> You should keep that sort of tip under your hat and short them yourself.
Why?
The more people shorting something, the better chance for short to succeed. It's in the best self-interest of all people shorting something to be as loud as possible about that.
Why would I do that? I think the fact that this sort of insane manic runups happens every few months on an anointed stock since the GameStop spectacle shows that institutional investors have now harnessed that sort of movement into a regular market maneuver. This isn't a sign of a functional market, why would I do something rational in a broken market?
Yeah man no reason the SPAC in the name of a former President with companies he's propped up who is the leading candidate for the opposition party with the incumbent reportedly having abysmal ratings would be having a surge
You think the stock market is filled with "rational" actors? It has always ALWAYS been a vibe check since its existence. The Tesla stock is obviously overvalued, not because there is some grand conspiracy to prop up the stock by a bunch of retail investors but because Elon is a hype man and he hypes up his own stocks. Tesla being overvalued is not a new phenomenon
Mania's have been a thing since the start of markets.
It's so funny to see HN readers who know absolutely nothing about finance or capital markets have "houlier-than-thou" attitudes towards institutional money.
> why would I do something rational in a broken market
Why do you think you're the rational one?
That's the entire point of how markets work. No one thinks markets are fully efficient and the way you make money by trading is through exploiting inefficiencies.
The market was in a panic mode around Facebook a year and a half ago and if you were smart enough to see that and take advantage then you'd have 4x'd your investment.
But I guess you're "too rational" to make money off that sort of thing?
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million. Scion Capital ultimately recorded returns of 489.34% (net of fees and expenses) between its November 1, 2000, inception and June 2008. The S&P 500, widely regarded as the benchmark for the US market, returned just under 3%, including dividends over the same period.
The quote "The market can stay irrational longer than you can stay solvent" is attributed to John Maynard Keynes many years before "the big short" movie even came out.
Most of Tesla's value is not actually Tesla, but it's an investment in Elon Musk, and treated more as a moonshot investment then a car company. So it's grossly higher then your average car company.
But we could be in a bubble, the key is bubbles can last for years.
On the face of it, "How can Tesla have 2x the market cap of Toyota?!?!" sounds pretty sane.
Tesla owns its dealership / sales network; what's the value of those "dealerships"? Similarly tesla runs a huge charging network and has convinced every other manufacturer to switch to their network (in North America). And tesla makes a bunch of power generation / distribution stuff. So "a car company" is incomplete. They also have tons of willing beta testers / AI trainers to go out and train their self driving model -- any tesla out there is collecting driving data and is getting trained by observing the driver's driving and comparing it to "what I'd have done" driving; not sure they'll ever get to "self driving" but there's some value there.
Tesla's also run by a drug addled risk addicted narcissist. He's pretty smart and has made a bunch of terrifying large bets that have consistently (cough except solar city and maxwell's dry cell battery stuff, and that eggs / stormfront thing) paid off pretty good.
Yes, but hardware is hard. Reliably building up to enough volume to put a dent in Nvidia sales is extremely hard and independent of designing the successful product, tying it to current software APIs and convincing users. I am not surprised that a new company, however talented, cannot crack that nut. My 2c.
The velocity at which the field is moving dictates that you must not wait for AMD and Intel to catch up with a working and performant implementation, even if the TOPS per dollar are somewhat better on paper.
There are a bunch of companies doing that. Cerebras, Tenstorrent, Nuvia and so on. Hyperscalers like Google and Amazon also try to get on the game while the field is pretty new.
But as as far as general purpose AI acceleration goes Nvidia has a massive headstart because they provided a rock solid software framework from the beginning, at a time AI wasn't having much reach beyond student projects. They captured the entire mindshare of academia and hobbyists.
Hopefully this means someone will enter the market and take them out. >50% profit margins are obscene and a product of rent-seeky behaviour on their monopolisation of the gfx compute market.
Nvidia has a "monopoly" on the graphics card market because of Cuda. AMD's hardware is catching up, but until there is a Cuda alternative, Nvidia will continue to dominate.
Making 11bn on a 19bn revenue is, prima fascie, evidence of a very uncompetitive market where this player has some extraordinary anti-competitive market power.
Hopefully competitors can take this boom and use it to bring this down.
