Where I live there aren't too many restrictions on housing, but a developer friend tells me he can barely make a profit at current prices because of 1) the cost of the land and 2) modern building codes make housing a lot more expensive. You can have cheaper houses if you're willing to give up things like the insulation that forces builders to use 2x6s instead of 2x4s for exterior framing.
That NIMBY stuff is mostly a problem for pricing if you want to live in a big city.
Yes, the price of housing is crazy. But so is the price of eggs.
Housing bubbles existed, we still use houses. The dot com bubble existed, we are still on a dot com.
It's very clear that the ramp for GPUs continues.
What really is a bubble? In my view, if we want to get strict with this, a bubble is really an enlargement in asset prices that is not backed by fundamentals.
Now as it stands, Nvidia's recent growth has been to date backed by fundamentals due to increases in free cash flows. However, its market capitalization is based upon the fact that demand for what they produce continues to rise notwithstanding competition.
The problem is, Nvidia's customers who are responsible for their revenue growth are not seeing meaningful ROI and how steep will the barriers to entry remain? Its questionable if Nvidia can maintain existing barriers to entry (let alone making those barriers any steeper) to sustain the market power it enjoys over a long time horizon to justify its present value. Therein lies the problem with Nvidia's valuation.
There is also no evidence that shows Nvidia's projects have real options embedded within them. Now of course, lets get real - who is really doing this level of analysis? Very few, and we are seeing this play out with jumps in the stock price with no tangible justification.
As unreal as it sounds, it could truly be worth trillions more, it’s just that the market is unwilling to say so atm. There’s nothing normal going on because almost any stock you ever looked at is surrounded by hundreds of other stocks to compare to.
People missed this stock pre-split, then at 90, 120, 140 … And they will miss it again.
As long as these data centers and their cloud patrons still keep providing those compute options, unlike, the 2000 crash where commodity hardware was widely available and the business use case was comparatively decentralized.
AI winter -> Datacenters have too much compute to sell -> Compute gets cheaper
AI summer -> Hardware companies are incentivized to make better chips-> Compute gets cheaper
The second actually is more powerful in the long run. The AI boom has actually made compute very cheap per flop.
1) We didn’t make the world digital native in that era
2) We didn’t connect the whole world to the internet
WMT is a better example than NVDA.
https://www.macrotrends.net/stocks/charts/WMT/walmart/revenu...
I think the expectation of ever growing compute is not totally crazy. It will come with lower margins eventually though, and more players in the market. It also might get much more moderate, including from hardware limitations. Efficiency wise h200->b200 isn’t as crazy as a100->h100.
Same argument can be somewhat applied to CPUs circa 90s. The growth did stop/stalled in the end.
Assumption is that business become profitable, and not just break even profitable but profitable at their expected multiples, isn't it?
Given enough compute, you can a very smart LLM to work on any number of things by itself.
I get the impression that you don't. This isn't meant to offend you, since this stuff is really hard to do. But I notice this a lot - wishy washy comments, that lack deep thought.
This place would be better with less posts but more thinking.
The people who understand corporate finance, valuation and product development can catch this stuff early on.
If there's a market crash it may change, like it did after the dot com crash.
cuttothechase•5mo ago