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Question for HNers: Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? And do you think all of Nv

Question for HNers: Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? And do you think all of Nvidia’s customers throwing money at data centres full of GPUs will cause the current generation of AIs (LLMs etc) to deliver greater and greater returns, sufficient to make Nvidia worth this current valuation and more? WalMart’s market cap is $540billion. Would you rather own one Nvidia, or WalMart six times over?

hiddencost 2y ago
Yes. For the last 20 years. Many of the largest applications aren't ones you're aware of or ever see directly. Most of Google's revenue, to pick one example. For every flashy start-up or cool open source project, there is an army of people quietly delivering 10% relative improvements that drive $100M revenue lift in their particular niche at a huge company.
- Ologn 2y ago
  Right. In 2011 Jeff Dean ran into Andrew Ng in the Google cafeteria, which AFAIK is where a lot of the modern Google AI started happening. AlexNet won the ImageNet challenge in 2012 (which HN was not impressed with at all at the time - https://news.ycombinator.com/item?id=4611830 https://news.ycombinator.com/item?id=4611830 ). Attention is All You Need was published in 2017. A lot of behind the scenes, invite-only etc. stuff has been happening for years, and only in the past two years do we see DALL-E, Stable Diffusion, Midjourney, ChatGPT, Gemini, Sora etc.
- riku_iki 2y ago
  > Most of Google's revenue, to pick one example. For every flashy start-up or cool open source project, there is an army of people quietly delivering 10% relative improvements that drive $100M revenue lift in their particular niche at a huge company. this is true for previous generations of deep learning but still not clear for current GenAI wave.
alberth 2y ago
The market is "pricing in" this future potential. With Walmart, it's hard to speculate what ground-breaking future potential they might have that isn't already known.
- riku_iki 2y ago
  > The market is "pricing in" this future potential. or short gain opportunity with goal to quite before crash.
- gizajob 2y ago
  That’s kind of my point in framing the question like that - we know WalMart and how ubiquitous it is (in America) and how it makes money, and it’s “moat” so it’s not a sexy business, but a totally solid one. So is what the market is pricing in really becoming silly now? I think Nvidia has a huge competitive advantage but I also think it could be undone within 3 years or so given how much money is now at stake. The other side of that is that I wouldn’t want to try and build a better WalMart inside three years. My ultimate worry is that Nvidia is becoming so overcooked now that it could pull the whole of the Nasdaq down when it blows, and that won’t be good for any of us.
  - alberth 2y ago
    > My ultimate worry is that Nvidia ... could pull the whole of the Nasdaq down when it blows It's already happened the other way. 50% of all S&P 500 growth comes from just 5-companies (Nvidia). Or said differently, 495-companies can only match what just 5-companies contributed (which Nvidia is 1 of those 5). https://finance.yahoo.com/news/meet-5-stocks-contributed-almost-100500978.html https://finance.yahoo.com/news/meet-5-stocks-contributed-alm...
    - abduhl 2y ago
      This is not news. Market gains generally have always been dragged along by a small percentage of companies: Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251
dvt 2y ago
> Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? I'm actually quite bearish on AI on the very long term (and as a trained philosopher, I don't buy into the whole AGI nonsense), but I do think AI will redefine how we interact with our computers/devices in the short-to-medium term. These days, everyone's too enamored with the generative aspect (which is, for the most park, bunk), and for whatever reason ignoring the way more value-generating aspects (synthesis, categorization, summarization, validation/invocation, etc.).
- gizajob 2y ago
  Funnily enough my bachelors thesis was “Wittgensteinian problems for Artificial General Intelligence” so I also have grounds for being bearish, even though I respect what is happening at the moment and have hope for the future.
  - N0b8ez 2y ago
    Is the Wittgensteinian problem that the AGI wouldn't understand concepts like we do, or is the problem that it wouldn't be able to use them better than a human?
    - gizajob 2y ago
      There’s a few different ways one can look at it if trying to take lessons and ideas from Wittgenstein. I didn’t do a brilliant job of the thesis to be honest… but I got a few things on an intuitive level from trying to grok a bunch of Wittgenstein that left me feeling like there was a serious problem in our attempts to build an AI. One of them is that we only have language with which to build an AI - language and symbols. Yet these nevertheless capture absolutely nothing about what it is to perceive and understand, on a human level, so yeah. It’s kind of what Searle was getting at - symbolic outputs and translation based on rules doesn’t get you intelligence, even if it produces a system that looks as if it is intelligent. There’s also that we have an intersubjective attunement to others that is pre-linguistic. Ultimately “meaning is use” which is a pithy take on later Wittgenstein- there’s nothing in language which means anything at all. So it’s not that it wouldn’t be able to use language or concepts better than we do, it’s that we change with the AI and don’t accept them - particularly as they start to become uncanny or unpredictable. There really is something to sentience that we all know that cannot be reduced to language or machinery. Our language about machinery, and intelligent machinery, is full of usage mistakes and categorical errors that we overlook, but which are more serious when analysed. We are complete beings - my intelligence is part of a system, and it makes no sense to abstract it out of that system in order to nail it down. “Pain” cannot be reduced down to or captured in language. Suffering is part of our intelligence and we’d be nowhere without it. So ideas kind of like that and more. AGI would have to suffer to become general enough to warrant the use of the word general.
havefunbesafe 2y ago
I suppose it depends if you are trying to optimize for short-term wealth, or long-term staying power.
up2isomorphism 2y ago
AI does not, either collecting/processing data does. The valuation has many factors not necessarily related to the actual impact.
