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

tomtunguz.com

71–80 of 218 posts

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

#71
post #28

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…

AGI is not near. At best, the domains where we send people to years of grad school so that they can do unnatural reasoning tasks in unmanageable knowledge bases, like law and medicine, will become solid application areas for LLMs. Coding, most of all, will become significantly more productive. Thing is, once the backlog of shite code gets re-engineered, the computing demand for a new code creation will not support bu…

> AGI is not near

There's also plenty of argument to be made that it's already here. AI can hold forth on pretty much any topic, and it's occasionally even correct. Of course to many (not saying you), the only acceptable bar is perfect factual accuracy, a deep understanding of meanings, and probably even a soul. Which keeps breathing life into the old joke "AI is whatever computers still can't do".

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

#72
post #31

Earlier quoted context omitted.

> 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.

>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…

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.

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

#73
I wonder if the buying customers of Nvidia are going to find the self’s left with the overcapacity. Certainly people are waking up to LLM challenges and as budgets focus more on useful applications, smaller language models, how much of that demand will remain.

Also, depreciation schedules beyond useful life of an asset may not be fraud but I’d call it a bit too creative for my liking.

Time will tell.

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

#74

I worked at a mom and pop ISP in the 90s. Lucent did seem at the forefront of internet equipment at the time. We used Portmaster 3s to handle dial up connections. We also looked into very early wireless technology from Lucent. Something I wanted to mention, only somewhat tanget. The Telecommunications Act of 1996 forced telecommunication companies to lease out their infrastructure. It massively reduced the prices an…

Changes in the legislative landscaped may have influenced the timing of the price war and the telecoms bubble.

But the price war was inevitable. And the telecoms bubble was highly likely in any case.

Telecoms investment was a response to crazy valuations of dot-com stocks.

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

#75
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 t…

Getting gold in the math Olympiad is a pretty strong indicator of operating independently on substantive problems.

A year ago they need an extensive harness to get silver, and two years ago they could hardly multiply 1000x10000.

Terence Tao tweeted yesterday about using GPT5 to help quickly solve a problem he was working on.

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

#76

Knowing history of past bubbles is only mildly informative. The dotcom bubble was different than the railroads bubble etc. The only thing to keep in mind is that all of this is about business and ROI. Given the colossal investments, even if the companies finances are healthy and not fraudulent, the economic returns have to be unprecedented or there will be a crash. They are all chasing a golden goose.

I’m concerned that the accounting differences mentioned between Lucent and Nvidia, Microsoft, OpenAI, Google just mean we have gotten much better at lying and misrepresenting things as true. Then the bubble pops and you get the real numbers and we are all like “yep it was the same thing all over again”.

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

#78

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.

This. It’s basic economics. The second there’s a blip the market will be flooded with cheap used GPUs and there will be zero reason to buy new ones. At that point it will be impossible for NVidia to sustain their revenue numbers.

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

#79

Earlier quoted context omitted.

>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…

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.

It's a pretty biased sample. Not to mention that people who are neutral and is just using AI won't be bothered to comment. So you only ever see one extreme or another.

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

#80

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.

What are you talking about? It's trading at 55x EPS and 41x forward EPS.
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