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This stock is a great example of invest in stocks where you have strong knowledge. I saw pallets of h100s shipping that were worth 100s of millions each pallet

This stock is a great example of invest in stocks where you have strong knowledge. I saw pallets of h100s shipping that were worth 100s of millions each pallet (each card is $40k and you can fit a lot on a pallet) as someone working for a company buying these and knowing that many other companies were doing the same (we have 12+ months of back orders with nvidia alone). I invested last year at ~$250 when redditors we're posting that "Nvidia is the best shorting opportunity" without any of the knowledge of the market. It looks like it's now going above $1000 and still going up. Invest in things you know intimately folks. Also do the opposite of Reddit.

amelius 2y ago
But don't put all your eggs in one basket.
aldarisbm 2y ago
do you have an exit strategy?
- AnotherGoodName 2y ago
  I started selling at the one year mark since capital gains is lower for stocks held longer than one year in the USA. For a complete exit I would need to see a genuine competitor emerge. I have not seen that yet.
somethoughts 2y ago
The million dollar question (or trillion dollar question I suppose) is for the upcoming quarters - will there be pallets of h100s waiting shipment, 2x pallets of h100s or 10x pallets of h100s... or have all the pallets are shipped for the time being. Has demand saturated while downstream AI engineers tinker on actually profitable use cases or is it going to keep growing exponentially. Probably most stock price models assume at minimum linear growth for the next 5-10 years. But if the future reality is that it nearly plateauing and will likely drop off...
- zooq_ai 2y ago
  The answer is we are in the Pentium II 33 MHz stage of AI chips. So, plan accordingly into what the future demand may look like.
  - timr 2y ago
    The pentium II was 233 MHz, not 33, but sure. The problem is, if that metaphor holds, we're so vastly far away from "the future" that it's impossible to predict what it looks like. Just for example, NVIDIA's chips kinda suck for inference. Vastly overprovisioned. It's like the folks who were saying "the internet is growing rapidly, Cisco powers the internet, therefore Cisco will grow as rapidly as the internet" in the late 90s. Oops.
  - somethoughts 2y ago
    I think the challenge is to determine whether or not AI applications are generalizably useful to all of society as general purpose PCs and smartphones or if they are more narrowly focused like crypto applications.
    - theGnuMe 2y ago
      The answer is yes.
    - aurareturn 2y ago
      I can think of hundreds of use cases for LLMs. But all my ideas are hindered by inference cost, context size, and LLM accuracy. I assume all 3 will rapidly improve.
- cokeandpepsi 2y ago
  [dead]
georgeburdell 2y ago
Is that not insider trading? I had opportunities to buy stock in companies that I knew my employer was about to do big business with, and could have profited handsomely, but was advised that it was at the very least against corporate guidelines
- AlotOfReading 2y ago
  They're not talking about their employer's actions moving the stock price, they're talking about the basic industry knowledge that everyone else is doing the same thing. I (probably) don't work at the same company and I had access to exactly the same information.
- bombcar 2y ago
  Almost certainly not, insider trading is for "knowledge that isn't out there". What you are describing is, because the "knowledge wasn't out there". It's a fuzzy distinction and you're better safe than sorry. "We bought a bunch of cards" vs "we're going to buy a bunch of cards" type thing.
- darth_avocado 2y ago
  If you work for NVIDIA, it is insider trading. If you saw the pallets in a truck at a gas station, it’s not. In the wild, it’s no different from Wall Street making trades based on strip club attendance or by flying drones near Tesla factories.
  - beejiu 2y ago
    > If you work for NVIDIA, it is insider trading. Just to be absolutely clear, it can be insider trading if you don't work at NVIDIA.
    - esprehn 2y ago
      Yeah, it's not about being an employee, it's about trading on Material Non-Public Information.
acchow 2y ago
The real questions: how much of this is already priced in? Will this trend continue in the future?
ipsento606 2y ago
I know nothing about stocks. But if a similar situation were to happen again, how can you tell whether or not the surge in demand is already "priced in"? Simply knowing that demand for a product has increased - even increased massively - surely can't tell you that the stock of the company that makes that product is going to increase in value, without also knowing whether or not that increase in demand is already reflected in the current price of the stock
- it_citizen 2y ago
  Exactly. And for one thing you know, there are 100s you don't know about the company. Luck and survivor bias.
  - bordercases 2y ago
    But is the luck biased to have more survivors in one direction over the other?
- foota 2y ago
  The easy answer here would be to look at analyst estimates. If you notice nvidia selling 20 billion in H100s and the consensus revenue is 10 billion, then it's probably not priced in.
  - jessriedel 2y ago
    How can you just "notice" them selling 20B? How are you getting better data than the analysts?
    - hhh 2y ago
      try to talk to them and see how hard it is to get a gpu
      - jldugger 2y ago
        But that's been known for months now. At one point a bloomberg podcast mentioned in passing that nVidia inventory now has a lead time measured in months. Which kinda sounds like the makings of a bullwhip effect induced bubble[0]. Everybody wants inventory now, so they put in massive orders, hopefully get some fraction of what they asked for, and if they happily get too much they can, in theory, easily sell their surplus into the market. Think about how many "AI platforms" boil down to "we have GPUs!" _If_ this is the bullwhip scenario, then it's basically a gamble about how many million cards nVidia can ship before their own short supply bubble bursts. Or the AI bubble more generally. [0]: https://en.wikipedia.org/wiki/Bullwhip_effect https://en.wikipedia.org/wiki/Bullwhip_effect
UncleMeat 2y ago
On the other hand, my uncle lost a fortune investing in a wireless networking company in the 00s. He has worked an entire career in networking and has contributed to bleeding edge systems in the area. This company had excellent tech, but ultimately didn't succeed. A lifetime of savings kaput. nvidia's p/e is also insanely high. "Wow they sure sell a shitload of product" isn't necessarily enough to justify the price. There are highly profitable companies that nevertheless see their stock price turn around.
- anon291 2y ago
  The vast majority of financial issues would be prevented simply by following Buffett's advice to not lose money. It's tongue in cheek, but he's correct. Suppose you have a great idea for investing. It doesn't matter how good it is... don't put your life savings into it. If you do this you will make money. Investing is mostly about not losing money.
