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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"? Simpl

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
      - ryandrake 2y ago
        Exactly. Very few people have actual, factual knowledge about whether Wall Street traders analysts are right or wrong about some company performance metric. They say "they know" but it's just hunches and gut feelings. The people who actually know for a fact are insiders and cannot legally trade on the knowledge. Everyone else are just gamblers who think they "have a system" that works.
  - AnotherGoodName 2y ago
    Well you could just look around like I did back then at orders and even linked documented Twitter posts (from analysts funnily enough) on the massive backlogs. https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/comment/jryimba/ https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/com...
  - foota 2y ago
    That's the hard part, but the OP is claiming they'd done that part :)
gizmo 2y ago
As a rule of thumb it is never priced in when a company suddenly has tremendous acceleration in revenue and profit growth. Wall Street is good at forecasting businesses with a stable growth trajectory. Wall Street is way too conservative at inflection points because it’s too embarrassing to be wrong (in either direction).
- moffkalast 2y ago
  Meme stocks are always priced in as well, since the investor speculation far outweighs any effects from irrelevant things such as how the company is actually doing in real life.
Salgat 2y ago
The only answer anyone can give you with total truth is that there is no way to know for sure (without having very secretive insider knowledge, such as being a CEO who is about to make a big deal). There's a reason why managed funds in the long term don't outperform index funds.

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
    - ryandrake 2y ago
      Exactly. Very few people have actual, factual knowledge about whether Wall Street traders analysts are right or wrong about some company performance metric. They say "they know" but it's just hunches and gut feelings. The people who actually know for a fact are insiders and cannot legally trade on the knowledge. Everyone else are just gamblers who think they "have a system" that works.
- AnotherGoodName 2y ago
  Well you could just look around like I did back then at orders and even linked documented Twitter posts (from analysts funnily enough) on the massive backlogs. https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/comment/jryimba/ https://www.reddit.com/r/wallstreetbets/comments/14zhy7f/com...
- foota 2y ago
  That's the hard part, but the OP is claiming they'd done that part :)

gizmo 2y ago

As a rule of thumb it is never priced in when a company suddenly has tremendous acceleration in revenue and profit growth. Wall Street is good at forecasting businesses with a stable growth trajectory. Wall Street is way too conservative at inflection points because it’s too embarrassing to be wrong (in either direction).

moffkalast 2y ago
Meme stocks are always priced in as well, since the investor speculation far outweighs any effects from irrelevant things such as how the company is actually doing in real life.

Salgat 2y ago

The only answer anyone can give you with total truth is that there is no way to know for sure (without having very secretive insider knowledge, such as being a CEO who is about to make a big deal). There's a reason why managed funds in the long term don't outperform index funds.