[HN Gopher] Nvidia Stock Crash Prediction
___________________________________________________________________
Nvidia Stock Crash Prediction
Author : todsacerdoti
Score : 310 points
Date : 2026-01-20 15:56 UTC (7 hours ago)
(HTM) web link (entropicthoughts.com)
(TXT) w3m dump (entropicthoughts.com)
| rwmj wrote:
| It goes to nearly zero if China invades Taiwan, and that seems
| like it has at least a 10% chance of happening in the next year
| or two.
| fkarg wrote:
| I agree. It's funny that this is one of the cited reason for
| the (relative) value suppression of tsmc, but the same factors
| should apply to Nvidia too.
| utopiah wrote:
| But then again what won't? Non tech stocks?
| zitterbewegung wrote:
| Industrial military complex and government contractors.
| utopiah wrote:
| Jets, tanks, drones and data centers for intelligence
| services, even design, are full of electronics but what's
| the share of those not made in Taiwan?
| LunaSea wrote:
| Don't they also depend on chips for a lot of components?
| mikkupikku wrote:
| Probably a lot more from TI and Intel than Taiwan.
| utopiah wrote:
| I'd be curious how many of the design and verification
| (using computer vision) tools used at TI and Intel rely
| on on farms of stock GPUs thus chips still made in
| Taiwan. They might have in house chips just for such part
| of their workflows though, any insight appreciated.
| rwmj wrote:
| Yes, lots of other companies would be affected to a greater
| or lesser extent (even non-tech stocks), but specifically any
| company that relies on manufacturing all their product in
| Taiwan will be affected most of all.
| throwaway5752 wrote:
| Gold stocks, basic materials, MSCI world and emerging market
| indexes. Look at their prices and see how very smart people
| are positioning their money.
| immibis wrote:
| The whole economy will crash. Probably won't be due to China
| invading Taiwan though. More likely because the president
| decided to delete their country's world reserve currency
| status (which is another word for a trade deficit).
| bpodgursky wrote:
| NVIDIA has been producing Blackwell in Arizona since October.
| Don't be dramatic.
|
| There would be a supply crunch but a lot of dollars will be
| shuffled VERY fast to ramp up production.
| rwmj wrote:
| They definitely made at least one wafer in Arizona in
| October.
| georgeburdell wrote:
| Packaging? Assembling onto boards?
| blackoil wrote:
| Can outsource to China. Only partial /s
| maxglute wrote:
| Arizona fabs don't work without TW's many sole source
| suppliers for fab consumables. They'll likely grind to halt
| after few months when stock runs out. All the dollar
| shuffling's not going to replace supply chain that will take
| (generously) years to build, if ever.
| khalic wrote:
| Idk the pro china side is getting more and more support, at
| this rate they'll vote themselves into mainland
| cjbgkagh wrote:
| I think Taiwanese elites can be bought, they say they can't
| but I think that's just part of the bargaining for a higher
| price. The overtures towards a costly and destructive
| invasion is Chinas attempt at lowering that price. As is the
| strategy of building up an indigenous chip manufacturing
| industry. The aggressive rhetoric from China has the added
| benefit of keeping the US on a self sabotaging aggressive
| posture.
| whatevaa wrote:
| Well, the reality is that most people don't want a bloodbath
| and it's increasingly looking like external support won't
| come, so what you gonna do... life is a very complex chess
| game, gotta play your pieces right.
| mikkupikku wrote:
| At this rate, even if they can't get the Taiwanese population
| to consent, it probably makes more sense to wait anyway to
| see how low America can sink. The lower America goes, the
| better their chance for success.
| Ekaros wrote:
| China is capable of taking long term view, beyond single
| election cycle. And currently USA really seems to be
| heading down faster and faster.
|
| If something even more drastic happens. China might even
| attempt unification with some reasoning like protecting
| Taiwan from USA or other nations.
| blackoil wrote:
| An EU type agreement will keep peace for some time. Remove
| all trade barriers between two countries, have a treaty
| preventing any side to be used militarily by third party, no
| attacking each other and free movement of all vessels through
| each other's seas. Maybe few more
| nebula8804 wrote:
| Thats just buying China more time until they can get their
| chip manufacturing to at least a similar ballpark. Then
| Taiwan has no cards left to play. China can cripple TSMC
| depriving the west of chips while they continue onwards.
| blackoil wrote:
| "buying China more time". China has no time-pressure to
| attack immediately, but all the upside right now of
| pretending to a stable, sensible world leader. Treaty
| with Taiwan will keep the ego of One China, prevent it
| from naval blockade by Taiwanese territories and will
| remove one of the major territorial issues raised against
| it.
| nebula8804 wrote:
| I don't know about that...don't they have massive
| overcapacity in many of their industries as well as ~25%
| youth unemployment? For all the mess the US is going
| through at least we are seeing it out in the open. China
| seems to be going through their own messes right now but
| it is behind the great wall. Will a treaty be enough or
| will their leaders falter and try to push for more. Guess
| we will see.
| pmarin wrote:
| I don't think is about China, it's more about Winnie the
| Pooh's legacy.
| ghosty141 wrote:
| I mean that's obviously the best outcome for the Chinese
| government. Same thing that happens/ed to Hongkong. War is
| bad for everybody.
| eagerpace wrote:
| Going to zero is one potential outcome. Equally plausible is it
| goes up 10% in a relatively quick battle or diplomatic outcome
| which ends the geopolitical uncertainty.
| rwmj wrote:
| There's approximately 0% chance that China will ship leading
| edge wafers from captured TSMC to the West.
| eagerpace wrote:
| This is the beauty of Polymarket. Then bet on it. There are
| so many more outcomes possible to this conflict than what
| you see reported in the media. Don't be so reductive.
| wordpad wrote:
| Not true, it might be something they compromise on to
| restore relations
| IsTom wrote:
| That's possible only if fabs are operational after the
| invasion.
| fullshark wrote:
| What does the US gov't do in response? Wouldn't they throw
| globs of money at Intel and Nvidia?
| bob1029 wrote:
| They already have.
| heathrow83829 wrote:
| but they're expected to have 8 or 9 aircraft carriers by 2035,
| doesn't it make sense to wait until then?
| flowerthoughts wrote:
| If the US is fighting with Europe and South America, China
| might not that many.
| toephu2 wrote:
| It doesn't goto nearly zero. TSMC has a large fab in Arizona
| and they are continuing to expand it. They also have a fab in
| Washington, and in Japan. [1]
|
| [1]https://www.tsmc.com/english/aboutTSMC/TSMC_Fabs
| alecco wrote:
| I think they are already hedging for Taiwan. 1. They just
| pseudo-acquired Groq, fully made in USA (GlobalFoundries) and
| with a diversified supply chain. 2. And they just announced
| they will be re-introducing RTX 3090 made in Korea (Samsung).
| 3. And they plan to produce chips in Intel's new US fabs soon.
|
| I think the bigger problems of the AI bubble are energy and
| that it's gaining a terrible reputation for being the excuse
| for mass layoffs while suffocating the Internet with
| slop/brainrot content. All while depending on government
| funding to grow.
| fooey wrote:
| https://archive.is/HXmoa
| koolba wrote:
| > One of the questions of the 2026 acx prediction contest is
| whether Nvidia's stock price will close below $100 on any day in
| 2026.
|
| Maybe I'm missing something, but isn't this just a standard
| American put option with a strike of $100 and expiry of Dec 31st?
| mklyachman wrote:
| Not really. American put options will pay differently for 95
| dollars vs 99 dollars, while this contract settles to 1 either
| which way.
| amelius wrote:
| No because if it goes to $99.99, you don't win much. With a
| prediction contest it is either you win or you lose.
| NewCzech wrote:
| He doesn't really address his own question.
|
| He's answering the question "How should options be priced?"
|
| Sure, it's possible for a big crash in Nvidia just due to
| volatility. But in that case, the market as a whole would likely
| be affected.
|
| Whether Nvidia specifically takes a big dive depends much more on
| whether they continue to meet growth estimates than general
| volatility. If they miss earnings estimates in a meaningful way
| the market is going to take the stock behind the shed and shoot
| it. If they continue to exceed estimates the stock will probably
| go up or at least keep its present valuation.
| dsr_ wrote:
| > Sure, it's possible for a big crash in Nvidia just due to
| volatility. But in that case, the market as a whole would
| likely be affected.
|
| Other way around: if NVidia sinks, it likely takes a bunch of
| dependent companies with it, because the likely causes of
| NVidia sinking all tell us that there was indeed an AI bubble
| and it is popping.
| weslleyskah wrote:
| Indeed, the market as a whole would be affected. But is not
| NVIDIA more of a software company than a hardware one? This
| bugs the shit out of me.
|
| They are maintaining this astronomical growth through data
| centers margins from the design of their chips and all of that
| started from graphics related to video games.
| coffeebeqn wrote:
| > But is not NVIDIA more of a software company than a
| hardware one?
|
| No? That's why they have almost no competition. Hardware
| starting costs are astronomical
| weslleyskah wrote:
| But the actual manufacturing foundry is TSMC no? And they
| create the whole software environment based on their chips.
| immibis wrote:
| It costs eight figures to create the masks (patterns) to
| use in the process of creating a modern chip. Just
| because it doesn't cost the eleven figures of the factory
| itself doesn't make it cheap.