Barrin92 2y ago
>Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? No, but in general I don't think anything justifies that valuation with 60 billion in annual revenue. Someone pointed out that Nvidia's market cap is now comparable to the entire German or Japanese stock market and I'd rather have an economy the size of a few trillion. American stock prices look like Japan in the 80s when the land value of the Imperial Palace was as high as California's economy.
- gizajob 2y ago
  Yeah a decent summary of my thoughts too. The bulls running away with things online are starting not to listen to the point that it’s concerning me that Nvidia is turning into a free money machine, and no good ever comes of that kind of thing long-term. And as you point out the revenue to market cap seems like we’re getting silly. It’s even making me wonder whether Jensen and his brains trust are going to start massaging their own figures, because any less-than-stellar results next quarter could really kill the party. And if Nvidia really is turning into a bubble, it could pop the whole of the Nasdaq for a while.
unoti 2y ago
> Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? Yes, but the thing is: it takes time to write the software. We had proof of concepts for some serious game-changing things written and working over a year ago, but organizationally it takes a long time to write and deploy the things and get them into production. Even if LLM's didn't get any better than they are right now, there are still years' worth of ground-breaking improvements we could roll out but those will take time to write and deploy the software and reshape the business processes.
- swalsh 2y ago
  Running into this same problem, the tech is progressing WAY faster than the org can transform to use the tech. I'm betting we end up transforming by aquiring a company that completed the transformation before us, and letting them run the show. The downside is I see a lot more job destruction that route vs the slow route we're currently on.
  - littlestymaar 2y ago
    > Running into this same problem, the tech is progressing WAY faster than the org can transform to use the tech It has always been the case. As a society we are still very far from having harnessed the full power of 90s era computers. Companies routinely pay hundreds of workers and even executives, to do things that computers are better at doing. For instance: managing plannings in big organizations.
    - m_fayer 2y ago
      Recently I was in the accounting office of my mom’s large senior-oriented NYC coop. Around a thousand apartments total. It was out of an old movie. Folders and coffee cups absolutely everywhere. Walls of well-used filing cabinets. The directors office was comical, you had to look over the piles if you were sitting. 15 year old computers were there but second fiddle. Honestly it was charming and made me nostalgic. It was also a reminder of exactly what you’re saying. Millions worth of NYC rentals run by a paper-driven org. The future is distributed unevenly indeed.
_lvbh 2y ago
> Do you think that AI is having a big enough impact already to generate this valuation? Yes. The impact is hype and the valuation comes from other big tech companies like Google and Microsoft > Is it changing your life? Not really. I barely use it anymore except when there’s no internet (phi-3 was useful as an unreliable alternative to stack overflow while on a flight) I think Nvidia is a solid company with an overblown valuation that will eventually stabilize lower but maintain its status as a major “tech” company. > Would you rather own one Nvidia, or WalMart six times over Walmart has many competitors and is generally easy to replace, especially when considering the international market. Nvidia is somewhat unique in the world, so yes, Nvidia should probably be valued more
rglover 2y ago
Value, no. Hype, yes. This is the Mr. Market theory playing out in real-time. Long-term, the value of AI (LLMs) as a productivity tool is massive, but if the delusional thinking around things like AGI continues (and the fear-mongering of Ai Is ToO DaNgErOuS), the major players will suffocate that potential and be humbled.
OtomotO 2y ago
No, it's not changing my life, it's just impressive ML rebranded. It hallucinates all the time... It's a toy. Impressive, but still a toy.
adventured 2y ago
There will be a pullback after the initial irrational exuberance, and the big spenders on Nvidia cards will pull back on that spending as the expected returns are not realized (or not fully realized). Variations of this story repeat over and over and over again throughout the decades of tech. After the pullback, given some time, AI will realize significant real world value and the overall market will be far larger (15-20 years out). That process takes longer than the exuberance suggests early on. Nvidia will pull back when that spending decline happens (yes, there will be a drop in their sales, they'll hit a wall and it'll go south for a while). The question is where the wall is at. They're speeding at it like Cisco was during the hype of the dotcom boom (and Cisco was growing at a crazy rate quarter over quarter, accelerating, which is a particularly unsustainable event). Tons of AI customers will die off to go along with the big spenders freezing and or reducing their spending.
- gizajob 2y ago
  Yeah good thinking. Does seem like it’s turning into an analogous situation to Cisco, and I feel like we will actually need a quantum leap on the software side of AI (again) for the hardware sales to sustain the revenue growth.
zarzavat 2y ago
The market cap is irrational and I submit as evidence Llama 3. AI won’t need huge amounts of computing resources. It will need moderate amounts of computing resources. The huge amount of computing resources seen today are the result of immature technology that uses resources inefficiently. As the technology improves, the capability-per-FLOP will increase and AI will move on-device.
- apsec112 2y ago
  AI has seen rapid efficiency improvements every year for the last decade, but the amount of computation used has gone up, not down. The improvements always go into making larger and more powerful models, not into just running the same models but at a lower cost per hour. https://epochai.org/blog/algorithmic-progress-in-language-models https://epochai.org/blog/algorithmic-progress-in-language-mo...
  - nyxtom 2y ago
