8 ms·

Elliott says Nvidia is in a 'bubble' and AI is 'overhyped'

62 points by jmsflknr 2y ago

boringg 2y ago
Really putting himself on the line with that assessment. /S
FL33TW00D 2y ago
https://archive.is/GVCIG https://archive.is/GVCIG
- Irishsteve 2y ago
  Pin this?
enraged_camel 2y ago
Who is Elliott? TFA is paywalled.
- agentultra 2y ago
  A hedge fund based in Florida, USA.
  - airstrike 2y ago
    Historically based in New York, moved to Florida after the pandemic
- beardedwizard 2y ago
  Activist investor known for buying their way in, harassing leadership out, then selling to PE. See bluecoat and Citrix as examples.
- airstrike 2y ago
  Probably the most famous "activist investor" after Carl Icahn. They like to call out bad management teams, stealthily build up sizeable stakes in companies until they hit a threshold (5%) at which point they must disclose their position, then they demand a seat or two on the board of directors and start trying to stir up shit to change the company so that it improves its return to shareholders. They often succeed. Which is to say they have something of a contrarian view on a lot of things. It must be a cool gig, tbh. Beats being the CEO's yes-man which is the case for all sorts of advisor roles..
aurizon 2y ago
Elliott - not as smart as he thinks. NVIDEA is indeed growing explosively, and that growth will indeed moderate, and NVIDEA improves cost/yields it will expand geometrically and decline to a linear rate - others will hop in and share. As for AI, it enjoys the same geometric growth - that will moderate individually, but applications will proliferate. This has years to run, maybe decades...
- constantcrying 2y ago
  This is a genuinely retarded comment. Do you have literally any idea about the stock market?
- paulmd 2y ago
  Yeah. The product isn’t AI, the product is Jensen - and he’s a legitimate business savant. He has an uncanny ability to see where the market could be going in 5-10 years and execute iteratively to get there. Right now you are seeing the RT groundwork finally take root - cerny is talking about how “surprised” they were about studios being so excited about RT. And sure it looks better, but the part cerny missed is that with game budgets ballooning, studios are eager to save wherever they can, and it turns out RT lighting can save about 25% of the development cost of a game. So now you are seeing a pivot to RT-by-default. We literally already have multiple games that do not even have a non-RT fallback renderer, on non-RT hardware they just do software-raytracing with shit-quality BVH and low ray count done on the cpu side instead of the gpu. Traditional raster fallback is essentially dead in the UE5 era. So far it’s metro EE, then Fortnite (even on series S!), Alan Wane, Avatar: Pandora, etc. The writing is on the wall, he did it again. That’s why Cerny is surprised, that’s why PS5 Pro might as well come with an RTX logo (the headline feature is the massive improvement in RT, plus AI upscaling), and that’s why AMD finally grumbled and is pushing forward a proper implementation in RDNA4.
rmholt 2y ago
I intuitively believe that from the beginning, markets are usually overly optimistic on the dawn of a new tech and I'm anticipating a correction in perhaps a few months or a year. Anyone knows how to short a stock on that time frame?
- cosmic_quanta 2y ago
  You can continuously roll options contracts. I don't know if any broker offers an order type to roll automatically; otherwise I really like Alpaca's API (https://alpaca.markets/ https://alpaca.markets/) to do it yourself.
- Graziano_M 2y ago
  If you need to ask how to short a stock you should not be doing it.
  - tomlue 2y ago
    everybody has to start somewhere...
    - agency 2y ago
      maybe not with financial derivatives with potentially unlimited downside
      - missedthecue 2y ago
        The point of financial derivatives is that the downside is limited.
        airstrike 2y ago
        no, that's the point of hedging. derivatives can have unlimited downside
        jnwatson 2y ago
nerdjon 2y ago
Can't read the article, but... yeah I think most people looking at this with any amount of logic realizes that. I feel like we are in a very rude awakening for a crash very soon, we have already seen multiple AI products come out and fail horribly. In my view there are 4 possible outcomes: - It is not overhyped but we realize that the current pace of things is un-sustainable for a variety of reasons and investment is decreased. - It is mildly overhyped but we realize that the vast majority of what these startups are doing can be done by Google, Microsoft, or Apple with just a minor change to their system prompt. And its moved to on device processing threatening Nvidia. - It is seriously overhyped, beyond AI startups failing we have a major issue like someone dieing or some other major scandal caused by AI doing something and no human verified it. We go back to recognizing what the technology actually is and what its limitations are. - We hit a wall with the current implementation and it does a decent job at things, but progress just stalls and hype dies down. I just don't see a positive outcome given the many issues that have come up and it being shoved into places as a source of authority and time and time again, it fails. Edit: Thank you for the archive. Yeah that aligns.
- claytongulick 2y ago
  There's the additional dimension to all this: cost. Regardless of hype or utility, these things are ridiculously expensive to run at any sort of scale.
  - nerdjon 2y ago
    > Regardless of hype or utility, these things are ridiculously expensive to run at any sort of scale. I probably should have been more clear, that is what I was referring to it being unsustainable. Cost, Energy use, Environmental impact, etc. All the things that are coming out recently about the "hidden cost" of AI.