| Shocka1 wrote:
| I've been selling options for almost a decade now, including
| running trading algorithms, and was laughing a bit to myself
| because it was basically just the math in an everyday option
| chain. As you already know, anyone can look at the strike they
| are talking about, with the IV already cooked into it, on
| platforms like Think Or Swim or even Yahoo Finance. Some of the
| stuff can be pretty useful though in backtesting and
| exploration.
|
| All that aside, I'm impressed it made it to the HN front page.
| PeterStuer wrote:
| How much of their turnover is financed directly or indirectly by
| themselves, then leveraged further by their 'customers' to
| collaterize further investments?
|
| Are they already "too big to fail"? For better or worse, they are
| 'all in' on AI.
| _fat_santa wrote:
| This article goes more into the technical analysis of the stock
| rather than the underlying business fundamentals that would lead
| to a stock dump.
|
| My 30k ft view is that the stock will inevitably slide as AI
| datacenter spending goes down. Right now Nvidia is flying high
| because datacenters are breaking ground everywhere but eventually
| that will come to an end as the supply of compute goes up.
|
| The counterargument to this is that the "economic lifespan" of an
| Nvidia GPU is 1-3 years depending on where it's used so there's a
| case to be made that Nvidia will always have customers coming
| back for the latest and greatest chips. The problem I have with
| this argument is that it's simply unsustainable to be spending
| that much every 2-3 years and we're already seeing this as Google
| and others are extending their depreciation of GPU's to something
| like 5-7 years.
| KeplerBoy wrote:
| Also there's no way Nvidia's market share isn't shrinking.
| Especially in inference.
| blackoil wrote:
| But will the whole pie grow or shrink?
| gpapilion wrote:
| The large api/token providers, and large consumers are all
| investing in their own hardware. So, they are in an
| interesting position where the market is growing, and NVIDIA
| is taking the lion's share of enterprise, but is shrinking at
| the hyperscaler side (google is a good example as they shift
| more and more compute to TPU). So, they have a shrinking
| market share, but its not super visible.
| zozbot234 wrote:
| > The large api/token providers, and large consumers are
| all investing in their own hardware.
|
| Which is absolutely the right move when your latest
| datacenter's power bill is literally measured in gigawatts.
| Power-efficient training/inference hardware simply does not
| look like a GPU at a hardware design level (though
| admittedly, it looks even less like an ordinary CPU), it's
| more like something that should run dog slow wrt. max
| design frequency but then more than make up for that with
| extreme throughput per watt/low energy expense per
| elementary operation.
|
| The whole sector of "neuromorphic" hardware design has long
| shown the broad feasibility of this (and TPUs are already a
| partial step in that direction), so it looks like this
| should be an obvious response to current trends in power
| and cooling demands for big AI workloads.
| dogma1138 wrote:
| Market share can shrink but if the TAM is growing you can
| still grow.
| jwoods19 wrote:
| "In a gold rush, sell shovels"... Well, at some point in the
| gold rush everyone already has their shovels and pickaxes.
| krupan wrote:
| Or people start to realize that the expected gold isn't
| really there and so stop buying shovels
| gopher_space wrote:
| The version I heard growing up was "In a gold rush, sell
| eggs."
| FergusArgyll wrote:
| Selling jeans is the one that actually worked
| baxtr wrote:
| I no AI fanboy at all. I think it there won't be AGI anytime
| soon.
|
| However, it's beyond my comprehension how anyone would think
| that we will see a decline in demand growth for compute.
|
| AI will conquer the world like software or the smartphone did.
| It'll get implemented everywhere, more people will use it.
| We're super early in the penetration so far.
| marricks wrote:
| > I no AI fanboy at all.
|
| While thinking computers will replace human brains soon is
| rabid fanaticism this statement...
|
| > AI will conquer the world like software or the smartphone
| did.
|
| Also displays a healthy amount of fanaticism.
| jwoods19 wrote:
| Even suggesting that computers will replace human brains
| brings up a moral and ethical question. If the computer is
| just as smart as a person, then we need to potentially
| consider that the computer has rights.
|
| As far as AI conquering the world. It needs a "killer app".
| I don't think we'll really see that until AR glasses that
| happen to include AI. If it can have context about your
| day, take action on your behalf, and have the same battery
| life as a smartphone...
| xenospn wrote:
| I don't see this as fanaticism at all. No one could predict
| a billion people mindlessly scrolling tiktok in 2007. This
| is going to happen again, only 10x. Faster and more
| addictive, with content generated on the fly to be so
| addictive, you won't be able to look away.
| Yossarrian22 wrote:
| Vine was around then
| Ekaros wrote:
| At this point computation is in essence commodity. And
| commodities have demand cycles. If other economic factors
| slowdown or companies go out of business they stop using
| compute or start less new products that use compute. Thus it
| is entirely realistic to me that demand for compute might go
| down. Or that we are just now over provisioning compute in
| short or medium term.
| wordpad wrote:
| So...like Cisco during dot com bust?
| Ekaros wrote:
| More so I meant to think of oil, copper and now silver.
| All follow demand for the price. All have had varying
| prices at different times. Compute should not really be
| that different.
|
| But yes. Cisco's value dropped when there was not same
| amount to spend on networking gear. Nvidia's value will
| drop as there is not same amount of spend on their gear.
|
| Other impacted players in actual economic downturn could
| be Amazon with AWS, MS with Azure. And even more so those
| now betting on AI computing. At least general purpose
| computing can run web servers.
| galaxyLogic wrote:
| I wonder, is the quality of AI answers going up over time
| or not? Last weekend I spent a lot of time with Preplexity
| trying to understand why my SeqTrack device didn't do what
| I wanted it to do and seems Perplexity had a wrong idea of
| how the buttons on the device are laid out, so it gave me
| wrong or confusing answers. I spent literally hours trying
| to feed it different prompts to get an answer that would
| solve my problem.
|
| If it had given me the right easy to understand answer
| right away I would have spent 2 minutes of both MY time and
| ITS time. My point is if AI will improve we will need less
| of it, to get our questions answered. Or, perhaps AI usage
| goes up if it improves its answers?
| zozbot234 wrote:
| If the AI hasn't specifically learned about SeqTracks as
| part of its training it's not going to give you useful
| answers. AI is not a crystal ball.
| SchemaLoad wrote:
| The problem is it's inability to say "I don't know". As
| soon as you reach the limits of the models knowledge it
| will readily start fabricating answers.
| jama211 wrote:
| Always worth trying a different model, especially if
| you're using a free one. I wouldn't take one data point
| to seriously either.
|
| The data is very strongly showing the quality of AI
| answers is rapidly improving. If you want a good example,
| check out the sixty symbols video by Brady Haran, where
| they revisited getting AI to answer a quantum physics
| exam after trying the same thing 3 years ago. The
| improvement is IMMENSE and unavoidable.
| lorddumpy wrote:
| With vision models (SOTA models like Gemini and ChatGPT
| can do this), you can take a picture/screenshot of the
| button layout, upload it, and have it work from that.
| Feeding it current documentation (eg a pdf of a user
| manual) helps too.
|
| Referencing outdated documentation or straight up
| hallucinating answers is still an issue. It is getting
| better with each model release though
| Ronsenshi wrote:
| What if its penetration ends up being on the same level as
| modern crypto? Average person doesn't seem to particularly
| care about meme coins or bitcoin - it is not being actively
| used in day to day setting, there's no signs of this status
| improving.
|
| Doesn't mean that crypto is not being used, of course. Plenty
| of people do use things like USDT, gamble on bitcoin or try
| to scam people with new meme coins, but this is far from what
| crypto enthusiasts and NFT moguls promised us in their
| feverish posts back in the middle of 2010s.
|
| So imagine that AI is here to stay, but the absolutely
| unhinged hype train will slow down and we will settle in some
| kind of equilibrium of practical use.
| infecto wrote:
| I have still been unable to see how folks connect AI to
| Crypto. Crypto never connected with real use cases. There
| are some edge cases and people do use it but there is not a
| core use.
|
| AI is different and businesses are already using it a lot.
| Of course there is hype, it's not doing all the things the
| talking heads said but it does not mean immense value is
| not being generated.
| Ronsenshi wrote:
| It's an analogy, it doesn't have to map 1:1 to AI. The
| point is that current situation around AI looks kind of
| similar to the situation and level of hype around Crypto
| when it was still growing: all the "ledger" startups,
| promises of decentralization, NFTs in video games and so
| on. We are somewhere around that point when it comes to
| AI.
| lorddumpy wrote:
| I agree with the all the startups but AI is already much
| more useful in everyday tasks vs crypto.
|
| Eg: A chatbot assistant is much more tangible to the
| regular joe than blockchain technology
| mnky9800n wrote:
| I really don't understand the argument that nvidia GPUs only
| work for 1-3 years. I am currently using A100s and H100s every
| day. Those aren't exactly new anymore.
| iancmceachern wrote:
| They're no longer energy competitive. I.e. the amount of
| power per compute exceeds what is available now.
|
| It's like if your taxi company bought taxis that were more
| fuel efficient every year.
| bob1029 wrote:
| Margins are typically not so razor thin that you cannot
| operate with technology from one generation ago. 15 vs 17
| mpg is going to add up over time, but for a taxi company
| it's probably not a lethal situation to be in.