  - panarky 2y ago
    > Investing is mostly about not losing money Counterintuitively, when I focus hard on not losing money, I become too risk averse, I fail to take appropriate risk, and my returns are stuck in the low single digits. I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain. By focusing on potential for high returns instead of not losing money, with a diverse portfolio of assets that don't correlate perfectly with each other, total returns are much greater even though individual bets can show big losses for months or years.
    - lumost 2y ago
      This is where a diversified portfolio makes sense. It's completely fine to take a "big bet" on what would amount to a years worth of returns/cash investment every now and then. But many great opportunities have already been priced appropriately, so the extra concentration of risk doesn't yield a great return. If one was to be able to simply select the 50% of companies which perform better than the rest of the field. You would be in good shape.
seydor 2y ago
also, never listen to survivorship bias
zooq_ai 2y ago
Do the opposite of (popular) HN too
- rvz 2y ago
  It really works. Unlike the OP who used insider knowledge (for being a customer of Nvidia) I went against the HN crowd more than twice with buying META at $89 [0] and GOOG at an average of down to $93 [1] [0] https://news.ycombinator.com/item?id=35620810 https://news.ycombinator.com/item?id=35620810 [1] https://news.ycombinator.com/item?id=34713073 https://news.ycombinator.com/item?id=34713073
throwbh 2y ago
Last year, I said my cousin who owns a Tesla car aandnd stocks believes Tesla has great potential that Elon Musk is a fraud and it's over valued. Turns out who never owned a car and never invested in any stocks got it right. TBH no one can predict the market.
mym1990 2y ago
Seeing pallets shipped out the door seems like a far cry from knowing something intimately. To know the business intimately would likely take knowledge of not only the AI industry but also understanding what customers are using these machines for, are the sales sustainable, etc... Your anecdote is just survivorship bias and you are one of the survivors.
- boguscoder 2y ago
  To know something intimately would also often ring “insider trading” bell…
akira2501 2y ago
> Invest in things you know intimately folks. Was there really anything "intimate" about the knowledge you possessed? You were on the other side of a large market with apparent high demand and a supply chain that can most easily be described as "extremely monopolized." > when redditors we're posting that "Nvidia is the best shorting opportunity" without any of the knowledge of the market. It looks to me like it was done with real knowledge of the overall market outside of single pallet moves and understanding of the risky position Nvidia put themselves into to capitalize on this. The bet either paid off completely or it severely tanked the company while crippling their consumer product division. Nvidia took a top heavy position and bet the farm that TSMC could and would keep up with their demand. Was that the bet you understood yourself to be taking when investing in them?
- AnotherGoodName 2y ago
  The 40k h100s have ballpark comparable transistor counts to their 1k gaming gpus. I didn't see concerns with production. The gains came from the massive margin increase. They never needed to massively increase production from tsmc. They just needed to go from 5% to 75% margin on the cards they sell which is exactly what they did. https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/comment/jry1sfb/ https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/com...
mysore 2y ago
redditors are fucking funny man. i lost 50% on palantir cause i listened to wall street bets lmao
- eastbound 2y ago
  By definition, by the time someone has time to phrase it and broadcast it on a public forum, it’s already priced in. And corollary, if just a thousand dollars can be made from influencing people on Reddit, then thinking how many people you can pay to create fake interest on Reddit. Now do the calculation for $10k and $100k.
supportengineer 2y ago
It sounds like you possessed and traded on material non-public information?
elevatedastalt 2y ago
Sounds like insider trading to me. The backorders your company has are material non-public information.
- jbverschoor 2y ago
  Yet it is not
- NoboruWataya 2y ago
  "My company bought their product" does not sound like material non-public information. It certainly doesn't sound material (and for this reason I also think it was sheer dumb luck that the investment paid off so handsomely, rather than intimate knowledge of the business).
  - jldugger 2y ago
    It's absolutely treated as insider info by policy where I work. It might not rise to SEC enforcement action, but if caught you probably won't have a job anymore...
    - kortilla 2y ago
      “Violated company policy” is a completely different thing from anything the SEC cares about.
    - SkipperCat 2y ago
      Why would your employer care what you invested in? How would they be impacted if you bought or sold public stock of someone they interact with? Would they care if you traded Google, Apple, Microsoft or Oracle? I think most employers wouldn't care at all.
      - georgeburdell 2y ago
        It matters if you’re in a position, no matter how small, to influence your employer’s dealings with the companies you’re invested in.
andrewmcwatters 2y ago
Total crap. Doesn't pass the smell test when 99% of people say this. Would you buy a lemon for 2.336T? No? Probably not. What do you specifically value Nvidia at? Not the share price. Your own calculation. You, AnotherGoodName, are going to buy Nvidia outright. You're basically Elon Musk, and you think you can create better AI chips. You don't know what that number is? Then you don't intimately know the value of the company. Knowing tech intimately means nothing. You know how much a banana costs, right? You probably wouldn't buy one for $10.
- rvz 2y ago
  > You don't know what that number is? Then you don't intimately know the value of the company. Unless he's an insider. (Which he admitted) > Knowing tech intimately means nothing. Exactly. Everyone's an expert in a bull market or when the stock runs without a down turn. HN is an indicator to be bearish when euphoric posts like this are around. We'll start to see the short term dumping of $NVDA when we hit higher prices and the increased geo-political risk with China and Taiwan or a surprise declaration of war.
tintor 2y ago
How is this not insider trading?
PheonixPharts 2y ago
