8 ms·

Nvidia dethrones Apple as the most valuable company

82 points by elsewhen 2y ago

tananaev 2y ago
The valuation is completely nuts. It assumes that Nvidia's revenues will continue to grow at the same pace for many many years, without any competition. That's a very silly assumption IMO.
- kylebenzle 2y ago
  Just wrote a blog post about this, it's time to short! https://news.ycombinator.com/item?id=41897679 https://news.ycombinator.com/item?id=41897679
  - parsimo2010 2y ago
    The market can remain irrational longer than you can remain solvent.
    - vinnyvichy 2y ago
      [dead]
    - Bombthecat 2y ago
      Yes! Tesla is the best example for this...
  - elteto 2y ago
    I’m always skeptical of people giving away their alpha.
- FireBeyond 2y ago
  Sounds like Tesla! Actually, Tesla has a higher rating...
- casey2 2y ago
  If AI really is as productive as this valuation claims then by then someone will have used it to invent a better cuda, and unless that's nvidia themselves they will lose their moat If AI isn't this productive then they are still the safest bubble company in the bubble. This situation, to me, says that most people are unsure of how productive AI will be so they don't want to directly invest in it, but following dot com logic companies partaking in tech bubbles will still beat the market as long as their P/E isn't in the multi hundreds year on year. Nvidias' P/E is similar to intel back then iirc
  - lm28469 2y ago
    > If AI really is as productive as this valuation The modern ai flavor has been there for almost two years now yet nothing hints to a productivity boost, nothing even remotely close to a scale that would be relevant.
    - deleted 2y ago
      [deleted]
ArtTimeInvestor 2y ago
The absolute number of $3.5T market cap seems high. But Nvidia's earnings last quarter were $17B. Annualized that is $68B. The PE ratio calculated by current market cap of $3.5T divided by that annualized earnings is 52. Not unusual for a growing tech company. I remember the arguments I hear here on HN these days "No company can be that big and still grow. Also competition will catch up!" from the early 2000's when Apple's market cap crossed $100B. And from 2017 when Tesla's market cap crossed that of BMW. It's not that easy. Companies are moving targets. Their future will be determined by revenue factors that are not generating any revenue today. With Apple it was the iPhone. With Tesla it was self-driving. With Nvidia it will be ... ?
- cameldrv 2y ago
  3500/68=51.5
  - ArtTimeInvestor 2y ago
    Thanks, fixed.
- acchow 2y ago
  The growth is one thing, but maintaining gross margins of 76% in big tech is quite challenging. Ignoring AI bubble risk, in the near term, their main risk is margin compression
  - tonyedgecombe 2y ago
    Yes, the big difference between them and Apple is Nvidia’s customers would jump in a flash if one of their competitors offered a better price performance ratio. Judging by the history of this industry that seems inevitable.
    - pjmlp 2y ago
      Apple had similar problem in the last century. They have a nice money cushion nowadays, but mankind isn't going to keep rebuying iPhone and iPads forever.
jiggawatts 2y ago
The problem with this valuation is that the AMD MI300 exists. It is directly comparable to NVIDIA's accelerators, with differences measured in tens of percentage points, not orders of magnitude. Sure, the software may not be as good as NVIDIA's at the moment, but would it take AMD $3 billion to match it, or $3 trillion? It didn't take NVIDIA trillions to develop CUDA! Similarly, for users of NVIDIA hardware, are they willing to fork over $3 trillion of their own money instead of, say, a "mere" $2T to AMD and work out the kinks in the software compatibility with the remaining one trillion dollars!? These valuations are not just insane, they are certifiably nuts. I'm still waiting for Apple Intelligence to ship, Windows Copilot is looking more like Clippy every day, and ChatGPT might partially replace Google Search for me, but not the rest of Google's products. I just don't see that $3.5T materialising as revenue before the bubble bursts, and if it doesn't, not before AMD starts taking a larger slice of the trillion-dollar-pie.
- pjmlp 2y ago
  It might exist, but its software ecosystem sucks, which is the part Intel and AMD keep missing out.
  - jiggawatts 2y ago
