is difficult to tell, but knowing that all of them will need shovels/mining equipment means that shovel sellers are a safe but extremely rewarding bet for the next little while.
- paulmd 3y ago
  maturity of the CUDA environment, continued good engineering and execution, a world-class organization (probably the best hardware team in the world) with a business savant at the helm and a founder-mindset and a truly agile and flat team structure, etc what's the price for apple after introducing the iphone? visionary leader in charge of a company that just delivered a money-faucet technology that - while yes, competition will emerge - they will still inevitably end up owning a large and highly desirable stake of in the market? cuda is literally 15 years ago, and people are just realizing they have to actually start by catching up to that. The "NVIDIA is an AI company now" was like 2015, "mid-2010s", it was a realization jensen had during alexnet's rise, in the early/mid 2010s. It truly will take a long time to build that kind of ecosystem, Apple's support is great with Metal and it still is fairly well a potemkin village until there's more traction on apple gpu support. And a lot of competitors don't even have that, AMD is only finally just realizing this and Intel is also spending like crazy to build out OneAPI/SyCL. Best time to plant the tree is 15 years ago, and Jensen has repeatedly planted trees where they needed them to be successful in the long term, and moved the engineering and business sides to make it happen. Programmable shaders, CUDA, tessellation, GSync, and tensor/ML (and RT at the same time) have all been big big bets, and many people criticized some of them real harshly at the time, or backseat-drove that NVIDIA should have given it away, etc. https://youtu.be/Xn1EsFe7snQ?t=1086 https://youtu.be/Xn1EsFe7snQ?t=1086 https://youtu.be/tu7pxJXBBn8?t=273 https://youtu.be/tu7pxJXBBn8?t=273 Also, just in general there's really only a handful of companies that can build something like H100/H200 or MI300X or Ponte Vecchio and get an actual competitive product out of it. Let alone the rest of the integration in the system (multi-node, networking, etc) which is all increasingly necessary to build HPC systems at scale etc. NVIDIA paid for mellanox, and amd paid for xilinx, etc. "just" integrate all that successfully into something that clients can start building products on, when can you deliver a from-scratch competitor? lol (shoutout to oxide though, that actually does look pretty sick, bryan cantrill is in charge so you know it's gonna be good) There's definitely an enormous amount of key-man risk, but it's also certainly the best cross-disciplinary team (hardware, software, business) in the business today. Nobody else can identify what's gonna be big, lay the groundwork, execute successfully, and roll with the punches (and manage inventory) 90s-tech-business style. What if you could invest in cray, but it was a business where cray had repeatedly executed successfully and managed to pioneer several large commercial applications for their systems, and expected to continue pivoting and innovating into new areas going forward? There is nobody else in the business like Jensen right now, he is a savant.
- mistermann 3y ago
  Future demand for compute could be beyond our current ability to imagine.
  - deleted 3y ago
    [deleted]
- basiccalendar74 3y ago
  that earnings remain same as this quarter for a few quarters (higher revenues, lower margins ofc). forward P/E is 30-40 range, typical for tech companies. Apple has been making a bank on iPhones, with no major leap frog in 10 years. Nvidia could do that too, hard but not unimaginable.
- familiarzombie7 3y ago
  Over the last year they've seen a 3x jump in gross profit up to 44b on 16b cost of revenue with no signs of going the other way any time soon. That's where I'm guessing the price is coming from
