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Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

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Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#41

Post by cyanydeez »

digitcatphd wrote: post #35

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.

TSLA is the same. Tge market is basically a new rich persons bank, abstracted by loans and lines of credit.

Obviously its a bubble but thats meaningless for anyone but the richest to manage.

The rest of us are just ants.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#42

Post by xadhominemx »

chatmasta wrote: post #32
cantor_S_drug wrote: post #20

Earlier quoted context omitted.

With improvements on the algorithm side and new techniques, even older hardware will become useful.

This is the biggest threat to the GPU economy – software breakthroughs that enable inference on commodity CPU hardware or specialized ASIC boards that hyperscalers can fabricate themselves. Google has a stockpile of TPUs that seem fairly effective, although it’s hard to tell for certain because they don’t make it easy to rent them.

More efficient inference = more reasoning token. Hyperscaler ASICs are closing the gap at the hardware/system level, yes.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#43

Post by xadhominemx »

digitcatphd wrote: post #35

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.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#44

Post by delusional »

JCM9 wrote: post #37

The smartest finance folks I know say that this “irrational exuberance” works until it doesn’t. Meaning nobody really thinks it’s sustainable, but companies and VCs chasing the AI hype bubble have backed themselves into a corner where the only way to stop the bubble from bursting is to keep inflating the bubble. The fate of the bubble will be decided by Wall Street not tech folks in the valley. Wall Street is already…

> have backed themselves into a corner where the only way to stop the bubble from bursting is to keep inflating the bubble.

They are not in any corner. They rightly believe that they won't be allowed to fail. There's zero cost to inflating the bubble. If they tank a loss, it's not their money and they'll go on to somewhere else. If they get lucky (maybe skillful?) they get out of the bubble before anyone else, but get to ride it all the way to the top.

The only way they lose is if they sit by and do nothing. The upside is huge, and the downside is non-existent.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#45

Post by jdlshore »

mg wrote: post #18

Fiber networks were using less than 0.002% of available capacity, with potential for 60,000x speed increases. It was just too early. I doubt we will see unused GPU capacity. As soon as we can prompt "Think about the codebase over night. Try different ways to refactor it. Tomorrow, show me your best solution." we will want as much GPU time at the current rate as possible. If a minute of GPU usage is currently $0.10, a…

> As soon as we can prompt…

This is the fundamental error I see people making. LLMs can’t operate independently today, not on substantive problems. A lot of people are assuming that they will some day be able to, but the fact is that, today, they cannot.

The AI bubble has been driven by people seeing the beginning of an S-curve and combining it with their science-fiction fantasies about what AI is capable of. Maybe they’re right, but I’m skeptical, and I think the capabilities we see today are close to as good as LLMs are going to get. And today, it’s not good enough.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#46

Post by xadhominemx »

narmiouh wrote: post #12

I think the fundamental issue is the uncertainty of achieving AGI with baked in fundamentals of reasoning. Almost 90% of topline investments appear to be geared around achieving that in the next 2-5 years. If that doesn’t come to pass soon enough, investors will loose interest. Interest has been maintained by continuous growth in benchmark results. Perhaps this pattern can continue for another 6-12 months before fati…

Hyperscalers are only spending less than half of their operating cash flows on AI capex. Full commitment to achieving AGI within a few years would look much different.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#47

Post by adventured »

hyghjiyhu wrote: post #21
pragmatic wrote: post #17

At a "telecom of telecom" we (they) were still lighting up dark fiber 15 years later (2015) when mobile data for cell carriers finally created enough demand. Hard to fathom the amount of overbuild. The only difference is fiber optic lines remained useful the whole time. Will these cards have the same longevity? (I have no idea just sharing anecdata)

I think the chips themselves won't have longevity, but the r&d gone into them is useful. Question is whether the value of that can be captured.

Depends on which companies we're talking about. Nvidia's annualized operating income is so high right now that it'll be capturing more value (op income) in the next four quarters (~$120 billion) than its R&D expenditures have cost over its 32 year history combined. For Nvidia the return has long since been achieved.

As the AI spending bubble gives out, Nvidia's profit growth will slow dramatically (single digits), and slamming into a wall (as Cisco did during the telecom bubble; leading up to the telecom crash, Cisco was producing rather insane quarter over quarter growth rates).

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#48

Post by Zigurd »

chatmasta wrote: post #32
cantor_S_drug wrote: post #20

Earlier quoted context omitted.

With improvements on the algorithm side and new techniques, even older hardware will become useful.

This is the biggest threat to the GPU economy – software breakthroughs that enable inference on commodity CPU hardware or specialized ASIC boards that hyperscalers can fabricate themselves. Google has a stockpile of TPUs that seem fairly effective, although it’s hard to tell for certain because they don’t make it easy to rent them.

I don't think we will need to wait for anything as unpredictable as a breakthrough. Optimizing inference for the most clearly defined tasks, which are also the tasks where value is most readily quantified, like coding, is underway now.

Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?

#49

Post by Cheer2171 »

cl42 wrote: post #25
narmiouh wrote: post #12

I think the fundamental issue is the uncertainty of achieving AGI with baked in fundamentals of reasoning. Almost 90% of topline investments appear to be geared around achieving that in the next 2-5 years. If that doesn’t come to pass soon enough, investors will loose interest. Interest has been maintained by continuous growth in benchmark results. Perhaps this pattern can continue for another 6-12 months before fati…

Not sure why you're getting downvoted. If you speak with AI researchers, they all seem reasonable in their expectations. ... but I work with non-technical business people across industries and their expectations are NOT reasonable. They expect ChatGPT to do their entire job for $20/month and hire, plan, budget accordingly. 12 months later, when things don't work out, their response to AI goes to the other end of the…

> their expectations are NOT reasonable. They expect ChatGPT to do their entire job for $20/month and hire, plan, budget accordingly.

This is entirely on the AI companies and their boosters. Sam Altman literally says gpt 5 is "like having a team of PhD-level experts in your pocket." All the commercials sell this fantasy.

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