    This ^, the models are getting larger and we don't appear to have scratched the surface on Video / Vision models yet. Energy consumption is accelerating along side that at 28% YOY https://www.weforum.org/agenda/2024/04/how-to-manage-ais-energy-demand-today-tomorrow-and-in-the-future/#:~:text=AI%20and%20energy%20demand&text=The%20energy%20required%20to%20run,of%20Iceland%20used%20in%202021 https://www.weforum.org/agenda/2024/04/how-to-manage-ais-ene....
    - zarzavat 2y ago
      While vision-vision models are certainly cool, I don’t think that they are as economically valuable as vision-speech or text-text. Humans don’t have vision output. Computation may be increasing, but that is a statement about the short-term not the long-term. If we want to predict the future then we care about: how many capabilities can you fit on a phone-sized computer? And I believe that the answer is: a lot.
  - SirMaster 2y ago
    But doesn't it feel like the larger models are seeing diminished returns compared to the smaller open models? Feels like they will eventually converge unless some big breakthrough happens that only benefits the large models.
pastor_bob 2y ago
The valuation is driven by its huge margins and growth in revenue. It's an inevitable pump sorts. It can't and won't last. There's just too much margin for players not to compete or design their own chips. The only question for capitalizing is how to time your shorts.
- gizajob 2y ago
  Yep, ripe for a bonanza day of shorting in the not-too-distant future, it would seem.
lucisferre 2y ago
I think this is a great question and one I keep mulling over. I've been evaluating paid AI products like Co-pilot to try to determine if there is enough general purpose value there to justify it's cost. At $360 a year, the productivity benefit doesn't need to be huge to justify the cost, lets say you would probably want to so $500-1,000/yr in expense reduction. I can say for certain that I have found roughly enough benefit myself in the past year for various tasks such as writing, presentations and the like. Nothing earth shattering mind you, but time has been saved. The question is, does this scale across an organization? Does everyone get leverage out of Copilot if you give it to them, or do only a fraction of advanced early-adopters? Also does the benefit really hit your bottom line, which may be harder to measure accurately. Personally, I think it is a toss-up right now, but I suspect many businesses will place their bet anyway. For a 1,000 person organization $360k isn't nothing but also not their biggest expense or even software expense. Likely a rounding error on revenue. Most businesses will roll out Copilot and/or similar tools broadly for at least a couple of years before starting to really question the ROI. It is pretty clear that the hype and FOMO on this is real. It would likely be better to be the executive who tried AI and found it wanting then to be the one that waited on the sidelines if it turns out to have a big impact. The hype cycle is just getting warmed up on this.
- gizajob 2y ago
  Thanks for your answer. It’s useful to think about for sure. I’m just trying to ponder where we are at with it, and whether Nvidia is becoming overblown or whether we’ll need another quantum leap on the software side to get better AI or whether the current generation and approaches are going to keep giving bigger and bigger returns. As you point out, AI really is improving tooling, particularly in coding, and this is worth paying for.
- sifar 2y ago
  >> At $360 a year, the productivity benefit doesn't need to be huge to justify the cost, lets say you would probably want to so $500-1,000/yr in expense reduction. You also have to factor in the cost of ai's failure modes. Though it might be difficult to put a number on it.
jandrese 2y ago
Right now AI is in the part of the hype cycle where we are in the first knee of the S curve and people are drawing straight lines from that to predict the future. I've seen so much ridiculous hype about AI becoming godlike super-geniuses before the decade is out that I have to wonder if any of these people have tried using AI for real work and not just flashy demos.
- bloopernova 2y ago
  It's just like the hype about self driving vehicles. 5 years ago I had bought into the hype and thought that most long haul truck drivers would be out of work by now.
  - gizajob 2y ago
    Funny that isn’t it. I wonder if Tesla throwing $4billion of Nvidia GPUs into a data centre will be enough to solve it “this time”. Self-driving could easily become one of the pins that bursts Nvidias bubble if we don’t see spectacular improvements.
    - jhallenworld 2y ago
      News today (from Nvidia!) was that Tesla isn't getting them, Elon redirected them to his new AI company. The new AI has the same problem as AI for self driving- you can't trust it.
      - gizajob 2y ago
        It's strange alongside, that he's doing it as part of a new company. I realise it's due to his ongoing squabble with Tesla over this $50billion payout he still hasn't had... but can you even imagine the CEO of any other company doing that? CEO: "Hey, so there's this thing about the product that I've been hyping as the killer widget it'll get, ohh for about ten years now. Well, we still didn't manage to solve the widget problem, so I'm going to start a new widget company that I own so I can sell us the widget." Shareholders & Board: "You're doing what??!? That's the most illegal thing we've ever heard!"
esafak 2y ago
It's valuable to me. I don't have to fish through search results and synthesize them any more.
nyxtom 2y ago
On a fundamentals basis, the demand is there for the compute. NVDA will likely get somewhat overbought in this cycle, but at some point here it should follow the same trajectories of the big 7. We don't appear to be anywhere close to an oversupply issue (yet).
croes 2y ago
AI will help to totally crush all the CO2 emission targets of Google, MS etc.
- gizajob 2y ago
  By crush do you mean it will become sentient and sequester the carbon in the bodies of their meaty workers by killing them all?
  - croes 2y ago
    More like this https://news.ycombinator.com/item?id=40403524 https://news.ycombinator.com/item?id=40403524
drewcoo 2y ago
> o you think that AI is having a big enough impact already to generate this valuation? Stock valuation is based on speculation. I don't think I understand the question.
ben_w 2y ago