I'm downvoted no doubt by double-thinkers who think 2x on the cost of a graphics card is a bad thing, and would prefer not to pay it.
nvidia in the rent-seeker position over all graphics compute is a terrible position to be in, for everyone but a handful of nvidia shareholders
There is a hype going on now, the relevant player simply can not afford not to pay that premium. The opportunity cost is too big. As things consolidate, those margins will come down. First world problems.
Sure, they created proprietary CPUs and invented a proprietary language to run on them; prevented as much open source or cross-platform work as possible; and cornered the AI market.
Now, they're extracting 50% of what people are paying in profit. Great!
And, what, you're their defender? I hope you have shares, or else, you've been hoodwinked.
In the "free" market, be assured, you're the loser not the winner. /We/ only win when there's sufficient competition, and clearly, there isnt.
It is not in your interest for an nvidia ransom to exist on all AI tech.
That's not what rent seeking is. Rent seeking is manipulating public policy or conditions to maximize profits. That would be like them calling for regulation of AI and gpus so that only they can produce them because "ai safety", which I don't believe they're doing
They developed an expertise and they are temporarily profiting extraordinarily from it.
They're practically the only player for now but it's different from a harmful monopoly enforced by force from the state
I think we've seen over the last 20 years that the 80s definition of undue market power is unfit for purpose in an era where state-granted IP monopolies (copyright, patents, etc.) and network effects (app-stores and other two-sided markets) create novel sorts of anti-competitive market power. It is highly likely these state granted rights over IP are part of nvidia's market power.
Prima facie, we should be suspicious that nvidia is able to keep $11bn out of $19bn -- why is no investor on the planet not chasing after at least half that?
In the end what we want is a free market where competition drives down prices by limiting profits, and where the power of capitalists is limited by their need to compete, and where the power of labour is improved likewise (and so on).
Given just why we even have a free market in the first place, companies like nvidia cropping up should be a cause for concern.
My hope is, exactly, that this is a transitiory effect where they're able to exploit their market position only in the very short term.
> 50% profit margins are obscene and a product of rent-seeky behaviour on their monopolisation of the gfx compute market.
For a sense of perspective, Nvidia’s operating margins as a company (including enterprise) are normally about the same as AMD’s gaming division (ie Radeon group). And Radeon is not exactly rolling in the cash…
They are making bank right now because they have a good product that has touched off a computing revolution. Just the same way AMD found themselves in a shower of money for having epyc ready to go at the moment intel stalled out on 10nm. This is transitory and won’t be a competitionless shower of money forever, but it will evolve into another large segment where nvidia is a player. But it's also an extremely deserved win for NVIDIA being in the right place at the right time (and that's hugely underselling NVIDIA's place in starting that revolution).
It’s super weird that people somehow begrudge nvidia their win from what is clearly a 20+ year bet on programmable shaders, gpgpu, and software ecosystem. Jensen bet the company over and over on shit that everyone else at the time said was lunacy, and utterly deserves the success he's earned. It is hard to overstate how much the "NVIDIA is a software company now" was mocked in the 2009-2014 era, it was a joke and a meme on tech forums in the same way "just buy it" or "the more you buy the more you save" is today. I'm sure there are some real choice SemiAccurate articles you can mine for laughs, Charlie is always great at that.
A large number of people cannot emotionally process the fact that electronics are just getting more expensive in the post-Moore's Law era and that GPUs are particularly exposed to this due to the nature of the product. But nobody else in the industry can do any better - MCM was a bust for AMD at driving down GPU costs, Intel is running negative margins to grow the product, etc. Even AMD is telling you the same thing - product costs are up, R&D costs are up, and the price anchors you knew in 2012 aren't going to hold forever.
(For that matter, there's no more $85 1600AF or $160 3600 deals anymore either - the era of "get last year's processor for, idk, does 75% off sound fair?" is completely dead in the CPU world too. And ASPs are up too - "mainstream" CPU is $300-350 now too. But people just don't have the narrative fed to them on CPUs, there is nobody telling them to be mad about it, so they aren't...)
This is actually the precise leap that Jensen made that internet commentators pooh-pooh'd: he has always understood the impact that Moore's Law has on his business, he is only there to find efficient ways to shovel out the transistors that TSMC mines for him. And if the treadmill of free transistors stops (or slows to a crawl) then where do the product gains come from? It has to be software, and accelerators, and other stuff. DLSS, for example. That's another leap where he was 10+ years ahead of the public, and was in a position of having to tell people what they wanted, because they didn't know it themselves yet.
If they arent making 11bn on 19bn as the article says, then I'm wrong and the whole thing is withdrawn -- that's just a premise.
