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What do you think is going to happen to their earnings when CAPEX slows?
Their earnings will certainly decline or at least decelerate if capex slows. I’m just saying, if the market wasn’t pricing in a slowdown, NVDA would be trading at 40-60x next year EPS, not 25x.
In reference 14 we read > However, what’s become clear is that OpenAI plans to pay for Nvidia’s graphics processing units (GPUs) through lease arrangements, rather than upfront purchases I wish someone here could explain it to a dummy like me. Nvidia tells OpenAI: heres some GPUs, can you pay for them over 5 years. How is this an "investment" by Nvidia? That reference keeps calling this an investment, but what they d…
Speculation by a non-accountant: At the end Nvidia retains ownership of what are probably very low value assets. Contrast that with car leases: there is a robust market for used cars. Nvidia is in effect financing the GPUs by not requiring the full payment up front. Do the lease payments add up to the total cost?
EDIT: Interesting note
> CPUs historically have 5-10 years of useful life , while GPUs in AI datacenters last 1-3 years in practice , despite 6-year accounting assumptions.30,31 Evidence from Google architects shows GPUs at 60-70% utilization survive 1-2 years , with 3 years maximum.31 Meta’s Llama 3 training experienced 9% annual GPU failure rates , suggesting 27% failure over 3 years.31
The biggest issue with Nvidia is their revenue is not recurring but the market is treating their stock as it were, which is correlated with all semi stocks, with a one-time massive CAPEX investment lasting 1-2 years. Simple as this - as to why its just not possible for this to continue.
NVDA stock does not trade at a huge multiple. Only 25x EPS despite very rapid top line growth and a dominant position at the eve of possibly the most important technology transition in the history of humankind. The market is (and has been) pricing in a slowdown.
Funnily enough when you spend some months thinking into this intensively the result is that a monetary investment into the company that will bring about the singularity / AGI is the most irrational thing one can do.
If the enterprise is successful and the singularity/AGI is benign you won't need money anymore, if the experiment fail the possibility of things going rogue is very high, or even the panic from a possible series of rogue events.
So for the first time the rational thing would be to either spend those money to learn poker/chess/videogames or whatever game we will play with each other to feel cool while the AI takes care of everything else, or maybe outright spend money on coke and strippers given the chance of doomsday.
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NVDA stock does not trade at a huge multiple. Only 25x EPS despite very rapid top line growth and a dominant position at the eve of possibly the most important technology transition in the history of humankind. The market is (and has been) pricing in a slowdown.
What are you talking about? It's trading at 55x EPS and 41x forward EPS.
This article is pretty confusing, doesn't really have a thesis, just listing some stats. Maybe that's the intent.
I had the same response. Certainly it suggests that “this time is different” without saying it in a quotable fashion. The metrics it provides seem useful. What are the metrics it is missing?
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> I doubt we will see unused GPU capacity I'd argue we very certainly will. Companies are gobbling up GPUs like there's no tomorrow, assuming demand will remain stable and continue growing indefinitely. Meanwhile LLM fatigue has started to set in, models are getting smaller and smaller and consumer hardware is getting better and better. There's no way this won't end up with a lot of idle GPUs.
Look at the human body. 2% of it is dedicated to thinking. My guess is that as a species, we will turn a similar percentage of our environment into thinking matter. If there are a billion houses on planet earth, 2% of it are 20 million datacenters we still have to build.
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>Meanwhile LLM fatigue has started to set in Has it? I think there is this compulsion to think that LLMs are made for senior devs, and if devs are getting wary of LLMs, the experiment is over. I'm not a programmer, my day job isn't tech, and the only people I know who express discontent with LLMs are a few of programmer friends I have. Which I get, but everyone else is using them gleefully for all manner of stuff. An…
> From OpenAI, programming is ~4% of chatGPTs usage. That's 96% being used for other stuff. I think it's important to remember that a good bunch of this is going to be people using it as an artificial friend, which is not really productive. Really that's destructive, because in that time you could be creating a relationship with an actual person instead of a context soon to be deleted. But on the other hand, some peo…
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You should get on Reddit, people hate AI with a passion there. People I meet in real life hate it also. I think the public actually hates AI more than it should now.
I spent 13 years chronically on reddit before stumbling into a exit hatch of the bubble chamber. Those people (well really it's teens and college kids) live on reddit, they are so far from an accurate representation of reality its insane.