> Question for HNers: Do you think that AI is having a big enough impact already to generate this valuation? I think that's the wrong question: "impact" is necessary but not sufficient for "valuation", as the latter also requires you to not have much competition driving down your margin, and there's a lot of competition in AI software. NVIDIA, being the metaphorical shovel-seller, can probably justify current valuations from current or near-term hardware sales… but I'm not sure the people spending the money to buy NVIDIA hardware to train their own models can justify those expenses, which means I'm expecting NVIDIA's sales to collapse when the "not invented here" bubble collapses and everyone becomes willing to use an existing off-the-shelf AI. > Is it changing your life? Yes: 1. LLMs by being the easy first step on side-projects I'd otherwise not have time to get into 2. Google Translate in general
- gizajob 2y ago
  Google Translate has been around for years, and runs on regular CPUs fine, so I personally wouldn’t classify it as current generation AI or predicated on Nvidia chips. Definitely a killer app though. Same as Google maps is a non-AI killer app.
  - aprilthird2021 2y ago
    Google Translate was probably the first commercial product to utilize Transformer architecture and also training it absolutely racked up a huge bill to NVidia probably even way back in the day up to now
  - int_19h 2y ago
    I'm not sure if that is what OP meant, but one thing that the current crop of top tier LLMs is extremely good at is translation. GPT-4 is good enough for Babelfish-style real time conversation on complicated topics for many languages.
molave 2y ago
As someone who dabbles in creating fiction as a pasttime, it's revolutionary. I can use AI to come up with details for minutiae that I don't have the time nor energy to conceptualize. There's just too many things that are in my head and not enough capabilities to realize them in a pre-AI world. The AI outputs are garbage as-is, but what they come up with already does 80% of the work done. I can do the rest to make it completely fit my needs.
Ologn 2y ago
I would rather own one Nvidia. The five most valuable companies in the world are, in order: Microsoft, Nvidia, Apple, Alphabet and Amazon. All very tied to software, or the hardware which software runs on. Walmart is worth less than Facebook, Broadcom and TSMC. If the past few decades have taught us anything, it is that software is a very good business to be in. Microsoft is the most valuable company in the world for a reason.
diob 2y ago
I don't think we will ever achieve general AI with this. While current AI is impressive, it fundamentally relies on big data and algorithms. The main limitation of big data, which affects AI as well, is the quality of the data and the resulting outputs. Who is curating the data? Who is curating the outputs? It's not magic. Overcoming this barrier may be possible, but I believe it's an issue that isn't being adequately addressed.
latchkey 2y ago
> Question for HNers: Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? Imagine asking these questions in the early 90's when "the web" was just getting started. Or when bitcoin was $0.10. These are the sorts of headlines people make fun of later on, “The internet is just a fad.” People learned their lessons and are way more willing to make bets on the future. Right now, clearly this is AI.
- aprilthird2021 2y ago
  Imagine asking these questions about the "metaverse" and cryptocurrencies just 2-3 years ago. Some technologies are great, pioneering even, and full of potential, and still flop in the market.
  - latchkey 2y ago
    Poor choice of examples. Bitcoin at $71k is hardly a flop. That was a term coined by stephenson during the early web, 1992. Virtual worlds are still extremely popular.
    - aprilthird2021 2y ago
      If you want to argue and pretend there weren't tons and tons of companies and technical products tied to both cryptocurrency and VR/AR lately that absolutely flopped despite being technically unique and innovative by cherry picking things that would have been sound investments back then and ignoring the myriad ways you'd have lost money or the fact that Bitcoin has less usefulness as a technology now than when it was hyped, fine
      - latchkey 2y ago
        Are you really trying to argue that all companies in a space need to succeed, for the space to be successful? As for bitcoin itself, people and companies have hyped it for their own benefit, but bitcoin itself isn't a company, and therefore isn't hyped. It is one technology that lives on its own and survives primarily because of the will of the people that choose to participate in it.
MuffinFlavored 2y ago
> Is it changing your life? According to the mainstream media, AI is supposed to replace me / make me obsolete within 5 years.
- Jlagreen 2y ago
  I have invested in Nvidia 8 years ago. So if AI becomes huge and replaces me than I'll simply retire on my shares otherwise I'll still have a job. Investing in Nvidia is called hedging your job :)
prng2021 2y ago
I think everyone knows that Apple and MS provide a lot more value to their lives and the companies they work for than NVIDIA does. The problem is every tech company and countless startups have promised a very near term revolution to life on earth as we know it, due to AI. Now every single one of those companies is thinking the following: 1. A competitor might actually make the visionary future a reality, and so, falling behind is a corporate existential crisis 2. They’re nowhere close to making their vision a reality. I think companies knowingly continue to sell a healthy dose of BS to their customers in terms of AI capabilities, but I also think they’ve fooled themselves with their own arrogance. For example, Google learning in realtime with the rest of the world that their AI generated search results are sometimes outputting nonsense. This is why I value NVIDIA over all software companies. I’m confident the latter group has hyped everything so much that most will eventually fail to meet expectations. NVIDIA just gets to sit back and watch it all play out. I do think they’ll eventually deserve a $3T valuation some years down the line as models continue to improve and some industries truly get revolutionized.
tonymet 2y ago
It's ultimately a question of what I prefer vs what I expect to happen. I would prefer that companies providing utility would be rewarded. I expect , however, that companies enabling administrative control (via AI , software, monopolization, surveilance, market capture) will actually be rewarded. So in a better world Walmart should be a higher value, since they are feeding and supplying the entire country with food, tools, consumer goods, luxuries, furniture, etc. But in reality Nvidia will be rewarded for enabling more administrative control.