    Yes, but does it suck billions or trillions? The market is saying that it's willing to throw the latter at the overall problem of AI training, so even if it did take a trillion dollars to fix AMD's software issues, that ought not be a significant hurdle either.
    - ivewonyoung 2y ago
      Some things are hard and just throwing more money at it doesn't work because it's about company culture and leadership. Compare ICE auto industry profits since 2003 when Tesla was founded to money invested in Tesla till 2019 when Model Y was finished. Tesla had very less money to work with. Multiple iterations of Volkswagen's car software sucked so bad and the company culture and leadership just couldn't develop good software so Volkswagen created a separate startup style subsidiary just to make software. Guess what? That startup also failed and they recently bought a $5 billion stake in Rivian so that they could use Rivian's car software. Meanwhile their sales are tanking. Also look at SpaceX vs. ESA or Boeing/ULA with reusable boosters. Or China with EUV and chips. Even nation state level with essentially unlimited funding may not work.
andrewstuart 2y ago
What if fast new LLMs don’t need a GPU?
- Jlagreen 2y ago
  On what are fast and new LLMs created if not on a GPU? The reason Nvidia dominates is that all the AI research is done on their GPUs for the past decade. That's why any new approach in AI will be on Nvidia's GPU and Nvidia will always fine tune their ecosystem based on research results. That's why the 6 months of A100s used to traing GPT-3.5 become 10 days with Blackwell. That's why Nvidia dominates since nobody even considers alternatives in AI research validation than Nvidia. And one major reason is that CUDA is dominant and AI researchers have known it for a decade. You see, Nvidia is talking about "all AI", so training, inferencing, networking, applications, everything. HW competitors only mean inferencing when they talk about AI and wonder why traction is so slow. Nobody on this planet would buy a Nvidia data center for research and training and then a competitor's data center for inferencing next to it. You simply extend your Nvidia data center seamlessly (thanks to Nvidia tools) and use it dynamically at full utilization for training, inferencing and whatever you need otherwise. To beat Nvidia, you have to beat them at everything, not just inferencing and even there on specific fields lol.
etempleton 2y ago
The thing I worry about with Nvidia in terms of valuation is that they have very successfully ridden two waves and I am not sure if a third is on the immediate horizon. Crypto mining kept demand for Nvidia processors artificially high throughout the pandemic and now then they transitioned immediately into AI hysteria. They, of course, have a healthy business without those things, but it is not entirely clear to me if such accelerated growth is sustainable.
- polishdude20 2y ago
  Well what's the next "thing" that will require massively parallel processors?
  - Jlagreen 2y ago
    Digital worlds used for prototyping so you can safe lots of money on prototyping. Imagine that you can build a complete factory virtually first and then test run it. Planning is the most effort in building a factory so you have to do it in virtual or real world equally. But in virtual world you can allow mistakes and correct them while in the real world you have 1 shot and a simple mistake can cost you millions later on. The same applies to many analog industries which aren't digital yet. Digitalization for IT and Tech is computers which are used in development and administration but analog processes in manufacturing are still far from being digital. Digial worlds is what will be a huge change in traditional industries and Nvidia is creating a global solution for it called Omniverse. And of course with a headstart, since the release was several years ago and now Nvidia is slowly distributing it into the world. Nobody sees it, nobody gets it but just like Nvidia started DGX 8 years ago and today everyone is surprised about Nvidia's dominance in AI compute, the same will happen with Nvidia and digital worlds. Also digital worlds will uplift 3rd world countries because they can skipp Industry revolution 2 and 3 and go straight to virtual solutions which then apply to real world. Just like many 3rd world countries in the past simply skipped cable TV and hard wired phones and jumped directly to mobile phone technology where they dominate now (see South Korea and others).
    - polishdude20 2y ago
rationalfaith 2y ago
[dead]