I take it that they are however, since their pricing seems extraordinarily out of keeping with the cost of manufacture.
But if the article is wrong, or misleading, so be it. I don't see signs of a undue market power at 10-20% profit, just a little inefficient in the competitive landscape
11bn on 19bn is only because of AI sales - when you are selling $40k enterprise chips for $100k it's going to push margins up.
The 2022 numbers are before AI kicked in, and those numbers are roughly comparable to what Radeon Group makes - and that's with NVIDIA mixing in an already-decent amount of enterprise sales (which pushes margins up).
Their pricing is pretty much in-line with the way costs have risen in the industry. GTX 670 launched at $399 for a 300mm2 cutdown in 2012, GTX 1070 launched at $449 (the "non-founders MSRP" was widely decried as fake at the time since partners didn't follow it) for a 300mm2 cutdown in 2016. $599 for 4070 is really about on the overall cost-trend curve for a product that's launched on a leading node.
Ampere and Turing both were trailing-node products - NVIDIA was trying to keep the cost down at a moment when TSMC was cranking prices and 7nm capacity was scarce. But once they moved back to the leading edge, prices "snapped back" from under-market to at-market. And I think you can certainly argue that this was a mistake, because it mis-calibrates people's expectations and the snap-back feels much worse all at once than as a gradual 3-gen increase.
This isn't to say stuff like 4080 weren't obscene, 4070 Ti and 4060 Ti were only good by comparison. But by the time we are getting to 4060 and 4070 launches NVIDIA is pretty much following the historical cost trends, and AMD is not able to drastically undercut these prices (because they're not particularly out-of-line).
That is the problem - people look at trailing-node products like Ampere and Turing and Maxwell and say "well, these dies were bigger and cost less" and yeah, if you are accepting something that's 2 nodes behind leading-edge it will cost less. You also don't get a 4090 or GTX Titan-class product that towers 50% above the 4080/680, and you get much worse efficiency, etc. And of course the dies will inherently be bigger, because they're lower density... 2060 being 440mm2 or whatever is absolutely not the norm for a x60 class card, it's a massive outlier cherrypicked to make a point.
And remember - it's not like AMD is giving you a 440mm2 die on a x60 class product either, historically or presently. For some reason the expectation of 440mm2 dies on x60 being a perpetual thing only applies to NVIDIA. Nobody made a 2-part video essay series about how the RX 5700XT was a "midrange product being sold at flagship prices" or whatever - and it's significantly smaller than 1080! Literally half the size of a 2060 - surely that’s a low-end card? https://www.youtube.com/watch?v=Jd1bp9eSfwo
RX 5700 XT was $399 for a 251mm die in 2019. 6700XT was $479 for a 335mm2 die in 2021 - and while yes, "mining prices", it probably wasn't inflated as much as people want it to be (the "it was mining" has become a Rorschach test for people to project whatever prices they want to imagine it should have been). And historically AMD has had to come in underneath NVIDIA anyway: if AMD was charging $480 then NVIDIA would...
That's more than the GDP of Argentine in a change that has happened in less than two months. It's crazy how we see such speculation as a normal process and I wonder if that's really a good thing.
It might be over bought, but what you call speculation is a good signal to the company and others. People are seeing the potential and importance of what Nvidia is doing so this attracts more investment and competition. It'll take a lot for a competitor to come in so the prize better be very large
This is just the latest example of what has been happening since GameStop. It's a sign that institutional investors took the concept and have been applying it to different stock every few months since then, DWAC, UPST ect. It's not real, it shows the market has been totally gamed.
GME's price rose to insane values because there wasn't enough shares in the market to satisfy all the short calls. This has nothing to do with NVIDIA's situation.
But what if you could achieve the same effect with a bunch of institutional money rushing in over a short period of time? The the first time it happened it might have been an accident, but as a regular occurrence its a sign of manipulation.
Please stop posting minor variations of the same message over and over on this story (6+ repetitive comments). Repeating something more times doesn't make it more true, and isn't evidence of veracity. This behavior degrades the quality of the discussion and is at odds with the HN site guidelines of fostering curiosity.
If you have real data, reference that instead. It'd actually be useful.
At least with gamestop there was a large short position being called. Granted I know that was just the catalyst for meme stocks.
I'd be surprised to learn anyone has a large Nvidia short position. It's not absurd since it speculates on when the AI bubble will pop. I suppose that's really up to the fed.