hiddencost 2y ago

Yes. For the last 20 years. Many of the largest applications aren't ones you're aware of or ever see directly. Most of Google's revenue, to pick one example. For every flashy start-up or cool open source project, there is an army of people quietly delivering 10% relative improvements that drive $100M revenue lift in their particular niche at a huge company.

Ologn 2y ago
Right. In 2011 Jeff Dean ran into Andrew Ng in the Google cafeteria, which AFAIK is where a lot of the modern Google AI started happening. AlexNet won the ImageNet challenge in 2012 (which HN was not impressed with at all at the time - https://news.ycombinator.com/item?id=4611830 https://news.ycombinator.com/item?id=4611830 ). Attention is All You Need was published in 2017. A lot of behind the scenes, invite-only etc. stuff has been happening for years, and only in the past two years do we see DALL-E, Stable Diffusion, Midjourney, ChatGPT, Gemini, Sora etc.
riku_iki 2y ago
> Most of Google's revenue, to pick one example. For every flashy start-up or cool open source project, there is an army of people quietly delivering 10% relative improvements that drive $100M revenue lift in their particular niche at a huge company. this is true for previous generations of deep learning but still not clear for current GenAI wave.

alberth 2y ago

The market is "pricing in" this future potential. With Walmart, it's hard to speculate what ground-breaking future potential they might have that isn't already known.

riku_iki 2y ago
> The market is "pricing in" this future potential. or short gain opportunity with goal to quite before crash.
gizajob 2y ago
That’s kind of my point in framing the question like that - we know WalMart and how ubiquitous it is (in America) and how it makes money, and it’s “moat” so it’s not a sexy business, but a totally solid one. So is what the market is pricing in really becoming silly now? I think Nvidia has a huge competitive advantage but I also think it could be undone within 3 years or so given how much money is now at stake. The other side of that is that I wouldn’t want to try and build a better WalMart inside three years. My ultimate worry is that Nvidia is becoming so overcooked now that it could pull the whole of the Nasdaq down when it blows, and that won’t be good for any of us.
- alberth 2y ago
  > My ultimate worry is that Nvidia ... could pull the whole of the Nasdaq down when it blows It's already happened the other way. 50% of all S&P 500 growth comes from just 5-companies (Nvidia). Or said differently, 495-companies can only match what just 5-companies contributed (which Nvidia is 1 of those 5). https://finance.yahoo.com/news/meet-5-stocks-contributed-almost-100500978.html https://finance.yahoo.com/news/meet-5-stocks-contributed-alm...
  - abduhl 2y ago
    This is not news. Market gains generally have always been dragged along by a small percentage of companies: Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251

dvt 2y ago

> Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? I'm actually quite bearish on AI on the very long term (and as a trained philosopher, I don't buy into the whole AGI nonsense), but I do think AI will redefine how we interact with our computers/devices in the short-to-medium term. These days, everyone's too enamored with the generative aspect (which is, for the most park, bunk), and for whatever reason ignoring the way more value-generating aspects (synthesis, categorization, summarization, validation/invocation, etc.).

gizajob 2y ago
Funnily enough my bachelors thesis was “Wittgensteinian problems for Artificial General Intelligence” so I also have grounds for being bearish, even though I respect what is happening at the moment and have hope for the future.
- N0b8ez 2y ago
  Is the Wittgensteinian problem that the AGI wouldn't understand concepts like we do, or is the problem that it wouldn't be able to use them better than a human?
  - gizajob 2y ago
    There’s a few different ways one can look at it if trying to take lessons and ideas from Wittgenstein. I didn’t do a brilliant job of the thesis to be honest… but I got a few things on an intuitive level from trying to grok a bunch of Wittgenstein that left me feeling like there was a serious problem in our attempts to build an AI. One of them is that we only have language with which to build an AI - language and symbols. Yet these nevertheless capture absolutely nothing about what it is to perceive and understand, on a human level, so yeah. It’s kind of what Searle was getting at - symbolic outputs and translation based on rules doesn’t get you intelligence, even if it produces a system that looks as if it is intelligent. There’s also that we have an intersubjective attunement to others that is pre-linguistic. Ultimately “meaning is use” which is a pithy take on later Wittgenstein- there’s nothing in language which means anything at all. So it’s not that it wouldn’t be able to use language or concepts better than we do, it’s that we change with the AI and don’t accept them - particularly as they start to become uncanny or unpredictable. There really is something to sentience that we all know that cannot be reduced to language or machinery. Our language about machinery, and intelligent machinery, is full of usage mistakes and categorical errors that we overlook, but which are more serious when analysed. We are complete beings - my intelligence is part of a system, and it makes no sense to abstract it out of that system in order to nail it down. “Pain” cannot be reduced down to or captured in language. Suffering is part of our intelligence and we’d be nowhere without it. So ideas kind of like that and more. AGI would have to suffer to become general enough to warrant the use of the word general.

havefunbesafe 2y ago

I suppose it depends if you are trying to optimize for short-term wealth, or long-term staying power.

up2isomorphism 2y ago

AI does not, either collecting/processing data does. The valuation has many factors not necessarily related to the actual impact.

