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Comment by johnnyjeans

3 days ago

> The delta between NVIDIA's value and AMD's is bigger than the annual GDP of Spain.

Nvidia is massively overvalued right now. AI has rocketed them into absolute absurdity, and it's not sustainable. Put aside the actual technology for a second and realize that public image of AI is at rock bottom. Every single time a company puts out AI-generated materials, they receive immense public backlash. That's not going away any time soon and it's only likely to get worse.

Speaking as someone that's not even remotely anti-AI, I wouldn't touch the shit with a 10 foot pole because of how bad the public image is. The moment that capital realizes this, that bubble is going to pop and it's going to pop hard.

33 comments

johnnyjeans

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cmrdporcupine  3 days ago

One thing I've learned the hard way is that industry trends -- and the stock valuations that go with them -- can stay irrational far longer than you can imagine.

jjordan  3 days ago

Interesting perspective, I haven't noticed much if any public backlash against AI generation. What are some examples?

spacebanana7  3 days ago

> AI has rocketed them into absolute absurdity, and it's not sustainable

Why isn't it sustainable? Their biggest customers all have strong finances and legitimate demand. Google and Facebook would happily run every piece of user generated content through an LLM if they had enough GPUs. Same with Microsoft and every enterprise document.

The VC backed companies and Open AI are more fragile, but they're comparatively small customers.

  • ndiddy  3 days ago

    IMO the closest analogue for Nvidia now is Cisco during the dot-com boom. Cisco sold the physical infrastructure required for Internet companies to operate. Investors all bought in because they figured it was a safe bet. Individual companies may come and go, but if the Internet keeps growing, companies will always need to buy networking equipment. Despite the Internet being way bigger than it was in 2000, and Cisco being highly profitable, Cisco's share price has never exceeded the peak it was at during the dot-com boom.

  • fancyfredbot  3 days ago

    Google may well want to run more of their content through an LLM, but they will not be using Nvidia hardware to do it, they'll be using their TPUs.

    Amazon are on their third generation of in-house AI chips and Anthropic will be using those chips to train the next generation of Claude.

    In other words, their biggest customers are looking for cheaper alternatives and are already succeeding in finding them.

    • a5ehren  3 days ago

      Google and Amazon still have to buy tons of Nvidia HW to provide in their clouds. No one writes to their custom chips besides internal teams because the software stack doesn't exist.

  • pjc50  3 days ago

    > Google and Facebook would happily run every piece of user generated content through an LLM if they had enough GPUs. Same with Microsoft and every enterprise document.

    .. But how much actual value derives from this?

    • spacebanana7  3 days ago

      Youtube could conceivably put multi language subtitles on every video. Potentially even dub them.

      But the "real value" would come from making adverts better targeted and more interactive. It's hard to quantity as a person outside of the companies, but the intuition for a positive value is pretty strong.

      1 reply →

the__alchemist  3 days ago

You state this very confidently. Are you shorting Nvidia stock? If not, why not?

  • bee_rider  3 days ago

    I see this form of argument sometimes here but I really don’t get it.

    Lots of people don’t play the stock market or just invest in funds. It seems like just a way of challenging somebody that looks vaguely clever, or calls them out in a “put your money where your mouth is” sense, but actually presents no argument.

    Anyway, if you want to short Nvidia you have to know when their bubble is going to pop to get much benefit out of it, right? The market can remain stupid for longer than you can remain solvent or whatever.

    • the__alchemist  3 days ago

      Spot on on the timing being important. I don't think you need to fine-tune it that much; short and hold until the pop happens. If you hold off for a the pop could happen at an indefinite time; maybe very far from now, then I think that invalidates the individual prediction.

      One frustrating aspect of investing is that confident information is tough to come by. It's my take that if you have any (I personally rarely do), you should act on it. So, when someone claims confidently (e.g. with adjectives that imply confidence) that something's going to happen, then that's better than the default.

      I don't have the insight the claimer does; my thought is: "I am jealous. I with I could be that confident about a stock's trajectory. I would act on it."

      3 replies →

    • ActorNightly  1 day ago

      You can short over any period of time. You just pay interest for borrowing the stock.

      Basically, its a really good question to ask, because even in the case that the person doesn't have investments because they don't play the stock market, it shows that they are not motivated enough to actually go short the security, which means that they truly aren't that sure.

    • mancerayder  2 days ago

      I agree with most everything you said, but the timing doesn't have to be exact and you don't have to short the stock to profit on its downfall. You can buy long-dated puts. Alas, they're not cheap because the risk is very real.

  • chrisan  3 days ago

    You imply you either would believe his word or would short nvidia yourself if he said he was. If not, why not?

  • johnnyjeans  3 days ago

    I forbid myself from speculative trading as a consequence of idiosyncratic principles that I live my life by. One of many symbolic rejections of toxic profiteering that infests our neo-mercantile society. I have enough digits in my bank account that adding any more would be unambiguously greedy and distasteful, so in the end it would be violating my principles simply to debase myself. No thanks.

    Anyways you'd need some kind of window of when a stock is going to collapse to short it. Good luck predicting this one.

    • the__alchemist  3 days ago

      I respect, and adore your philosophy.

      For a short, I think you don't need that strong of a window. For an options combination, yes.