4 ms·

Is this bullish for NVDA?

deleted 2y ago
[deleted]
lenerdenator 2y ago
Theoretically, anything that lets someone do more with the same number of their chips should be bullish. Unless, of course, the market is saying "there's only so much we see anyone doing with genAI." Which is what the 15% haircut they've taken today would indicate they're saying.
- jvanderbot 2y ago
  I never understood this reaction the market is having. It's like reading the tea leaves - effectively random and not helpful. I think it makes more sense if someone thinks "Gen AI is just NVIDIA - and if china has Gen AI, then they must have their own NVIDIA" so they sell. But it makes the most sense if someone thinks "Headlines link US lead in Gen AI and NVIDIA, bad headlines for Gen AI must mean bad news for NVIDIA". And the theoretically ultimate market analysis guru probably thinks "Everyone is wrong about Gen AI and NVIDIA being intimately linked, but that will make them sell regarding this news, so I must also sell and buy back at bottom"
  - mullingitover 2y ago
    > And the theoretically ultimate market analysis guru probably thinks "Everyone is wrong about Gen AI and NVIDIA being intimately linked, but that will make them sell regarding this news, so I must also sell and buy back at bottom" That's most likely exactly what's going on. Markets aren't about intrinsic values, they're about predicting what everyone else is going to do. Couple that with the fact that credit is shackled to confidence, and so much of market valuations are based on available credit. One stiff breeze is all it takes to shake confidence, collapse credit, and spark a run on the market.
  - prettygood 2y ago
    Isn’t it that the current market price of NVDA was based on the amount of chips they need to sell? Because to train and run models you need so many GPU’s. Now that deepseek is showing you need less GPU’s to train and run it, the value of NVDA lowers since they won’t sell as much.
    - apwell23 2y ago
      yep all the valuations on built on their predictions for massive demand.
      - grajaganDev 2y ago
        And the prediction that there is enough power to run all of those GPUs.
    - jvanderbot 2y ago
      Wasn't deepseek trained on NVIDIA chips anyway?? All this proves is that there exist no non-NVIDIA solutions to the hottest new thing.
      - apwell23 2y ago
        no it proves more than that; parent comment mentioned what that is ( and other comments below your original comment).
        jvanderbot 2y ago
        Parent's comment was changed enough that my comment is meaningless. They previously said that you don't need NVIDIA for deepseek. I'll leave mine alone.
      - lm28469 2y ago
        So what? It doesn't mean Nvidia's stock will pump forever and ever
  - lenerdenator 2y ago
    > I never understood this reaction the market is having. It's like reading the tea leaves - effectively random and not helpful. You're exactly right. People in the US treat the market like the Oracle of Delphi. It's really just a bunch of people who don't have a grasp on things like AI or the tech industry at large placing wagers on who's gonna make the most money in those fields. And you can apply that to most fields that publicly-traded companies operate in.
  - deleted 2y ago
    [deleted]
  - UltraSane 2y ago
    I wonder if someday AI can do a better job at pricing things like goods and company shares.
  - TeaBrain 2y ago
    From the reporting, it seems like the large drop has much to do with the idea that DeepSeek has revealed how much can be accomplished without many billions in infrastructure spend, allocated largely to purchasing more NVIDIA chips, due to the perception that DeepSeek has spent relatively small amounts in the training of their models.
  - bombcar 2y ago
    There are so many investors in the market that it's hard to figure out what or why anything happens. But roughly, I suspect the main thing is "enough people thought NVDA was the only supplier for AI chips, and now they realize there's at least one other" that it slipped.
  - coliveira 2y ago
    At this point, this reaction of the market means nothing. All these stocks were at an all time high, so the drop was inevitable. Tomorrow they can come up with a different spin and move the stock up again.
- rhubarbtree 2y ago
  > Theoretically, anything that lets someone do more with the same number of their chips should be bullish. If NVidia make money per compute capacity, and a new method requires less capacity, then all other things being equal NVidia will make less money. Now, you might say "demand will make more use of the available resources", but that really depends, and certainly there is a limit to demand for anything.
  - Ekaros 2y ago
    I especially see limit in demand for number of models. Eventually you have good enough models, and then you need less training and thus less hardware. Also Nvidia's profit are based on the margins. If there is less demand, there is most likely less margins unless they limit supply. Thus their profit will go down either as they sell less or they profit less per unit sold.
  - lenerdenator 2y ago
    That's what I meant by the market saying that it doesn't think people will use AI that much. As of right now, there's the limited number of use cases to be applied to GenAI. Maybe that will change now that the barriers to entry have been substantially lowered and more people can play with ideas. Short-term: bearish Long-term: bullish
  - buu700 2y ago