Curious if you've closed out your position yet? The tricky thing about the market is both entering and exiting at the correct time. I have strong knowledge of this is space and don't invest in it exactly for that reason. LLMs are great, but the hype is greater, and I personally don't want to have my income and my investments correlated. NVIDIA may be selling a lot, but their P/E ratio is nearly 80, so that price isn't fundamentals alone. All we need is this ages equivalent to "perceptrons can't XOR" and there will be a fast correction. This could go on a long time and I wouldn't be surprised if NVIDIA doubled over the next few years. After all crypto is still doing well despite everyone more or less agreeing it's a scam. I can also imagine world were something is revealed in a few months and everyone flees from "AI". The only thing I know about the stock market is arbitrage theory still holds, and the future value of any stock tends to be it's current price + risk free rate over time.
- ls612 2y ago
  Apple had a net income of ~$100B last year (and will in all likelihood have a similar amount this year) and a market cap of ~$3T. Nvidia is likely to have a net income of around $50-60B this year and has a market cap of around $2.4T. It doesn't take that much growth being priced in for the stock to suddenly seem reasonably priced.
- solidasparagus 2y ago
  I saw NVIDIA as the next big thing due to AI 6 years ago back when their stock price was dictated by gaming and crypto. I was working for a hyperscaler and I was confident they were undervalued, along with Microsoft and AMD. And then I sold all 3 during COVID because I realized the exact problem you are saying - I had no idea when to sell and ultimately I was happy with my gains. Whoops I guess. Now all serious investing money just goes into index funds and I don't have to worry.
  - Hikikomori 2y ago
    Didn't get Nvidia early enough so only 5x on them, but 10x on AMD, still holding most of it. Was planning on selling more but then ai took off hard.
hiddencost 2y ago
Invest in index funds and stay away from people who give you investing advice. They usually only tell about the times they got lucky.
- throwaway2037 2y ago
  I agree. The OP is scary. Always run away when Internet stranger tells you about their stock market success. It is the same as a cab driver telling you about DotCom stocks in the late 1990s!
bradfox2 2y ago
I work at the intersection of power and AI. Buy utility stock. The bottleneck for AI expansion will not be installed GPUs, but the electricity they need to run. We are in an energy crisis and not many realize it yet. Virgina, Texas, Arizona and soon to be Ohio and Georgia are out of generation capacity and the data centers are like locusts.
- soferio 2y ago
  This is very interesting to read. I am in Australia and quite interested in this investment thesis although I’m not an investment professional. What are the best things to read about the demand Supply mismatch?
- mjthrowaway1 2y ago
  Been on this thesis for the last few months. Any companies you think are interesting or have potential to grow during the energy crisis? Looking for more prospects to evaluate.
  - bradfox2 2y ago
    I'd look at generators in unregulated markets and suppliers of generation equipment.
austhrow743 2y ago
How did you know the $250 price didn't already account for the fact that Nvidia has at least a years worth of back orders to fill?
shostack 2y ago
I'll do it one better. As a gamer when I was younger, I knew they were the future. I asked for shares for my bday at the time and got them at least at $22.88 a share as that's as far back as my records go.
- crtified 2y ago
  Nice one! :) When I read that undeniably impressive anecdote, what really stands out is not the shares or the money - it's the incredible childhood you had, the smart and organised parents who raised you in a way that you'd even understand those notions at a young age, and be in a position to enable them. The way I was raised, I could top my schoolmates academically no problem, but the concepts and methods for creating monetary wealth - beyond "I need to somehow scrape together enough to pay for the next week's needs" - weren't even part of my (or my family's) universe, until I gradually learned them by accretion from decades of my own adulthood.
  - shostack 2y ago
    For sure a healthy dose of privilege enabled that. I was surprised to learn my father even owned NVDA shares from even further back for some reason. The most valuable thing he taught me though was not buying individual shares, but low fee index funds. Ie. the Boglehead approach.
- digging 2y ago
  > I knew they were the future I think you made a good bet, but it's important to recognize it was a bet. Believing something is true, and then turning out to be correct, isn't the same as knowing something. The future is not knowable - it's only varying degrees of predictable.
- skirmish 2y ago
  Hah, as a starving student I knew 3d gaming was the future, and thus scrounged $1.5k to invest into TDFX. Next, they sold all assets to NVDA and dissolved the company [1]. [1] https://web.archive.org/web/20010405091710/http://www.3dfx.com/rel-15dec_2.htm https://web.archive.org/web/20010405091710/http://www.3dfx.c...
hi-v-rocknroll 2y ago
Although not using real money, I went 90% in to IOMG in a high school virtual portfolio assignment when I was selling Zip drives as fast as they could be produced. The problem then becomes getting out before the rest of the market and before the good times stop. Like a party, perhaps one should sell while everyone is still having a good time.
unclad5968 2y ago
Demand could have plummeted for any reason and Nvidia would be sitting on hundred million dollar pallets. The reality is that your gamble was just as much gambling as their gamble. You just happened to win.
- jejeyyy77 2y ago
  was it not fairly obvious that all the big software companies were going to ramp up on training AI models? the writing was on the wall, some people just didnt read it.
  - sp332 2y ago
    If AMD had fixed their software, nvidia would have faced real competition with they launched the MI300X.
- rasz 2y ago
  The point is those $44K cards have $500-1000 BOM.
deleted 2y ago
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jejeyyy77 2y ago
so many folks here have industry knowledge that is as valuable as insider knowledge yet they don't have fortitude to act on it. Instead, they dismiss their own intuition and listen to reddit/social hivemind.
Salgat 2y ago
The market is too fickle to rely on your own experience and knowledge. Remember, there's plenty of experts in the tech industry whose sole job is to trade tech stocks, this information is baked into the market. It's far more likely that you were lucky, rather than had some super special inside knowledge compared to others. The only (semi)reliable stock is an index.
- powerbroker 2y ago
  It is possible to do well, even with insufficient information. Look at jet aircraft that are routinely landed without the ability to see the runway -- long before GPS was available. This is called flying with instrument flight rules. Everyone only has a fraction of all the information. And you have to be satisfied with big returns in which you wonder, "how much of that was luck?" And, the occasional big losers. I can say I don't have 'the formula', but I'm returning 15% for over 20 years... knowing there is a ton I don't know. Which is something you find out when you are a patent attorney, and innovations come out of nowhere while MOST 'innovations' also lead nowhere. Just. Have to be. OK. With. Not knowing.
