Replace Internet with AI in the following quote from the New York Times, November 11, 1996[0]:
"For many people, AI could replace the functions of a broker, whose stock in trade is information, advice and execution of transactions, all of which may be cheap and easy to find on line. AI also is prompting some business executives to wonder whether they really need a high-priced Wall Street investment bank to find backers for their companies when they may now be able to reach so many potential investors directly over the Net. And ultimately, AI's ability to bring buyers and sellers together directly may change the very nature of American financial markets."
It's a cautionary tale. Obviously, the Internet did live up to the hype. Just after it wiped out millions of retail investors...
It is fairly different though in scope. NVidia clearly is making tons of money from AI. Probably after OpenAI they are the company most directly impacted by AI.
The .com boom of the late 90s was different. Companies who had very little to do with the internet were adding ".com" to their name. I was a penny stock trader and that was one of the fastest ways companies would increase value -- add ".com" and issue a press release about how they plan to be "internet enabled" or "create a web presence".
Today most companies aren't getting a bump by talking about AI. You don't see Spotify changing their name to Spotify.AI. Companies are dabbling in offering AI, e.g., SnapChat, but they aren't shifting their whole focus to AI.
Now there is an industry of small companies building on AI, and I think that's healthy. A handful will find something of value. Going back to the early .com days -- I remember companies doing video/movie streaming over the web and voice chats. None of those early companies, AFAIK, still exist. But the market for this technology is bigger than its ever been.
You seem to misunderstand the dot com bubble. Sure, there were companies like Pets.com and companies adding an 'e' to the beginning of their names. But there were also companies like Cisco and Sun Microsystems. Companies making profits selling real goods needed by the growing internet. Go look up those companies and their stock charts. Also, if you think random companies aren't mentioning AI to boost their stock you haven't been paying much attention.
Cisco peaked at $77.00 in March 2000. It's currently $50.00. In the interim there have been no splits.
Intel peaked at $73.94 in September 2000. It's currently $28.99. In the interim there have been no splits.
NVidia has split 5 times (cumulative 48x) since 2000. It closed 2000 around $2.92. It is currently $389.93. Totally gain 6400x. If you ignore the last 12 months, NVidia's last peak was $315 in 2021, for a total gain of 5178x. -ish.
I imagine we might be looking at different points in each company’s lifecycle? Nvidia was founded in the 90s. If we look at intel’s stock over the same range relative to the start of the company, what happens then? Feels like this comparison is not that relevant to the dot com bubble and whether AI is similar.
I'm concerned that if AI really lives up to the hype that retail investors are thinking, it's more of a civilization ending event than some sort of ascension to heaven.
Meanwhile the hedge funds and institutional investors are just trying to ride the momentum while it lasts, which could be for a while.
I think you misunderstood my point. My thesis was that these two eras were different in scope (my first sentence). I was pointing out how the .com booms impact was so much larger than the current AI boom, in terms of financial impact. I wasn't trying to say the .com boom was smaller or more well-reasoned. In fact quite the opposite. I don't think we've seen comparable spikes to the .com boom yet, and you seem to agree.
If we're going to see an AI spike and bust, we're just at the beginning of it.
Nvidia is pricing on actual revenue growth (~16%?) and projected growth (~20%). Since 2016 they've been killing it.
AI will turn into a bubble when unrelated companies begin being priced like that, without historical or current revenue growth to back up their projections, simply by virtue of being AI-associated.
I would be comparing how someone like Intel did during dot.com instead of Pets.com etc. Of course it far from being the same and Intel did struggle in the early 00’s but they still ended up dominating their market which had significant growth in the 20 years after dot.com.
Did Intel ever ‘grow’ into their massively overvalued valuation? No.. their stock never even reached it’s September, 2000 peak yet.
There is a chance that AMD, Intel, maybe Google etc. catch up with Nvidia in a year or two and data center GPUs become a commodity (clearly the entry bar should be lower than what it was for x86 CPUs back in) and what happens then?