    That's an interesting framing, but "all other things being equal" is doing a lot of work there. In an alternate timeline where ChatGPT needed 1000x compute capacity to run, Nvidia wouldn't make 1000x the revenue from OpenAI; ChatGPT as we know it simply wouldn't exist. The bull case as I see it is that demand for AI capacity will always rise to meet supply, at least until it starts to hit some very high natural limits based on things like human population size and availability of natural resources on or in reasonable proximity to Earth. Just as we quickly found uses for more than 640 KB RAM and gigabit+ Internet connections, there's no shortage of what could be done with 1000x more AI capacity. Best case scenario, we're eventually going to start throwing as much compute as humanly possible at running fully automated factories, automatically building new factories and infrastructure, running automated factories that build the machines that automatically build factories and infrastructure, and so on. Looking forward a bit further, it's not hard to imagine an AI-driven process of terraforming and industrializing Mars. I don't know how much if any of that would be possible with current AI software given a hypothetical infinitely powerful GPU, but AI is still rapidly improving. Once it gets to the point where it can make humanoid robots do tasks at a lower cost than human labor, the demand ceiling will shoot sky-high and become a self-reinforcing feedback loop. AI will be used 24/7 to churn out new AI capacity, robots, power infrastructure, and so on, along with all the other things we might want it to produce (cars, cities, high-speed rail, drone carriers, food, etc.). Imagine having an equivalent to AWS that could be used for provisioning and managing low-cost automatons with comparable physical and cognitive capabilities to average human laborers, along with self-driving cars, AI-controlled construction and manufacturing equipment, and so on. That would be on top of all the purely digital capabilities that are already commonplace and rapidly improving. Essentially, every public works project or business idea that anyone could conceive of would ultimately become viable to attempt with a dramatically smaller amount of capital than today, so long as the necessary natural resources were physically available and there were no insurmountable legal/regulatory roadblocks. We have an awful lot of undeveloped land and an awful lot of people on the planet who could certainly find interesting things to do with a glut of AI capacity.
marcusestes 2y ago
This is why Satya was posting about Jevan's Paradox at 10pm last night. (https://x.com/satyanadella/status/1883753899255046301 https://x.com/satyanadella/status/1883753899255046301) Decreasing resource cost of intelligence should increase consumption of intelligence. That would be the bull case for Nvidia. If you believe there's a hard limit on how much intelligence society wishes to consume, that's a bear case.
- fullshark 2y ago
  Hmm it also means like coal, it becomes a commodity.
  - UltraSane 2y ago
    Nvidia would be selling the coal furnaces in this analogy.
    - grajaganDev 2y ago
      And there is a shortage of coal.
    - lm28469 2y ago
      Nah it's much better, Nvidia's toasters are close to 100% efficiency, coal furnaces are well bellow that
- DaiPlusPlus 2y ago
  > Decreasing resource cost of intelligence should increase consumption of intelligence > If you believe there's a hard limit on how much intelligence society wishes to consume I feel like I walked-in on a LessWrong+LinkedIn convention.
  - marcusestes 2y ago
    lol, that's a nasty combo
- 2y ago
ein0p 2y ago
It's complicated. On the one hand Nvidia is supply constrained, so anything that makes AI better and more efficient (and therefore more usable by the masses) is bullish for it. On the other, a significant chunk of research lower tier large GenAI orgs have been doing is now obsolete, so they might reduce their cloud spend until they gain their bearings and reset at a higher level using DeepSeek's models and insights. Furthermore, the gap between open source and top tier behemoths has shrunk considerably last week. For the first time you can run a practically usable reasoning LLM on your MacBook Pro with 64GB of RAM or more. In the mind of the normies (some of whom are investors) this puts future profitability of top tier research into question. This is a midwit take - top labs have much more than they show, but that might not matter if investors get cold feet, with secondary effects on NVIDIA and those staggeringly large planned investments into AI. Still, NVIDIA is a monopolist for GPU compute. That is not going to change in the foreseeable future, and they will remain supply constrained in the foreseeable future, and therefore able to exercise considerable pricing power. So my bet is: short term pullback, long term bullish. In fact you could see the bullish case last night: Deepseek's free chat service got overloaded and crapped out due to lack of GPU capacity. That's bullish for NVIDIA.
verghese 2y ago
I'm not sure if this will impact the market the same way the R1 did. However, my general impression is that while Meta spent $20B on their 100k H100s, DeepSeek is demonstrating that you can achieve better results far more cost-effectively using just 2k H100s. This doesn't seem like good news for Nvidia, but it sets a great precedent for companies looking to train models.
- jeremyjh 2y ago
  It’s essentially as if the number of existing premium GPU chips were multiplied by 30x or 50x. Yes, when you 30x a supply of something, you are going to lower its price. The question is does this lowered price then increase the demand but that’s a lot more speculative than the supply impact, and could easily take much longer to be felt.
bloomingkales 2y ago
Imagine if in the infancy of the NBA someone figures out how to dunk. Like woah, game is over, someone will just take the ball and dump it in the basket. Game over. Right?
- fullshark 2y ago
  They banned dunking actually when players started using it, especially Kareem Abdul Jabbar in High School and at UCLA.

