Nvidia - Semiconductors and AI

[mizzmonika]

@This2ShallPass

I just used the Cisco analogy to show the recent example of exuberance in things that are “backbone” of any new technology change - Internet or GenAI. Not saying Nvidia will follow the same path of Cisco (SDN vs. embracing CUDA earlier). Software defined networking was how competition came at Cisco (and as the world move towards Marc Andreessen’s prescient prediction back in 2011 that Software is eating the world).

@This2ShallPass

Actually, this might be a good topic for discussion in the board. Might help us find what the next SaaS is going to be. With every new technology revolution - who gets the spoils? Has there ever been a case where an enabler was able to garner most of the value?

I think what you are missing is several points:

1. We are at the BEGINNING of the AI revolution. Year 1.5. Whatever you worry about happening, is still far away. Everything we hear is that these chips are consumed as fast as they come out of the factory, and the early ones will be obsolete in a few years.

2. Huang is WICKED SMART. LIke IMHO light years ahead of every other CEO on the planet. He saw this coming 10 years ago. He sees the need not to be JUST in chips. CUDA is not just to keep people locked into his chips. His little “inference modules” or whatever he calls them - snippets that enable you to do AI functionality that you can embed into your offering - is brilliant. Of course open source may compete but he will always be one step ahead. He is already in markets yet to rise. He is that kind of CEO.

You cannot predict where “the next SaaS” is going to be. It’s going to come out in the winners as they win. LLM chat bots may not even play in the big-money game. ML is equally important or more so. APP might be a winner with machine learning to improve advertising, hopeful there, a little too early to tell. Surely some companies will win in drug / diagnosis related AI. AI/ML will pop up EVERYWHERE and the winners will not be concentrated in one place. We are too early in the cycle to tell and the winners will become clear as they win and not before. Remember sexy does not necessarily lead to revenues and profits.

@This2ShallPass

All that’s needed is for competition to take 10-20% market share and suddenly Nvidia’s prices have to come down significantly. This is key in my mind and something Nvidia owners should think about.

Why do you think that? What’s needed is BETTER chips or at least ON PAR chips at cheaper costs to eat into NVDA’s profits. For sure competition WILL take 10-20% or market share, maybe more, but if NVDA has got the best product, it will not impact prices or margins if enough companies/nations want that product.

Bottom line: I count among my biggest mistakes not investing in ZOOM when it was obvious it was rising because I saw past its adoption and then thought, what’s next? Where are the adjacencies? I was right long term but I left tons and tons of money off the table short term.

To worry about what will happen N years out and leave this massive shift off the table, well, that’s your business. But don’t rule out Huang continuing to skate well ahead of the puck for several years to come, and that’s all I need to stay in for now.