Nvidia Becomes First $5 Trillion Company as AI Demand Surges

[JPack]

Nobody predicted Apple SoCs would eat Nvidia 10-15 years ago. Made-up fat to argue against. Apple didn’t even have laptop/desktop SoCs until 5 years ago.

People predicted Apple would improve the performance of their GPU. We were seeing 100% increases with each generation. Apple desktop SoCs were not a matter of if, but when.

Apple’s new A9 and A9X processors promise ‘desktop-class performance’

The A9X is 1.8x faster than the chip in the iPad Air 2

www.theverge.com

 

[jdawgnoonan]

I would love to believe things are really that positive, but this really feels like a bubble. If Nvidia is that valuable, does that mean they have no real competitors?

 

[Mainsail]

I have never been able to time the market, and I don't know anyone that reliably can. So, I set a target portfolio mix of equities and fixed assets and rebalance a few time per year. The trick is to not rebalance too often and to not obsess over fluctuations. It has worked extremely well over the last 30 years.

 

[bluecoast]

It very likely is a bubble.

But it very likely is that GenAI is already extremely important and is going to be continue to be for the forseeable future - and that Nvidia make the best chips to run GenAI.

In the same way that the iPhone heralded the boom in the smartphone revolution, Google in search, Amazon in e-commerce, Windows 95 in the PC revolution etc. etc.

So even if the bubble bursts, it's likely that Nvidia will still be a very important - and valuable - company.

 

[Mainsail]

It very likely is a bubble.

But it very likely is that GenAI is already extremely important and is going to be continue to be for the forseeable future - and that Nvidia make the best chips to run GenAI.

In the same way that the iPhone heralded the boom in the smartphone revolution, Google in search, Amazon in e-commerce, Windows 95 in the PC revolution etc. etc.

So even if the bubble bursts, it's likely that Nvidia will still be a very important - and valuable - company.

I kind of agree with this. Both things can be true at the same time. This has all of the feel of a bubble, and AI can still be a major disruptor that will result in large profits for the companies that succeed to the top of this space.

 

[CaTOAGU]

I'm pretty bullish on NVDA, but a lot of their earnings are heavily concentrated in other big tech companies. It only takes one of them to decide maybe they don't need as many GPUs as they thought, and it could trigger a repricing domino effect down the line. At current estimates, they are valued pretty well, but those estimates can change.

This.

The trouble for me is businesses who sell AI are not really profiting from it, apart from Nvidia and they aren't really into AI, they mostly just sell the current compute tool used to run the models. At the moment, financially, it's a house of cards. Now it may be that AI really does end up fulfilling all its promises and companies like Open AI become profitable, it's just there's no evidence yet that they will. There is a lot of shifting, delaying and redefining of terms. There are some companies who think AI really does save them money, and some who don't see a benefit at all. But how sustainable will it be for the former when the subscriptions inevitably go up, when people tire of lending Open AI money and they're forced to make (or try to make) a profit.

 

[WarmWinterHat]

I kind of agree with this. Both things can be true at the same time. This has all of the feel of a bubble, and AI can still be a major disruptor that will result in large profits for the companies that succeed to the top of this space.

Hopefully the "winner" of the AI race will be a company that respects privacy, is energy and water-use conscientious, and doesn't have Sam Altman involved.

One can dream..

I have never been able to time the market, and I don't know anyone that reliably can. So, I set a target portfolio mix of equities and fixed assets and rebalance a few time per year. The trick is to not rebalance too often and to not obsess over fluctuations. It has worked extremely well over the last 30 years.

Agreed. We rebalance about every 4-6 months, and been doing fine for 25...even during the 2008 recession. Mix and match as well, but tend to avoid "hot" stocks and other in-the-news nonsense.

 

[NewOldStock]

Just waiting on Cleaner Air,Cleaner Water,Safer Foods,Better health by products of all this AI that it is supposed to help with. And i hope they find money to help those that will not be working anymore survive when their job is gone!
So far the environment is going taking a big hit on all of this and the cost is very very high on all of this.

 

[Skyscraperfan]

Nobody knows how much a company is really worth. The stock price is just calculated by the value of the latest trades. Multiplying the current stock price by the number of stocks paints a wrong picture. As long as there are nom potential buyers who would pay the $5 trillion to acquire all the stocks, you can't really say that Nvidia is worth that much. Your car is only worth $20,000, if there are people out there willing to pay that price for your car.

 

[klasma]

All these trillion dollar companies became sorts of banks for holding people’s wealth.

What happens once people need money and need to cash out?

The trillion dollar companies aren’t holding the stock, the shareholders are. The value of the stock is premised on the fact that other people would be willing to buy the stock if you want to sell it. If the situation gets so dire that no one wants to buy that stock from the people who need to cash out, then we’ll have much worse problems in the first place (like a wholesale economic breakdown).

 

[sw1tcher]

I'm pretty bullish on NVDA, but a lot of their earnings are heavily concentrated in other big tech companies. It only takes one of them to decide maybe they don't need as many GPUs as they thought, and it could trigger a repricing domino effect down the line. At current estimates, they are valued pretty well, but those estimates can change.