  - HDThoreaun 2y ago
    Costs go down quickly. Intels new CPUs releasing end of year have an iGPU equivalent to a 3060 and the entire chip has a tdp of 30 watts. Another 5-10 years and the same will probably be true of todays top of line gpus.
fullshark 2y ago
I don't get why anyone would listen to the public musings of a hedge fund.
- Retr0id 2y ago
  The musings of hedge funds have non-trivial impacts on allocation of capital, especially in markets where prices are driven so heavily by speculation.
  - fullshark 2y ago
    I doubt you can sort out the noise/misdirection effectively to predict price movements, but if you can you should probably stop talking to us about it.
    - Retr0id 2y ago
      I don't need to personally profit from market movements to find them interesting.
- derefr 2y ago
  This is an important point: what any professional investor (i.e. someone with a fiduciary duty to their company to attempt to make money through investing, rather than just gambling) says in public about their investments, is going to be far more about manipulating the market than observing the market. If they honestly expected their observations to exactly predict the future, publicizing them would just lose them all their alpha.
  - everybodyknows 2y ago
    > about manipulating the market It's also about manipulating their clients' opinions -- say, in the direction of believing that staying with Elliott will, eventually, work out better than moving everything to ARK. > If they honestly expected their observations to exactly predict the future, publicizing them would just lose them all their alpha. Not if they're talking about positions in which they're already fully invested. In that case they are "talking their book".
egberts1 2y ago
We can always watch the stock tradings by The Pelosi Camelot (Nancy, Gavin, et al.) Might be a 45-day delay for its public disclosure, although.
yinser 2y ago
Hardware is always a leading winner in tech super cycles followed by larger wins by software. NVIDIA was always going to lead market gains with AI before software catches up. It’s been this way with the personal computer, internet, and mobile super cycles.
- detourdog 2y ago
  It’s also the least agile.
  - detourdog 2y ago
    When I say this I think about all the stories in the early PC days of hardware getting buried in landfills due to over production.
- dtech 2y ago
  And potential large market crashes. Yes Amazon and Google made massive gains, but very little of the tech stocks that were at all time highs in 2000 remain.
- havefunbesafe 2y ago
  Selling picks and shovels
Irishsteve 2y ago
The claim that AI products will never work might be valid. But NVIDIA don't need to care about that at the moment. What NVIDIA care about is the likes of AWS who are investing heavily into GPUs so that AWS customers can determine that maybe they don't need some model with tens of billions of parameters to make a search engine for an e-commerce product that has 100 listings.
- Mistletoe 2y ago
  Eventually the Ouroboros reaches the end. https://en.wikipedia.org/wiki/Ouroboros https://en.wikipedia.org/wiki/Ouroboros
- okasaki 2y ago
  > The claim that AI products will never work might be valid. Doesn't look very valid from my perspective, having used ChatGPT almost every day for more than a year.
  - Jensson 2y ago
    ChatGPT isn't a multi trillion dollar product though, what they mean is that AI products doesn't today work well enough to warrant trillions of dollars in market cap that you see in NVIDIA etc.
    - binary132 2y ago
      ChatGPT is a tech demo for the purpose of pitching a product market. The chat UI is not the cash cow.
  - forgetfulness 2y ago
    It comes down to how many of these offerings can deliver value worth $X/month to fund the multi-billion dollar ventures behind them, where companies find that they are willing to pay that $X per seat for it. There must be at least 6 major players among OpenAI, Microsoft, Google, Meta, Apple, Stability, and more that I haven't kept track of. NVIDIA has no way of knowing how viable all these businesses are in the medium term, they know how many GPUs they're buying while investment capital is flowing to them.
trte9343r4 2y ago
AI is not a bubble! It will change society in the same way as Internet and social media. Many jobs and professions will be eliminated. Problem is that big tech has no idea how to capitalize on AI! So far their biggest "idea" was how to censor it!
- RobotToaster 2y ago
  >It will change society in the same way as Internet and social media. >Many jobs and professions will be eliminated. What jobs and professions were eliminated by the internet and/or social media? I can think of jobs eliminated by computers (computer was originally a job title, after all), but none that were entirely eliminated by the internet.
  - wsintra2022 2y ago
    Newspaper and magazine printing factories, local TV station employees, that’s all I got.
    - throw310822 2y ago
      Travel agencies. Video rentals. Bank offices.
  - kkfx 2y ago
    That's what most people fails to understand: most real layoffs today are due to mere automation, people simply have mostly no more needs to go to a physical bank office, they use internet banking, the bank does not need the physical front office anymore, there is no AI in the game, but headlines say the opposite. AI is a bubble, something will remain, far resized, but the main issue here is that we are about to loose our software primacy because some big giants want an untenable model to keep their profit instead of keeping the desktop model with the user at the center, not the service at the center with "endpoints" scattered around. Unfortunately DUE to certain commercial practice most people do not know nor understand the power of IT so there is no real push against certain models.