Barrin92 2y ago

>Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? No, but in general I don't think anything justifies that valuation with 60 billion in annual revenue. Someone pointed out that Nvidia's market cap is now comparable to the entire German or Japanese stock market and I'd rather have an economy the size of a few trillion. American stock prices look like Japan in the 80s when the land value of the Imperial Palace was as high as California's economy.

gizajob 2y ago
Yeah a decent summary of my thoughts too. The bulls running away with things online are starting not to listen to the point that it’s concerning me that Nvidia is turning into a free money machine, and no good ever comes of that kind of thing long-term. And as you point out the revenue to market cap seems like we’re getting silly. It’s even making me wonder whether Jensen and his brains trust are going to start massaging their own figures, because any less-than-stellar results next quarter could really kill the party. And if Nvidia really is turning into a bubble, it could pop the whole of the Nasdaq for a while.

unoti 2y ago

> Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? Yes, but the thing is: it takes time to write the software. We had proof of concepts for some serious game-changing things written and working over a year ago, but organizationally it takes a long time to write and deploy the things and get them into production. Even if LLM's didn't get any better than they are right now, there are still years' worth of ground-breaking improvements we could roll out but those will take time to write and deploy the software and reshape the business processes.

swalsh 2y ago
Running into this same problem, the tech is progressing WAY faster than the org can transform to use the tech. I'm betting we end up transforming by aquiring a company that completed the transformation before us, and letting them run the show. The downside is I see a lot more job destruction that route vs the slow route we're currently on.
- littlestymaar 2y ago
  > Running into this same problem, the tech is progressing WAY faster than the org can transform to use the tech It has always been the case. As a society we are still very far from having harnessed the full power of 90s era computers. Companies routinely pay hundreds of workers and even executives, to do things that computers are better at doing. For instance: managing plannings in big organizations.
  - m_fayer 2y ago
    Recently I was in the accounting office of my mom’s large senior-oriented NYC coop. Around a thousand apartments total. It was out of an old movie. Folders and coffee cups absolutely everywhere. Walls of well-used filing cabinets. The directors office was comical, you had to look over the piles if you were sitting. 15 year old computers were there but second fiddle. Honestly it was charming and made me nostalgic. It was also a reminder of exactly what you’re saying. Millions worth of NYC rentals run by a paper-driven org. The future is distributed unevenly indeed.

_lvbh 2y ago

> Do you think that AI is having a big enough impact already to generate this valuation? Yes. The impact is hype and the valuation comes from other big tech companies like Google and Microsoft > Is it changing your life? Not really. I barely use it anymore except when there’s no internet (phi-3 was useful as an unreliable alternative to stack overflow while on a flight) I think Nvidia is a solid company with an overblown valuation that will eventually stabilize lower but maintain its status as a major “tech” company. > Would you rather own one Nvidia, or WalMart six times over Walmart has many competitors and is generally easy to replace, especially when considering the international market. Nvidia is somewhat unique in the world, so yes, Nvidia should probably be valued more

rglover 2y ago

Value, no. Hype, yes. This is the Mr. Market theory playing out in real-time. Long-term, the value of AI (LLMs) as a productivity tool is massive, but if the delusional thinking around things like AGI continues (and the fear-mongering of Ai Is ToO DaNgErOuS), the major players will suffocate that potential and be humbled.

OtomotO 2y ago

No, it's not changing my life, it's just impressive ML rebranded. It hallucinates all the time... It's a toy. Impressive, but still a toy.

adventured 2y ago

There will be a pullback after the initial irrational exuberance, and the big spenders on Nvidia cards will pull back on that spending as the expected returns are not realized (or not fully realized). Variations of this story repeat over and over and over again throughout the decades of tech. After the pullback, given some time, AI will realize significant real world value and the overall market will be far larger (15-20 years out). That process takes longer than the exuberance suggests early on. Nvidia will pull back when that spending decline happens (yes, there will be a drop in their sales, they'll hit a wall and it'll go south for a while). The question is where the wall is at. They're speeding at it like Cisco was during the hype of the dotcom boom (and Cisco was growing at a crazy rate quarter over quarter, accelerating, which is a particularly unsustainable event). Tons of AI customers will die off to go along with the big spenders freezing and or reducing their spending.

gizajob 2y ago
Yeah good thinking. Does seem like it’s turning into an analogous situation to Cisco, and I feel like we will actually need a quantum leap on the software side of AI (again) for the hardware sales to sustain the revenue growth.

zarzavat 2y ago

The market cap is irrational and I submit as evidence Llama 3. AI won’t need huge amounts of computing resources. It will need moderate amounts of computing resources. The huge amount of computing resources seen today are the result of immature technology that uses resources inefficiently. As the technology improves, the capability-per-FLOP will increase and AI will move on-device.

apsec112 2y ago
AI has seen rapid efficiency improvements every year for the last decade, but the amount of computation used has gone up, not down. The improvements always go into making larger and more powerful models, not into just running the same models but at a lower cost per hour. https://epochai.org/blog/algorithmic-progress-in-language-models https://epochai.org/blog/algorithmic-progress-in-language-mo...
- nyxtom 2y ago
  This ^, the models are getting larger and we don't appear to have scratched the surface on Video / Vision models yet. Energy consumption is accelerating along side that at 28% YOY https://www.weforum.org/agenda/2024/04/how-to-manage-ais-energy-demand-today-tomorrow-and-in-the-future/#:~:text=AI%20and%20energy%20demand&text=The%20energy%20required%20to%20run,of%20Iceland%20used%20in%202021 https://www.weforum.org/agenda/2024/04/how-to-manage-ais-ene....
  - zarzavat 2y ago
    While vision-vision models are certainly cool, I don’t think that they are as economically valuable as vision-speech or text-text. Humans don’t have vision output. Computation may be increasing, but that is a statement about the short-term not the long-term. If we want to predict the future then we care about: how many capabilities can you fit on a phone-sized computer? And I believe that the answer is: a lot.
- SirMaster 2y ago
  But doesn't it feel like the larger models are seeing diminished returns compared to the smaller open models? Feels like they will eventually converge unless some big breakthrough happens that only benefits the large models.