82 points by elsewhen 2y ago

The valuation is completely nuts. It assumes that Nvidia's revenues will continue to grow at the same pace for many many years, without any competition. That's a very silly assumption IMO.

kylebenzle 2y ago
Just wrote a blog post about this, it's time to short! https://news.ycombinator.com/item?id=41897679 https://news.ycombinator.com/item?id=41897679
- parsimo2010 2y ago
  The market can remain irrational longer than you can remain solvent.
  - vinnyvichy 2y ago
    [dead]
  - Bombthecat 2y ago
    Yes! Tesla is the best example for this...
- elteto 2y ago
  I’m always skeptical of people giving away their alpha.
FireBeyond 2y ago
Sounds like Tesla! Actually, Tesla has a higher rating...
casey2 2y ago
If AI really is as productive as this valuation claims then by then someone will have used it to invent a better cuda, and unless that's nvidia themselves they will lose their moat If AI isn't this productive then they are still the safest bubble company in the bubble. This situation, to me, says that most people are unsure of how productive AI will be so they don't want to directly invest in it, but following dot com logic companies partaking in tech bubbles will still beat the market as long as their P/E isn't in the multi hundreds year on year. Nvidias' P/E is similar to intel back then iirc
- lm28469 2y ago
  > If AI really is as productive as this valuation The modern ai flavor has been there for almost two years now yet nothing hints to a productivity boost, nothing even remotely close to a scale that would be relevant.
  - deleted 2y ago
    [deleted]

ArtTimeInvestor 2y ago

The absolute number of $3.5T market cap seems high. But Nvidia's earnings last quarter were $17B. Annualized that is $68B. The PE ratio calculated by current market cap of $3.5T divided by that annualized earnings is 52. Not unusual for a growing tech company. I remember the arguments I hear here on HN these days "No company can be that big and still grow. Also competition will catch up!" from the early 2000's when Apple's market cap crossed $100B. And from 2017 when Tesla's market cap crossed that of BMW. It's not that easy. Companies are moving targets. Their future will be determined by revenue factors that are not generating any revenue today. With Apple it was the iPhone. With Tesla it was self-driving. With Nvidia it will be ... ?

cameldrv 2y ago
3500/68=51.5
- ArtTimeInvestor 2y ago
  Thanks, fixed.
acchow 2y ago
The growth is one thing, but maintaining gross margins of 76% in big tech is quite challenging. Ignoring AI bubble risk, in the near term, their main risk is margin compression
- tonyedgecombe 2y ago
  Yes, the big difference between them and Apple is Nvidia’s customers would jump in a flash if one of their competitors offered a better price performance ratio. Judging by the history of this industry that seems inevitable.
  - pjmlp 2y ago
    Apple had similar problem in the last century. They have a nice money cushion nowadays, but mankind isn't going to keep rebuying iPhone and iPads forever.

jiggawatts 2y ago

The problem with this valuation is that the AMD MI300 exists. It is directly comparable to NVIDIA's accelerators, with differences measured in tens of percentage points, not orders of magnitude. Sure, the software may not be as good as NVIDIA's at the moment, but would it take AMD $3 billion to match it, or $3 trillion? It didn't take NVIDIA trillions to develop CUDA! Similarly, for users of NVIDIA hardware, are they willing to fork over $3 trillion of their own money instead of, say, a "mere" $2T to AMD and work out the kinks in the software compatibility with the remaining one trillion dollars!? These valuations are not just insane, they are certifiably nuts. I'm still waiting for Apple Intelligence to ship, Windows Copilot is looking more like Clippy every day, and ChatGPT might partially replace Google Search for me, but not the rest of Google's products. I just don't see that $3.5T materialising as revenue before the bubble bursts, and if it doesn't, not before AMD starts taking a larger slice of the trillion-dollar-pie.

