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The DAX is only 40 companies, most of which make real products rather than advertising mechanisms. Making real physical things just doesn't scale, and never wil

The DAX is only 40 companies, most of which make real products rather than advertising mechanisms. Making real physical things just doesn't scale, and never will. While I would enjoy a US tech salary, I'm not sure we want a world where all manufacturing is set aside to focus on the attention economy. Nvidia value deserves to be much higher than any company on the DAX (maybe all of them together, as it currently is) - but how much of that current value is real rather than an AI speculation bubble?

B1FF_PSUVM 2y ago
> Making real physical things just doesn't scale, Nvidia sells chips ...
- chad1n 2y ago
  Investors don't even know what NVIDIA is selling, I was listening to a random investor podcast and they were talking about Intel, AMD and NVIDIA, but no one knew what exactly they are selling, they only knew they are part of this AI bubble so that's why you should invest in them
  - petra 2y ago
    What about seroous analysts, say like morningstar, don't the undedtand the business that they recommended relatively well?
- CapeTheory 2y ago
  They can't make them fast enough to satisfy hype-driven demand; they are not scaling like a tech company, but their market cap is being inflated like one.
  - lucianbr 2y ago
    What is the meaning of "tech" in this context? "Software"? I mean, if Nvidia isn't a technology company...
    - CapeTheory 2y ago
      Sorry should have said "big tech", as commonly used to refer to FAANG companies who focus more on software and/or services.
- dukeyukey 2y ago
  Nvidia is a fabless chip designer. They design chips and software to go with the chips, but contract out the actual manufacturing.
  - zzbn00 2y ago
    Yes, they buy these chips from fabs (made to their design) but it is the chips they then sell on, at about a 4x markup to what they bought them for. Good business model! Buy low, sell high. Whether good enough to justify current valuation is another question.
- kuschku 2y ago
  How much of Nvidia's value do you think comes from the chips? Chips are a commodity, AMD's chips have been better and cheaper than Nvidia for many years. The reason Nvidia's value has been so inflated is the software stack and the lock-in they offer. CUDA, CuDNN, that's where Nvidia's value lies. And obviously, now that all relevant ML frameworks are designed for Nvidia's software stack, Nvidia has a monopoly on the supply. That's why their value is being inflated so much. And Nvidia doesn't have produce the chips themselves, that's all contracted out as well.
gizmo 2y ago
> The DAX is only 40 companies, most of which make real products rather than advertising mechanisms This, as the kids say, is just cope. American big tech makes real products. Google is not just ads. Apple is not. Amazon is not. Tesla is not. NVidia is not. Netflix is not. NVidia might be overvalued because of the current AI hype but that does not diminish their real accomplishments! Europe has almost no real tech companies. There is one exception, founded in 1984. Not exactly a spring chicken. How can a wealthy continent with 750 million people produce no big tech companies? It's a big problem.
- Rinzler89 2y ago
  >How can a wealthy continent with 750 million people produce no big tech companies? It's a big problem. Much more difficult to scale a product across 26 different countries and nearly as many languages and regulatory jurisdictions. US is one country, not a collection of countries fighting each other, meaning your product is instantly available to 300M people speaking the same language under (nearly) the same regulations.
  - pell 2y ago
    Language aside, the entire point of the EU is the single market so you don’t have 26 different rule sets. (There are some exceptions such as health care but that is no different in the US.)
    - Rinzler89 2y ago
      Except you do have 26 different rules. It's a single market on paper as the eu only mandates a small subset of common rules and regulations such as removing tarrifs or freedom of movement, but have you ever tried in practice to launch your company from Belgium to France or from Netherlands to Belgium or from Austria to Germany, or from Romania to Italy? It's much more difficult when the rubber hits the road as every country has various extra laws and protectionist measures in place to protect it's domestic players from outsiders even if they came from within the EU. And that's besides the language barrier which means added costs. This is much less efficient than the US market. EU countries and voters still value their national sovereignty and culture (both with the upsides and downsides) above a united EU under the same laws and language for everyone, ruled from outside their country's borders. See what happened with Brexit and the constant internal squabbling and sabotaging over critical EU issues that affect us all like the war in Ukraine or illegal mass migration. An US style unification just won't work here since every little country wants to be it's own king while having its cake and eating it too.
chollida1 2y ago
> but how much of that current value is real rather than an AI speculation bubble? I mean, by definition given that it trades freely their market cap is real. Your market cap today is what the market thinks your future cash flows are worth. The bubble and the bubble popping should in theory both be priced into Nvidia's market cap. What isnt' is events the market doesn't anticipate, AMD coming out with a current generation chip that can do inference as well as the H100 is something the market hasn't priced in. Andy our manufacturing example is very poor as NVidia is certainly part of the manufacturing pipe line by designing physical products that people buy.
- mewpmewp2 2y ago
  > can do inference as well as the H100 is something the market hasn't priced in. I think probability of that would still be priced in. Not sure what the exact probability is, though. But if say it was clear that AMD can come up with a competitive option, then NVDA stock would drop. But if it was clear the other way that AMD can't do it, NVDA price would increase.
- rybosworld 2y ago
  > Your market cap today is what the market thinks your future cash flows are worth. The bubble and the bubble popping should in theory both be priced into insert_financial_product_here This is a bit of a tired viewpoint, and is evidently proven not true time after time. The collective despair/euphoria of market participants is extremely powerful and well documented, at least as far back as dutch tulips. Stock valuations are relative, and they are relatively misvalued most of the time. That's why there are (albeit rare) funds that are capable of outperforming the market for decades - Berkshire, and Medallion for example. It's certainly possible that AMD is valued (almost) fairly. It's just as likely that it's relatively misvalued for no reason other than emotions (lack of hype).
mejutoco 2y ago
> Making real physical things just doesn't scale, and never will. Nvidia sells physical things, and they are bigger than 40 companies because the companies are selling physical things? I am not arguing hardware scales better than software but this is a strange argument in this context.