| iancmceachern wrote:
| Tell that to the airline industry
| bob1029 wrote:
| I don't think the airline industry is a great example
| from an IT perspective, but I agree with regard to the
| aircraft.
| hibikir wrote:
| And yet they aren't running planes and engines all from
| 2023 or beyond: See the MD-11 that crashed in Louisville:
| Nobody has made a new MD-11 in over 20 years. Planes move
| to less competitive routes, change carriers, and
| eventually might even stop carrying people and switch to
| cargo, but the plane itself doesn't get to have zero
| value when the new one comes out. An airline will want to
| replace their planes, but a new plane isn't fully
| amortized in a year or three: It still has value for
| quite a while
| SchemaLoad wrote:
| At least with crypto mining this was the case. Hardware
| from 6 months ago is useless ewaste because the new
| generation is more power efficient. All depends on how
| expensive the hardware is vs the cost of power.
| mikkupikku wrote:
| If a taxi company did that every year, they'd be losing a
| lot of money. Of course new cars and cards are cheaper to
| operate than old ones, but is that difference enough to
| offset buying a new one every one to three years?
| wordpad wrote:
| If your competitor refreshes their cards and you dont,
| they will win on margin.
|
| You kind of have to.
| lazide wrote:
| Not necessarily if you count capital costs vs operating
| costs/margins.
|
| Replacing cars every 3 years vs a couple % in efficiency
| is not an obvious trade off. Especially if you can do it
| in 5 years instead of 3.
| zozbot234 wrote:
| You can sell the old, less efficient GPUs to folks who
| will be running them with markedly lower duty cycles (so,
| less emphasis on direct operational costs), e.g. for on-
| prem inference or even just typical workstation/consumer
| use. It ends up being a win-win trade.
| lazide wrote:
| Then you're dealing with a lot of labor to do the
| switches (and arrange sales of used equipment), plus
| capital float costs while you do it.
|
| It can make sense at a certain scale, but it's a non
| trivial amount of cost and effort for potentially
| marginal returns.
| pixl97 wrote:
| Building a new data center and getting power takes years
| to double your capacity. Swapping out out a rack that is
| twice as fast takes very little time in comparison.
| lazide wrote:
| Huh? What does your statements have to do with what I'm
| saying?
|
| I'm just pointing out changing it out at 5 years is
| likely cheaper than at 3 years.
| pixl97 wrote:
| Depends at the rate of growth of the hardware. If your
| data center is full and fully booked, and hardware is
| doubling in speed every year it's cheaper to switch it
| out every couple of years.
| iancmceachern wrote:
| You highlight the exact dilemma.
|
| Company A has taxis that are 5 percent less efficient and
| for the reasons you stated doesn't want to upgrade.
|
| Company B just bought new taxis, and they are
| undercutting company A by 5 percent while paying their
| drivers the same.
|
| Company A is no longer competitive.
| dylan604 wrote:
| >offset buying a new one every one to three years?
|
| Isn't that precisely how leasing works? Also, don't
| companies prefer _not_ to own hardware for tax purposes?
| I 've worked for several places where they leased compute
| equipment with upgrades coming at the end of each lease.
| gowld wrote:
| That works either because _someone_ wants to buy old
| hardware for the manufacturer /lessor, or because the
| hardware is EOL in 3 years but it's easier to let the
| lessor deal with recyling / valuable parts recovery.
| mikkupikku wrote:
| Who wants to buy GPUs that were redlined for three years
| in a data center? Maybe there's a market for those, but
| most people already seem wary of lightly used GPUs from
| other consumers, let alone GPUs that were burning in a
| crypto farm or AI data center for years.
| coryrc wrote:
| Depends on the price, of course. I'm wary of paying 50%
| of new for something run hard 3 years. Seems an NVIDIA
| H100 is going for $20k+ on EBay. I'm not taking that
| risk.
| pixl97 wrote:
| Depending on the discount, a lot of people.
| dylan604 wrote:
| > Who wants to buy
|
| who cares? that's the beauty of the lease. once it's
| over, the old and busted gets replaced with new and
| shiny. what the leasing company does is up to them. it
| becomes one of those YP not an MP situations with
| deprecated equipment.
| gruez wrote:
| >If a taxi company did that every year, they'd be losing
| a lot of money. Of course new cars and cards are cheaper
| to operate than old ones, but is that difference enough
| to offset buying a new one every one to three years?
|
| That's where the analogy breaks. There are massive
| efficiency gains from new process nodes, which new GPUs
| use. Efficiency improvements for cars are glacial, aside
| from "breakthroughs" like hybrid/EV cars.
| philwelch wrote:
| If there was a new taxi every other year that could
| handle twice as many fares, they might. That's not how
| taxis work but that is how chips work.
| echelon wrote:
| Nvidia has plenty of time and money to adjust. They're
| already buying out upstart competitors to their throne.
|
| It's not like the CUDA advantage is going anywhere
| overnight, either.
|
| Also, if Nvidia invests in its users and in the
| infrastructure layouts, it gets to see upside no matter
| what happens.
| linkregister wrote:
| The common factoid raised in financial reports is GPUs used
| in model training will lose thermal insulation due to their
| high utilization. The GPUs ostensibly fail. I have heard
| anecdotal reports of GPUs used for cryptocurrency mining
| having similar wear patterns.
|
| I have not seen hard data, so this could be an oft-repeated,
| but false fact.
| munk-a wrote:
| I can't confirm that fact - but it's important to
| acknowledge that consumer usage is very different from the
| high continuous utilization in mining and training. It is
| credulous that the wear on cards under such extreme usage
| is as high as reported considering that consumers may use
| their cards at peak 5% of waking hours and the wear drop
| off is only about 3x if it is used near 100% - that is a
| believable scale for endurance loss.
| zozbot234 wrote:
| > I have heard anecdotal reports of GPUs used for
| cryptocurrency mining having similar wear patterns.
|
| If this was anywhere close to a common failure mode, I'm
| pretty sure we'd know that already given how crypto mining
| GPUs were usually ran to the max in makeshift settings with
| woefully inadequate cooling and environmental control. The
| overwhelming anecdotal evidence from people who have bought
| them is that even a "worn" crypto GPU is absolutely fine.
| Melatonic wrote:
| It's the opposite actually - most GPU used for mining are
| run at a consistent temp and load which is good for long
| term wear. Peaky loads where the GPU goes from cold to hot
| and back leads to more degradation because of changes in
| thermal expansion. This has been known for some time now.
| Yizahi wrote:
| That is commonly repeated idea, but it doesn't take into
| account countless token farms which are smaller than a
| datacenter. Basically anything from a single MB with 8
| cards to a small shed with rigs, all of which tend to
| disregard common engineering practices and run hardware
| into a ground to maximize output until next police raid
| or difficulty bump. Plenty of photos in the internet of
| crappy rigs like that, and no one guarantees which GPU
| comes whom where.
|
| Another commonly forgotten issue is that many electrical
| components are rated by hours of operation. And cheaper
| boards tend to have components with smaller tolerances.
| And that rated time is actually a graph, where hour
| decrease with higher temperature. There were instances of
| batches of cards failing due to failing MOSFETs for
| example.
| whaleofatw2022 wrote:
| Let's also not forget the set of miners that either
| overclock or dont really care about long term in how they
| set up thermals
| belval wrote:
| Miners usually don't overclock though. If anything
| underclocking is the best way to improve your ROI because
| it significantly reduces the power consumption while
| retaining most of the hashrate.
| Melatonic wrote:
| Exactly - more specifically undervolting. You want the
| minimum volts going to the card with it still performing
| decently.
|
| Even in amateur setups the amount of power used is a huge
| factor (because of the huge draw from the cards
| themselves and AC units to cool the room) so minimising
| heat is key.
|
| From what I remember most cards (even CPUs as well) hit
| peak efficiency when undervolted and hitting somewhere
| around 70-80% max load (this also depends on cooling
| setup). First thing to wear out would probably be the fan
| / cooler itself (repasting occasionally would of course
| help with this as thermal paste dries out with both time
| and heat)
| zozbot234 wrote:
| Wouldn't the exact same considerations apply to AI
| training/inference shops, seeing as gigawatts are usually
| the key constraint?
| coryrc wrote:
| Specifically, we expect a halving of lifetime per 10K
| increase in temperature.
| Melatonic wrote:
| While I'm sure there are small amateur setups done poorly
| that push cards to their limits this seems like a more
| rare and inefficient use. GPUS (even used) are expensive
| and running them at maximum would require large costs and
| time to be replacing them regularly. Not to mention the
| increased cost of cooling and power.
|
| Not sure I understand the police raid mentality - why are
| the police raiding amateur crypto mining setups ?
|
| I can totally see cards used by casual amateurs being
| very worn / used though - especially your example of
| single mobo miners who were likely also using the card
| for gaming and other tasks.
|
| I would imagine that anyone purposely running hardware
| into the ground would be running cheaper / more efficient
| ASICS vs expensive Nvidia GPUs since they are much easier
| and cheaper to replace. I would still be surprised
| however if most were not proritising temps and cooling
| mbesto wrote:
| Source?
| savorypiano wrote:
| You aren't trying to support ad-based demand like OpenAI is.
| linuxftw wrote:
| I think the story is less about the GPUs themselves, and more
| about the interconnects for building massive GPU clusters.