breadwinner 2y ago
> Invest in things you know Exactly. I invested in NVDA when it was $21.85, after I saw a demo of Deep Learning for the first time. This was long before LLMs and generative AI. I was blown away by how you can upload any random image and it would tell you what is in the image. Then I learned about NVDA and CUDA and how DNNs leverage them and decided it would be a good investment.
sushid 2y ago
Honestly, this post reeks of a barber giving stock advice to me.
kevstev 2y ago
I agree here. Bought some well over a decade ago because of their dominance in gpus. Bought some more around 2017 after my company wanted to get access to some gpus on AWS and we couldnt because AWS couldn't get their hands on enough- and the crypto boom was driving demand. Bought some more again about a year ago when I saw companies large and small on the ai train- is not just openai and Goog/fb/apple. Even if the stock falls 3/4 I've had an incredible return and I just don't see the ai hype dying down soon, though im always trying to feel out that inflection point. I'm not super stoked about the ability of AI to really be monetized that well in its current form, but I'm happy to be invested in the picks and shovel business behind it.
zeroonetwothree 2y ago
I always invest based on a d20. Back when BTC was $1 I rolled one and got a natural 20 so I knew it would take off. I put my life savings into it and cashed out last year. Now I own three yachts and two islands and have the whole day free to troll on HN.
- sinatra 2y ago
  And the d20 rolled a 12 when you checked it for duration to hold? Man, lucky you! Give the dice a kiss!
7speter 2y ago
Redditors mostly only look at all technology through the eyes of gaming and nothing else. So because Nvidia cards were relatively cheap compared to the last few years because of cryptomining, of course Nvidia is in dire straits and will be left to the mercy of the almighty gamer. The en-vogue group think on Reddit now is to show total disdain towards all AI, and insist that the 'AI PC' is solely a marketing tactic for Intel, Dell and Microsoft to sell more computers, mostly because it really seems most people on reddit don't do any work to appreciate the benefits AI can provide to productive people.
gnicholas 2y ago
This can be good advice, except that it tends to create a correlation between one's portfolio (unless you're shorting) and one's profession. So if your industry tanks, you could find yourself laid off and with a slashed portfolio.
attentive 2y ago
That is great way to loose tons of money. Being in a winning trade doesn't make you genius. Price matters. Geo matters. Policy matters. Many other things matter.
lanza 2y ago
https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias
goles 2y ago
Or people with strong knowledge you trust. There's a somewhat famous legend of a trade Peter Lynch did based, in some part, upon his wife commenting on buying pantyhose at the supermarket. I'll let you read for yourself - "I had a great luck company called Hanes. They test marketed a product called L'Eggs in Boston and I think in Columbus, Ohio, maybe three or four markets. And Carolyn, ah, brought this product home and she was buying and she said, "It's great." And she almost got a black belt in shopping. She's a very good shopper. If we hadn't had these three kids, she now -- when Beth finally goes off to college, I think we'll be able to resume her training. But she's a very good shopper and she would buy these things. She said, "They're really great." And I did a little bit of research. I found out the average woman goes to the supermarket or a drugstore once a week. And they go a woman's specialty store or department store once every six weeks. And all the good hosiery, all the good pantyhose is being sold in department stores. They were selling junk in the supermarkets. They were selling junk in the drugstores. So this company came up with a product. They rack-jobbed it, they had all the sizes, all the fits, a down they never advertised price. They just advertised "This fits. You'll enjoy it." And it was a huge success and it became my biggest position and I always worried somebody'd come out with a competitive product, and about a year-and-a-half they were on the market another large company called Kaiser-Roth came out with a product called No Nonsense. They put it right next to L'eggs in the supermarket, right next to L'eggs in the drugstore. I said, "Wow, I gotta figure this one out." So I remember buying -- I bought 48 different pairs at the supermarket, colors, shapes, and sizes. They must have wondered what kind of house I had at home when I got to the register. They just let me buy it. So I brought it into the office. I gave it to everybody. I said, "Try this out and come back and see what's the story with No Nonsense." And people came back to me in a couple weeks and said, "It's not as good." That's what fundamental research is. So I held onto Hanes and it was a huge stock and it was bought out by Consolidated Foods, which is now called Sara Lee, and it's been a great division of that company. It might have been a thirty bagger instead of a ten bagger, if it hadn't been bought out." https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/lynch.html https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/... He talks about this more in One Up On Wallstreet about how an observant retail investor who goes to the supermarket or department store or fast food chains, or in your example a loading dock, every week is actually more in touch with what's happening in some businesses than some institutional investors. The service here has really gone down over the years, product sucks everyone is switching to the competitor, friends can't stop raving about this new product. I don't know how well that advice holds up in today's market but it's a fun idea, maybe just for the play-money account.
aiauthoritydev 2y ago
While I appreciate your inputs for those reading this please do not take this as good investment advice. A lot of things need to align for you to benefit from even the specialized knowledge here.
guenthert 2y ago
That seems like fine advise, if the market were rational. I'd think, it's as important to understand people than it is to understand businesses when it comes to the stock market. Said that, don't take financial advise from me, I haven't had much luck with my bets.
dcl 2y ago
I had heavily pondered investing in Nvidia in 2014 when I thought deep learning was really becoming interesting (90+% of my other investments are in index funds) in some sense, I had some expert knowledge of the field. However, I thought that margins would compress because AMD, Intel, and perhaps other firms would get involved... Boy was I wrong.
RiverStone 2y ago
This is well intentioned but bad advice. Studies in behavioral finance are clear that ordinary investors should not invest in individual stocks over indexes. There are too many pitfalls. Even hedge funds with teams of sector analysts rarely beat the market consistently.

