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Nvidia seems to be operating more like a sovereign wealth fund than a traditional business. They have a very-in-demand product, that is not likely to last forev
by nrmitchi 1y ago
Nvidia seems to be operating more like a sovereign wealth fund than a traditional business. They have a very-in-demand product, that is not likely to last forever, and is getting their fingers in as many pies as possible with the money and influence while they have it.
- stanislavb 1y agoWhich is not not smart. edit: highlight: "not not". I think it's very smart.
- byyoung3 1y agoyou calling nvidia dumb not smart
- kgc 1y agoWhy is it not smart?
- mikestorrent 1y agoThere were two nots
- chasil 1y agoThe classical answer would be RCA, who famously bought Carpetland, Banquet Foods, and Hertz car rental, and was bequeathed the moniker "Rugs, Chickens, and Automobiles" by the investment community. Buying a stake in Nokia is admittedly different than taking it over and managing it, but the danger there is very clear. Distracted management that strays away from core competence can easily kill the golden goose driving revenue. The contrarian view is that Berkshire Hathaway is able to hold an array of successful manufacturing and service businesses (Kirby vacuum cleaners, Dairy Queen, Clayton Homes, and the prominent Sees Candy) without losing management control of GEICO and their other insurance holdings. Hopefully, Nvidia sees the example of RCA and Gulf Western, and will not lose focus on their core competence. RCA famously birthed the semiconductor industry in Taiwan. I think that focused trade regulation would prevent a repeat of that event in modern times. Edit: It appears that RCA bought Coronet Carpets, not Carpetland.
- dtagames 1y agoPerhaps not forever but GPUs for AI is likely to be a very solid and profitable business for a long time. CPUs made plenty of money for their makers in that era.
- shortrounddev2 1y agoAI is a bubble and will pop soon, theres no way even 80% of the spending has yielded the returns they were looking for. Nvidia cards will lower in demand though probably the bubble will be a net gain for nvidia over the preceding 4 or 5 years, though it will take them a while to regain their peak market cap
- adastra22 1y agoAI, while undeniably powerful and transformative, is in the midst of the biggest, most insane tech bubble we have ever seen. And nearly all of that money is ending up, directly or indirectly, in GPU data centers. And NVIDIA is the largest cost (profit maker) there. When that investment firehouse gets turned off, the AI providers will stop building new data centers. Likely for some years. That revenue stream for NVIDIA will go to zero so fast… The unknown, as with any bubble, is timing.
- chii 1y ago> most insane tech bubble we have ever seen. the current "bubble" hasn't surpassed the dot-com boom yet.
- adastra22 1y agoThe total aggregate loss of value from top to bottom of the dotcom crash was about $5 trillion. That’s the current market cap of NVIDIA alone, to say nothing of other AI companies. So yeah, it has.
- chii 1y agothat number back in 2000 is about $9.7 trillion adjusted for inflation. You can't merely just compare the numbers at that time with a number today. It's meaningless. You have to compare forward earnings to share-price ratios.
- kumarvvr 1y agoAs it seems now, they are into producing silicon that does massive parallel calculations, and variants on it thereof. To me, that seems to be a requirement for the computing industry for a long time. And, they seemed to have amassed enough capital to comfortably pivot to the next great thing that requires similar calculations. I think this is their super power. The next logical step would be to get into CPUs, to become a fully integrated computing solutions provider.
- super256 1y agoNvidia is already doing that under MGX. They also offer their Grace CPUs on that platform.
- chemotaxis 1y ago> To me, that seems to be a requirement for the computing industry for a long time. Sure, but they have a market cap of 5 trillion. It's about 10x that of AMD, which also sells similar silicon (and isn't in any distress). It's more than Apple, Google, and Microsoft - and these companies historically found ways to make more money than the vendors they buy chips from. The problem isn't that Nvidia doesn't have good fundamentals or good products, it's that the market is expecting miracles. In the case of Nvidia, the funny thing is that their high valuations started not with AI, but with cryptocurrencies. Just never really came down - they coasted from a silly hype cycle to a more substantive one. Ten years ago, NVDA wasn't an interesting stock at all.
- cluckindan 1y agoStock values go up when people buying stocks expect them to go up. Stock values go down when people holding stocks expect them to go down.
- mnky9800n 1y agoWhy would you hold a stock if you think it should go down? If you think the stock is valuable but in the near term should go down, why not sell and then buy in increments as it goes down?
- toasted-subs 1y agoWhen an organization reaches a certain level of wealth they become what amounts to as lawyers. Placing money in areas that demonstrate their understanding of the situation even if it may result in potential losses strengthens their brand and reputation.