| Nvidia just announced a massive switch for linking GPUs
| inside a rack. So the next couple of generations of GPU
| clusters will be capable of things that were previously
| impossible or impractical.
|
| This doesn't mean much for inference, but for training, it is
| going to be huge.
| legitster wrote:
| From an accounting standpoint, it probably makes sense to
| have their depreciation be 3 years. But yeah, my
| understanding is that either they have long service lives, or
| the customers sell them back to the distributor so they can
| buy the latest and greatest. (The distributor would sell them
| as refurbished)
| denimnerd42 wrote:
| 1-3 is too short but they aren't making new A100s, theres 8
| in a server and when one goes bad what do you do? you wont be
| able to renew a support contract. if you wanna diy you
| eventually you have to start consolidating pick and pulls.
| maybe the vendors will buy them back from people who want to
| upgrade and resell them. this is the issue we are seeing with
| A100s and we are trying to see what our vendor will offer for
| support.
| mbesto wrote:
| Not saying your wrong. A few things to consider:
|
| (1) We simply don't know what the useful life is going to be
| because of how new the advancements of AI focused GPUs used
| for training and inference.
|
| (2) Warranties and service. Most enterprise hardware has
| service contracts tied to purchases. I haven't seen anything
| publicly disclosed about what these contracts look like, but
| the speculation is that they are much more aggressive (3
| years or less) than typical enterprise hardware contracts
| (Dell, HP, etc.). If it gets past those contracts the
| extended support contracts can typically get really pricey.
|
| (3) Power efficiency. If new GPUs are more power efficient
| this could be huge savings on energy that could necessitate
| upgrades.
| epolanski wrote:
| Nvidia is moving to a 1 year release life cycle for data
| center, and in Jensen's words once a new gen is released
| you lose money for being on the older hardware. It makes no
| longer financially sense to run it.
| pixl97 wrote:
| That will come back to bite them in the ass if money
| leaves the AI race.
| mbrumlow wrote:
| It's not that they don't work. It's how businesses handle
| hardware.
|
| I worked at a few data centers on and off in my career. I got
| lots of hardware for free or on the cheap simply because the
| hardware was considered "EOL" after about 3 years, often when
| support contracts with the vendor ends.
|
| There are a few things to consider.
|
| Hardware that ages produce more errors, and those errors
| cost, one way or another.
|
| Rack space is limited. A perfectly fine machine that consumes
| 2x the power for half the output cost. It's cheaper to
| upgrade a perfectly fine working system simply because it
| performs better per watt in the same space.
|
| Lastly. There are tax implications in buying new hardware
| that can often favor replacement.
| fooker wrote:
| I'll be so happy to buy a EOL H100!
|
| But no, there's none to be found, it is a 4 year, two
| generations old machine at this point and you can't buy one
| used at a rate cheaper than new.
| aswegs8 wrote:
| Not sure why this "GPUs obsolete after 3 years" gets
| thrown around all the time. Sounds completely
| nonsensical.
| belval wrote:
| Especially since AWS still have p4 instances that are 6
| years old A100s. Clearly even for hyperscalers these have
| a useful life longer than 3 years.
| bmurphy1976 wrote:
| It's because they run 24/7 in a challenging environment.
| They will start dying at some point and if you aren't
| replacing them you will have a big problem when they all
| die en masse at the same time.
|
| These things are like cars, they don't last forever and
| break down with usage. Yes, they can last 7 years in your
| home computer when you run it 1% of the time. They won't
| last that long in a data center where they are running
| 90% of the time.
| zozbot234 wrote:
| A makeshift cryptomining rig is absolutely a "challenging
| environment" and most GPUs by far that went through that
| are just fine. The idea that the hardware might just die
| after 3 years' usage is bonkers.
| Der_Einzige wrote:
| Crypto miners undervote for efficiency GPUs and in
| general crypto mining is extremely light weight on GPUs
| compared to AI training or inference at scale
| Der_Einzige wrote:
| With good enough cooling they can run indefinitely!!!!!
| The vast majority of failures are either at the beginning
| due to defects or at the end due to cooling! It's like
| the idea that no moving parts (except the HVAC) is
| somehow unreliable is coming out of thin air!
| tuckerman wrote:
| I agree that there is hyperbole thrown around a lot here
| and its possible to still use some hardware for a long
| time or to sell it and recover some cost but my
| experience in planning compute at large companies is that
| spending money on hardware and upgrading can often result
| in saving money long term.
|
| Even assuming your compute demands stay fixed, its
| possible that a future generation of accelerator will be
| sufficiently more power/cooling efficient for your
| workload that it is a positive return on investment to
| upgrade, more so when you take into account you can start
| depreciating them again.
|
| If your compute demands aren't fixed you have to work
| around limited floor space/electricity/cooling
| capacity/network capacity/backup generators/etc and so
| moving to the next generation is required to meet demand
| without extremely expensive (and often slow)
| infrastructure projects.
| pixl97 wrote:
| Well demand is so high currently that it's likely this
| cycle doesn't exist yet for fast cards.
|
| For servers I've seen where the slightly used equipment
| is sold in bulk to a bidder and they may have a single
| large client buy all of it.
|
| Then around the time the second cycle comes around it's
| split up in lots and a bunch ends up at places like ebay
| lancekey wrote:
| Yea looking at 60 day moving average on computeprices.com
| H100 have actually gone UP in cost recently, at least to
| rent.
|
| A lot of demand out there for sure.
| SequoiaHope wrote:
| There's plenty on eBay? But at the end of your comment
| you say "a rate cheaper than new" so maybe you mean you'd
| love to buy a discounted one. But they do seem to be
| available used.
| JMiao wrote:
| Do you know how support contract lengths are determined?
| Seems like a path to force hardware refreshes with
| boilerplate failure data carried over from who knows when.
| swalsh wrote:
| If power is the bottleneck, it may make business sense to
| rotate to a GPU that better utilizes the same power if the
| newer generation gives you a significant advantage.
| nospice wrote:
| > My 30k ft view is that the stock will inevitably slide as AI
| datacenter spending goes down.
|
| Their stock trajectory started with one boom (cryptocurrencies)
| and then seamlessly progressed to another (AI). You're
| basically looking at a decade of "number goes up". So yeah, it
| will probably come down _eventually_ (or the inflation will
| catch up), but it 's a poor argument for betting against them
| right now.
|
| Meanwhile, the investors who were "wrong" anticipating a
| cryptocurrency revolution and who bought NVDA have not much to
| complain about today.
| munk-a wrote:
| That's the rub - it's clearly overvalued and will readjust...
| the question is when. If you can figure out when precisely
| then you've won the lottery, for everyone else it's a game of
| chicken where for "a while" money that you put into it will
| have a good return. Everyone would love if that lasted
| forever so there is a strong momentum preventing that market
| correction.
| jama211 wrote:
| It was overvalued when crypto was happening too, but
| another boom took its place. Of course, lightening rarely
| strikes twice and all that, but it proves overvalued
| doesn't mean the price is guaranteed to go down it seems.
| Predicting the future is hard.
| sidrag22 wrote:
| if there was anything i was going to bet against between
| 2019 and now, it was nvidia... and wow it feels wild how
| much in the opposite direction it went.
|
| I do wonder what people would think the reasoning would
| be for them to increase in value this much back then,
| prolly would just assume crypto related still.
| pixl97 wrote:
| As they say, the market can remain irrational far longer
| than you can remain solvent.
| mysteria wrote:
| Personally I wonder even if the LLM hype dies down we'll get
| a new boom in terms of AI for robotics and the "digital twin"
| technology Nvidia has been hyping up to train them. That's
| going to need GPUs for both the ML component as well as 3D
| visualization. Robots haven't yet had their SD 1.1 or GPT-3
| moment and we're still in the early days of Pythia, GPT-J, AI
| Dungeon, etc. in LLM speak.
| iwontberude wrote:
| Exactly, they will pivot back to AR/VR
| mysteria wrote:
| That's going to tank the stock price though as that's a
| much smaller market than AI, though it's not going to
| kill the company. Hence why I'm talking about something
| like robotics which has a lot of opportunity to grow and
| make use of all those chips and datacenters they're
| building.
|
| Now there's one thing with AR/VR that might need this
| kind of infrastructure though and that's basically AI
| driven games or Holodeck like stuff. Basically have the
| frames be generated rather than modeled and rendered
| traditionally.
| bigyabai wrote:
| Nvidia's not your average bear, they can walk and chew
| bubblegum at the same time. CUDA was developed off money
| made from GeForce products, and now RTX products are
| being subsidized by the money made on CUDA compute. If an
| enormous demand for efficient raster compute arises,
| Nvidia doesn't have to pivot much further than increasing
| their GPU supply.
|
| Robotics is a bit of a "flying car" application that gets
| people to think outside the box. Right now, both Russia
| and Ukraine are using Nvidia hardware in drones and
| cruise missiles and C2 as well. The United States will
| join them if a peer conflict breaks out, and if push
| comes to shove then Europe will too. This is the kind of
| volatility that crazy people love to go long on.
| ericmcer wrote:
| Crypto & AI can both be linked to part of a broader trend
| though, that we need processors capable of running compute on
| massive sets of data quickly. I don't think that will ever go
| down, whether some new tech emerges or we just continue
| shoveling LLMs into everything. Imagine the compute needed to
| allow every person on earth to run a couple million tokens
| through a model like Anthropic Opus every day.