B1FF_PSUVM 2y ago

> Making real physical things just doesn't scale, Nvidia sells chips ...

chad1n 2y ago
Investors don't even know what NVIDIA is selling, I was listening to a random investor podcast and they were talking about Intel, AMD and NVIDIA, but no one knew what exactly they are selling, they only knew they are part of this AI bubble so that's why you should invest in them
- petra 2y ago
  What about seroous analysts, say like morningstar, don't the undedtand the business that they recommended relatively well?
CapeTheory 2y ago
They can't make them fast enough to satisfy hype-driven demand; they are not scaling like a tech company, but their market cap is being inflated like one.
- lucianbr 2y ago
  What is the meaning of "tech" in this context? "Software"? I mean, if Nvidia isn't a technology company...
  - CapeTheory 2y ago
    Sorry should have said "big tech", as commonly used to refer to FAANG companies who focus more on software and/or services.
dukeyukey 2y ago
Nvidia is a fabless chip designer. They design chips and software to go with the chips, but contract out the actual manufacturing.
- zzbn00 2y ago
  Yes, they buy these chips from fabs (made to their design) but it is the chips they then sell on, at about a 4x markup to what they bought them for. Good business model! Buy low, sell high. Whether good enough to justify current valuation is another question.
kuschku 2y ago
How much of Nvidia's value do you think comes from the chips? Chips are a commodity, AMD's chips have been better and cheaper than Nvidia for many years. The reason Nvidia's value has been so inflated is the software stack and the lock-in they offer. CUDA, CuDNN, that's where Nvidia's value lies. And obviously, now that all relevant ML frameworks are designed for Nvidia's software stack, Nvidia has a monopoly on the supply. That's why their value is being inflated so much. And Nvidia doesn't have produce the chips themselves, that's all contracted out as well.

gizmo 2y ago

> The DAX is only 40 companies, most of which make real products rather than advertising mechanisms This, as the kids say, is just cope. American big tech makes real products. Google is not just ads. Apple is not. Amazon is not. Tesla is not. NVidia is not. Netflix is not. NVidia might be overvalued because of the current AI hype but that does not diminish their real accomplishments! Europe has almost no real tech companies. There is one exception, founded in 1984. Not exactly a spring chicken. How can a wealthy continent with 750 million people produce no big tech companies? It's a big problem.

Rinzler89 2y ago
>How can a wealthy continent with 750 million people produce no big tech companies? It's a big problem. Much more difficult to scale a product across 26 different countries and nearly as many languages and regulatory jurisdictions. US is one country, not a collection of countries fighting each other, meaning your product is instantly available to 300M people speaking the same language under (nearly) the same regulations.
- pell 2y ago
  Language aside, the entire point of the EU is the single market so you don’t have 26 different rule sets. (There are some exceptions such as health care but that is no different in the US.)
  - Rinzler89 2y ago
    Except you do have 26 different rules. It's a single market on paper as the eu only mandates a small subset of common rules and regulations such as removing tarrifs or freedom of movement, but have you ever tried in practice to launch your company from Belgium to France or from Netherlands to Belgium or from Austria to Germany, or from Romania to Italy? It's much more difficult when the rubber hits the road as every country has various extra laws and protectionist measures in place to protect it's domestic players from outsiders even if they came from within the EU. And that's besides the language barrier which means added costs. This is much less efficient than the US market. EU countries and voters still value their national sovereignty and culture (both with the upsides and downsides) above a united EU under the same laws and language for everyone, ruled from outside their country's borders. See what happened with Brexit and the constant internal squabbling and sabotaging over critical EU issues that affect us all like the war in Ukraine or illegal mass migration. An US style unification just won't work here since every little country wants to be it's own king while having its cake and eating it too.

chollida1 2y ago

> but how much of that current value is real rather than an AI speculation bubble? I mean, by definition given that it trades freely their market cap is real. Your market cap today is what the market thinks your future cash flows are worth. The bubble and the bubble popping should in theory both be priced into Nvidia's market cap. What isnt' is events the market doesn't anticipate, AMD coming out with a current generation chip that can do inference as well as the H100 is something the market hasn't priced in. Andy our manufacturing example is very poor as NVidia is certainly part of the manufacturing pipe line by designing physical products that people buy.

mewpmewp2 2y ago
> can do inference as well as the H100 is something the market hasn't priced in. I think probability of that would still be priced in. Not sure what the exact probability is, though. But if say it was clear that AMD can come up with a competitive option, then NVDA stock would drop. But if it was clear the other way that AMD can't do it, NVDA price would increase.
rybosworld 2y ago
> Your market cap today is what the market thinks your future cash flows are worth. The bubble and the bubble popping should in theory both be priced into insert_financial_product_here This is a bit of a tired viewpoint, and is evidently proven not true time after time. The collective despair/euphoria of market participants is extremely powerful and well documented, at least as far back as dutch tulips. Stock valuations are relative, and they are relatively misvalued most of the time. That's why there are (albeit rare) funds that are capable of outperforming the market for decades - Berkshire, and Medallion for example. It's certainly possible that AMD is valued (almost) fairly. It's just as likely that it's relatively misvalued for no reason other than emotions (lack of hype).

mejutoco 2y ago

> Making real physical things just doesn't scale, and never will. Nvidia sells physical things, and they are bigger than 40 companies because the companies are selling physical things? I am not arguing hardware scales better than software but this is a strange argument in this context.