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Obviously you don't mean NVIDIA, because 80% margins on matrix multiplication will last foreverrrrr.
by smallmancontrov 2y ago
Obviously you don't mean NVIDIA, because 80% margins on matrix multiplication will last foreverrrrr.
- dehrmann 2y agoAnd I can't name several customers with very deep pockets working on their own chips to squeeze/compete with NVDA.
- alephnerd 2y ago> And I can't name several customers with very deep pockets working on their own chips to squeeze/compete with NVDA. Google, Amazon, and Microsoft all have custom ASIC and TPU projects in their pipeline, and what holds true today might not hold true in 5 years. A major reason Nvidia was able to do so well was because of technical outreach by donating their GPUs to programs all over the US, building a strong albeit self serving OSS relationship, the CUDA ecosystem, and the acquisition of Infiniband. Much of these advantages can be nullified by competitive margins and pricing for hyperscalers designed and owned hardware. Cisco was hit by this same situation as server vendors like Dell began integrating their own in-house networking functionality within their servers, and Dell itself was outcompeted by cloud vendors.
- smallmancontrov 2y agoAgreed, the only thing I'd add would be AMD's self-sabotage. Pretending to have compute capability (see also "right around the corner") for over a decade when it was actually so broken as to be sub-viable was an enormous own-goal that they doubled down on when they exited desperation mode without rehydrating the teams and tripled down on with the RDNA/CDNA split. By rights they should have been fast followers, but they stacked the critical mistakes so high that frankly I think NVIDIA's subsidized GPGPU classes are the smaller part of this story. If the people struggling to get OpenCL to work had been able to get it to work (on other than NVIDIA GPUs lol) the situation would look very different today.
- JKCalhoun 2y agoAnd I'd be surprised (disappointed) if AAPL were sitting on their hands.
- roenxi 2y agoI think you're not naming entire nation states, given the way the Chinese are splashing money around there it looks like there is about to be a flood of chipmaking capacity hitting the market and a lot of that will end up competing in matrix multiplying. Although I hear VCs are working on an algorithm where they burn money directly and the smoke patterns represent the solution to the multiplication. That might keep the margins high.
- smallmancontrov 2y agoThose Chinese companies will have to fight our western champions, TSMC in a green trenchcoat, TSMC in a red trenchcoat, TSMC in a blue trenchcoat, TSMC in a purple trenchcoat, and TSMC in a yellow trenchcoat.
- selimthegrim 2y agoIs this after the same Spidermen TSMCs got down from all sitting on top of each other?
- randmeerkat 2y ago> Although I hear VCs are working on an algorithm where they burn money directly and the smoke patterns represent the solution to the multiplication. That might keep the margins high. This has been bothering me for some time now. It’s rather obvious to me, as an engineer, which startups are well positioned and which aren’t… Do VCs really have no standard for due diligence, do they really just not care, or is there something else at play that I’m missing…?
- paxys 2y ago> It’s rather obvious to me, as an engineer, which startups are well positioned and which aren’t So I assume you are a multi-billionaire, right?
- kasey_junk 2y agoYou could know precisely what to invest in but not have access to the funds or deal flow and not be successful.
- diamond559 2y agoMicrosoft, Meta and Oracle already spend billions on supposedly completely inferior(according to the Nvidia cultists) AMD chips. Nvidia is the biggest bubble in human history.
- 8ytecoder 2y agoThat’s got to be Tesla. Nvidia’s PE is still half that of Tesla.
- schmidtleonard 2y agoPE isn't a cheat code to rational stock valuation, it's the "nothing ever changes" assumption dressed up in a formula. PE looks at past earnings, while the price of a stock buys its future earnings. A modest PE on NVDA says "I expect datacenter revenue to continue" while a modest PE on TSLA would say "I expect robotaxi to fail." These are fair opinions to have, as are their opposites, but if datacenter revenue collapses then today's modest PE won't save NVDA and if TSLA can pull off robotaxi then today's high PE will be vindicated. Stocks are all about Future Earnings, but you can't put that in a column and sort by it so we have PE. You can certainly have success while avoiding high PE stocks, but you are on a site about startups and your name suggests you work in the tech sector, which are both places where high PE often does make sense and it pays to be familiar with the reasons.
- marcosdumay 2y ago> a modest PE on TSLA would say "I expect robotaxi to fail." No. Just having competition is enough to destroy the expectations on TSLA. And realistically, they are abut last on that race, being thrown out of track about a decade ago and never managing to make anything work since then. So, yeah, betting on no competition is a very weird option.
- JKCalhoun 2y agoGood point. With BMW, Lexus, Audi, Mercedes, Porsche — all with luxury EV's — Tesla really is looking like an also-ran. I'm not in that circle of clientele though so I don't know: are any of these now seen as the luxury electric car?
- doctorpangloss 2y agoPeople choose NVIDIA because of the software. So will software margins go away?
- JKCalhoun 2y agoJust an interested layman here: seems like it's the libraries that people choose. I don't see why those can't be ported to other hardware.
- duped 2y agoThey are ported to new hardware, it's just that new hardware is made by NVidia. Part of why their moat is so deep is that they are able to keep the software stack stable with transparent hardware architecture upgrades. It's kind of the opposite of intel.