| pixl97 wrote:
| Agreed, single thread performance increases are dead and
| things are moving to massively parallel processing.
| AnotherGoodName wrote:
| I'll also point out there were insane takes a few years ago
| before nVidia's run up based on similar technical analysis and
| very limited scope fundamental analysis.
|
| Technical analysis fails completely when there's an underlying
| shift that moves the line. You can't look at the past and say
| "nvidia is clearly overvalued at $10 because it was $3 for
| years earlier" when they suddenly and repeatedly 10x earnings
| over many quarters.
|
| I couldn't get through to the idiots on reddit.com/r/stocks
| about this when there was non-stop negativity on nvidia based
| on technical analysis and very narrow scoped fundamental
| analysis. They showed a 12x gain in quarterly earnings at the
| time but the PE (which looks on past quarters only) was 260x
| due to this sudden change in earnings and pretty much all of
| reddit couldn't get past this.
|
| I did well on this yet there were endless posts of "Nvidia is
| the easiest short ever" when it was ~$40 pre-split.
| lairv wrote:
| NVIDIA stock tanked in 2025 when people learned that Google
| used TPUs to train Gemini, which everyone in the community
| knows since at least 2021. So I think it's very likely that
| NVIDIA stock could crash for non-rationale reasons
|
| edit: 2025* not 2024
| readthenotes1 wrote:
| It also tanked to ~$90 when Trump announced tariffs on all
| goods for Taiwan except semiconductors.
|
| I don't know if that's non-rational, or if people can't be
| expected to read the second sentence of an announcement
| before panicking.
| Loudergood wrote:
| The market is full of people trying to anticipate how other
| people are going to react and exploit that by getting there
| first. There's a layer aimed at forecasting what that layer
| is going to do as well.
|
| It's guesswork all the way down.
| recursive wrote:
| Personally, I try to predict how others are going to
| predict that yet others will react.
| MrOrelliOReilly wrote:
| And I just predict how you'll predict
| svnt wrote:
| You jerk
| gpderetta wrote:
| Keynesian beauty contest.
| gertlex wrote:
| This was also on top of claims (Jan 2025) that Deepseek
| showed that "we don't actually need as much GPU, thus
| NVidia is less needed"; at least it was my impression this
| was one of the (now silly-seeming) reasons NVDA dropped
| then.
| mschuster91 wrote:
| > I don't know if that's non-rational, or if people can't
| be expected to read the second sentence of an announcement
| before panicking.
|
| These days you have AI bots doing sentiment based training.
|
| If you ask me... all these excesses are a clear sign for
| one thing, we need to drastically rein in the stonk
| markets. The markets should serve us, not the other way
| around.
| Der_Einzige wrote:
| Google did not use TPUs for literally every bit of compute
| that led to Gemini. GCP has millions of high end Nvidia GPUs
| and programming for them is an order of magnitude easier,
| even for googlers.
|
| Any claim from google that all of Gemini (including previous
| experiments) was trained entirely by TPUs is lies. What they
| are truthfully saying is that the final training run was done
| on all TPUs. The market shouldn't react heavily to this, but
| instead should react positively to the fact that google is
| now finally selling TPUs externally and their fab yields are
| better than expected.
| notyourwork wrote:
| Why should it not react heavily? What's stopping this from
| being a start of a trend for google and even Amazon?
| djsjajah wrote:
| > including all previous experiments
|
| How far back do you go? What about experiments into
| architecture features that didn't make the cut? What about
| pre-transformer attention?
|
| But more generally, why are you so sure that they team that
| built Gemini didn't exclusively use TPUs while they were
| developing it?
|
| I think that one of the reasons that Gemini caught up so
| quickly is because they have so much compute at fraction of
| the price of everyone else.
| cheschire wrote:
| Well, not to be too egregiously reductive... but when the M2
| money supply spiked in the 2020 to 2022 timespan, a lot of new
| money entered the middle class. That money was then funneled
| back into the hands of the rich through "inflation". That left
| the rich with a lot of spare capital to invest in finding the
| next boom. Then AI came along.
|
| Once the money dries up, a new bubble will be invented to
| capture the middle class income, like NFTs and crypto before
| that, and commissionless stocks, etc etc
|
| It's not all pump-and-dump. Again, this is a pretty reductive
| take on market forces. I'm just saying I don't think it's quite
| as unsustainable as you might think.
| agentcoops wrote:
| I hear your argument, but short of major algorithmic
| breakthroughs I am not convinced the global demand for GPUs
| will drop any time soon. Of course I could easily be wrong, but
| regardless I think the most predictable cause for a drop in the
| NVIDIA price would be that the CHIPS act/recent decisions by
| the CCP leads a Chinese firm to bring to market a CUDA
| compatible and reliable GPU at a fraction of the cost. It
| should be remembered that NVIDIA's /current/ value is based on
| their being locked out of their second largest market (China)
| with no investor expectation of that changing in the future.
| Given the current geopolitical landscape, in the hypothetical
| case where a Chinese firm markets such a chip we should expect
| that US firms would be prohibited from purchasing them, while
| it's less clear that Europeans or Saudis would be. Even so, if
| NVIDIA were not to lower their prices at all, US firms would be
| at a tremendous cost disadvantage while their competitors would
| no longer have one with respect to compute.
|
| All hypothetical, of course, but to me that's the most
| convincing bear case I've heard for NVIDIA.
| coryrc wrote:
| Not _that_ locked out:
| https://www.cnbc.com/2025/12/31/160-million-export-
| controlle...
| iLoveOncall wrote:
| > short of major algorithmic breakthroughs I am not convinced
| the global demand for GPUs will drop any time soon
|
| Or, you know, when LLMs don't pay off.
| selfhoster11 wrote:
| They already are paying off. The nature of LLMs means that
| they will require expensive, fast hardware that's a large
| capex.
| kortilla wrote:
| They aren't yet because the big providers that paid for
| all of this GPU capacity aren't profitable yet.
|
| They continually leap frog each other and shift around
| customers which indicates that the current capacity is
| already higher than what is required for what people
| actually pay for.
| MrDarcy wrote:
| Google, Amazon, and Microsoft aren't profitable?
| notyourwork wrote:
| I assume the reference was AI use cases are not
| profitable. Those companies are subsidizing and
| OpenAI/grok are burning money.
| josefx wrote:
| Aren't all Microsoft products OpenAI based? OpenAI has
| always been burning money.
| wolfram74 wrote:
| Do you think it's odd you only listed companies with
| already existing revenue streams and not companies that
| started with and only have generative algos as their
| product?
| dangus wrote:
| How many business units have Google and Microsoft shut
| down or ceased investment for being unprofitable?
|
| I hear Meta is having massive VR division layoffs...who
| could have predicted?
|
| Raw popularity does not guarantee sustainability. See:
| Vine, WeWork, MoviePass.
| Forgeties79 wrote:
| Where? Who's in the black?
| unsupp0rted wrote:
| Even if LLMs didn't advance at all from this point onward,
| there's still loads of productive work that could be
| optimized / fully automated by them, at no worse output
| quality than the low-skilled humans we're currently
| throwing at that work.
| SchemaLoad wrote:
| How much of the current usage is productive work that's
| worth paying for vs personal usage / spam that would just
| drop off after usage charges come in? I imagine flooding
| youtube and instagram with slop videos would reduce if
| users had to pay fair prices to use the models.
|
| The companies might also downgrade the quality of the
| models to make it more viable to provide as an ad
| supported service which would again reduce utilisation.
| unsupp0rted wrote:
| For any "click here and type into a box" job for which
| you'd hire a low-skilled worker and give them an SOP to
| follow, you can have an LLM-ish tool do it.
|
| And probably for the slightly more skilled email jobs
| that have infiltrated nearly all companies too.
|
| Is that productive work? Well if people are getting paid,
| often a multiple of minimum wage, then it's productive-
| seeming enough.
| pvab3 wrote:
| inference requires a fraction of the power that training
| does. According to the Villalobos paper, the median date
| is 2028. At some point we won't be training bigger and
| bigger models every month. We will run out of additional
| material to train on, things will continue commodifying,
| and then the amount of training happening will
| significantly decrease unless new avenues open for new
| types of models. But our current LLMs are much more
| compute-intensive than any other type of generative or
| task-specific model
| stingraycharles wrote:
| Exactly, the current spend on LLMs is based on extremely
| high expectations and the vendors operating at a loss. It's
| very reasonable to assume that those expectations will not
| be met, and spending will slow down as well.
|
| Nvidia's valuation is based on the current trend continuing
| and even increasing, which I consider unlikely in the long
| term.
| bigyabai wrote:
| > Nvidia's valuation is based on the current trend
| continuing
|
| People said this back when Folding@Home was dominated by
| Team Green years ago. Then again when GPUs sold out for
| the cryptocurrency boom, and now again that Nvidia is
| addressing the LLM demand.
|
| Nvidia's valuation is backstopped by the fact that
| Russia, Ukraine, China and the United States are all
| tripping over themselves for the chance to deploy it
| operationally. If the world goes to war (which is an
| unfortunate likelihood) then Nvidia will be the only
| trillion-dollar defense empire since the DoD's _Last
| Supper_.