pastor_bob 2y ago

The valuation is driven by its huge margins and growth in revenue. It's an inevitable pump sorts. It can't and won't last. There's just too much margin for players not to compete or design their own chips. The only question for capitalizing is how to time your shorts.

gizajob 2y ago
Yep, ripe for a bonanza day of shorting in the not-too-distant future, it would seem.

lucisferre 2y ago

I think this is a great question and one I keep mulling over. I've been evaluating paid AI products like Co-pilot to try to determine if there is enough general purpose value there to justify it's cost. At $360 a year, the productivity benefit doesn't need to be huge to justify the cost, lets say you would probably want to so $500-1,000/yr in expense reduction. I can say for certain that I have found roughly enough benefit myself in the past year for various tasks such as writing, presentations and the like. Nothing earth shattering mind you, but time has been saved. The question is, does this scale across an organization? Does everyone get leverage out of Copilot if you give it to them, or do only a fraction of advanced early-adopters? Also does the benefit really hit your bottom line, which may be harder to measure accurately. Personally, I think it is a toss-up right now, but I suspect many businesses will place their bet anyway. For a 1,000 person organization $360k isn't nothing but also not their biggest expense or even software expense. Likely a rounding error on revenue. Most businesses will roll out Copilot and/or similar tools broadly for at least a couple of years before starting to really question the ROI. It is pretty clear that the hype and FOMO on this is real. It would likely be better to be the executive who tried AI and found it wanting then to be the one that waited on the sidelines if it turns out to have a big impact. The hype cycle is just getting warmed up on this.

gizajob 2y ago
Thanks for your answer. It’s useful to think about for sure. I’m just trying to ponder where we are at with it, and whether Nvidia is becoming overblown or whether we’ll need another quantum leap on the software side to get better AI or whether the current generation and approaches are going to keep giving bigger and bigger returns. As you point out, AI really is improving tooling, particularly in coding, and this is worth paying for.
sifar 2y ago
>> At $360 a year, the productivity benefit doesn't need to be huge to justify the cost, lets say you would probably want to so $500-1,000/yr in expense reduction. You also have to factor in the cost of ai's failure modes. Though it might be difficult to put a number on it.

jandrese 2y ago

Right now AI is in the part of the hype cycle where we are in the first knee of the S curve and people are drawing straight lines from that to predict the future. I've seen so much ridiculous hype about AI becoming godlike super-geniuses before the decade is out that I have to wonder if any of these people have tried using AI for real work and not just flashy demos.

bloopernova 2y ago
It's just like the hype about self driving vehicles. 5 years ago I had bought into the hype and thought that most long haul truck drivers would be out of work by now.
- gizajob 2y ago
  Funny that isn’t it. I wonder if Tesla throwing $4billion of Nvidia GPUs into a data centre will be enough to solve it “this time”. Self-driving could easily become one of the pins that bursts Nvidias bubble if we don’t see spectacular improvements.
  - jhallenworld 2y ago
    News today (from Nvidia!) was that Tesla isn't getting them, Elon redirected them to his new AI company. The new AI has the same problem as AI for self driving- you can't trust it.
    - gizajob 2y ago
      It's strange alongside, that he's doing it as part of a new company. I realise it's due to his ongoing squabble with Tesla over this $50billion payout he still hasn't had... but can you even imagine the CEO of any other company doing that? CEO: "Hey, so there's this thing about the product that I've been hyping as the killer widget it'll get, ohh for about ten years now. Well, we still didn't manage to solve the widget problem, so I'm going to start a new widget company that I own so I can sell us the widget." Shareholders & Board: "You're doing what??!? That's the most illegal thing we've ever heard!"

esafak 2y ago

It's valuable to me. I don't have to fish through search results and synthesize them any more.

nyxtom 2y ago

On a fundamentals basis, the demand is there for the compute. NVDA will likely get somewhat overbought in this cycle, but at some point here it should follow the same trajectories of the big 7. We don't appear to be anywhere close to an oversupply issue (yet).

croes 2y ago

AI will help to totally crush all the CO2 emission targets of Google, MS etc.

gizajob 2y ago
By crush do you mean it will become sentient and sequester the carbon in the bodies of their meaty workers by killing them all?
- croes 2y ago
  More like this https://news.ycombinator.com/item?id=40403524 https://news.ycombinator.com/item?id=40403524

drewcoo 2y ago

> o you think that AI is having a big enough impact already to generate this valuation? Stock valuation is based on speculation. I don't think I understand the question.