You're right they can, and likely will, change. Probably to the upside considering those EPS estimates do not count any sales to China. If China starts buying Nvidia chips again, those EPS numbers are going higher.

 

[klasma]

If Nvidia is that valuable, does that mean they have no real competitors?

Very roughly: yes. An important part of their moat is the software ecosystem around their hardware, which is not easily replicated.

 

[iamgalt]

And when, not if, when the AI bubble bursts, it will get cut in half within a few days. They are way way way overvalued...

We're in the roaring 20's right now. I'm guessing 3-4 more years of the AI bubble, then pop.

You'd almost think history is repeating itself.

 

[Andres Cantu]

I tend to agree. Looking at their monthly chart, it's got that kind of parabolic look with the "blow off top" coming.

View attachment 2573780​

Imagine going parabolic on a monthly chart’s RSI. Apple’s does that, too.

Once the trend changes for real, it’s going to catch a lot of people off guard.

 

[ellsworth]

I think a couple things need to happen first before there are any indications that the AI bubble is about to burst and "guessing" isn't a valid indicator. Amazon just fired 14,000 employees to focus their money and resources on AI. Apparently more lay-off are coming. UPS, Paramount, Warner Bros., Disney, Target, Microsoft and Intel have all laid-off workers and are investing in automation. This is the first indicator, lay-off workers, pour more money into AI, realize that AI isn't what it's cracked out to be for a business model, back-track and then start cutting AI spending. THAT'S when you'll see the WallStreet Bets crew causing chaos and retail investors will catch on and start pulling their money in a fashion we haven't seen since the dot com bubble burst.

With that said, I agree with others that a lot of money is currently being left off the table by not investing in AI companies at the moment. $10,000 invested 5 years ago is now worth $145,000. Even if you are afraid of the AI bubble, that amount of money gained in 5 years can be life changing for many people. Yes! We're in a bubble. Yes! It will pop. Yes! People will lose money but you won't because you're smart enough to set a stop-loss on all of your AI investments and you've convinced yourself to cash out when you're investments hit that golden number.

 

[Manzzle]

As a consumer this news to me actually makes Apple look bad.
They have all these trillions and can't kill Siri and just have their own ai that works just as good as at least ChatGPT?

 

[sleeptodream]

All these trillion dollar companies became sorts of banks for holding people’s wealth.

What happens once people need money and need to cash out?

The people holding the majority of the shares will never “need money”. The top 10% owns over 90% of stocks, and they’ll be the last ones hurting, which is maybe why the economy feels bad for us normal people but the stock market keeps going up

They’ll just move the money to different investments, if anything, if they think the gains will be better than at Nvidia or whatever other trillion dollar company

 

[sleeptodream]

My portfolio has tracked the market this entire year, without either of those catagores.

So no, you don't "got it".

Some people’s have doubled the S&P 500’s growth over the past year, that’s a lot to leave on the table

 

[code-m]

As a consumer this news to me actually makes Apple look bad.
They have all these trillions and can't kill Siri and just have their own ai that works just as good as at least ChatGPT?

Apple Intelligence will be called AL, whatever you want to make that acronym be creative.

 

[WarmWinterHat]

Some people’s have doubled the S&P 500’s growth over the past year, that’s a lot to leave on the table

That's nice. I'm not an investor and pay other people to do it. I prefer to spend my free-time in the forest or in my garden instead of tracking stock prices.

Fact is, I just really don't care and am doing quite well with or without the market.

 

[klasma]

As a consumer this news to me actually makes Apple look bad.
They have all these trillions and can't kill Siri and just have their own ai that works just as good as at least ChatGPT?

Apple doesn’t have the trillions. The shareholders have.

I mostly agree with the rest of your point, but it’s not about the trillions.

 

[pksv]

It’s honestly funny watching the same cycle play out once again. People said the internet was pointless, then swore smartphones were a gimmick, and now we basically live on both. Same story with social media and streaming first eye rolls, then total dependence. Give it a little time and today’s “never” ai turns into the new normal.

 

[now i see it]

There is no money in AI. No one has figured out how to make a profit.

Perhaps right now. But whoever dominates it in the future will be winner take all. Its an existential crisis looming for all tech companies.
Literally apple could disappear in a few decades.

 

[WarmWinterHat]

It’s honestly funny watching the same cycle play out once again. People said the internet was pointless, then swore smartphones were a gimmick, and now we basically live on both. Same story with social media and streaming first eye rolls, then total dependence. Give it a little time and today’s “never” ai turns into the new normal.

AI is a bit (a lot, actually) different than everything else on the list. They have zero path to profitability, use energy and water in staggering and unsustainable numbers, flout every law and ethics rule they can find to get training data, and pollute the web with generated garbage to the point that some sites are becoming worthless.

I don't live on my phone, or the net, and I don't use social media...and can easily live without AI. 🤷🏻‍♂️

 

[vantelimus]

A trillion here, a trillion there, and pretty soon you're talking real money.

That's an evergreen joke. Just keep adding zeroes as the years tick by and you'll be able to use it again and again.