| matthewdgreen wrote:
| China is restricting purchases of H200s. The strong
| likelihood is that they're doing this to promote their
| own domestic competitors. It may take a few years for
| those chips to catch up and enter full production, but
| it's hard to envision any "trillion dollar" Nvidia
| defense empire once that happens.
| bArray wrote:
| > My 30k ft view is that the stock will inevitably slide as AI
| datacenter spending goes down. Right now Nvidia is flying high
| because datacenters are breaking ground everywhere but
| eventually that will come to an end as the supply of compute
| goes up.
|
| Exactly, it is currently priced as though infinite GPUs are
| required indefinitely. Eventually most of the data centres and
| the gamers will have their GPUs, and demand will certainly
| decrease.
|
| Before that, though, the data centres will likely fail to be
| built in full. Investors will eventually figure out that LLMs
| are still not profitable, no matter how many data centres you
| produce. People are interested in the product derivatives at a
| lower price than it costs to run them. The math ain't mathin'.
|
| The longer it takes to get them all built, the more exposed
| they all are. _Even if_ it turns out to be profitable, taking
| three years to build a data centre rather than one year is
| _significant_ , as profit for these high-tech components falls
| off over time. And how many AI data centres do we _really_
| need?
|
| I would go further and say that these long and complex supply
| chains are quite brittle. In 2019, a 13 minute power cut caused
| a loss of 10 weeks of memory stock [1]. _Normally_ , the shops
| and warehouses act as a capacitor and can absorb small supply
| chain ripples. But now these components are being piped
| straight to data centres, they are far more sensitive to blips.
| What about a small issue in the silicon that means you damage
| large amounts of your stock trying to run it at full power
| through something like electromigration [2]. Or a random
| war...?
|
| > The counterargument to this is that the "economic lifespan"
| of an Nvidia GPU is 1-3 years depending on where it's used so
| there's a case to be made that Nvidia will always have
| customers coming back for the latest and greatest chips. The
| problem I have with this argument is that it's simply
| unsustainable to be spending that much every 2-3 years and
| we're already seeing this as Google and others are extending
| their depreciation of GPU's to something like 5-7 years.
|
| Yep. Nothing about this adds up. Existing data centres with
| proper infrastructure are being forced to extend use for
| previously uneconomical hardware because new data centres
| currently building infrastructure have run the price up so
| high. If Google really thought this new hardware was going to
| be so profitable, they would have bought it all up.
|
| [1] https://blocksandfiles.com/2019/06/28/power-cut-flash-
| chip-p...
|
| [2] https://www.pcworld.com/article/2415697/intels-
| crashing-13th...
| cortesoft wrote:
| > The problem I have with this argument is that it's simply
| unsustainable to be spending that much every 2-3 years
|
| Isn't this entirely dependent on the economic value of the AI
| workloads? It all depends on whether AI work is more valuable
| than that cost. I can easily see arguments why it won't be that
| valuable, but if it is, then that cost will be sustainable.
| alfalfasprout wrote:
| 100% this. _all_ of this spending is predicated on a
| stratospheric ROI on AI investments at the proposed
| investment levels. If that doesn 't pan out, we'll see a lot
| of people left holding the cards including chip fabs,
| designers like Nvidia, and of course anyone that ponied up
| for that much compute.
| jiggawatts wrote:
| Chip fabs will be fine. The demand for high end processors
| will remain because of the likes of Apple and AMD.
| stego-tech wrote:
| Add in the fact companies seriously invested in AI (and like
| workloads typically reliant on GPUs) are also investing more
| into bespoke accelerators, and the math for nVidia looks
| particularly grim. Google's TPUs set them apart from the
| competition, as does Apple's NPU; it's reasonable to assume
| firms like Anthropic or OpenAI are also investigating or
| investing into similar hardware accelerators. After all, it's
| easier to lock-in customers if your models cannot run on
| "standard" kit like GPUs and servers, even if it's also
| incredibly wasteful.
|
| The math looks bad regardless of which way the industry goes,
| too. A successful AI industry has a vested interest in bespoke
| hardware to build better models, faster. A stalled AI industry
| would want custom hardware to bring down costs and reduce
| external reliance on competitors. A failed AI industry needs no
| GPUs at all, and an inference-focused industry _definitely_
| wants custom hardware, not general-purpose GPUs.
|
| So nVidia is capitalizing on a bubble, which you could argue is
| the right move under such market conditions. The problem is
| that they're also alienating their core customer base (smaller
| datacenters, HPC, gaming market) in the present, which will
| impact future growth. Their GPUs are scarce and overpriced
| relative to performance, which itself has remained a near-
| direct function of increased power input rather than efficiency
| or meaningful improvements. Their software solutions - DLSS
| frame-generation, ray reconstruction, etc - are locked to their
| cards, but competitors can and have made equivalent-performing
| solutions of their own with varying degrees of success. This
| means it's no longer necessary to have an nVidia GPU to, say,
| crunch scientific workloads or render UHD game experiences,
| which in turn means we can utilize cheaper hardware for similar
| results. Rubbing salt in the wound, they're making cards even
| more expensive by unbundling memory and clamping down on AIB
| designs. Their competition - Intel and AMD primarily - are
| happily enjoying the scarcity of nVidia cards and reaping the
| fiscal rewards, however meager they are compared to AI at
| present. AMD in particular is sitting pretty, powering four of
| the five present-gen consoles, the Steam Deck (and copycats),
| and the Steam Machine, not to mention outfits like Framework;
| if you need a smol but capable boxen on the (relative) cheap,
| what used to be nVidia + ARM is now just AMD (and soon, Intel,
| if they can stick the landing with their new iGPUs).
|
| The business fundamentals paint a picture of cannibalizing
| one's evergreen customers in favor of repeated fads (crypto and
| AI), and years of doing so has left those customer markets
| devastated and bitter at nVidia's antics. Short of a new series
| of GPUs with immense performance gains at lower price and power
| points with availability to meet demand, my personal read is
| that this is merely Jenson Huang's explosive send-off before
| handing the bag over to some new sap (and shareholders) once
| the party inevitably ends, one way or another.
| kqr wrote:
| Fundamental analysis is great! But I have trouble answering
| concrete questions of probability with it.
|
| How do you use fundamental analysis to assign a probability to
| Nvidia closing under $100 this year, and what probability do
| you assign to that outcome?
|
| I'd love to hear your reasoning around specifics to get better
| at it.
| esafak wrote:
| Don't you need a model for how people will react to the
| fundamentals? People set the price.
| kqr wrote:
| Possibly? I don't know -- hence the question!
|
| GP was presenting fundamental analysis as an alternative to
| the article's method for answering the question, but then
| never answered the question.
|
| This is a confusion I have around fundamental analysis.
| Some people appear to do it very well (Buffett?) but most
| of its proponents only use it to ramble about possibilities
| without making any forecasts speciic enough to be
| verifiable.
|
| I'm curious about that gap.
| djeastm wrote:
| I think the idea of fundamental analysis that you focus on
| return on equity and see if that valuation is appreciably
| more than the current price (as opposed to assigning a
| probability)
| richardw wrote:
| I'm sad about Grok going to them, because the market needs the
| competition. But ASIC inference seems to require a simpler
| design than training does, so it's easier for multiple
| companies to enter. It seems inevitable that competition
| emerges. And eg a Chinese company will not be sold to Nvidia.
|
| What's wrong with this logic? Any insiders willing to weigh in?
| bigyabai wrote:
| I'm not an insider, but ASICs come with their own suite of
| issues and might be obsolete if a different architecture
| becomes popular. They'll have a much shorter lifespan than
| Nvidia hardware in all likelihood, and will probably struggle
| to find fab capacity that puts them on equal footing in
| performance. For example, look at the GPU shortage that hit
| crypto despite hundreds of ASIC designs existing.
|
| The industry badly needs to cooperate on an actual competitor
| to CUDA, and unfortunately they're more hostile to each other
| today than they were 10 years ago.
| jpadkins wrote:
| How much did you short the stock?
| m12k wrote:
| I think the way to think about the AI bubble is that we're
| somewhere in 97-99 right now, heading toward the dotcom crash.
| The dotcom crash didn't kill the web, it kept growing in the
| decades that followed, influencing society more and more. But
| the era where tons of investments were uncritically thrown at
| anything to do with the web ended with a bang.
|
| When the AI bubble bursts, it won't stop the development of AI
| as a technology. Or its impact on society. But it will end the
| era of uncritically throwing investments at anyone that works
| "AI" into their pitch deck. And so too will it end the era of
| Nvidia selling pickaxes to the miners and being able to reach
| soaring heights of profitability born on wings of pretty much
| all investment capital in the world at the moment.
| enos_feedler wrote:
| Bubble or not it's simply strange to me that people
| confidently put a timeline on it. To name the phases of the
| bubble and calling when they will collapse just seems counter
| intuitive to what a bubble is. Brad Gerstner was the first
| "influencer" I heard making these claims of a bubble time
| line. It just seems downright absurd.
| JakeSc wrote:
| Agree on looking at the company-behind-the-numbers. Though
| presumably you're aware of the Efficient Market Hypothesis.
| Shouldn't "slowed down datacenter growth" be baked into the
| stock price already?