  - zarzavat 2y ago
hnthrowaway0328 2y ago
If the AI bubble bursts, what's going to be a fair value for Nvidia?
- epolanski 2y ago
  There's no concept of "fair" value. Best you can do is to open an excel, predict their cash flow for a decade with which growth and decide what is the sum you're willing to pay
- airstrike 2y ago
  To echo the sibling comment "fair value" doesn't mean "just" but rather "fair to defend given some reasonable assumptions X, Y and Z".
tiffanyh 2y ago
"In the short run, the market is a voting machine but in the long run, it is a weighing machine." - Warren Buffet You could replace "market" with "AI"
- tim333 2y ago
  AI is a voting machine?
say_it_as_it_is 2y ago
A lot of companies are marketing products based on very shallow work and shallow understanding of the technology. The engineers and data scientists who know what is going on at these companies are silently coping with having business leaders who have been told about the limitations and are selling snake oil.
fxj 2y ago
They already work. AlphaFold is just transforming an industry. And runway will be a game changer for Hollywood. Udio and Suno are disrupting the music industry. And this are only some of the innovations that came up in the last 2 years. We live in interesting times. btw. yesterday I came across withpretzel.com, this is a revolution for working interactively with supercomputers and jupyer.
- jeffreyrogers 2y ago
  Something can be significant and overhyped at the same time. I don't have a strong opinion about any of the companies you listed but if you look at the markets they are targeting they aren't very big. Runway, for example, seems to be targeting a similar market as Industrial Light and Magic. Its parent company (Lucasfilm) was purchased in 2012 for ~$4 billion. You need a lot of billion dollar companies to justify the current AI hype, and if AI is used incrementally to serve existing markets (as all those examples are), then most of its success stories will be smallish. Maybe in aggregate all those moderate successes justify the valuations of Nvidia and the cloud providers but so far there is no massive AI use case, just a lot of little improvements.
deleted 2y ago
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homefree 2y ago
Nvidia risk is all about the stability (or not) of their monopoly. How quickly or effectively will model creators be able to make their vertically integrated custom training hardware is an open question and determines how you should bet imo. Nvidia is trying to make themselves a vertically integrated product with a necessary software layer on top, but it’s not obvious if that will succeed or if it’s enough of a moat to hold on to the monopoly long term with the incentives as they are. Intelligent software is such an obvious capability shift that its dismissal as overhyped is dumb. The web was known to be a big deal in the 90s but it was still hard to bet on and in 99 you would have lost a lot of money in most cases. Does that mean the web was overhyped? Enormous value will be created and captured - Nvidia has a monopoly now, if you think it’s resilient you should buy but it’s unclear how resilient it really is and it could drop in the short term either way. Major shifts are hard to bet on. Even obvious bets like Amazon in 99 you’d have to have waited a long time to 10x your initial investment. My personal take was I bought Nvidia when this seemed obvious a year ago and sold it when it hit 3T. It seemed clear it’d capture all the value on training in the short term, but I’m less certain about the future and 3T is a lot.
idunnoman1222 2y ago
Yes, of course the most advanced microchip maker in the world, why would there be continued demand for the most advanced microchips made ever? -please sell i need to reup
isk517 2y ago
NVIDIA must be feeling pretty invincible right now considering the last time they were in a bubble and it burst they just land right on top of a new bubble.
bee_rider 2y ago
AI might be a bubble, but Nvidia seems like they are in a decent spot going forward? Programmers have gotten pretty good at hiding latency nowadays and Nvidia makes the most popular high-throughput devices, and has an utterly dominant software ecosystem for those types of devices. Meanwhile Intel continues to fumble. AMD actually doing pretty ok on the hardware side, but their software ecosystem is not great. Who’s going to compete with Nvidia? Apple, lol?
- Jensson 2y ago
  The total GPU producer valuation ballooned 10x the past few years, even if NVIDIA captures the entire market the valuation still isn't warranted unless the market massively grows going forward.
  - paulmd 2y ago
    Narrator: the market grew massively going forward. Again, that’s why you see these periodic mining bubbles, AI bubbles, etc, as various fields discover their killer app for gpgpus. You should stop calling them mining bubbles or whatever and just call them what they really are: “dense compute surge demand”.
    - bee_rider 2y ago
      Yeah, it seems extremely rare that someone will say, “finally, we’ve discovered a way to run this previously GPGPU-centric algorithm on a CPU!”
- constantcrying 2y ago
  If an AI bubble exists and it bursts, Nvidia will loose a massive amount of customers. I have no doubt that they can survive, but they will still suffer from a massive financial hit. >Who’s going to compete with Nvidia? You know what is the surest way for a market leading company to go bankrupt? Pretending that the current situation is inevitable and no competitor will ever try to challenge them.
- boringg 2y ago
constantcrying 2y ago