> There is a chance that AMD, Intel, maybe Google etc. catch up with Nvidia in a year or two and data center GPUs become a commodity (clearly the entry bar should be lower than what it was for x86 CPUs back in) and what happens then?
Realistically, there is next to zero chance Intel (especially given the Arc catastrophe and foundry capabilities) or AMD (laundry list of reasons) catchup within 2 years.
Safe bet Google's TPUv5 will be competitive with the H100, as the v4 was with the A100, but their offering clearly hasn't impacted market share thus far and there is no indication Google intends to make their chips available outside of GCP.
With that said I also agree the current valuation seems too high, but I highly doubt there is a serious near-term competitor. I think it is more likely that current growth projections are too aggressive and demand will subside before they grow into their valuation, especially as the space evolves with open source foundation models and techniques come out (like LoRA/PEFT) that substantially reduce demand for the latest chips.
> there is no indication Google intends to make their chips available outside of GCP.
1. You can buy mini versions of their chips through Coral (coral.ai). But yea, they’d never sell them externally as long as there exists a higher-margin advantage to selling software on top of them, and chips have supply constraints.
2. Google can sell VMs with the tensor chips attached, like GPUs. Most organizations with budgets that’d impact things will be using the cloud. If Apple/MSFT/AWS/Goog/Meta start serious building their own chips, NVidia could be left out of the top end.
> Google can sell VMs with the tensor chips attached, like GPUs.
They have already been doing this for quite a while now and even when offered free via TRC barely anyone uses TPUs. There is nothing to suggest that Google as an organization is shifting focus to be the HPC cloud provider for the world.
As it stands TPU cloud access really seems ancillary to their own internal needs.
> If Apple/MSFT/AWS/Goog/Meta start serious building their own chips, NVidia could be left out of the top end.
That's a big "if", especially within two years, given that this chip design/manufacturing isn't really a core business interest for any of those companies (other than Google which has massive internal need and potentially Apple who have never indicated interest in being a cloud provider).
They certainly could compete with Nvidia for the top-end, but it would be really hard and how much would the vertical integration actually benefit their bottom line? A 2048 GPU SuperPOD is what, like 30M?
There's also the risk that the not-always-friendly DoJ gets anti-trusty if a cloud provider has a massive advantage and is locking the HW in their walled garden.
Anecdotal data warning but for context my research is in medical informatics and I've quite extensively followed publications on transformers dating back to the early BERT variants (including non-medical).
I'm making that statement as my experience (easily several hundreds of publications read or reviewed over 3 years) is that it is very uncommon to see TPU's mentioned or TRC acknowledged in any non-Google transformer paper (especially major publications) dating back to the early BERT family of models despite the fact that Google is very generous with research credits (they'll give out preemptible v3-32s and v3-64s for 14 days with little question, presumably upgraded now as I haven't asked for credits in a while).
Fully acknowledge this isn't quality evidence to back my claim and I'm happy to be proven wrong but I'm very confident a literature review would support this as when I tried to use TPUs myself I couldn't find much.
This doesn't account for industry use, there is probably a non-insignificant amount of enterprise customers still using AutoML (I can think of a few at least) which I believe uses the TPU cloud but I would be surprised if many use TPU nodes directly outside of Jax shops like cohere and anyone still using TF.
PyTorch XLA has just breaks too much otherwise and when I last tried to use it in January of this year there was still quite a significant throughput reduction on TPUs. Additionally when using nodes there is a steeper learning curve on the ops side (VM, storage, Stackdriver logging) that make working with them harder than spinning up a A100x8 which is relatively cheap, cheaper than the GCP learning curve for sure.