deleted 2y ago

[deleted]

Theoretically, anything that lets someone do more with the same number of their chips should be bullish. Unless, of course, the market is saying "there's only so much we see anyone doing with genAI." Which is what the 15% haircut they've taken today would indicate they're saying.

jvanderbot 2y ago
I never understood this reaction the market is having. It's like reading the tea leaves - effectively random and not helpful. I think it makes more sense if someone thinks "Gen AI is just NVIDIA - and if china has Gen AI, then they must have their own NVIDIA" so they sell. But it makes the most sense if someone thinks "Headlines link US lead in Gen AI and NVIDIA, bad headlines for Gen AI must mean bad news for NVIDIA". And the theoretically ultimate market analysis guru probably thinks "Everyone is wrong about Gen AI and NVIDIA being intimately linked, but that will make them sell regarding this news, so I must also sell and buy back at bottom"
- mullingitover 2y ago
  > And the theoretically ultimate market analysis guru probably thinks "Everyone is wrong about Gen AI and NVIDIA being intimately linked, but that will make them sell regarding this news, so I must also sell and buy back at bottom" That's most likely exactly what's going on. Markets aren't about intrinsic values, they're about predicting what everyone else is going to do. Couple that with the fact that credit is shackled to confidence, and so much of market valuations are based on available credit. One stiff breeze is all it takes to shake confidence, collapse credit, and spark a run on the market.
- prettygood 2y ago
  Isn’t it that the current market price of NVDA was based on the amount of chips they need to sell? Because to train and run models you need so many GPU’s. Now that deepseek is showing you need less GPU’s to train and run it, the value of NVDA lowers since they won’t sell as much.
  - apwell23 2y ago
    yep all the valuations on built on their predictions for massive demand.
    - grajaganDev 2y ago
      And the prediction that there is enough power to run all of those GPUs.
  - jvanderbot 2y ago
    Wasn't deepseek trained on NVIDIA chips anyway?? All this proves is that there exist no non-NVIDIA solutions to the hottest new thing.
    - apwell23 2y ago
      no it proves more than that; parent comment mentioned what that is ( and other comments below your original comment).
      - jvanderbot 2y ago
        Parent's comment was changed enough that my comment is meaningless. They previously said that you don't need NVIDIA for deepseek. I'll leave mine alone.
    - lm28469 2y ago
      So what? It doesn't mean Nvidia's stock will pump forever and ever
- lenerdenator 2y ago
  > I never understood this reaction the market is having. It's like reading the tea leaves - effectively random and not helpful. You're exactly right. People in the US treat the market like the Oracle of Delphi. It's really just a bunch of people who don't have a grasp on things like AI or the tech industry at large placing wagers on who's gonna make the most money in those fields. And you can apply that to most fields that publicly-traded companies operate in.
- deleted 2y ago
  [deleted]
- UltraSane 2y ago
  I wonder if someday AI can do a better job at pricing things like goods and company shares.
- TeaBrain 2y ago
  From the reporting, it seems like the large drop has much to do with the idea that DeepSeek has revealed how much can be accomplished without many billions in infrastructure spend, allocated largely to purchasing more NVIDIA chips, due to the perception that DeepSeek has spent relatively small amounts in the training of their models.
- bombcar 2y ago
  There are so many investors in the market that it's hard to figure out what or why anything happens. But roughly, I suspect the main thing is "enough people thought NVDA was the only supplier for AI chips, and now they realize there's at least one other" that it slipped.