>AI, it added, was in effect software that had so far not delivered “value commensurate with the hype”. Sober assessment in my opinion. It is obviously hard to make predictions about the future, but AI, as it exists now, has not revolutionized the world. It definitely makes me some percentage points more productive, but while the overall effect of a widely spread small productivity enhancement might be large, that doesn't means the technology lives up to the revolution it promised.
resource_waste 2y ago
In 5 years, everyone will have CUDA-like solutions. That erases Nvidia's lead. Okay, Nvidia is a bubble. AI overhyped? What?!?! Has this person used LLMs at all? Without a doubt, LLM AI is the most useful thing to happen to me. Probably on-par with than the entire internet due to how quickly I can get a response and how detailed/nuanced/niche it can be. I expect AI to eliminate the need for most diagnosing doctors and pharmacists. If we can't get that back in GDP, its a medical corruption problem. That example alone should be proof that AI is not overhyped.
- constantcrying 2y ago
  Months ago we debated whether ChatGPT would cause the end of the world. Compared to that the results are obviously underwhelming. >I expect AI to eliminate the need for most diagnosing doctors and pharmacists. That is a ridiculous claim if you know anything about the medical profession.
  - resource_waste 2y ago
    A single human trying to remember 25 year old outdated knowledge from medical school is better than AI? Rofl Anyway, I own a medical clinic, and chatGPT is literally better than my practitioners at diagnosis. I have seen patients cured after 2 years of incorrect diagnosis because we entered their symptoms into GPT3... yeah.. that was GPT3.
    - constantcrying 2y ago
      That is such a delusional claim and such an obvious lie. Even if it were true you could easily outperform a chatbot by basic medical knowledge. If doctors do not have that they are quacks and should not be practicing medicine.
airstrike 2y ago
> Many of AI’s supposed uses are “never going to be cost efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy”, it added. Uhh... I was with them on the "bubble" and "overhyped" from a valuation perspective. Without having done the proper math of a valuation model, it does seem (based on gut/experience) that the expected value here is baking in too much certainty when this is still early innings... But I wouldn't go as far as saying products will never work. It's really hard to make predictions, especially about the future.
waffletower 2y ago
I believe Elliott is accurate that there is valuation bubble for key AI companies, however, I think it is important to note that this valuation has little to do with the actual performance and prospects of the companies and technology involved, particularly Nvidia, in the near term (2-3 years). The bubble exists from trader behavior -- the valuations have reached heights where stock investors are now rotating out of AI positions in significant numbers. This aggressive valuation growth spanned roughly a year, a duration significantly shorter from the capital purchases schedule for AI investments made by companies making significant AI data center investments. Nvidia's quarterly earnings report later this month will probably indicate more growth -- the actual health of their business is immaterial and separate from the speculative valuations of their stock value. It is important to see the two as distinct and largely disconnected. Wall Street has little cognizance of the actual value of AI, and neither do we, Apple's consumer AI foray hasn't even been released -- yet the traders are done and investing elsewhere. Wall Street is extraordinarily myopic and divorced from the actual market time scales at play here.
binary132 2y ago
Isn’t that kind of the point? Nvidia and OpenAI are clearly seeking to become market-makers by promoting AI hype to the masses: mostly the masses of tech wantrepreneurs who will borrow oodles of dollars and spend them on hosted compute accelerators and paid model / LLMaaS licenses. If that segment succeeds at replacing lots of unwanted tech employees, they all win. If it doesn’t, they’ll move on to the next hype bubble. That’s what these companies do for money, not B2C products like glorified chatbots.
1vuio0pswjnm7 2y ago
Works where archive.is is blocked: https://web.archive.org/web/20240802162730if_/https://www.ft.com/content/24a12be1-a973-4efe-ab4f-b981aee0cd0b https://web.archive.org/web/20240802162730if_/https://www.ft... https://webcache.googleusercontent.com/search?q=cache:https://www.ft.com/content/24a12be1-a973-4efe-ab4f-b981aee0cd0b https://webcache.googleusercontent.com/search?q=cache:https:... https://cc.bingj.com/cache.aspx?d=3560540516523&w=cpSY8kDyA5SYMO3bI1Krgh3oWpoFIvwN https://cc.bingj.com/cache.aspx?d=3560540516523&w=cpSY8kDyA5...
mikewarot 2y ago
To me, we're obviously in a bubble. Everyone assumes that it's going to continue to take economically disrupting amounts of compute to train larger and larger models into the foreseeable future. They think that the need for compute will always go up. Just like they thought that the price of real estate would always go up, until it didn't in 2006 or so. We're in for a correction, a strong correction, in hardware demand. Someone will figure out a better algorithm, a better way to do transfer learning, or maybe a better architecture for AI chips that greatly increases performance. At the rate things are going, we'll be using 2 bit arithmetic (0,1,infinity,-1) for models and all of the huge multiply-accumulate arrays won't be quite so useful. I don't see how "line goes up" continues forever.
- jhanschoo 2y ago
  What estimations and pieces of evidence do you have in mind that leads you to feel that the trend is towards extreme quantization?