The Intel® Data Center GPU Max Series outperforms Nvidia H100 PCIe card by an average of 30% on diverse workloads1, while independent software vendor Ansys shows a 50% speedup for the Max Series GPU over H100 on AI-accelerated HPC applications.2
The Xeon Max Series CPU, the only x86 processor with high bandwidth memory, exhibits a 65% improvement over AMD’s Genoa processor on the High Performance Conjugate Gradients (HPCG) benchmark1, using less power. High memory bandwidth has been noted as among the most desired features for HPC customers.3
4th Gen Intel Xeon Scalable processors – the most widely used in HPC – deliver a 50% average speedup over AMD’s Milan4, and energy company BP’s newest 4th Gen Xeon HPC cluster provides an 8x increase in performance over its previous-generation processors with improved energy efficiency.2
The Gaudi2 deep learning accelerator performs competitively on deep learning training and inference, with up to 2.4x faster performance than Nvidia A100.
> next to zero chance Intel (especially given the Arc catastrophe and foundry capabilities)
Arc is manufactured using TSMC N6.
Intel originally wanted to use Intel 4 but it wasn’t ready yet. Maybe the next batch of GPUs assuming Meteor Lake and their other CPUs don’t consume all the Intel 4 capacity.
Also Arc hardware-wise is fine for what it is and the process node it’s using - N6 isn’t a leading edge node to my knowledge. Drivers are unfortunately something that’s going to take time to fix up - there is no way around this.
Agree but Intel has yet to show they can successfully make a high end GPU, and they're heavily invested in Arc at the moment.
Given Intel 4 is launching at the end of the year I would expect their focus will be on catching up wth AMD on CPUs and the next-gen Arc GPUs. Assuming everything goes well with their yields and they have extra foundry time (which they won't be using as part of IFS) will they have the institutional energy/capital/will to open a new software+hardware battle in a market the entrenched Nvidia will fight to the death for?
It seems extremely unlikely to me within 1-2 years.
I wouldn’t discount AMD just yet. They closed quite a big gap in the server cpu market against Intel, most probably due to better leadership and management. I wouldn’t be surprised if they are able to pull that trick a second time with GPUs. 2 years isn’t short but it isn’t that long either.
People have said AAPL was overvalued perennially as long as I remember yet their market performance seems to ignore these opinions.
On the other hand, a big part of it also comes down to the tool chain, and NVIDIA owns CUDA. Until OpenCL or other gpu platforms catch up, it seems like NVIDIA can continue to corner the gpu market at large.
Nvidia seems like a tougher competitor to oust than Intel.
> People have said AAPL was overvalued perennially
Yes but they were saying this when AAPL's p/e ratio was in the low teens and now it's near 30. it was never near the insanity that is NVDA. I will grant that there's a lot of uncertainty about the future, but there's immense optimism baked in right now. It will be hard to live up to.
Arc has already caught up to Nvidia. The latest Nvidia GPUs are a disaster (the 4060ti is being universally mocked for its very pathetic performance), they're intentionally royally screwing their customers.
The A750 and A770 are tremendous GPUs and compete very well with anything Nvidia has in those brackets (and Intel is willing to hammer Nvidia on price, as witnessed by the latest price cuts on the A750). Drivers have rapidly improved in the past few quarters. It's likely given how Nvidia has chosen to aggressively mistreat its customers that Intel will surpass them on value proposition with Battlemage.
Now that I think it's right of them to do, but all consumer Nvidia products are overpriced to hell and have been for a long time, now.
The reason is because they can get away with it, because there's so much demand for their product. Were Nvidia to see AMD release a 4090 equivalent at half the price they need only reduce their own ridiculous prices and take less of a profit margin.
This being the operative part of the statement. If we're talking top-end GPUs it's not even close.
> Intel is willing to hammer Nvidia on price
They also have no choice, Intel's spend on Arc has been tremendous (which is what I mean by catastrophe, everything I've read suggests this will be a huge loss for Intel). I doubt they have much taste for another loss-leader in datacenter-level GPUs right now, if they even have the manufacturing capacity.