I think you could probably create the same sort of hyperbolic moves if you rushed in a bunch of institutional money over a short period. Maybe the first time they discovered they could have this effect it was accident, not as a regular feature of the market.
It does have a definite whiff of a meme stock to it now.
There were real things pushing it up, plus the sort of genuine hype you expect with big tech. But now everyone is talking about it it takes on a a life of its own, it's hype on top of hype and to a certain degree everyone knows it so now its just gambling on who can get out before it turns.
There is an aspect of this where it is natural, but given this happens every few months and the companies that it happens to don't really cohere or make sense makes to have valuations anywhere near what they achieve it seems like there is an artificial aspect to it to say the least.
> It's not real, it shows the market has been totally gamed.
It's really crazy how things are moving since the end of lockdowns, more or less everybody agrees the economy is in a bad spot, layoffs, inflation, recession risks, fertility issues, climate change issues, energy issues, wars, people can't afford housing, the end of "cheap" money, &c. Meanwhile my stocks pumped 50% over 6 months for seemingly no reasons, more than half of my gains happened in the last year
idk what's cooking but I'm starting to smell smoke
I think it's not just the amount of inflow into a stock its the herding behavior and the speed that sets up these crazy unnatural movements. Most of these stocks are come back to Earth relatively quickly so they all leave at the same time too.
I wonder how much is due to the average joe getting into trading since it's becoming easier and easier to invest money and as it is it looks like free money.
It is retail investors, but to create the momentum that drives the frenzy you need a lot of cash rushing in at the same time. Like with GameStop it was all over the news, there just isn't the same level of media hype to cause the run up. I bet what tips it into a feeding frenzy is a massive institutional investor inflow which creates enough of an outsized move to then attract guppy retail investors who end up driving the craziness and holding the bag. It's part natural behavior, part manipulation.
It has been happening since well before GameStop. Think Dutch Tulip Mania, and literally thousands of examples since then. If anything the madness of crowds appears to be a regular occurrence in the market (or perhaps wherever money is involved and limited goods, like this recent Stanley Cup craziness, or Beanie Babies of yesteryear)
The comparison is fine. It's a comparison between the labor of a country of 45 million people working for a full year vs the value created by a company with 25 thousand employees working for a few months.
It's not a perfect analogy (what analogy is?) but it is the kind of thing that should make you go "hmm".
It's pretty obvious that Nvidia didn't create $500 billion in value in a few months. Either the vast majority of that value was created over the last decade or so, and is now being harvested with a delay, or it's a speculative bubble rather than value creation.
I don't get why people keep measuring companies valuations against countries GDP, GDP is per year, valuation is total value. Meaning those are completely unrelated metrics.
What makes more sense is to compare the company revenues or profits against a country GDP.
Absolutely not. For a country most labor doesn't compound in value.
When a farmer produces wheat the value created is equal to the value of the wheat. When a barber cuts somebodies hair the value created is again more or less equal to the price charged. A barber shop doesn't make anything that accumulates in value. This is true for most the economy. It trades at about 1x revenue.
Tech is different. Write software once, sell it many times. Design a chip once, sell millions of copies. Tech companies are the outliers. The rest of the world doesn't work like this.
I don't think this analogy works. What the farmer would sell his farm for ("market cap") is much more than an annual harvest value ("revenue").
Also tech is not that special. You could say the same about a factory, which you build once and it churns out cars, or a mine which churns out minerals. And to the extent this is not true, for example factories needing upgrades and labour, the same is true of tech. Software gets old, needs support, and the labour of well paid technologists.
For used cars, they just don’t incorporate them. They can ask the dealer whether the car sales are for new or used cars. They might incorporate the profit from the transaction (to the extent there is profit) or fees associated with
the transaction. But not the value of a used car itself.
Every hedge fund and every pension fund in the world wants some exposure to AI, as it is widely believed to be the next big thing. What happens when everybody is buying NVIDIA and Super Micro? Right.
Instead of thinking in terms of speculation think in terms of money flows. A lot of money flowing into a handful of stocks results in an explosive move up. There is plenty of speculation as well, of course, but that isn't why AI stocks are up.
When will NVDA and SMCI go down? When all the big funds become sellers. But what else can they buy? INTC and AMD don't have competitive chips or software.
What’s so interesting about this bubble is that virtually all the money is flowing into a single stock. Wild. There are still basically no workable business models and barely any revenues for AI products.