62 points by jmsflknr 2y ago

boringg 2y ago

Really putting himself on the line with that assessment. /S

FL33TW00D 2y ago

https://archive.is/GVCIG https://archive.is/GVCIG

Irishsteve 2y ago
Pin this?

enraged_camel 2y ago

Who is Elliott? TFA is paywalled.

agentultra 2y ago
A hedge fund based in Florida, USA.
- airstrike 2y ago
  Historically based in New York, moved to Florida after the pandemic
beardedwizard 2y ago
Activist investor known for buying their way in, harassing leadership out, then selling to PE. See bluecoat and Citrix as examples.
airstrike 2y ago
Probably the most famous "activist investor" after Carl Icahn. They like to call out bad management teams, stealthily build up sizeable stakes in companies until they hit a threshold (5%) at which point they must disclose their position, then they demand a seat or two on the board of directors and start trying to stir up shit to change the company so that it improves its return to shareholders. They often succeed. Which is to say they have something of a contrarian view on a lot of things. It must be a cool gig, tbh. Beats being the CEO's yes-man which is the case for all sorts of advisor roles..

aurizon 2y ago

Elliott - not as smart as he thinks. NVIDEA is indeed growing explosively, and that growth will indeed moderate, and NVIDEA improves cost/yields it will expand geometrically and decline to a linear rate - others will hop in and share. As for AI, it enjoys the same geometric growth - that will moderate individually, but applications will proliferate. This has years to run, maybe decades...

constantcrying 2y ago
This is a genuinely retarded comment. Do you have literally any idea about the stock market?
paulmd 2y ago
Yeah. The product isn’t AI, the product is Jensen - and he’s a legitimate business savant. He has an uncanny ability to see where the market could be going in 5-10 years and execute iteratively to get there. Right now you are seeing the RT groundwork finally take root - cerny is talking about how “surprised” they were about studios being so excited about RT. And sure it looks better, but the part cerny missed is that with game budgets ballooning, studios are eager to save wherever they can, and it turns out RT lighting can save about 25% of the development cost of a game. So now you are seeing a pivot to RT-by-default. We literally already have multiple games that do not even have a non-RT fallback renderer, on non-RT hardware they just do software-raytracing with shit-quality BVH and low ray count done on the cpu side instead of the gpu. Traditional raster fallback is essentially dead in the UE5 era. So far it’s metro EE, then Fortnite (even on series S!), Alan Wane, Avatar: Pandora, etc. The writing is on the wall, he did it again. That’s why Cerny is surprised, that’s why PS5 Pro might as well come with an RTX logo (the headline feature is the massive improvement in RT, plus AI upscaling), and that’s why AMD finally grumbled and is pushing forward a proper implementation in RDNA4.

rmholt 2y ago

I intuitively believe that from the beginning, markets are usually overly optimistic on the dawn of a new tech and I'm anticipating a correction in perhaps a few months or a year. Anyone knows how to short a stock on that time frame?

cosmic_quanta 2y ago
You can continuously roll options contracts. I don't know if any broker offers an order type to roll automatically; otherwise I really like Alpaca's API (https://alpaca.markets/ https://alpaca.markets/) to do it yourself.
Graziano_M 2y ago
If you need to ask how to short a stock you should not be doing it.
- tomlue 2y ago
  everybody has to start somewhere...
  - agency 2y ago
    maybe not with financial derivatives with potentially unlimited downside
    - missedthecue 2y ago
      The point of financial derivatives is that the downside is limited.
      - airstrike 2y ago
        no, that's the point of hedging. derivatives can have unlimited downside
      - jnwatson 2y ago

nerdjon 2y ago

Can't read the article, but... yeah I think most people looking at this with any amount of logic realizes that. I feel like we are in a very rude awakening for a crash very soon, we have already seen multiple AI products come out and fail horribly. In my view there are 4 possible outcomes: - It is not overhyped but we realize that the current pace of things is un-sustainable for a variety of reasons and investment is decreased. - It is mildly overhyped but we realize that the vast majority of what these startups are doing can be done by Google, Microsoft, or Apple with just a minor change to their system prompt. And its moved to on device processing threatening Nvidia. - It is seriously overhyped, beyond AI startups failing we have a major issue like someone dieing or some other major scandal caused by AI doing something and no human verified it. We go back to recognizing what the technology actually is and what its limitations are. - We hit a wall with the current implementation and it does a decent job at things, but progress just stalls and hype dies down. I just don't see a positive outcome given the many issues that have come up and it being shoved into places as a source of authority and time and time again, it fails. Edit: Thank you for the archive. Yeah that aligns.

claytongulick 2y ago
There's the additional dimension to all this: cost. Regardless of hype or utility, these things are ridiculously expensive to run at any sort of scale.
- nerdjon 2y ago
  > Regardless of hype or utility, these things are ridiculously expensive to run at any sort of scale. I probably should have been more clear, that is what I was referring to it being unsustainable. Cost, Energy use, Environmental impact, etc. All the things that are coming out recently about the "hidden cost" of AI.
- HDThoreaun 2y ago
  Costs go down quickly. Intels new CPUs releasing end of year have an iGPU equivalent to a 3060 and the entire chip has a tdp of 30 watts. Another 5-10 years and the same will probably be true of todays top of line gpus.

fullshark 2y ago

I don't get why anyone would listen to the public musings of a hedge fund.