|
| If I'm understanding your prediction correctly, you're
| asserting that the market thinks datacenter spending will
| continue at this pace indefinitely, and you yourself uniquely
| believe that to be not true. Right? I wonder why the market
| (including hedge fund analysis _much_ more sophisticated than
| us) should be so misinformed.
|
| Presumably the market knows that the whole earth can't be
| covered in datacenters, and thus has baked that into the price,
| no?
| testdelacc1 wrote:
| I saw a $100 bill on the ground. I nearly picked it up before
| I stopped myself. I realised that if it was a genuine
| currency note, the Efficient Market would have picked it up
| already.
| matthewdgreen wrote:
| The EMH does not mean that markets are free of over-
| investment and asset bubbles, followed by crashes.
| throwaway85825 wrote:
| It's not flat growth that's currently priced in, but continuing
| high growth. Which is impossible.
| bigbuppo wrote:
| Since there's such an interdependence between nvidia and the
| other companies involed in AI to the point that if one fails they
| all fail, shouldn't the analysis focus on the weakest link in the
| AI circle jerk?
| tuetuopay wrote:
| Nvidia is the biggest link, however, I'd wager OpenAI and the
| likes are big enough to make a significant dent in the mammoth.
| So yeah, this analysis is sort of a spherical cows in a vacuum
| situation.
|
| Still, it's interesting the probability is so high _while
| ignoring real-world factors_. I 'd expect it to be much higher
| due to: - another adjacent company dipping - some earnings
| target not being met - china/taiwan - just the AI craze slowing
| down
| zvqcMMV6Zcr wrote:
| Technical analysis is amazing, it is most refined form of
| pseudoscience.
| cheald wrote:
| This isn't technical analysis, this is an article on how to use
| the options market's price discovery mechanism to understand
| what the discovered price implies about the collective belief
| about the future price of the underlying.
| stonogo wrote:
| That's what "technical analysis" means in the finance world,
| though... so, am I missing a joke?
| cheald wrote:
| Technical analysis is the projection of future price data
| through analysis of _past_ price data (usually for the
| purpose of trying to create trendlines or find
| "patterns"). Options pricing is quite a different beast -
| it encodes marketwide uncertainty about the future price of
| the underlying, which has little to do with the past price
| action of the underlying, and everything to do with all
| known information about the actual underlying company,
| including fundamentals analysis, market sentiment, future
| expectations and risks, etc.
|
| To put it another way, to price an option I need a) the
| current price of the underlying, b) the time until option
| expiry, c) the strike price of the option, and d) the
| collective expectation of how much the underlying's price
| will vary over the period between now and expiry. This last
| piece is "volatility", and is the only piece that can't be
| empirically measured; instead, through price discovery on a
| sufficiently liquid contract, we can reparameterize the
| formula to empirically derive the volatility expectation
| which satisfies that current price (or "implied
| volatility"). Due to the efficient market hypothesis, we
| can generally treat this as a best-effort proxy for all
| public information about the underlying. None of this
| calculation requires any measurement or analysis of the
| underlying's past price action, patterns, etc. The options
| price will necessarily include TA traders' sentiments about
| the underlying based on their TA (or whatever else), just
| as it will include fundamentals traders' sentiments (and,
| if you're quick and savvy enough, insiders' advance
| knowledge!) The price fundamentally reflects market
| sentiment about the future, not some projection of trends
| from the past.
| t_serpico wrote:
| how so? (i'm not too familiar)
| immibis wrote:
| It's easy to predict that a bubble will pop, but there's a
| variance in the timing of approximately half a human lifetime,
| and if you don't guess that correctly, you throw away yours.
|
| Everything that can't go on forever will eventually stop. But
| when?
| baal80spam wrote:
| Well put and clearly explains why "timing the market" is never
| a good plan.
| incomingpain wrote:
| Nvidia PE ratio: 44
|
| I do hope they crash so that I can buy as much as possible at a
| discount.
| 4fterd4rk wrote:
| Them being far above the median PE ratio for the S&P 500 tells
| you that a future correction would be a discount and you should
| buy? Please walk me through your logic on this one.
| Joel_Mckay wrote:
| Every gambler thinks they can time the market, and buy the
| dip.
|
| In general, they often get stung by the dead cat bounce, =3
|
| https://en.wikipedia.org/wiki/Dead_cat_bounce
| linkregister wrote:
| This implies you think a crash would be a temporary mispricing
| of the stock, which will recover in value, correct?
| Joel_Mckay wrote:
| While I am no fan of NVIDIA, they are effectively a Monopoly
| for CUDA GPU.
|
| This means that cash revenue will likely remain high long
| after the LLM hype bubble undergoes correction. The market
| will eventually saturate as incremental product improvements
| stall, and demand rolls off rather than implodes. =3
| MuffinFlavored wrote:
| Worth noting that the implied volatility extracted here is
| largely a function of how far OTM the strike is relative to
| current spot, not some market-specific view on $100. If NVDA were
| trading at $250 today, the options chain would reprice and you'd
| extract similar vol for whatever strike was ~45% below. The
| analysis answers "what's the probability of a near-halving from
| here" more than "what's special about $100." Still useful for the
| prediction contest, but the framing makes it sound like the
| market is specifically opining on that price level.
| visarga wrote:
| this is gpt, right?
| Sohcahtoa82 wrote:
| There are grammatical mistakes and abbreviations, big tells
| that it's NOT ChatGPT.
| MuffinFlavored wrote:
| I had a conversation (prompts) with Claude about this article
| because I didn't feel I could as succinctly describe my point
| alone.
| kwar13 wrote:
| This is more of a derivative pricing article and has nothing to
| do with nvidia really
| bilater wrote:
| was expecting some actual reasons presented as to why this would
| happen. instead got some math.
| baal80spam wrote:
| _checks calendar_ Ah, NVIDIA earnings call is close - prepare for
| the inevitable doomer articles.
| mvdtnz wrote:
| People don't actually believe this type of analysis... do they?
| cheald wrote:
| The entire options market is built on this kind of analysis.
| bitshiftfaced wrote:
| You have it turned upside down. The analysis is of people's
| beliefs. In other words, the underlying data is created from
| the beliefs of the people who trade it, and the analysis is
| taking those beliefs and applying it to a specific question.
| iancmceachern wrote:
| The real question is what else will this cause to fall when it
| does happen.
| syntaxing wrote:
| I'm more curious how these "future" contract will work out.
| Supposedly, a bunch of RAM is paid and allocated for that isn't
| even made yet. If the bubble ever pops, the collateral is going
| to be on the order of 2007 subprime mortgage crisis
| traceroute66 wrote:
| The simple answer to the question:
|
| Nvidia stock crash will happen when the vendor financing bubble
| bursts.
|
| They are engaged in a dangerous game of circular financing. So it
| is case of when, not if the chickens come home to roost.
|
| It is simply not sustainable.
| 10xDev wrote:
| I mean common sense reasoning tells me that if OpenAI has decided
| to turn into an ad business, the actual return expected from
| investing into compute isn't going to be nearly as great as
| advertised.
| weirdmantis69 wrote:
| It's forward looking P/E is 24-26. That doesn't seem like a huge
| crash is coming. It could come down a bit but they print money.
| They also have potential car market and robots coming in.
| r_lee wrote:
| They're enjoying a massive demand for GPUs due to AI blowing up,
| at a time when there isn't much competition, yet the technology
| is already pleateauing, with similar offerings from AMD, not to
| mention proven training & inference chips from Google & AWS, plus
| the Chinese national strategy of prioritizing domestic chips
|
| The only way the stock could remain at its current price or grow
| (which is why you'd hold it) is if demand would just keep going
| up (with the same lifecycle as current GPUs) and that there would
| be no competition, which the latter to me us just never going to
| be a thing.
|
| Investors are convinced that Nvidia can maintain its lead because
| they have the "software" side, I.e. CUDA, which to me is so
| ridiculous, as if with the kind of capital that's being deployed
| into these datacenters, you couldn't fit your models into other
| software stacks by hiring people....
| mythical_39 wrote:
| or couldn't use a LLM to help port your CUDA code to "new
| framework", i.e. software is no longer a lock-in....
|
| assuming LLM coding agents are good, but if they aren't any
| good, then what is the value of the CUDA code?
| vatsachak wrote:
| Who said that monads don't have any application?
| vatsachak wrote:
| They implement Applicative, so by definition they do
| dist-epoch wrote:
| I'm calling it - this is a submarine article to prove that
| Haskell is used in the real world to solve actual problems
| dexterlagan wrote:
| There is one thing everybody forgets when making such
| predictions: companies don't stand still. Nvidia and every other
| tech business is constantly exploring new options, taking over
| competitors, buying startups with novel technologies etc...
| Nvidia is no slouch in that regard, and their recent quasi-
| acquisition of Groq is just one example of this. So, when
| attempting at making predictions, we're looking at a moving
| target, not systems set in stone. If the people at the helm are
| smart (and they are), you can expect lots of action and ups and
| downs - especially in the AI sphere.
|
| My personal opinion, having witnessed first hand nearly 40 years
| of tech evolution, is that _this_ AI revolution is different. We
| 're at the very beginning of a true paradigm shift: the
| commoditization of intelligence. If that's not enough to make
| people think twice before betting against it, I don't know what
| is. And it's not just computing that is going to change.
| _Everything_ is about to change, for better or worse.
| reflexe wrote:
| According to nvidia's 2025 annual report [1], 34% of their sales
| for 2025 comes from just 3 customers.