ben_w 2y ago

> Question for HNers: Do you think that AI is having a big enough impact already to generate this valuation? I think that's the wrong question: "impact" is necessary but not sufficient for "valuation", as the latter also requires you to not have much competition driving down your margin, and there's a lot of competition in AI software. NVIDIA, being the metaphorical shovel-seller, can probably justify current valuations from current or near-term hardware sales… but I'm not sure the people spending the money to buy NVIDIA hardware to train their own models can justify those expenses, which means I'm expecting NVIDIA's sales to collapse when the "not invented here" bubble collapses and everyone becomes willing to use an existing off-the-shelf AI. > Is it changing your life? Yes: 1. LLMs by being the easy first step on side-projects I'd otherwise not have time to get into 2. Google Translate in general

gizajob 2y ago
Google Translate has been around for years, and runs on regular CPUs fine, so I personally wouldn’t classify it as current generation AI or predicated on Nvidia chips. Definitely a killer app though. Same as Google maps is a non-AI killer app.
- aprilthird2021 2y ago
  Google Translate was probably the first commercial product to utilize Transformer architecture and also training it absolutely racked up a huge bill to NVidia probably even way back in the day up to now
- int_19h 2y ago
  I'm not sure if that is what OP meant, but one thing that the current crop of top tier LLMs is extremely good at is translation. GPT-4 is good enough for Babelfish-style real time conversation on complicated topics for many languages.

molave 2y ago

As someone who dabbles in creating fiction as a pasttime, it's revolutionary. I can use AI to come up with details for minutiae that I don't have the time nor energy to conceptualize. There's just too many things that are in my head and not enough capabilities to realize them in a pre-AI world. The AI outputs are garbage as-is, but what they come up with already does 80% of the work done. I can do the rest to make it completely fit my needs.

Ologn 2y ago

I would rather own one Nvidia. The five most valuable companies in the world are, in order: Microsoft, Nvidia, Apple, Alphabet and Amazon. All very tied to software, or the hardware which software runs on. Walmart is worth less than Facebook, Broadcom and TSMC. If the past few decades have taught us anything, it is that software is a very good business to be in. Microsoft is the most valuable company in the world for a reason.

diob 2y ago

I don't think we will ever achieve general AI with this. While current AI is impressive, it fundamentally relies on big data and algorithms. The main limitation of big data, which affects AI as well, is the quality of the data and the resulting outputs. Who is curating the data? Who is curating the outputs? It's not magic. Overcoming this barrier may be possible, but I believe it's an issue that isn't being adequately addressed.

latchkey 2y ago

> Question for HNers: Do you think that AI is having a big enough impact already to generate this valuation? Is it changing your life? Imagine asking these questions in the early 90's when "the web" was just getting started. Or when bitcoin was $0.10. These are the sorts of headlines people make fun of later on, “The internet is just a fad.” People learned their lessons and are way more willing to make bets on the future. Right now, clearly this is AI.

aprilthird2021 2y ago
Imagine asking these questions about the "metaverse" and cryptocurrencies just 2-3 years ago. Some technologies are great, pioneering even, and full of potential, and still flop in the market.
- latchkey 2y ago
  Poor choice of examples. Bitcoin at $71k is hardly a flop. That was a term coined by stephenson during the early web, 1992. Virtual worlds are still extremely popular.
  - aprilthird2021 2y ago
    If you want to argue and pretend there weren't tons and tons of companies and technical products tied to both cryptocurrency and VR/AR lately that absolutely flopped despite being technically unique and innovative by cherry picking things that would have been sound investments back then and ignoring the myriad ways you'd have lost money or the fact that Bitcoin has less usefulness as a technology now than when it was hyped, fine
    - latchkey 2y ago
      Are you really trying to argue that all companies in a space need to succeed, for the space to be successful? As for bitcoin itself, people and companies have hyped it for their own benefit, but bitcoin itself isn't a company, and therefore isn't hyped. It is one technology that lives on its own and survives primarily because of the will of the people that choose to participate in it.

MuffinFlavored 2y ago

> Is it changing your life? According to the mainstream media, AI is supposed to replace me / make me obsolete within 5 years.

Jlagreen 2y ago
I have invested in Nvidia 8 years ago. So if AI becomes huge and replaces me than I'll simply retire on my shares otherwise I'll still have a job. Investing in Nvidia is called hedging your job :)

prng2021 2y ago

I think everyone knows that Apple and MS provide a lot more value to their lives and the companies they work for than NVIDIA does. The problem is every tech company and countless startups have promised a very near term revolution to life on earth as we know it, due to AI. Now every single one of those companies is thinking the following: 1. A competitor might actually make the visionary future a reality, and so, falling behind is a corporate existential crisis 2. They’re nowhere close to making their vision a reality. I think companies knowingly continue to sell a healthy dose of BS to their customers in terms of AI capabilities, but I also think they’ve fooled themselves with their own arrogance. For example, Google learning in realtime with the rest of the world that their AI generated search results are sometimes outputting nonsense. This is why I value NVIDIA over all software companies. I’m confident the latter group has hyped everything so much that most will eventually fail to meet expectations. NVIDIA just gets to sit back and watch it all play out. I do think they’ll eventually deserve a $3T valuation some years down the line as models continue to improve and some industries truly get revolutionized.

tonymet 2y ago

It's ultimately a question of what I prefer vs what I expect to happen. I would prefer that companies providing utility would be rewarded. I expect , however, that companies enabling administrative control (via AI , software, monopolization, surveilance, market capture) will actually be rewarded. So in a better world Walmart should be a higher value, since they are feeding and supplying the entire country with food, tools, consumer goods, luxuries, furniture, etc. But in reality Nvidia will be rewarded for enabling more administrative control.