Retr0id 2y ago
The musings of hedge funds have non-trivial impacts on allocation of capital, especially in markets where prices are driven so heavily by speculation.
- fullshark 2y ago
  I doubt you can sort out the noise/misdirection effectively to predict price movements, but if you can you should probably stop talking to us about it.
  - Retr0id 2y ago
    I don't need to personally profit from market movements to find them interesting.
derefr 2y ago
This is an important point: what any professional investor (i.e. someone with a fiduciary duty to their company to attempt to make money through investing, rather than just gambling) says in public about their investments, is going to be far more about manipulating the market than observing the market. If they honestly expected their observations to exactly predict the future, publicizing them would just lose them all their alpha.
- everybodyknows 2y ago
  > about manipulating the market It's also about manipulating their clients' opinions -- say, in the direction of believing that staying with Elliott will, eventually, work out better than moving everything to ARK. > If they honestly expected their observations to exactly predict the future, publicizing them would just lose them all their alpha. Not if they're talking about positions in which they're already fully invested. In that case they are "talking their book".

egberts1 2y ago

We can always watch the stock tradings by The Pelosi Camelot (Nancy, Gavin, et al.) Might be a 45-day delay for its public disclosure, although.

yinser 2y ago

Hardware is always a leading winner in tech super cycles followed by larger wins by software. NVIDIA was always going to lead market gains with AI before software catches up. It’s been this way with the personal computer, internet, and mobile super cycles.

detourdog 2y ago
It’s also the least agile.
- detourdog 2y ago
  When I say this I think about all the stories in the early PC days of hardware getting buried in landfills due to over production.
dtech 2y ago
And potential large market crashes. Yes Amazon and Google made massive gains, but very little of the tech stocks that were at all time highs in 2000 remain.
havefunbesafe 2y ago
Selling picks and shovels

Irishsteve 2y ago

The claim that AI products will never work might be valid. But NVIDIA don't need to care about that at the moment. What NVIDIA care about is the likes of AWS who are investing heavily into GPUs so that AWS customers can determine that maybe they don't need some model with tens of billions of parameters to make a search engine for an e-commerce product that has 100 listings.

Mistletoe 2y ago
Eventually the Ouroboros reaches the end. https://en.wikipedia.org/wiki/Ouroboros https://en.wikipedia.org/wiki/Ouroboros
okasaki 2y ago
> The claim that AI products will never work might be valid. Doesn't look very valid from my perspective, having used ChatGPT almost every day for more than a year.
- Jensson 2y ago
  ChatGPT isn't a multi trillion dollar product though, what they mean is that AI products doesn't today work well enough to warrant trillions of dollars in market cap that you see in NVIDIA etc.
  - binary132 2y ago
    ChatGPT is a tech demo for the purpose of pitching a product market. The chat UI is not the cash cow.
- forgetfulness 2y ago
  It comes down to how many of these offerings can deliver value worth $X/month to fund the multi-billion dollar ventures behind them, where companies find that they are willing to pay that $X per seat for it. There must be at least 6 major players among OpenAI, Microsoft, Google, Meta, Apple, Stability, and more that I haven't kept track of. NVIDIA has no way of knowing how viable all these businesses are in the medium term, they know how many GPUs they're buying while investment capital is flowing to them.

trte9343r4 2y ago

AI is not a bubble! It will change society in the same way as Internet and social media. Many jobs and professions will be eliminated. Problem is that big tech has no idea how to capitalize on AI! So far their biggest "idea" was how to censor it!

RobotToaster 2y ago
>It will change society in the same way as Internet and social media. >Many jobs and professions will be eliminated. What jobs and professions were eliminated by the internet and/or social media? I can think of jobs eliminated by computers (computer was originally a job title, after all), but none that were entirely eliminated by the internet.
- wsintra2022 2y ago
  Newspaper and magazine printing factories, local TV station employees, that’s all I got.
  - throw310822 2y ago
    Travel agencies. Video rentals. Bank offices.
- kkfx 2y ago
  That's what most people fails to understand: most real layoffs today are due to mere automation, people simply have mostly no more needs to go to a physical bank office, they use internet banking, the bank does not need the physical front office anymore, there is no AI in the game, but headlines say the opposite. AI is a bubble, something will remain, far resized, but the main issue here is that we are about to loose our software primacy because some big giants want an untenable model to keep their profit instead of keeping the desktop model with the user at the center, not the service at the center with "endpoints" scattered around. Unfortunately DUE to certain commercial practice most people do not know nor understand the power of IT so there is no real push against certain models.
- zarzavat 2y ago

hnthrowaway0328 2y ago

If the AI bubble bursts, what's going to be a fair value for Nvidia?