amelius 2y ago

But don't put all your eggs in one basket.

aldarisbm 2y ago

do you have an exit strategy?

AnotherGoodName 2y ago
I started selling at the one year mark since capital gains is lower for stocks held longer than one year in the USA. For a complete exit I would need to see a genuine competitor emerge. I have not seen that yet.

somethoughts 2y ago

The million dollar question (or trillion dollar question I suppose) is for the upcoming quarters - will there be pallets of h100s waiting shipment, 2x pallets of h100s or 10x pallets of h100s... or have all the pallets are shipped for the time being. Has demand saturated while downstream AI engineers tinker on actually profitable use cases or is it going to keep growing exponentially. Probably most stock price models assume at minimum linear growth for the next 5-10 years. But if the future reality is that it nearly plateauing and will likely drop off...

zooq_ai 2y ago
The answer is we are in the Pentium II 33 MHz stage of AI chips. So, plan accordingly into what the future demand may look like.
- timr 2y ago
  The pentium II was 233 MHz, not 33, but sure. The problem is, if that metaphor holds, we're so vastly far away from "the future" that it's impossible to predict what it looks like. Just for example, NVIDIA's chips kinda suck for inference. Vastly overprovisioned. It's like the folks who were saying "the internet is growing rapidly, Cisco powers the internet, therefore Cisco will grow as rapidly as the internet" in the late 90s. Oops.
- somethoughts 2y ago
  I think the challenge is to determine whether or not AI applications are generalizably useful to all of society as general purpose PCs and smartphones or if they are more narrowly focused like crypto applications.
  - theGnuMe 2y ago
    The answer is yes.
  - aurareturn 2y ago
    I can think of hundreds of use cases for LLMs. But all my ideas are hindered by inference cost, context size, and LLM accuracy. I assume all 3 will rapidly improve.
cokeandpepsi 2y ago
[dead]

georgeburdell 2y ago

Is that not insider trading? I had opportunities to buy stock in companies that I knew my employer was about to do big business with, and could have profited handsomely, but was advised that it was at the very least against corporate guidelines

AlotOfReading 2y ago
They're not talking about their employer's actions moving the stock price, they're talking about the basic industry knowledge that everyone else is doing the same thing. I (probably) don't work at the same company and I had access to exactly the same information.
bombcar 2y ago
Almost certainly not, insider trading is for "knowledge that isn't out there". What you are describing is, because the "knowledge wasn't out there". It's a fuzzy distinction and you're better safe than sorry. "We bought a bunch of cards" vs "we're going to buy a bunch of cards" type thing.
darth_avocado 2y ago
If you work for NVIDIA, it is insider trading. If you saw the pallets in a truck at a gas station, it’s not. In the wild, it’s no different from Wall Street making trades based on strip club attendance or by flying drones near Tesla factories.
- beejiu 2y ago
  > If you work for NVIDIA, it is insider trading. Just to be absolutely clear, it can be insider trading if you don't work at NVIDIA.
  - esprehn 2y ago
    Yeah, it's not about being an employee, it's about trading on Material Non-Public Information.

acchow 2y ago

The real questions: how much of this is already priced in? Will this trend continue in the future?

ipsento606 2y ago

I know nothing about stocks. But if a similar situation were to happen again, how can you tell whether or not the surge in demand is already "priced in"? Simply knowing that demand for a product has increased - even increased massively - surely can't tell you that the stock of the company that makes that product is going to increase in value, without also knowing whether or not that increase in demand is already reflected in the current price of the stock

it_citizen 2y ago
Exactly. And for one thing you know, there are 100s you don't know about the company. Luck and survivor bias.
- bordercases 2y ago
  But is the luck biased to have more survivors in one direction over the other?
foota 2y ago
The easy answer here would be to look at analyst estimates. If you notice nvidia selling 20 billion in H100s and the consensus revenue is 10 billion, then it's probably not priced in.
- jessriedel 2y ago
  How can you just "notice" them selling 20B? How are you getting better data than the analysts?
  - hhh 2y ago
    try to talk to them and see how hard it is to get a gpu
    - jldugger 2y ago
      But that's been known for months now. At one point a bloomberg podcast mentioned in passing that nVidia inventory now has a lead time measured in months. Which kinda sounds like the makings of a bullwhip effect induced bubble[0]. Everybody wants inventory now, so they put in massive orders, hopefully get some fraction of what they asked for, and if they happily get too much they can, in theory, easily sell their surplus into the market. Think about how many "AI platforms" boil down to "we have GPUs!" _If_ this is the bullwhip scenario, then it's basically a gamble about how many million cards nVidia can ship before their own short supply bubble bursts. Or the AI bubble more generally. [0]: https://en.wikipedia.org/wiki/Bullwhip_effect https://en.wikipedia.org/wiki/Bullwhip_effect

UncleMeat 2y ago

On the other hand, my uncle lost a fortune investing in a wireless networking company in the 00s. He has worked an entire career in networking and has contributed to bleeding edge systems in the area. This company had excellent tech, but ultimately didn't succeed. A lifetime of savings kaput. nvidia's p/e is also insanely high. "Wow they sure sell a shitload of product" isn't necessarily enough to justify the price. There are highly profitable companies that nevertheless see their stock price turn around.

