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Nvidia’s Blowout Forecast Sparks $260B AI Rally

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Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#21

Post by chatmasta »

SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

Investors are herd animals. If you were to invest in tech companies by what you read on HN, you'd often beat wall street investments by multiple years or months. I'll always remember reading a 2013 analysis of AMZN by Morgan Stanley that spent a few dozen pages comparing Amazon to Walmart and didn't make a single mention of AWS.

Similarly the AI thesis for NVDA has been clear for multiple years, even if it got obscured a bit by the Crypto thesis. Deep learning and ML has been an obvious trend that requires increasing amounts of GPU power since at least 2017. There are basically two companies manufacturing GPUs and Nvidia is one of them. It shouldn't take a genius to have picked that stock.

Frankly we should amend the old quote about the barber recommending a stock to be about Wall Street recommending a stock. By the time the finance bros catch on to a trend, it's too late for the tech bros to profitably invest in it.

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#22

Post by thunky »

huijzer wrote: post #11
SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

My guess is that retail investors buy without thinking about the price and institutional investors play along. For some reason, retail investors look at the price when buying a car, but not at the price of a company when buying a stock. At the same time, institutional investors focus on the near-term due to misaligned incentives. As Warren Buffet put it in 1985, institutional investors can't wait for a good long-term…

> For some reason, retail investors look at the price when buying a car, but not at the price of a company when buying a stock.

This because these are very different processes from the buyer's perspective:

A retail stock investor primarily decides to spend $x on some ticker, and then they divide $x by the current share price to determine how many shares to buy (or they buy fractional shares if their platform supports it). So they can "own" NVDA by paying whatever amount they choose.

This is the opposite from buying a car, where the buyer has to pay the full sticker price all or nothing.

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#23

Post by HFguy »

SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

You can argue that this PE, at this market cap implies, it will eventually have the world's largest market cap (larger than apple...maybe 2X).

Would think OpenAI and others would tire of buying chips from NVIDIA at some point well before that and make their own (like Google does).

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#24

Post by [deleted] »

SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

[deleted]

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#25

Post by HDThoreaun »

huijzer wrote: post #18
CHY872 wrote: post #17

Earlier quoted context omitted.

Naked shorting certainly leads to unlimited losses, but it’s not the only kind. Simple example is that i can buy a put option in some company. If the stock price falls below that point, I buy shares and sell them to the option writer and make a profit. My maximum loss is limited to the amount I spent on the option. Likewise the put seller has not taken unlimited risk - their risk is limited to the cost of the shares…

The most likely winner of such schemes are the brokers who sold two things instead of one. Buying great companies at fair prices is much easier and, in my opinion, safer. Another argument: how many short seller billionaires are there and how many long billionaires?

Writing options is an incredibly competitive market, margins are very tight. The quant firms writing them only work because of the massive scale, they lose almost as often as they win.

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#26

Post by asdff »

huijzer wrote: post #11
SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

My guess is that retail investors buy without thinking about the price and institutional investors play along. For some reason, retail investors look at the price when buying a car, but not at the price of a company when buying a stock. At the same time, institutional investors focus on the near-term due to misaligned incentives. As Warren Buffet put it in 1985, institutional investors can't wait for a good long-term…

To use a Drake lyric, retail investors are in it "for a good time not a long time". They don't care what the PE is. They don't care what the price is. The volitility is the entire opportunity. You jump into the meme stock and diamond hand your holdings, and just look it pumped 25% today. Its a gamble, that's why it makes no sense to traditionally minded investors like yourself and not gamblers who consider things like potential payouts multiple times over their initial bet, and are buying nvda calls right along side them betting on games through draftkings. If you had like $500 money you could stand to lose, why not role the dice? $500 in options for nvda yesterday would have made you like $10k today, or if you set a stop loss at say 20% you'd only be out $100 for that gamble. It almost makes less sense to sit on the sidelines considering these fixed losses and unlimited profit potential with call side options on a stock that's being actively memed. Have one of your runners pop off then all your picks from there can be made with house money.

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#28

Post by SilverBirch »

HFguy wrote: post #23
SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

You can argue that this PE, at this market cap implies, it will eventually have the world's largest market cap (larger than apple...maybe 2X). Would think OpenAI and others would tire of buying chips from NVIDIA at some point well before that and make their own (like Google does).

Yes, this is exactly the point - some people are making arguments about Nvidia's amazing software stack. Sorry, but Amazon and Google have some pretty fucking good software engineers, Google already tapes out TPUs. Oh, and those are Nvidia's biggest potential customers.

Honestly this stock market move makes it look like Google should just announce "hey we're putting the TPU on sale for general availability" they'd jump 25% overnight.

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#29

Post by SilverBirch »

dangwhy wrote: post #12
SilverBirch wrote: post #8

I just can't get my head around this. Sure, Nvidia is in a good position with AI and Data Centre. I absolutely think they're in a great position and they're going to sell a lot of chips. But they're trading at 200 times earnings? I don't see how anyone could reasonably justify that. And not only that, but while yes, the earnings are good, surely the AI hype cycle has pulled forward a decent amount of demand, it's a r…

would it be good idea to short the stock though?

I worked at a large semiconductor company in 2013-16. It was very clear it was fucked. It took about 8 years before its stock price suffered any real headwind in its stock price. So who the fuck knows.

Re: Nvidia’s Blowout Forecast Sparks $260B AI Rally

#30

Post by ethbr0 »

SilverBirch wrote: post #28
HFguy wrote: post #23

Earlier quoted context omitted.

You can argue that this PE, at this market cap implies, it will eventually have the world's largest market cap (larger than apple...maybe 2X). Would think OpenAI and others would tire of buying chips from NVIDIA at some point well before that and make their own (like Google does).

Yes, this is exactly the point - some people are making arguments about Nvidia's amazing software stack. Sorry, but Amazon and Google have some pretty fucking good software engineers, Google already tapes out TPUs. Oh, and those are Nvidia's biggest potential customers. Honestly this stock market move makes it look like Google should just announce "hey we're putting the TPU on sale for general availability" they'd ju…

I dunno if I'd trust Google hardware from a reliability and support standpoint.
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