- coliveira 2y ago
  At this point, this reaction of the market means nothing. All these stocks were at an all time high, so the drop was inevitable. Tomorrow they can come up with a different spin and move the stock up again.
rhubarbtree 2y ago
> Theoretically, anything that lets someone do more with the same number of their chips should be bullish. If NVidia make money per compute capacity, and a new method requires less capacity, then all other things being equal NVidia will make less money. Now, you might say "demand will make more use of the available resources", but that really depends, and certainly there is a limit to demand for anything.
- Ekaros 2y ago
  I especially see limit in demand for number of models. Eventually you have good enough models, and then you need less training and thus less hardware. Also Nvidia's profit are based on the margins. If there is less demand, there is most likely less margins unless they limit supply. Thus their profit will go down either as they sell less or they profit less per unit sold.
- lenerdenator 2y ago
  That's what I meant by the market saying that it doesn't think people will use AI that much. As of right now, there's the limited number of use cases to be applied to GenAI. Maybe that will change now that the barriers to entry have been substantially lowered and more people can play with ideas. Short-term: bearish Long-term: bullish
- buu700 2y ago
  That's an interesting framing, but "all other things being equal" is doing a lot of work there. In an alternate timeline where ChatGPT needed 1000x compute capacity to run, Nvidia wouldn't make 1000x the revenue from OpenAI; ChatGPT as we know it simply wouldn't exist. The bull case as I see it is that demand for AI capacity will always rise to meet supply, at least until it starts to hit some very high natural limits based on things like human population size and availability of natural resources on or in reasonable proximity to Earth. Just as we quickly found uses for more than 640 KB RAM and gigabit+ Internet connections, there's no shortage of what could be done with 1000x more AI capacity. Best case scenario, we're eventually going to start throwing as much compute as humanly possible at running fully automated factories, automatically building new factories and infrastructure, running automated factories that build the machines that automatically build factories and infrastructure, and so on. Looking forward a bit further, it's not hard to imagine an AI-driven process of terraforming and industrializing Mars. I don't know how much if any of that would be possible with current AI software given a hypothetical infinitely powerful GPU, but AI is still rapidly improving. Once it gets to the point where it can make humanoid robots do tasks at a lower cost than human labor, the demand ceiling will shoot sky-high and become a self-reinforcing feedback loop. AI will be used 24/7 to churn out new AI capacity, robots, power infrastructure, and so on, along with all the other things we might want it to produce (cars, cities, high-speed rail, drone carriers, food, etc.). Imagine having an equivalent to AWS that could be used for provisioning and managing low-cost automatons with comparable physical and cognitive capabilities to average human laborers, along with self-driving cars, AI-controlled construction and manufacturing equipment, and so on. That would be on top of all the purely digital capabilities that are already commonplace and rapidly improving. Essentially, every public works project or business idea that anyone could conceive of would ultimately become viable to attempt with a dramatically smaller amount of capital than today, so long as the necessary natural resources were physically available and there were no insurmountable legal/regulatory roadblocks. We have an awful lot of undeveloped land and an awful lot of people on the planet who could certainly find interesting things to do with a glut of AI capacity.