There are absolutely workable business models. They're just not publicly visible yet. That's fairly common: Facebook or Google didn't monetize for years and pundits wondered if they'd ever make money. In a winner-take-most market, it's generally best to focus entirely on growth until you're #1 before starting to charge money.
Pumping Nvidia by something like $1 trillion on “not publicly visible” business models of any kind anywhere sounds a hell of a lot like “wild speculation run amok” to me. It’s not that I don’t get your argument, but seriously, where is a company that’s making money from charging customers for AI services, let alone enough that there’s a trillion dollar ecosystem here? It just doesn’t exist. Ultimately to support this kind of valuation there have to be paying customers and real business models and real value add at the end of the line otherwise it’s just a bubble like all the ones before.
> There are still basically no workable business models and barely any revenues for AI products.
At this point, AIs are being embedded into existing apps as new way to interact with users. Also, you need a decent GPU to run most LLMs, so there is demand in the market for GPUs for all kinds of devices, aside servers at cloud services.
80 comments
[ 3.8 ms ] story [ 177 ms ] threadWhy?
The more people shorting something, the better chance for short to succeed. It's in the best self-interest of all people shorting something to be as loud as possible about that.
You think the stock market is filled with "rational" actors? It has always ALWAYS been a vibe check since its existence. The Tesla stock is obviously overvalued, not because there is some grand conspiracy to prop up the stock by a bunch of retail investors but because Elon is a hype man and he hypes up his own stocks. Tesla being overvalued is not a new phenomenon
Mania's have been a thing since the start of markets.
It's so funny to see HN readers who know absolutely nothing about finance or capital markets have "houlier-than-thou" attitudes towards institutional money.
> why would I do something rational in a broken market
Why do you think you're the rational one?
That's the entire point of how markets work. No one thinks markets are fully efficient and the way you make money by trading is through exploiting inefficiencies.
The market was in a panic mode around Facebook a year and a half ago and if you were smart enough to see that and take advantage then you'd have 4x'd your investment.
But I guess you're "too rational" to make money off that sort of thing?
As popularized in "The Big Short": https://en.wikipedia.org/wiki/Michael_Burry
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million. Scion Capital ultimately recorded returns of 489.34% (net of fees and expenses) between its November 1, 2000, inception and June 2008. The S&P 500, widely regarded as the benchmark for the US market, returned just under 3%, including dividends over the same period.
But we could be in a bubble, the key is bubbles can last for years.
Tesla owns its dealership / sales network; what's the value of those "dealerships"? Similarly tesla runs a huge charging network and has convinced every other manufacturer to switch to their network (in North America). And tesla makes a bunch of power generation / distribution stuff. So "a car company" is incomplete. They also have tons of willing beta testers / AI trainers to go out and train their self driving model -- any tesla out there is collecting driving data and is getting trained by observing the driver's driving and comparing it to "what I'd have done" driving; not sure they'll ever get to "self driving" but there's some value there.
Tesla's also run by a drug addled risk addicted narcissist. He's pretty smart and has made a bunch of terrifying large bets that have consistently (cough except solar city and maxwell's dry cell battery stuff, and that eggs / stormfront thing) paid off pretty good.
Doesn't Google mostly not rely on NVIDIA?
Are intel & amd really just sitting by and allowing nvidia to scoop this market?
Yes, because unlike AMD and Intel, NVIDIA really is a software company with a hardware division, like Apple and Microsoft.
Making 11bn on a 19bn revenue is, prima fascie, evidence of a very uncompetitive market where this player has some extraordinary anti-competitive market power.
Hopefully competitors can take this boom and use it to bring this down.
I'm downvoted no doubt by double-thinkers who think 2x on the cost of a graphics card is a bad thing, and would prefer not to pay it.
nvidia in the rent-seeker position over all graphics compute is a terrible position to be in, for everyone but a handful of nvidia shareholders
For them, this has been a 10+ year long bet that’s now paying off extraordinarily.
Check your privilege.
Now, they're extracting 50% of what people are paying in profit. Great!
And, what, you're their defender? I hope you have shares, or else, you've been hoodwinked.
In the "free" market, be assured, you're the loser not the winner. /We/ only win when there's sufficient competition, and clearly, there isnt.
It is not in your interest for an nvidia ransom to exist on all AI tech.
Their only competition ATI is also trying to fight Intel in the CPU single vendor market. And I don’t think they are even trying that hard in gfx.