- gethly 1y agoThey know their time is running out. CEO has been selling shares like they are going out of business the next monday, but nobody talks about it because market could wake up from the dream and crash the entire market as the AI bubble is the only thing holding up the entire USA economy(yes, not just the markets) right now. https://fintel.io/n/huang-jen-hsun https://fintel.io/n/huang-jen-hsun
- Podrod 1y ago>nobody talks about it https://www.cnbc.com/2025/07/19/nvidia-ceo-jensen-huang-sells-shares.html https://www.cnbc.com/2025/07/19/nvidia-ceo-jensen-huang-sell... https://www.nasdaq.com/articles/jensen-huang-selling-nvidia-stock-again-should-you-do-same https://www.nasdaq.com/articles/jensen-huang-selling-nvidia-... https://www.ft.com/content/36f346ad-c649-42ac-a6b6-1a8cc881e0bb https://www.ft.com/content/36f346ad-c649-42ac-a6b6-1a8cc881e... https://timesofindia.indiatimes.com/technology/tech-news/nvidia-ceo-jensen-huang-sells-shares-worth-42-million-under-the-same-rule-that-also-sees-google-and-microsoft-ceos-sell-their-shares/articleshow/124291699.cms https://timesofindia.indiatimes.com/technology/tech-news/nvi...
- adammarples 1y agoSeems like he's sold 10% ish of his shares in 2025, not really that extreme
- ambicapter 1y ago10% seems pretty high, running out of shares to sell of a company you own over the course of a decade? Definitely seems like you're hedging against a downturn.
- gethly 1y agoFacebook too https://fintel.io/n/zuckerberg-mark https://fintel.io/n/zuckerberg-mark They know the market is going to crash soon-ish.
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- mprovost 1y agoYes but they're using this fund to prop up their core business (and share price) by artificially creating demand for their own products. Most of the money that they invest comes back to them when these companies buy GPUs.
- reactordev 1y agoStrategic Enablement Yup, give them $1B so they can build out AI DC’s stocked with $1B of Nvidia chips.
- ratelimitsteve 1y agobuy in, let them use your money to buy your product back from you, then if you think they'll actually succeed you make money and if not you can slowly dump that stock back onto the market and end up ahead. you've basically manufactured a customer at that point.
- reactordev 1y agoExactly, the risk is extremely small. If they fail, there will be others too, which means that WSBro’s can bundle and derivatives their way into at least a neural exit.
- erikig 1y agoMore importantly than gaining a client for Nvidia's AI chips, this investment gives the company a solid foothold in a competitor to Broadcom in the wireless, datacenter and networking solutions space. I wouldn't be surprised if Nvidia eventually scoops up all of Nokia.
- usrusr 1y agoCould this be a strategy to scare away overoptimistic stock buyers? When you have a money printing machine that you don't expect to run forever (but aren't afraid of the future beyond, optimistic that you can still make money, just not that easy), as a publicly traded company you have the problem that eventually all owners who have similar expectations will have sold to more optimistic owners who expect nothing less than the money printing machine running forever. And getting even bigger while at it. When that ownership change has happened, the company does not really have any other option than to die trying. Deliberately diluting the value of the company with ownership in "definitely not a money printing machine!" before that happens could be a way to avoid that death march, a survival strategy.
- boringg 1y agoFeels more like they are taking a page of SoftBank vision fund thesis but repacking it for strategic investment.
- zipy124 1y agoExcept usually sovereign wealth funds are for diversification, so oil rich nations will use their wealth fund to invest in non-oil linked commodities, since then if they're revenue dries up their investments shouldn't. Even better they can invest in this with an inverse correlation to oil such as green energy, so when their oil revenue dries up their investments go up. Nvidia is not diversifying, but investing in it's customers, which are very very linked to it's own performance.
- nrmitchi 1y agoYou’re definitely right, but I don’t think the risk here is that the industry goes away, or that there isn’t demand for the same set of products. What I think is likely to go away is Nvidia’s monopoly in the space. When it does, Nvidia will still have pieces of all the major players.
- hopelite 1y agoI’m not sure how you mean “… very-in-demand product, that is not likely to last forever…” is an analogue for a sovereign wealth fund, but there is also the issue of one interpretation of what you said very much providing an avenue for sustainability; that all the GPUs for all the AI systems are all going to burn up and/or become outdated in a mere 3-5 years, prompting repurchases. I’m aware there are some efforts in play to offer alternatives to GPUs and compete with Nvidia, but I don’t see a path for how that actually happens in the near term with Nvidia's market dominance, short of revolutionary technological breakthrough or possibly even anti-trusting Nvidia. I suspect what you mean is the circular business practices that we’ve been seeing, seemingly starting with Nvidia for some reason. Is that the aspect you are comparing to some sovereign wealth funds that through simply massive scale, they are capturing the whole lifetime cycle in some places and domains?
- nrmitchi 1y agoIm saying that Nvidia’s current monopoly isn’t going to last forever. The product space will (very likely) still exist, but in 10 years Nvidia may not be able to get the ~80% margins it currently does (due to competition, technological changes, etc). When that happens, they’ll still have their fingers in all the pies. It’s arguably a much better approach for Nvidia as a company.
- klysm 1y agoI guess it’s better than just doing share buybacks?