- deleted 2y ago[deleted]
- slowtrek 2y agoCisco did not innovate out of their first incarnation. Nvidia evolved out of gaming gpus, and they didn't do it because they were looking for trends.
- oldpersonintx 2y ago[dead]
- csomar 2y agoNvidia didn't innovate into AI. Developers used their gaming cards for AI. They kinda got into that situation by pure luck. I wouldn't trust they will be able to pivot into the next big bubble if it's quite outside their area of expertise.
- est 2y agoalso crypto mining does tons of SHA256 on CUDA.
- latchkey 2y agoSHA265 hasn't been efficient on a GPU (compared with an ASIC) in over 10 years.
- akimbostrawman 2y agocrpto != only Bitcoin. Any cryptocurrency worth its salt is ASCI resistant.
- latchkey 2y agoEven ethash had ASICs. As long as there is enough financial incentive, there can always be ASICs built for cheating the system. "Any cryptocurrency worth its salt" would have that incentive.
- theshackleford 2y ago
- aurareturn 2y agoObviously you don't mean NVIDIA, because 80% margins on matrix multiplication will last foreverrrrr. It won't last forever. The question will always be: Are we in the 1995 or the 2000 of the dotcom era? By 1995, Cisco's stock had already increased 6x since the start of 1993. If you bought at 1995, you'd 10x by its peak. Even after the bust, Cisco's stock was still 50% higher than it was in 1995. The problem with Nvidia's stock isn't demand. The problem is that Nvidia makes something so good and so valuable that the US government has decided to nationalize them by dictating who they can or can't sell to. If Nvidia is freely able to sell to any country they want, their sales and margins would be much higher right now. The demand is that great.
- diamond559 2y ago"AI" isn't even profitable, it is neither good nor valuable outside of for creating a massive asset bubble. The export ban was made by old dinosaurs that don't understand the tech and is more about China than "AI".
- immibis 2y agoLLMs (what you mean by "AI" with the scare quotes) are great at spamming and scamming people.
- acdha 2y agoI’d generalize that somewhat to say that LLMs are good where you can cheaply verify the results relative to the cost of being wrong. A lot of scamming is already structured around most people ignoring their messages, and they don’t support anything so it’s just a question of whether they lose more potential marks than doing it manually. (This is also why coding is one of the areas where they perform best: the cost of structural validation is low and there’s a human in the loop verifying the behavior)
- aaronbaugher 2y agoI've tinkered with LLMs, because I keep thinking it'd be cool to have an "assistant" that could research and boil down information for me. The problem is coming up with a question that is A) too complicated to be answered in a single web search that I can do myself as fast as asking the question, and B) not too complicated or important for me to accept the answer without redoing the research myself to verify the answers are correct. For simple questions (How long does the moon take to orbit the earth), a search engine will give the answer right in the results; I don't even have to click through to a page. An LLM can't save me any time there, so I'd only be using it to be using "AI" (which is what I see people around me doing). For difficult or currently controversial questions (What's the best hosting service for my new subscription site, taking into account price, reliability, location, and hardware support?) there's no way I could trust it not to be making shit up. By the time I checked all its work, I might as well have done it myself. So I'd like to usefully use it, but I can't figure out how to use it as more than a curious toy.
- Workaccount2 2y agoI'm continually impressed how Google manages to be left out of LLM discussions. I don't know what it is but it always seems like people forget about Google in this space. Google has both cutting edge SOTA AI models and has it's own in-house ai acceleration hardware that is approximately on par with Nvidia. It's why their models are dirt cheap to use and have enormous context.
- Centigonal 2y agoAll of this is true, but it's somewhat offset by the possibility that LLMs may disrupt Google's core revenue stream from search.
- do_not_redeem 2y agoUntil you can buy a TPU and stick it in your own server, Google may as well be just another commodotized provider on OpenRouter.
- yabones 2y agoThey're more or less dev boards, but they absolutely do sell TPU modules that you can stick right into a M.2 or mini PCIe slot. https://coral.ai/products/ https://coral.ai/products/
- do_not_redeem 2y agoI have to say these seem like hobbyist-level products. For example https://coral.ai/products/m2-accelerator-dual-edgetpu https://coral.ai/products/m2-accelerator-dual-edgetpu can do 8 TOPS, but a 5-year-old RTX 2060 gets you 50 TOPS. A newer H100 gets you 3958 TOPS. Nobody's going to buy 500 of those chips and stick them in 500 M.2 slots to match the performance of a single H100. Do they make any better chips that I missed?
- margalabargala 2y agoI would call them less hobbyist products, and more compute for IOT/edge devices. They aren't made for a datacenter and aren't trying to compete with an H100. Yes, it has one sixth the performance of a RTX 2060, but it has one-five-hundredth the volume. For a specific siloed application, 8 TOPS is plenty. Think image processing, etc. There are plenty of production use cases where that makes sense and an H100 does not.
- georgeecollins 2y agoObviously you can't keep that margin forever, but the counter argument would be that NVDA could just sell more chips if they had to accept smaller margins. You could see them making more affordable graphics cards, put more emphasis on AI at the edges, like in mobile devices or computers. And also everybody thinks about robotics as these fancy bipeds. What about sticking visual recognition in a garage door or kitchen appliances. There will be lots of applications if the chips were cheap. The stock is overpriced but I think the company will be OK.