I mean, your first instinct is to say, "but how could all their prices so up, they'll steal value from each other", but that's not necessarily true. If AI starts solving useful problems, and especially if it starts requiring multi-modality to do so, I would expect the total GPU processing demand to increase by 10,000-100,000X that we have now.
Now, you're going to say "What's going to pay for this massive influx of GPU power by corporations". And my reply would be "Corporations not having to pay for your health insurance any longer".
I'm not sure AMD will catch up to Nvidia. Obviously there are a lot of traders betting on that right now, given that AMD has started to rally in response to Nvidia. However after all this time NV still commands like 80% share of the gaming GPU market despite AMD often (not always) releasing competitive cards. Gaming GPUs are already a commodity - why hasn't AMD caught up there?
I mean, maybe it's not a fair comparison but I don't see why the datacenter/GPGPU market won't end up the same way. Nvidia is notorious for trying to lock in users with proprietary tech too, though people don't seem to mind.
Exactly. In the current situation the "dotcom boom" would be any companies who are currently forcing themselves to use AI for the sake of using AI so that they can say "we use AI to [task that can be done without AI]".
Nvidia is different in that they're the ones selling the hardware, AI isn't going anywhere imo, the spike Nvidia is seeing atm may subside a little but I doubt it, as minor players give up, stronger players will still need more hardware anyway.
Tbh imagine being Nvidia:
* Known for dominating in the gaming market, consumers buy plenty of Nvidia cards and always will do
* Workstation cards have always been used for CAD/rendering digital media and always will be
* Nvidia hardware used in plenty of supercomputers
* Crypto craze hit and Nvidia sold a bajillion cards for that, I imagine 2nd-hand mining cards have impacted the consumer arm of their biz but probably not too much, I've seen people avoid buying crypto cards unless they're offered at a very low price
* Nvidia has sold cards to people doing AI for a long time, but now the AI boom has started and they're making bank
Basically they've enjoyed the crypto boom and are now enjoying the AI boom, but even if AI boom declines to 0 (it won't) they can still fall back on their workstation/consumer hardware.
Reason I don't think the AI boom will end is that besides companies smashing AI in for no reason, actual applications of it are incredibly useful. I still remember friends being amazed that they could search their Google Photos by "dog" or "cat" (which as furries it's hilarious that it comes up with fursuiters).
Are there numbers available on current ML applications GPU sales volume, is it really a big share of NV revenue? Dedicated ML hardware like TPUs would seem to be the logical perf/$ competitor longer term, they're so far proprietary but so are NV sw and hw after all.
"Figures show its [NVidia] AI business generated around $15bn (£12bn) in revenue last year, up about 40% from the previous year and overtaking gaming as its largest source of income"
Oddly, in updates to the article they rewrote a lot of it, and that line is missing, but you can still see it if you search for it.
I did the same s/ai/internet thing yesterday when I asked Bard to give me analyst ratings for cisco stock before the dot-com crash:
"The highest analyst price target for Cisco stock before the dot-com crash was $125 per share. This target was set by Merrill Lynch analyst Henry Blodget in April 2000, just as the dot-com bubble was beginning to burst. Blodget's target was based on his belief that Cisco was well-positioned to benefit from the continued growth of the Internet."
I was looking to compare with analyst targets set for NVDA yesterday. Analysts now are saying the exact thing about Nvidia being able to capture the continued growth of AI:
"JPMorgan set its price target to $500 Wednesday, double its previous estimate and among the highest out of the big banks. Analyst Harlan Sur said this is the “first massive wave of demand in generative AI,” with more gains to follow. He reiterated his overweight rating on the stock."
The ironic bit of course is that my own research here is powered by Bard which probably used an NVDA gpu to train it. But even those dot-com analyst calls were probably emailed around on equipment sold by Cisco.