- lm28469 3y ago
  Haven't you heard? AI will replace all of us in our jobs by like 2027 Just like teslas became fully autonomous in 2014 and replaced all human drivers as saint Elon Musk prophecised
mandeepj 3y ago
It’s not going to end well
ng12 3y ago
something something gold rush something shovels
deleted 3y ago
[deleted]
CamperBob2 3y ago
Isn't Nvidia completely constrained by fab capacity for the next several years? I'd like to understand why that's apparently not already priced in.
- silverquiet 3y ago
  I don't know about fab capacity, but I suspect the price they can sell GPUs for is not so constrained.
- lucubratory 3y ago
  Supply can be fully constrained and future expected revenue can still go up if demand or capital availability increases, because higher demand and access to more capital mean that NVIDIA can charge more per card and still sell out their entire supply. The hypothesis would be that AI research precedes GPU demand that increases NVIDIA's profit margins, so if you're seeing AI research that you're judging will increase future demand, you should expect NVIDIA's value to go up.
- nothercastle 3y ago
  They can probably drop the entire gpu line and focus on ai chips to best use the capacity
- alecco 3y ago
  Nvidia is no longer selling just expansion cards. They are selling full cluster solutions with Infiniband networking (Mellanox acquisition) and even CPUs (Grace). I wouldn't be surprised if they put most of their GPGPU chip production in these. And they are much better than the competition, too. AFAIK, only Google and Microsoft have anything competitive in terms of full architecture (but internal).
menshiki 3y ago
Nvidia is heavily overpriced at the moment. My personal prediction is that in the long term, Nvidia can expect a similar situation to what happened to Tesla, which involves a relatively slow price correction after the AI hype diminishes. The EV hype slowly died out, and we can see it reflected in the prices of all EV companies.
- latsu 3y ago
  Tesla still seems to be over-valued. I don't see why they would be worth 10x other car manufacturers, especially ones that have quality manufacturing already down.
  - nradov 3y ago
    Have you taken a short position?
    - matsemann 3y ago
      Is that relevant?
      - kelseyfrog 3y ago
        Yes
        loceng 3y ago
        "Put your money where your mouth is"
        matsemann 3y ago
        But things can remain overhyped longer than I can afford to short it. Hence why I believe it's not relevant.
        TheAlchemist 3y ago
MuffinFlavored 3y ago
Slightly more interesting in my opinion If you were willing to risk $2,100 on a "buy-to-open" long 2-days-to-expiration (2023-02-23 expirations bought 2023-02-01 right before close) 3.5% out of the money call ($700 strike), you would've had a 300% return today. How many people (hundreds? thousands? millions?) tried to guess the right combination of earnings up/down (long/short, call/put) risking money they might not necessarily should be, high premium / theta decay / implied volatility crush be damned? I'm not saying the stock market is "as much like a casino as it has ever been" but... like... at 50-50 coin flip... it is better odds than a casino? lol I guess roulette red/black.
- jondwillis 3y ago
  IDK but I bought some NVDA throughout last year in my self directed IRAs and it’s really been single-handedly keeping me above market return. E.g. without it i’d be worse than S&P over the same period, lol.
- lm28469 3y ago
  And how much of it comes from the elite who amassed the free money we printed like madmen since 2008 and during the pandemic
anh690136 3y ago
that's huge...
fragmede 3y ago
SMCI isn't too far behind either!
p3opl3 3y ago
If there were ever a "this is a massive bubble" flag - this headline would be it. When it starts to get silly - it is..