marcusestes 2y ago

This is why Satya was posting about Jevan's Paradox at 10pm last night. (https://x.com/satyanadella/status/1883753899255046301 https://x.com/satyanadella/status/1883753899255046301) Decreasing resource cost of intelligence should increase consumption of intelligence. That would be the bull case for Nvidia. If you believe there's a hard limit on how much intelligence society wishes to consume, that's a bear case.

fullshark 2y ago
Hmm it also means like coal, it becomes a commodity.
- UltraSane 2y ago
  Nvidia would be selling the coal furnaces in this analogy.
  - grajaganDev 2y ago
    And there is a shortage of coal.
  - lm28469 2y ago
    Nah it's much better, Nvidia's toasters are close to 100% efficiency, coal furnaces are well bellow that
DaiPlusPlus 2y ago
> Decreasing resource cost of intelligence should increase consumption of intelligence > If you believe there's a hard limit on how much intelligence society wishes to consume I feel like I walked-in on a LessWrong+LinkedIn convention.
- marcusestes 2y ago
  lol, that's a nasty combo
2y ago

ein0p 2y ago

It's complicated. On the one hand Nvidia is supply constrained, so anything that makes AI better and more efficient (and therefore more usable by the masses) is bullish for it. On the other, a significant chunk of research lower tier large GenAI orgs have been doing is now obsolete, so they might reduce their cloud spend until they gain their bearings and reset at a higher level using DeepSeek's models and insights. Furthermore, the gap between open source and top tier behemoths has shrunk considerably last week. For the first time you can run a practically usable reasoning LLM on your MacBook Pro with 64GB of RAM or more. In the mind of the normies (some of whom are investors) this puts future profitability of top tier research into question. This is a midwit take - top labs have much more than they show, but that might not matter if investors get cold feet, with secondary effects on NVIDIA and those staggeringly large planned investments into AI. Still, NVIDIA is a monopolist for GPU compute. That is not going to change in the foreseeable future, and they will remain supply constrained in the foreseeable future, and therefore able to exercise considerable pricing power. So my bet is: short term pullback, long term bullish. In fact you could see the bullish case last night: Deepseek's free chat service got overloaded and crapped out due to lack of GPU capacity. That's bullish for NVIDIA.

verghese 2y ago

I'm not sure if this will impact the market the same way the R1 did. However, my general impression is that while Meta spent $20B on their 100k H100s, DeepSeek is demonstrating that you can achieve better results far more cost-effectively using just 2k H100s. This doesn't seem like good news for Nvidia, but it sets a great precedent for companies looking to train models.

jeremyjh 2y ago
It’s essentially as if the number of existing premium GPU chips were multiplied by 30x or 50x. Yes, when you 30x a supply of something, you are going to lower its price. The question is does this lowered price then increase the demand but that’s a lot more speculative than the supply impact, and could easily take much longer to be felt.

bloomingkales 2y ago

Imagine if in the infancy of the NBA someone figures out how to dunk. Like woah, game is over, someone will just take the ball and dump it in the basket. Game over. Right?

fullshark 2y ago
They banned dunking actually when players started using it, especially Kareem Abdul Jabbar in High School and at UCLA.