anon291 2y ago
The vast majority of financial issues would be prevented simply by following Buffett's advice to not lose money. It's tongue in cheek, but he's correct. Suppose you have a great idea for investing. It doesn't matter how good it is... don't put your life savings into it. If you do this you will make money. Investing is mostly about not losing money.
- panarky 2y ago
  > Investing is mostly about not losing money Counterintuitively, when I focus hard on not losing money, I become too risk averse, I fail to take appropriate risk, and my returns are stuck in the low single digits. I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain. By focusing on potential for high returns instead of not losing money, with a diverse portfolio of assets that don't correlate perfectly with each other, total returns are much greater even though individual bets can show big losses for months or years.
  - lumost 2y ago
    This is where a diversified portfolio makes sense. It's completely fine to take a "big bet" on what would amount to a years worth of returns/cash investment every now and then. But many great opportunities have already been priced appropriately, so the extra concentration of risk doesn't yield a great return. If one was to be able to simply select the 50% of companies which perform better than the rest of the field. You would be in good shape.

seydor 2y ago

also, never listen to survivorship bias

zooq_ai 2y ago

Do the opposite of (popular) HN too

rvz 2y ago
It really works. Unlike the OP who used insider knowledge (for being a customer of Nvidia) I went against the HN crowd more than twice with buying META at $89 [0] and GOOG at an average of down to $93 [1] [0] https://news.ycombinator.com/item?id=35620810 https://news.ycombinator.com/item?id=35620810 [1] https://news.ycombinator.com/item?id=34713073 https://news.ycombinator.com/item?id=34713073

throwbh 2y ago

Last year, I said my cousin who owns a Tesla car aandnd stocks believes Tesla has great potential that Elon Musk is a fraud and it's over valued. Turns out who never owned a car and never invested in any stocks got it right. TBH no one can predict the market.

mym1990 2y ago

Seeing pallets shipped out the door seems like a far cry from knowing something intimately. To know the business intimately would likely take knowledge of not only the AI industry but also understanding what customers are using these machines for, are the sales sustainable, etc... Your anecdote is just survivorship bias and you are one of the survivors.

boguscoder 2y ago
To know something intimately would also often ring “insider trading” bell…

akira2501 2y ago

> Invest in things you know intimately folks. Was there really anything "intimate" about the knowledge you possessed? You were on the other side of a large market with apparent high demand and a supply chain that can most easily be described as "extremely monopolized." > when redditors we're posting that "Nvidia is the best shorting opportunity" without any of the knowledge of the market. It looks to me like it was done with real knowledge of the overall market outside of single pallet moves and understanding of the risky position Nvidia put themselves into to capitalize on this. The bet either paid off completely or it severely tanked the company while crippling their consumer product division. Nvidia took a top heavy position and bet the farm that TSMC could and would keep up with their demand. Was that the bet you understood yourself to be taking when investing in them?

AnotherGoodName 2y ago
The 40k h100s have ballpark comparable transistor counts to their 1k gaming gpus. I didn't see concerns with production. The gains came from the massive margin increase. They never needed to massively increase production from tsmc. They just needed to go from 5% to 75% margin on the cards they sell which is exactly what they did. https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/comment/jry1sfb/ https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/com...

mysore 2y ago

redditors are fucking funny man. i lost 50% on palantir cause i listened to wall street bets lmao

eastbound 2y ago
By definition, by the time someone has time to phrase it and broadcast it on a public forum, it’s already priced in. And corollary, if just a thousand dollars can be made from influencing people on Reddit, then thinking how many people you can pay to create fake interest on Reddit. Now do the calculation for $10k and $100k.

supportengineer 2y ago

It sounds like you possessed and traded on material non-public information?

elevatedastalt 2y ago

Sounds like insider trading to me. The backorders your company has are material non-public information.

jbverschoor 2y ago
Yet it is not
NoboruWataya 2y ago
"My company bought their product" does not sound like material non-public information. It certainly doesn't sound material (and for this reason I also think it was sheer dumb luck that the investment paid off so handsomely, rather than intimate knowledge of the business).
- jldugger 2y ago
  It's absolutely treated as insider info by policy where I work. It might not rise to SEC enforcement action, but if caught you probably won't have a job anymore...
  - kortilla 2y ago
    “Violated company policy” is a completely different thing from anything the SEC cares about.
  - SkipperCat 2y ago
    Why would your employer care what you invested in? How would they be impacted if you bought or sold public stock of someone they interact with? Would they care if you traded Google, Apple, Microsoft or Oracle? I think most employers wouldn't care at all.
    - georgeburdell 2y ago
      It matters if you’re in a position, no matter how small, to influence your employer’s dealings with the companies you’re invested in.

andrewmcwatters 2y ago

Total crap. Doesn't pass the smell test when 99% of people say this. Would you buy a lemon for 2.336T? No? Probably not. What do you specifically value Nvidia at? Not the share price. Your own calculation. You, AnotherGoodName, are going to buy Nvidia outright. You're basically Elon Musk, and you think you can create better AI chips. You don't know what that number is? Then you don't intimately know the value of the company. Knowing tech intimately means nothing. You know how much a banana costs, right? You probably wouldn't buy one for $10.

rvz 2y ago
> You don't know what that number is? Then you don't intimately know the value of the company. Unless he's an insider. (Which he admitted) > Knowing tech intimately means nothing. Exactly. Everyone's an expert in a bull market or when the stock runs without a down turn. HN is an indicator to be bearish when euphoric posts like this are around. We'll start to see the short term dumping of $NVDA when we hit higher prices and the increased geo-political risk with China and Taiwan or a surprise declaration of war.

tintor 2y ago

How is this not insider trading?