epolanski 2y ago
There's no concept of "fair" value. Best you can do is to open an excel, predict their cash flow for a decade with which growth and decide what is the sum you're willing to pay
airstrike 2y ago
To echo the sibling comment "fair value" doesn't mean "just" but rather "fair to defend given some reasonable assumptions X, Y and Z".

tiffanyh 2y ago

"In the short run, the market is a voting machine but in the long run, it is a weighing machine." - Warren Buffet You could replace "market" with "AI"

tim333 2y ago
AI is a voting machine?

say_it_as_it_is 2y ago

A lot of companies are marketing products based on very shallow work and shallow understanding of the technology. The engineers and data scientists who know what is going on at these companies are silently coping with having business leaders who have been told about the limitations and are selling snake oil.

fxj 2y ago

They already work. AlphaFold is just transforming an industry. And runway will be a game changer for Hollywood. Udio and Suno are disrupting the music industry. And this are only some of the innovations that came up in the last 2 years. We live in interesting times. btw. yesterday I came across withpretzel.com, this is a revolution for working interactively with supercomputers and jupyer.

jeffreyrogers 2y ago
Something can be significant and overhyped at the same time. I don't have a strong opinion about any of the companies you listed but if you look at the markets they are targeting they aren't very big. Runway, for example, seems to be targeting a similar market as Industrial Light and Magic. Its parent company (Lucasfilm) was purchased in 2012 for ~$4 billion. You need a lot of billion dollar companies to justify the current AI hype, and if AI is used incrementally to serve existing markets (as all those examples are), then most of its success stories will be smallish. Maybe in aggregate all those moderate successes justify the valuations of Nvidia and the cloud providers but so far there is no massive AI use case, just a lot of little improvements.

deleted 2y ago

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homefree 2y ago

Nvidia risk is all about the stability (or not) of their monopoly. How quickly or effectively will model creators be able to make their vertically integrated custom training hardware is an open question and determines how you should bet imo. Nvidia is trying to make themselves a vertically integrated product with a necessary software layer on top, but it’s not obvious if that will succeed or if it’s enough of a moat to hold on to the monopoly long term with the incentives as they are. Intelligent software is such an obvious capability shift that its dismissal as overhyped is dumb. The web was known to be a big deal in the 90s but it was still hard to bet on and in 99 you would have lost a lot of money in most cases. Does that mean the web was overhyped? Enormous value will be created and captured - Nvidia has a monopoly now, if you think it’s resilient you should buy but it’s unclear how resilient it really is and it could drop in the short term either way. Major shifts are hard to bet on. Even obvious bets like Amazon in 99 you’d have to have waited a long time to 10x your initial investment. My personal take was I bought Nvidia when this seemed obvious a year ago and sold it when it hit 3T. It seemed clear it’d capture all the value on training in the short term, but I’m less certain about the future and 3T is a lot.

idunnoman1222 2y ago

Yes, of course the most advanced microchip maker in the world, why would there be continued demand for the most advanced microchips made ever? -please sell i need to reup

isk517 2y ago

NVIDIA must be feeling pretty invincible right now considering the last time they were in a bubble and it burst they just land right on top of a new bubble.

bee_rider 2y ago

AI might be a bubble, but Nvidia seems like they are in a decent spot going forward? Programmers have gotten pretty good at hiding latency nowadays and Nvidia makes the most popular high-throughput devices, and has an utterly dominant software ecosystem for those types of devices. Meanwhile Intel continues to fumble. AMD actually doing pretty ok on the hardware side, but their software ecosystem is not great. Who’s going to compete with Nvidia? Apple, lol?

Jensson 2y ago
The total GPU producer valuation ballooned 10x the past few years, even if NVIDIA captures the entire market the valuation still isn't warranted unless the market massively grows going forward.
- paulmd 2y ago
  Narrator: the market grew massively going forward. Again, that’s why you see these periodic mining bubbles, AI bubbles, etc, as various fields discover their killer app for gpgpus. You should stop calling them mining bubbles or whatever and just call them what they really are: “dense compute surge demand”.
  - bee_rider 2y ago
    Yeah, it seems extremely rare that someone will say, “finally, we’ve discovered a way to run this previously GPGPU-centric algorithm on a CPU!”
constantcrying 2y ago
If an AI bubble exists and it bursts, Nvidia will loose a massive amount of customers. I have no doubt that they can survive, but they will still suffer from a massive financial hit. >Who’s going to compete with Nvidia? You know what is the surest way for a market leading company to go bankrupt? Pretending that the current situation is inevitable and no competitor will ever try to challenge them.
boringg 2y ago

constantcrying 2y ago

>AI, it added, was in effect software that had so far not delivered “value commensurate with the hype”. Sober assessment in my opinion. It is obviously hard to make predictions about the future, but AI, as it exists now, has not revolutionized the world. It definitely makes me some percentage points more productive, but while the overall effect of a widely spread small productivity enhancement might be large, that doesn't means the technology lives up to the revolution it promised.