pjmlp 2y ago
It might exist, but its software ecosystem sucks, which is the part Intel and AMD keep missing out.
- jiggawatts 2y ago
  Yes, but does it suck billions or trillions? The market is saying that it's willing to throw the latter at the overall problem of AI training, so even if it did take a trillion dollars to fix AMD's software issues, that ought not be a significant hurdle either.
  - ivewonyoung 2y ago
    Some things are hard and just throwing more money at it doesn't work because it's about company culture and leadership. Compare ICE auto industry profits since 2003 when Tesla was founded to money invested in Tesla till 2019 when Model Y was finished. Tesla had very less money to work with. Multiple iterations of Volkswagen's car software sucked so bad and the company culture and leadership just couldn't develop good software so Volkswagen created a separate startup style subsidiary just to make software. Guess what? That startup also failed and they recently bought a $5 billion stake in Rivian so that they could use Rivian's car software. Meanwhile their sales are tanking. Also look at SpaceX vs. ESA or Boeing/ULA with reusable boosters. Or China with EUV and chips. Even nation state level with essentially unlimited funding may not work.

andrewstuart 2y ago

What if fast new LLMs don’t need a GPU?

Jlagreen 2y ago
On what are fast and new LLMs created if not on a GPU? The reason Nvidia dominates is that all the AI research is done on their GPUs for the past decade. That's why any new approach in AI will be on Nvidia's GPU and Nvidia will always fine tune their ecosystem based on research results. That's why the 6 months of A100s used to traing GPT-3.5 become 10 days with Blackwell. That's why Nvidia dominates since nobody even considers alternatives in AI research validation than Nvidia. And one major reason is that CUDA is dominant and AI researchers have known it for a decade. You see, Nvidia is talking about "all AI", so training, inferencing, networking, applications, everything. HW competitors only mean inferencing when they talk about AI and wonder why traction is so slow. Nobody on this planet would buy a Nvidia data center for research and training and then a competitor's data center for inferencing next to it. You simply extend your Nvidia data center seamlessly (thanks to Nvidia tools) and use it dynamically at full utilization for training, inferencing and whatever you need otherwise. To beat Nvidia, you have to beat them at everything, not just inferencing and even there on specific fields lol.

etempleton 2y ago

The thing I worry about with Nvidia in terms of valuation is that they have very successfully ridden two waves and I am not sure if a third is on the immediate horizon. Crypto mining kept demand for Nvidia processors artificially high throughout the pandemic and now then they transitioned immediately into AI hysteria. They, of course, have a healthy business without those things, but it is not entirely clear to me if such accelerated growth is sustainable.

polishdude20 2y ago
Well what's the next "thing" that will require massively parallel processors?
- Jlagreen 2y ago
  Digital worlds used for prototyping so you can safe lots of money on prototyping. Imagine that you can build a complete factory virtually first and then test run it. Planning is the most effort in building a factory so you have to do it in virtual or real world equally. But in virtual world you can allow mistakes and correct them while in the real world you have 1 shot and a simple mistake can cost you millions later on. The same applies to many analog industries which aren't digital yet. Digitalization for IT and Tech is computers which are used in development and administration but analog processes in manufacturing are still far from being digital. Digial worlds is what will be a huge change in traditional industries and Nvidia is creating a global solution for it called Omniverse. And of course with a headstart, since the release was several years ago and now Nvidia is slowly distributing it into the world. Nobody sees it, nobody gets it but just like Nvidia started DGX 8 years ago and today everyone is surprised about Nvidia's dominance in AI compute, the same will happen with Nvidia and digital worlds. Also digital worlds will uplift 3rd world countries because they can skipp Industry revolution 2 and 3 and go straight to virtual solutions which then apply to real world. Just like many 3rd world countries in the past simply skipped cable TV and hard wired phones and jumped directly to mobile phone technology where they dominate now (see South Korea and others).
  - polishdude20 2y ago

rationalfaith 2y ago

[dead]