91 points by mfiguiere 3y ago

hu3 3y ago

I wonder what are they pricing? Some leapfrogging in energy efficiency? Just more CUDA monopoly?

rkagerer 3y ago
AI hype
- anthk 3y ago
  Something Something Dot Com Crash 2.0
- bamboozled 3y ago
  I think you're right because yes they make the hardware behind the products, but they're not making the products, which is where you'd think the actual money should be. On the other hand, it will be interesting to see how much money there is in "intelligence" the more abundant it becomes.
  - I_AM_A_SMURF 3y ago
    Who is competing with Nvidia right now? if nobody is then they can basically dictate their own price with the kind of demand there is right now for GPUs.
  - nothercastle 3y ago
    There is not that much product to be made just like there wasn’t that much gold to be mined
    - blagie 3y ago
      This is dot-com rush all over again, but it's worth keeping in mind the dot-com rush (with some poetic license) gave us Google, Amazon, Meta, and much of the value of modern Apple+Microsoft. Those are five of the top ten companies in the world by market cap. Not many more dot-coms on the list of top 100 though: https://companiesmarketcap.com/ https://companiesmarketcap.com/ It was a winner-takes-all market with a few big winners and a lot of losers. There's a lot of product to be made. AI is already transforming a lot of businesses. It's too early to tell who the big winners will be, how the market will be structured, or what will happen. I suspect, in the metaphor, NVidia is the Cisco or the Sun Microsystems. They power the gold rush. Cisco is #60 on biggest companies, and Sun died 14 years ago. I suspect NVidia is now overvalued, but I suspect it should still be highly-valued. I suspect things will self-correct if AMD, Intel, or one of the startups gets software in shape. The problem is that as much as NVidia can maintain competitive advantage, competition is likely to cap profit margin. If Intel is 30% less efficient than NVidia in compute-per-dollar, than NVidia's profit margin can be at most 30% more than Intel.
  - tareqak 3y ago
    The way I see it right now, the situation with NVIDIA and AI companies is like shovel sellers and gold miners. Picking which gold miner is going to strike gold and which ones will go bust is difficult to tell, but knowing that all of them will need shovels/mining equipment means that shovel sellers are a safe but extremely rewarding bet for the next little while.
paulmd 3y ago
maturity of the CUDA environment, continued good engineering and execution, a world-class organization (probably the best hardware team in the world) with a business savant at the helm and a founder-mindset and a truly agile and flat team structure, etc what's the price for apple after introducing the iphone? visionary leader in charge of a company that just delivered a money-faucet technology that - while yes, competition will emerge - they will still inevitably end up owning a large and highly desirable stake of in the market? cuda is literally 15 years ago, and people are just realizing they have to actually start by catching up to that. The "NVIDIA is an AI company now" was like 2015, "mid-2010s", it was a realization jensen had during alexnet's rise, in the early/mid 2010s. It truly will take a long time to build that kind of ecosystem, Apple's support is great with Metal and it still is fairly well a potemkin village until there's more traction on apple gpu support. And a lot of competitors don't even have that, AMD is only finally just realizing this and Intel is also spending like crazy to build out OneAPI/SyCL. Best time to plant the tree is 15 years ago, and Jensen has repeatedly planted trees where they needed them to be successful in the long term, and moved the engineering and business sides to make it happen. Programmable shaders, CUDA, tessellation, GSync, and tensor/ML (and RT at the same time) have all been big big bets, and many people criticized some of them real harshly at the time, or backseat-drove that NVIDIA should have given it away, etc. https://youtu.be/Xn1EsFe7snQ?t=1086 https://youtu.be/Xn1EsFe7snQ?t=1086 https://youtu.be/tu7pxJXBBn8?t=273 https://youtu.be/tu7pxJXBBn8?t=273 Also, just in general there's really only a handful of companies that can build something like H100/H200 or MI300X or Ponte Vecchio and get an actual competitive product out of it. Let alone the rest of the integration in the system (multi-node, networking, etc) which is all increasingly necessary to build HPC systems at scale etc. NVIDIA paid for mellanox, and amd paid for xilinx, etc. "just" integrate all that successfully into something that clients can start building products on, when can you deliver a from-scratch competitor? lol (shoutout to oxide though, that actually does look pretty sick, bryan cantrill is in charge so you know it's gonna be good) There's definitely an enormous amount of key-man risk, but it's also certainly the best cross-disciplinary team (hardware, software, business) in the business today. Nobody else can identify what's gonna be big, lay the groundwork, execute successfully, and roll with the punches (and manage inventory) 90s-tech-business style. What if you could invest in cray, but it was a business where cray had repeatedly executed successfully and managed to pioneer several large commercial applications for their systems, and expected to continue pivoting and innovating into new areas going forward? There is nobody else in the business like Jensen right now, he is a savant.
mistermann 3y ago
Future demand for compute could be beyond our current ability to imagine.
- deleted 3y ago
  [deleted]
basiccalendar74 3y ago
that earnings remain same as this quarter for a few quarters (higher revenues, lower margins ofc). forward P/E is 30-40 range, typical for tech companies. Apple has been making a bank on iPhones, with no major leap frog in 10 years. Nvidia could do that too, hard but not unimaginable.
familiarzombie7 3y ago
Over the last year they've seen a 3x jump in gross profit up to 44b on 16b cost of revenue with no signs of going the other way any time soon. That's where I'm guessing the price is coming from
lm28469 3y ago
Haven't you heard? AI will replace all of us in our jobs by like 2027 Just like teslas became fully autonomous in 2014 and replaced all human drivers as saint Elon Musk prophecised