resource_waste 2y ago

In 5 years, everyone will have CUDA-like solutions. That erases Nvidia's lead. Okay, Nvidia is a bubble. AI overhyped? What?!?! Has this person used LLMs at all? Without a doubt, LLM AI is the most useful thing to happen to me. Probably on-par with than the entire internet due to how quickly I can get a response and how detailed/nuanced/niche it can be. I expect AI to eliminate the need for most diagnosing doctors and pharmacists. If we can't get that back in GDP, its a medical corruption problem. That example alone should be proof that AI is not overhyped.

constantcrying 2y ago
Months ago we debated whether ChatGPT would cause the end of the world. Compared to that the results are obviously underwhelming. >I expect AI to eliminate the need for most diagnosing doctors and pharmacists. That is a ridiculous claim if you know anything about the medical profession.
- resource_waste 2y ago
  A single human trying to remember 25 year old outdated knowledge from medical school is better than AI? Rofl Anyway, I own a medical clinic, and chatGPT is literally better than my practitioners at diagnosis. I have seen patients cured after 2 years of incorrect diagnosis because we entered their symptoms into GPT3... yeah.. that was GPT3.
  - constantcrying 2y ago
    That is such a delusional claim and such an obvious lie. Even if it were true you could easily outperform a chatbot by basic medical knowledge. If doctors do not have that they are quacks and should not be practicing medicine.

airstrike 2y ago

> Many of AI’s supposed uses are “never going to be cost efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy”, it added. Uhh... I was with them on the "bubble" and "overhyped" from a valuation perspective. Without having done the proper math of a valuation model, it does seem (based on gut/experience) that the expected value here is baking in too much certainty when this is still early innings... But I wouldn't go as far as saying products will never work. It's really hard to make predictions, especially about the future.

waffletower 2y ago

I believe Elliott is accurate that there is valuation bubble for key AI companies, however, I think it is important to note that this valuation has little to do with the actual performance and prospects of the companies and technology involved, particularly Nvidia, in the near term (2-3 years). The bubble exists from trader behavior -- the valuations have reached heights where stock investors are now rotating out of AI positions in significant numbers. This aggressive valuation growth spanned roughly a year, a duration significantly shorter from the capital purchases schedule for AI investments made by companies making significant AI data center investments. Nvidia's quarterly earnings report later this month will probably indicate more growth -- the actual health of their business is immaterial and separate from the speculative valuations of their stock value. It is important to see the two as distinct and largely disconnected. Wall Street has little cognizance of the actual value of AI, and neither do we, Apple's consumer AI foray hasn't even been released -- yet the traders are done and investing elsewhere. Wall Street is extraordinarily myopic and divorced from the actual market time scales at play here.

binary132 2y ago

Isn’t that kind of the point? Nvidia and OpenAI are clearly seeking to become market-makers by promoting AI hype to the masses: mostly the masses of tech wantrepreneurs who will borrow oodles of dollars and spend them on hosted compute accelerators and paid model / LLMaaS licenses. If that segment succeeds at replacing lots of unwanted tech employees, they all win. If it doesn’t, they’ll move on to the next hype bubble. That’s what these companies do for money, not B2C products like glorified chatbots.

1vuio0pswjnm7 2y ago

Works where archive.is is blocked: https://web.archive.org/web/20240802162730if_/https://www.ft.com/content/24a12be1-a973-4efe-ab4f-b981aee0cd0b https://web.archive.org/web/20240802162730if_/https://www.ft... https://webcache.googleusercontent.com/search?q=cache:https://www.ft.com/content/24a12be1-a973-4efe-ab4f-b981aee0cd0b https://webcache.googleusercontent.com/search?q=cache:https:... https://cc.bingj.com/cache.aspx?d=3560540516523&w=cpSY8kDyA5SYMO3bI1Krgh3oWpoFIvwN https://cc.bingj.com/cache.aspx?d=3560540516523&w=cpSY8kDyA5...

mikewarot 2y ago

To me, we're obviously in a bubble. Everyone assumes that it's going to continue to take economically disrupting amounts of compute to train larger and larger models into the foreseeable future. They think that the need for compute will always go up. Just like they thought that the price of real estate would always go up, until it didn't in 2006 or so. We're in for a correction, a strong correction, in hardware demand. Someone will figure out a better algorithm, a better way to do transfer learning, or maybe a better architecture for AI chips that greatly increases performance. At the rate things are going, we'll be using 2 bit arithmetic (0,1,infinity,-1) for models and all of the huge multiply-accumulate arrays won't be quite so useful. I don't see how "line goes up" continues forever.

jhanschoo 2y ago
What estimations and pieces of evidence do you have in mind that leads you to feel that the trend is towards extreme quantization?