|
| Additionally, they mentioned that customers can cancel purchases
| with little to no penalty and notice [2].
|
| This is not unique for hardware companies, but to think that all
| it takes is just one company to get their sales down by 12%
| (14b$).
|
| To cut to the point, my guess is that nvidia is not sustainable,
| and at some point one or more of these big customers won't be
| able to keep up with the big orders, which will cause them to
| miss their earnings and then it will burst. But maybe i'm wrong
| here.
|
| [1]
| https://s201.q4cdn.com/141608511/files/doc_financials/2025/a...,
| page 155: > Sales to direct Customers A, B and C represented 12%,
| 11% and 11% of total revenue, respectively, for fiscal year 2025.
|
| [2] same, page 116: > Because most of our sales are made on a
| purchase order basis, our customers can generally cancel, change,
| or delay product purchase commitments with little notice to us
| and without penalty.
| smw wrote:
| I have lots of skepticism about everything involved in this,
| but on this particular point:
|
| It's a bit like TSMC: you couldn't buy space on $latestGen fab
| because Apple had already bought it all. Many companies would
| have very much liked to order H200s and weren't able to, as
| they were all pre-sold to hyperscalers. If one of them stopped
| buying, it's very likely they could sell to other customers,
| though there might be more administrative overhead?
|
| Now there are some interesting questions about Nvidia creating
| demand by investing huge amounts of money in cloud providers
| that will order nv hardware, but that's a different issue.
| CoolestBeans wrote:
| Its probably not very likely that if a large buyer pulled
| out, NVIDIA could just sell to other customers. If a large
| buyer pulls out, that's a massive signal to everyone else to
| begin cutting costs as well. The large buyer either knows
| something everyone else doesn't, or knows something that
| everyone else has already figured out. Either way, the large
| buyer pulling out signals "I don't think the overall market
| is large enough to support this amount of compute at these
| prices at current interest rates" and everybody is doing the
| same math too.
| matt3210 wrote:
| New competition is an issue. It wasn't as lucrative to compete
| with nvidia in the past
| mwkaufma wrote:
| "Predictably" prediction markets have opened up space in the void
| left by journalism for tea-leaf reading with the fig leaf of
| mathy jargon.
| iwontberude wrote:
| Click bait for teaching options analysis
| ironbound wrote:
| It's a problem if you have to keep asking "are we in a bubble?"
| javcasas wrote:
| The thing is, in this gold rush, Nvidia is the one selling
| shovels.
| huqedato wrote:
| That's smoke and mirrors. You can't logically predict the market.
| It never worked.
| kqr wrote:
| Sure you can predict the market. Making money off of it beyond
| the regular risk-adjusted return is what's hard. (And the
| prediction of this article is indeed based on that assumption.)
| originalvichy wrote:
| As others have noted, the article is analysing the actual
| financial markets angle.
|
| For my two cents on the technical side, it is likely that any
| Western-origin shakiness will come from Apple and how it manages
| to land the Gemini deal and Apple Intelligence v2. There is an
| astounding amount of edge inference sitting in people's phones
| and laptops that only slightly got cracked open with Apple
| Intelligence.
|
| Data centre buildouts will get corrected when the numbers come in
| from Apple: how large of a share in tokens used by the average
| consumer can be fulfilled with lightweight models and Google
| searches of the open internet. This will serve as a guiding
| principle for any future buildout and heavyweight inference cards
| that Nvidia is supplying. The 2-5 year moat top providers have
| with the largest models will get chomped at by the
| leisure/hobby/educational use cases that lightweight models
| capably handle. Small language and visual models are already
| amazing. The next crack will appear when the past gen cards (if
| they survive the around the clock operation) get bought up by
| second hand operators that can provide capable inference of even
| current gen models.
|
| If past knowledge of DC operators holds (e.g. Google and its
| aging TPUs that still get use), the providers with the resources
| to buy new space for newer gens will accumulate the amount of
| hardware, but the providers who need to continuously shave off
| the financial hit that comes with using less efficient older
| cards.
|
| I'm excited to see future blogs about hardware geeks buying used
| inference stacks and repurposing them for home use :)
| notatoad wrote:
| >when the numbers come in from Apple: how large of a share in
| tokens used by the average consumer can be fulfilled with
| lightweight models and Google searches of the open internet
|
| is there any reason to expect that this information will ever
| be known outside of apple?
| originalvichy wrote:
| Accuracy wise we won't know the exact numbers, but insiders
| and industry experts usually are able to find ballpark
| figures that they share with the press. The alternative is
| the usual find out the estimates through competitors' lost
| MAU numbers in apps like ChatGPT for iOS.
| IceHegel wrote:
| I'm surprised more people are not talking about the fact that the
| two best models in the world, Gemini 3 and Claude 4.5 Opus, were
| both trained on Google TPU clusters.
|
| Presumably, inference can be done on TPUs, Nvidia chips, in
| Anthropic's case, new stuff like Trainium.
| hagope wrote:
| NVIDIA Vera Rubin NVL72 unveiled at CES makes any other computer
| look like a pocket calculator, and that's why I wouldn't want to
| be bearish on NVDA right now, see https://www.nvidia.com/en-
| us/data-center/vera-rubin-nvl72
| notepad0x90 wrote:
| Everyone is saying data center build outs are the main thing to
| look out for. But those data centers with all those gpus will
| need to replace those gpus right? Nvidia will come up with
| better, faster, more efficient gpus.
|
| LLM use age won't crash either, it might decline or taper off but
| it's here to stay.
|
| My concern is better models that won't need a whole of GPU, or
| China comping up with their own foundry and GPUs that compete.
| There is also the strategy issue, can Nvidia's leadership think
| global enough? will they start pursuing data centers in europe,
| latam, asia? can they make gpus cheap enough to compete in those
| regions?
|
| The way things are, lots of countries want this tech local, but
| they can't deny the demand either.
|
| Europe for example might not want anything to do with American AI
| companies, but they still need GPUs for their own models. But can
| Nvidia rebrand itself as a not-so-american-but-also-american
| company? Like Coca Cola for example. i.e.: not just operate in
| europe but have an HQ in europe that has half their execs working
| from there, and the rest from california. Or perhaps asia is
| better (doubt)? either way, they can't live off of US demand
| forever, or ignore geopolitics.
| d--b wrote:
| The option market is an insurance market.
|
| Most people buy low-strike puts as insurance against catastrophic
| market events.
|
| Since catastrophic crises are rare, the price of these puts is
| quite low. But since many people fear a crisis, the price is very
| inflated over the actual probabilites. Which is why there are
| lots of people selling those puts as a business. These guys will
| bite the dust in case of a major crisis, but will make a ton if
| the market stays afloat.
|
| Realistically, the current US government is so obsessed with its
| image that it will do everything to avoid a market crash during
| its term. The president has been pushing for lower rates for a
| while, and he's likely going to succeed in removing the head of
| the Fed and do just that. Lowering interest rates is just another
| way of pumping investment.
|
| NVidia is definitely not going below $100 in 2026.
| jmyeet wrote:
| Predicting any stock will crash, be it from a technical analysis
| or from looking at fundamentals, is a fool's game. As Keynes
| allegedly said, the market can stay irrational longer than you
| can remain solvent.
|
| The poster child for this is Tesla. Nothing fundamental justifies
| Tesla's valuation.
|
| IMHO the only rational way to look at the future of AI and the
| companies from profit from it is to look at geopolitics.
|
| The market seems to have decided there's going to be one winner
| of the AI race. I actually don't think that'll be OpenAI. I think
| it'll be Google or Nvidia of the companies currently in the race.
| But I also don't think it'll be either of them.
|
| The magic of software is that it is infinitely reproducible. That
| makes it difficult to build a wall around it. Microsoft,
| Facebook, Apple and Google have successfully built moats around
| their software very successfully in spite of this. Google's big
| advantage in the AI race is their ability to build and manage
| data centers and that they'll probably end up relying on their
| own hardware rather than NVidia.
|
| I think China will be the AI winner or they'll make sure there is
| no winner. It's simply too important to them. For me, DeepSeek
| was a shot across the bow that they were going to commoditize
| these models.
|
| The US blocked the export of the best lithography machines AND
| the best chips to China. IMHO this was a mistake. Being unable to
| import chips meant Chinese companies had no choice but to make
| their own. This created a captive market for China recreating EUV
| technology. Chinese companies have no choice but to buy Chinese
| chips.
|
| The Chinese government has the patience and infrastructure for
| recreating ASML's technology and it's an issue of national
| security. And really all it takes is hiring a few key people to
| recreate that technology. So Western governments and analysts who
| said China will take 20+ years to catch up (if they ever do)
| simply don't understand China or the market they're talking
| about.
|
| They sound exactly like post-WW2 generals and politicians who
| thought the USSR would take 20+ years to copy the atomic bomb. It
| took 4 years. And hydrogen bombs came even quicker.
|
| There's a story that should get more attention: China has
| reportedly refused a deal for NVidia's latest chips [1]. If true,
| why do you think they're doing that? Because they don't want to
| be reliant on foreign chips. They're going to make their own.
|
| [1]: https://ca.finance.yahoo.com/news/nvidia-stock-slides-
| china-...
| tagami wrote:
| does that include the chance for a stock split?
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