Comment by alberth
2 days ago
I think it’s similar in that…
- Everyone knew the Internet (and now AI) was going to be transformational.
- It was clear it would reshape economies and open up entirely new possibilities.
- But no one really knew what the killer use case would be, or how big any given Internet (now AI) business might get.
So, like a gold rush, huge amounts of money poured in, and everyone hoped their idea would turn into the next massive market.
——
There’s also parallels between NVIDIA and Cisco.
When the Internet was in its infancy, Cisco stock soured because the thinking was that Cisco networking is what’s ultimately going to power the Internet. (Much like how NVIDIA powers AI).
But what happened was that, new networking companies entered the market and it was found that the Internet economics was so large it overshadowed the relatively small networking needed for it in comparison.
Cisco still exists and was a winner for a long time. The company that emerged hugely successful out of the dot com era was Amazon, they dominate ecommerce today.
Take a look further back to the Personal Computer era in the 80's into early 90's. There were tons of PC makers out there, IBM became dominant but they haven't been in that business for a long time now. Microsoft was the enormous winner coming out of that.
When grandma starts talking about GPU's and NVIDIA stock, this AI bubble might be at its peak. I think if history rhymes with past lyrics (that whole history doesn't repeat but rhymes thing), its more likely that a software company (OpenAI, Google, Microsoft) is going to be the dominant player emerging from a potential bubble burst.
A potential pin-prick to the bubble (looking into my crystal ball): pricing for AI - once companies realize their runways are running out and they want to turn a profit of some kind to stakeholders they will need to raise prices to offset the energy and hardware build outs. Customers may realize they aren't getting the productivity to offset those increased costs and hold back budgets on AI spend. Or chip tariffs depending on TACO volatility.
And note: it took Cisco 25-years to recoup its market cap bubble from its high of 2000.
https://finance.yahoo.com/quote/CSCO/
Isn't that true for other companies that survived the times? That the bubble created extreme highs before it burst and now the companies have grown more naturally?
For example, Intel: https://finance.yahoo.com/quote/INTC
Honest question. Not my area of focus.
The difference is that Cisco gear uses industry standard open protocols that anyone can duplicate. Nvidia’s current moat is CUDA.
But Amazon, Google, Tesla and to a lesser extent Microsoft are all creating their own chips to lessen their dependence on Nvidia
This.
I am still thinking and trying to figure out what the new concepts i.e social media, streaming, etc, of the AI era will be. There are of course the extrapolations of existing concepts, e.g shopping just like it adapted to the internet world will adapt to the AI world and you'll have a few companies there -- equivalents of uber, amazon, zomato, etc (or maybe those companies themselves).
Products with no margin such as translation will of course get a million times better, but I mean in terms of economic value.
5% of my social media feed is AI generated. I can easily imagine a completely AI generated feed that is custom tailored to my interests. The future is already here. It is just unevenly distributed.