PheonixPharts 2y ago

Curious if you've closed out your position yet? The tricky thing about the market is both entering and exiting at the correct time. I have strong knowledge of this is space and don't invest in it exactly for that reason. LLMs are great, but the hype is greater, and I personally don't want to have my income and my investments correlated. NVIDIA may be selling a lot, but their P/E ratio is nearly 80, so that price isn't fundamentals alone. All we need is this ages equivalent to "perceptrons can't XOR" and there will be a fast correction. This could go on a long time and I wouldn't be surprised if NVIDIA doubled over the next few years. After all crypto is still doing well despite everyone more or less agreeing it's a scam. I can also imagine world were something is revealed in a few months and everyone flees from "AI". The only thing I know about the stock market is arbitrage theory still holds, and the future value of any stock tends to be it's current price + risk free rate over time.

ls612 2y ago
Apple had a net income of ~$100B last year (and will in all likelihood have a similar amount this year) and a market cap of ~$3T. Nvidia is likely to have a net income of around $50-60B this year and has a market cap of around $2.4T. It doesn't take that much growth being priced in for the stock to suddenly seem reasonably priced.
solidasparagus 2y ago
I saw NVIDIA as the next big thing due to AI 6 years ago back when their stock price was dictated by gaming and crypto. I was working for a hyperscaler and I was confident they were undervalued, along with Microsoft and AMD. And then I sold all 3 during COVID because I realized the exact problem you are saying - I had no idea when to sell and ultimately I was happy with my gains. Whoops I guess. Now all serious investing money just goes into index funds and I don't have to worry.
- Hikikomori 2y ago
  Didn't get Nvidia early enough so only 5x on them, but 10x on AMD, still holding most of it. Was planning on selling more but then ai took off hard.

hiddencost 2y ago

Invest in index funds and stay away from people who give you investing advice. They usually only tell about the times they got lucky.

throwaway2037 2y ago
I agree. The OP is scary. Always run away when Internet stranger tells you about their stock market success. It is the same as a cab driver telling you about DotCom stocks in the late 1990s!

bradfox2 2y ago

I work at the intersection of power and AI. Buy utility stock. The bottleneck for AI expansion will not be installed GPUs, but the electricity they need to run. We are in an energy crisis and not many realize it yet. Virgina, Texas, Arizona and soon to be Ohio and Georgia are out of generation capacity and the data centers are like locusts.

soferio 2y ago
This is very interesting to read. I am in Australia and quite interested in this investment thesis although I’m not an investment professional. What are the best things to read about the demand Supply mismatch?
mjthrowaway1 2y ago
Been on this thesis for the last few months. Any companies you think are interesting or have potential to grow during the energy crisis? Looking for more prospects to evaluate.
- bradfox2 2y ago
  I'd look at generators in unregulated markets and suppliers of generation equipment.

austhrow743 2y ago

How did you know the $250 price didn't already account for the fact that Nvidia has at least a years worth of back orders to fill?

shostack 2y ago

I'll do it one better. As a gamer when I was younger, I knew they were the future. I asked for shares for my bday at the time and got them at least at $22.88 a share as that's as far back as my records go.

crtified 2y ago
Nice one! :) When I read that undeniably impressive anecdote, what really stands out is not the shares or the money - it's the incredible childhood you had, the smart and organised parents who raised you in a way that you'd even understand those notions at a young age, and be in a position to enable them. The way I was raised, I could top my schoolmates academically no problem, but the concepts and methods for creating monetary wealth - beyond "I need to somehow scrape together enough to pay for the next week's needs" - weren't even part of my (or my family's) universe, until I gradually learned them by accretion from decades of my own adulthood.
- shostack 2y ago
  For sure a healthy dose of privilege enabled that. I was surprised to learn my father even owned NVDA shares from even further back for some reason. The most valuable thing he taught me though was not buying individual shares, but low fee index funds. Ie. the Boglehead approach.
digging 2y ago
> I knew they were the future I think you made a good bet, but it's important to recognize it was a bet. Believing something is true, and then turning out to be correct, isn't the same as knowing something. The future is not knowable - it's only varying degrees of predictable.
skirmish 2y ago
Hah, as a starving student I knew 3d gaming was the future, and thus scrounged $1.5k to invest into TDFX. Next, they sold all assets to NVDA and dissolved the company [1]. [1] https://web.archive.org/web/20010405091710/http://www.3dfx.com/rel-15dec_2.htm https://web.archive.org/web/20010405091710/http://www.3dfx.c...

hi-v-rocknroll 2y ago

Although not using real money, I went 90% in to IOMG in a high school virtual portfolio assignment when I was selling Zip drives as fast as they could be produced. The problem then becomes getting out before the rest of the market and before the good times stop. Like a party, perhaps one should sell while everyone is still having a good time.

unclad5968 2y ago

Demand could have plummeted for any reason and Nvidia would be sitting on hundred million dollar pallets. The reality is that your gamble was just as much gambling as their gamble. You just happened to win.

jejeyyy77 2y ago
was it not fairly obvious that all the big software companies were going to ramp up on training AI models? the writing was on the wall, some people just didnt read it.
- sp332 2y ago
  If AMD had fixed their software, nvidia would have faced real competition with they launched the MI300X.
rasz 2y ago
The point is those $44K cards have $500-1000 BOM.

deleted 2y ago

[deleted]

jejeyyy77 2y ago

so many folks here have industry knowledge that is as valuable as insider knowledge yet they don't have fortitude to act on it. Instead, they dismiss their own intuition and listen to reddit/social hivemind.