They developed an expertise and they are temporarily profiting extraordinarily from it.
They're practically the only player for now but it's different from a harmful monopoly enforced by force from the state
Prima facie, we should be suspicious that nvidia is able to keep $11bn out of $19bn -- why is no investor on the planet not chasing after at least half that?
In the end what we want is a free market where competition drives down prices by limiting profits, and where the power of capitalists is limited by their need to compete, and where the power of labour is improved likewise (and so on).
Given just why we even have a free market in the first place, companies like nvidia cropping up should be a cause for concern.
My hope is, exactly, that this is a transitiory effect where they're able to exploit their market position only in the very short term.
For a sense of perspective, Nvidia’s operating margins as a company (including enterprise) are normally about the same as AMD’s gaming division (ie Radeon group). And Radeon is not exactly rolling in the cash…
This includes Ada, which had lower operating margins than any year since about 2012. https://i.imgur.com/KP6fClJ.png
They are making bank right now because they have a good product that has touched off a computing revolution. Just the same way AMD found themselves in a shower of money for having epyc ready to go at the moment intel stalled out on 10nm. This is transitory and won’t be a competitionless shower of money forever, but it will evolve into another large segment where nvidia is a player. But it's also an extremely deserved win for NVIDIA being in the right place at the right time (and that's hugely underselling NVIDIA's place in starting that revolution).
It’s super weird that people somehow begrudge nvidia their win from what is clearly a 20+ year bet on programmable shaders, gpgpu, and software ecosystem. Jensen bet the company over and over on shit that everyone else at the time said was lunacy, and utterly deserves the success he's earned. It is hard to overstate how much the "NVIDIA is a software company now" was mocked in the 2009-2014 era, it was a joke and a meme on tech forums in the same way "just buy it" or "the more you buy the more you save" is today. I'm sure there are some real choice SemiAccurate articles you can mine for laughs, Charlie is always great at that.
A large number of people cannot emotionally process the fact that electronics are just getting more expensive in the post-Moore's Law era and that GPUs are particularly exposed to this due to the nature of the product. But nobody else in the industry can do any better - MCM was a bust for AMD at driving down GPU costs, Intel is running negative margins to grow the product, etc. Even AMD is telling you the same thing - product costs are up, R&D costs are up, and the price anchors you knew in 2012 aren't going to hold forever.
(For that matter, there's no more $85 1600AF or $160 3600 deals anymore either - the era of "get last year's processor for, idk, does 75% off sound fair?" is completely dead in the CPU world too. And ASPs are up too - "mainstream" CPU is $300-350 now too. But people just don't have the narrative fed to them on CPUs, there is nobody telling them to be mad about it, so they aren't...)
https://www.pcgamer.com/amd-moores-law-aint-dead-its-just-a-...
https://www.tomshardware.com/tech-industry/newer-chips-are-r...
This is actually the precise leap that Jensen made that internet commentators pooh-pooh'd: he has always understood the impact that Moore's Law has on his business, he is only there to find efficient ways to shovel out the transistors that TSMC mines for him. And if the treadmill of free transistors stops (or slows to a crawl) then where do the product gains come from? It has to be software, and accelerators, and other stuff. DLSS, for example. That's another leap where he was 10+ years ahead of the public, and was in a position of having to tell people what they wanted, because they didn't know it themselves yet.
I take it that they are however, since their pricing seems extraordinarily out of keeping with the cost of manufacture.
But if the article is wrong, or misleading, so be it. I don't see signs of a undue market power at 10-20% profit, just a little inefficient in the competitive landscape
The 2022 numbers are before AI kicked in, and those numbers are roughly comparable to what Radeon Group makes - and that's with NVIDIA mixing in an already-decent amount of enterprise sales (which pushes margins up).
Their pricing is pretty much in-line with the way costs have risen in the industry. GTX 670 launched at $399 for a 300mm2 cutdown in 2012, GTX 1070 launched at $449 (the "non-founders MSRP" was widely decried as fake at the time since partners didn't follow it) for a 300mm2 cutdown in 2016. $599 for 4070 is really about on the overall cost-trend curve for a product that's launched on a leading node.
https://old.reddit.com/r/Amd/comments/4navtq/amd_this_is_how...
https://hardforum.com/threads/geforce-gtx-1080-most-bizarre-...
https://forums.anandtech.com/threads/hardocp-geforce-gtx-108...
