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> 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.

> 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).

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).