Salgat 2y ago

The market is too fickle to rely on your own experience and knowledge. Remember, there's plenty of experts in the tech industry whose sole job is to trade tech stocks, this information is baked into the market. It's far more likely that you were lucky, rather than had some super special inside knowledge compared to others. The only (semi)reliable stock is an index.

powerbroker 2y ago
It is possible to do well, even with insufficient information. Look at jet aircraft that are routinely landed without the ability to see the runway -- long before GPS was available. This is called flying with instrument flight rules. Everyone only has a fraction of all the information. And you have to be satisfied with big returns in which you wonder, "how much of that was luck?" And, the occasional big losers. I can say I don't have 'the formula', but I'm returning 15% for over 20 years... knowing there is a ton I don't know. Which is something you find out when you are a patent attorney, and innovations come out of nowhere while MOST 'innovations' also lead nowhere. Just. Have to be. OK. With. Not knowing.

breadwinner 2y ago

> Invest in things you know Exactly. I invested in NVDA when it was $21.85, after I saw a demo of Deep Learning for the first time. This was long before LLMs and generative AI. I was blown away by how you can upload any random image and it would tell you what is in the image. Then I learned about NVDA and CUDA and how DNNs leverage them and decided it would be a good investment.

sushid 2y ago

Honestly, this post reeks of a barber giving stock advice to me.

kevstev 2y ago

I agree here. Bought some well over a decade ago because of their dominance in gpus. Bought some more around 2017 after my company wanted to get access to some gpus on AWS and we couldnt because AWS couldn't get their hands on enough- and the crypto boom was driving demand. Bought some more again about a year ago when I saw companies large and small on the ai train- is not just openai and Goog/fb/apple. Even if the stock falls 3/4 I've had an incredible return and I just don't see the ai hype dying down soon, though im always trying to feel out that inflection point. I'm not super stoked about the ability of AI to really be monetized that well in its current form, but I'm happy to be invested in the picks and shovel business behind it.

zeroonetwothree 2y ago

I always invest based on a d20. Back when BTC was $1 I rolled one and got a natural 20 so I knew it would take off. I put my life savings into it and cashed out last year. Now I own three yachts and two islands and have the whole day free to troll on HN.

sinatra 2y ago
And the d20 rolled a 12 when you checked it for duration to hold? Man, lucky you! Give the dice a kiss!

7speter 2y ago

Redditors mostly only look at all technology through the eyes of gaming and nothing else. So because Nvidia cards were relatively cheap compared to the last few years because of cryptomining, of course Nvidia is in dire straits and will be left to the mercy of the almighty gamer. The en-vogue group think on Reddit now is to show total disdain towards all AI, and insist that the 'AI PC' is solely a marketing tactic for Intel, Dell and Microsoft to sell more computers, mostly because it really seems most people on reddit don't do any work to appreciate the benefits AI can provide to productive people.

gnicholas 2y ago

This can be good advice, except that it tends to create a correlation between one's portfolio (unless you're shorting) and one's profession. So if your industry tanks, you could find yourself laid off and with a slashed portfolio.

attentive 2y ago

That is great way to loose tons of money. Being in a winning trade doesn't make you genius. Price matters. Geo matters. Policy matters. Many other things matter.

lanza 2y ago

https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias

goles 2y ago

Or people with strong knowledge you trust. There's a somewhat famous legend of a trade Peter Lynch did based, in some part, upon his wife commenting on buying pantyhose at the supermarket. I'll let you read for yourself - "I had a great luck company called Hanes. They test marketed a product called L'Eggs in Boston and I think in Columbus, Ohio, maybe three or four markets. And Carolyn, ah, brought this product home and she was buying and she said, "It's great." And she almost got a black belt in shopping. She's a very good shopper. If we hadn't had these three kids, she now -- when Beth finally goes off to college, I think we'll be able to resume her training. But she's a very good shopper and she would buy these things. She said, "They're really great." And I did a little bit of research. I found out the average woman goes to the supermarket or a drugstore once a week. And they go a woman's specialty store or department store once every six weeks. And all the good hosiery, all the good pantyhose is being sold in department stores. They were selling junk in the supermarkets. They were selling junk in the drugstores. So this company came up with a product. They rack-jobbed it, they had all the sizes, all the fits, a down they never advertised price. They just advertised "This fits. You'll enjoy it." And it was a huge success and it became my biggest position and I always worried somebody'd come out with a competitive product, and about a year-and-a-half they were on the market another large company called Kaiser-Roth came out with a product called No Nonsense. They put it right next to L'eggs in the supermarket, right next to L'eggs in the drugstore. I said, "Wow, I gotta figure this one out." So I remember buying -- I bought 48 different pairs at the supermarket, colors, shapes, and sizes. They must have wondered what kind of house I had at home when I got to the register. They just let me buy it. So I brought it into the office. I gave it to everybody. I said, "Try this out and come back and see what's the story with No Nonsense." And people came back to me in a couple weeks and said, "It's not as good." That's what fundamental research is. So I held onto Hanes and it was a huge stock and it was bought out by Consolidated Foods, which is now called Sara Lee, and it's been a great division of that company. It might have been a thirty bagger instead of a ten bagger, if it hadn't been bought out." https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/lynch.html https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/... He talks about this more in One Up On Wallstreet about how an observant retail investor who goes to the supermarket or department store or fast food chains, or in your example a loading dock, every week is actually more in touch with what's happening in some businesses than some institutional investors. The service here has really gone down over the years, product sucks everyone is switching to the competitor, friends can't stop raving about this new product. I don't know how well that advice holds up in today's market but it's a fun idea, maybe just for the play-money account.

aiauthoritydev 2y ago

While I appreciate your inputs for those reading this please do not take this as good investment advice. A lot of things need to align for you to benefit from even the specialized knowledge here.

guenthert 2y ago

That seems like fine advise, if the market were rational. I'd think, it's as important to understand people than it is to understand businesses when it comes to the stock market. Said that, don't take financial advise from me, I haven't had much luck with my bets.

dcl 2y ago

I had heavily pondered investing in Nvidia in 2014 when I thought deep learning was really becoming interesting (90+% of my other investments are in index funds) in some sense, I had some expert knowledge of the field. However, I thought that margins would compress because AMD, Intel, and perhaps other firms would get involved... Boy was I wrong.

RiverStone 2y ago

This is well intentioned but bad advice. Studies in behavioral finance are clear that ordinary investors should not invest in individual stocks over indexes. There are too many pitfalls. Even hedge funds with teams of sector analysts rarely beat the market consistently.