Ampere and Turing both were trailing-node products - NVIDIA was trying to keep the cost down at a moment when TSMC was cranking prices and 7nm capacity was scarce. But once they moved back to the leading edge, prices "snapped back" from under-market to at-market. And I think you can certainly argue that this was a mistake, because it mis-calibrates people's expectations and the snap-back feels much worse all at once than as a gradual 3-gen increase.
This isn't to say stuff like 4080 weren't obscene, 4070 Ti and 4060 Ti were only good by comparison. But by the time we are getting to 4060 and 4070 launches NVIDIA is pretty much following the historical cost trends, and AMD is not able to drastically undercut these prices (because they're not particularly out-of-line).
That is the problem - people look at trailing-node products like Ampere and Turing and Maxwell and say "well, these dies were bigger and cost less" and yeah, if you are accepting something that's 2 nodes behind leading-edge it will cost less. You also don't get a 4090 or GTX Titan-class product that towers 50% above the 4080/680, and you get much worse efficiency, etc. And of course the dies will inherently be bigger, because they're lower density... 2060 being 440mm2 or whatever is absolutely not the norm for a x60 class card, it's a massive outlier cherrypicked to make a point.
And remember - it's not like AMD is giving you a 440mm2 die on a x60 class product either, historically or presently. For some reason the expectation of 440mm2 dies on x60 being a perpetual thing only applies to NVIDIA. Nobody made a 2-part video essay series about how the RX 5700XT was a "midrange product being sold at flagship prices" or whatever - and it's significantly smaller than 1080! Literally half the size of a 2060 - surely that’s a low-end card? https://www.youtube.com/watch?v=Jd1bp9eSfwo
RX 5700 XT was $399 for a 251mm die in 2019. 6700XT was $479 for a 335mm2 die in 2021 - and while yes, "mining prices", it probably wasn't inflated as much as people want it to be (the "it was mining" has become a Rorschach test for people to project whatever prices they want to imagine it should have been). And historically AMD has had to come in underneath NVIDIA anyway: if AMD was charging $480 then NVIDIA would...
If you have real data, reference that instead. It'd actually be useful.
I'd be surprised to learn anyone has a large Nvidia short position. It's not absurd since it speculates on when the AI bubble will pop. I suppose that's really up to the fed.
It's really crazy how things are moving since the end of lockdowns, more or less everybody agrees the economy is in a bad spot, layoffs, inflation, recession risks, fertility issues, climate change issues, energy issues, wars, people can't afford housing, the end of "cheap" money, &c. Meanwhile my stocks pumped 50% over 6 months for seemingly no reasons, more than half of my gains happened in the last year
idk what's cooking but I'm starting to smell smoke
It's not a perfect analogy (what analogy is?) but it is the kind of thing that should make you go "hmm".
What makes more sense is to compare the company revenues or profits against a country GDP.
When a farmer produces wheat the value created is equal to the value of the wheat. When a barber cuts somebodies hair the value created is again more or less equal to the price charged. A barber shop doesn't make anything that accumulates in value. This is true for most the economy. It trades at about 1x revenue.
Tech is different. Write software once, sell it many times. Design a chip once, sell millions of copies. Tech companies are the outliers. The rest of the world doesn't work like this.
Also tech is not that special. You could say the same about a factory, which you build once and it churns out cars, or a mine which churns out minerals. And to the extent this is not true, for example factories needing upgrades and labour, the same is true of tech. Software gets old, needs support, and the labour of well paid technologists.
I.e. if everyone just bought stuff back and forth from each other constantly (assuming no taxes on the transactions) the GDP would shoot up.
Edit: I.e. how does "it" know if people just bought a ton of used cars, or if people were simply selling them back and forth to each other constantly?
(and if sales between private persons wouldn't register, imagine dealers being in between every transaction)
Instead of thinking in terms of speculation think in terms of money flows. A lot of money flowing into a handful of stocks results in an explosive move up. There is plenty of speculation as well, of course, but that isn't why AI stocks are up.
When will NVDA and SMCI go down? When all the big funds become sellers. But what else can they buy? INTC and AMD don't have competitive chips or software.
At this point, AIs are being embedded into existing apps as new way to interact with users. Also, you need a decent GPU to run most LLMs, so there is demand in the market for GPUs for all kinds of devices, aside servers at cloud services.
If you're right, you'll likely be tempted to short again.
And does Google use Nvidia hardware on Gemini?