mandeepj 3y ago

It’s not going to end well

ng12 3y ago

something something gold rush something shovels

deleted 3y ago

[deleted]

CamperBob2 3y ago

Isn't Nvidia completely constrained by fab capacity for the next several years? I'd like to understand why that's apparently not already priced in.

silverquiet 3y ago
I don't know about fab capacity, but I suspect the price they can sell GPUs for is not so constrained.
lucubratory 3y ago
Supply can be fully constrained and future expected revenue can still go up if demand or capital availability increases, because higher demand and access to more capital mean that NVIDIA can charge more per card and still sell out their entire supply. The hypothesis would be that AI research precedes GPU demand that increases NVIDIA's profit margins, so if you're seeing AI research that you're judging will increase future demand, you should expect NVIDIA's value to go up.
nothercastle 3y ago
They can probably drop the entire gpu line and focus on ai chips to best use the capacity
alecco 3y ago
Nvidia is no longer selling just expansion cards. They are selling full cluster solutions with Infiniband networking (Mellanox acquisition) and even CPUs (Grace). I wouldn't be surprised if they put most of their GPGPU chip production in these. And they are much better than the competition, too. AFAIK, only Google and Microsoft have anything competitive in terms of full architecture (but internal).

menshiki 3y ago

Nvidia is heavily overpriced at the moment. My personal prediction is that in the long term, Nvidia can expect a similar situation to what happened to Tesla, which involves a relatively slow price correction after the AI hype diminishes. The EV hype slowly died out, and we can see it reflected in the prices of all EV companies.

latsu 3y ago
Tesla still seems to be over-valued. I don't see why they would be worth 10x other car manufacturers, especially ones that have quality manufacturing already down.
- nradov 3y ago
  Have you taken a short position?
  - matsemann 3y ago
    Is that relevant?
    - kelseyfrog 3y ago
      Yes
      - loceng 3y ago
        "Put your money where your mouth is"
        matsemann 3y ago
        But things can remain overhyped longer than I can afford to short it. Hence why I believe it's not relevant.
      - TheAlchemist 3y ago

MuffinFlavored 3y ago

Slightly more interesting in my opinion If you were willing to risk $2,100 on a "buy-to-open" long 2-days-to-expiration (2023-02-23 expirations bought 2023-02-01 right before close) 3.5% out of the money call ($700 strike), you would've had a 300% return today. How many people (hundreds? thousands? millions?) tried to guess the right combination of earnings up/down (long/short, call/put) risking money they might not necessarily should be, high premium / theta decay / implied volatility crush be damned? I'm not saying the stock market is "as much like a casino as it has ever been" but... like... at 50-50 coin flip... it is better odds than a casino? lol I guess roulette red/black.

jondwillis 3y ago
IDK but I bought some NVDA throughout last year in my self directed IRAs and it’s really been single-handedly keeping me above market return. E.g. without it i’d be worse than S&P over the same period, lol.
lm28469 3y ago
And how much of it comes from the elite who amassed the free money we printed like madmen since 2008 and during the pandemic

anh690136 3y ago

that's huge...

fragmede 3y ago

SMCI isn't too far behind either!

p3opl3 3y ago

If there were ever a "this is a massive bubble" flag - this headline would be it. When it starts to get silly - it is..