If I were holding that stock right now, regardless of how right these analysts end up being over the next year or so. I would sell today
I don't think this is just another bubble about to burst. I mean, the bubble bears have been talking about the imminently bursting bubble since 2016. The past couple years are what that burst bubble looks like. Hype-driven companies going out of business, disappearing unicorns, pullback on VC, massive layoffs, bank implosions, tons of tech stocks pulled back by 70-90%, consequences on the likes of Theranos, SBF, etc.
The current AI wave is 95% hype (ultimately useless/broken crap invoking LLM APIs or AI art app du jour) but some of the companies are clearly useful (transcription, summarization, categorization, code generation, next-gen search engine, etc.) and will disrupt traditional services and scale large.
And AI infra companies (AI hardware, AI software on top of hardware, and generic AI model SaaS) will make tons of money as those app companies scale.
What ElevenLabs is doing with synthesised voices is absolutely amazing. Not quite fully realistic yet, but they're the best I've ever heard.
In addition 2minute papers viewers have seen that AI generated media is coming fast, soon we'll go from Unity/Unreal having an AI "assistant" that can generate models "make a chair for two characters in the same style as this single person chair" to "based on the current information you know about this game world, generate a new zone for the player that includes x, y, z challenges, resources. Create models, textures, animations for all of this" etc. And this is only implications for making games, let along all the other stuff we could get it to do.
The video on automatic animations (https://www.youtube.com/watch?v=wAbLsRymXe4 and others) is super cool, once refined it's going to be possible to have a system that can: generate a character model, texture it, automatically animate it for that particular character (young, old, how many limbs) and adjust as needed "right foot becomes injured, so limp" generated voices and unique dialogue set within the realm of the overall game world. I think main plots will still be controlled by game makers, but interaction with rando npcs/side-quests could be totally organic.
That is incredible, thanks for the link! It kind of reminds me of the invention of the music synthesizer. Suddenly you could create any sound, fluidly and interactively.
You are correct that the overall economic backdrop is quite different from the late 90s.
Nonetheless, the AI news cycle is continuous (like .COM was) and the attribution of NVDA's +25% romp to the prospects of AI grabs the attention of retail investors, who tuned in to see AVGO +20% and the likes of MSFT, TSLA, NFLX and GOOG add 5% in 2 days. The longer that goes on, the more we'll see investors looking for reasons that companies will benefit from AI and want to buy in, then, companies that don't have a strong AI story will need to get on the train and start buying all the AI startups that have materialized over the last couple of years. Then, we start seeting AI IPOs with increasingly sketchy histories. (sorry, .COM PTSD kicking in...)
All this could happen in a weak market. In fact, strong returns in AI during a weak overall market will simply call more attention to it.
‘At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?’— Scott McNealy, Business Week, 2002
I mean it's completely wrong though as you still have shares in the company after getting paid.
A very good rule of thumb is: if someone's mentions dividends when discussing valuation they are clueless. It doesn't always work (paying high dividends has implications ranging from clueless management to political pressure on the company) but it's a very good rule that the argument is nonsense.
This ignores inflation and other factors in the macro environment. But ultimately, any argument that a stock is mispriced is definitionally wrong, because the price of a stock is what someone is willing to pay for it. It's a cliche but it's also an incontrovertible fact, even if people like to ignore it because it invalidates all their arguments.
>because the price of a stock is what someone is willing to pay for it.
It's only true assuming fully efficient markets, which even academic economists studying markets don't do.
The fact someone is willing to pay $100 for one share doesn't mean every share is worth $100.
The fair value of a stock should always depend on the expected cash flow you can receive by holding the stock for perpetuity. Nobody can predict the future, so nobody really knows what the fair value is.
But, if you had 1 trillion dollars and still wouldn't want to pay 1 trillion to acquire an entire company, because you feel you very likely can't make that 1 trillion back, then it's fair to say the company is not worth 1 trillion to you.
> …2 years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?
Whether are not AI will follow the same destiny as the dot com bubble, doesn't really matter: In contrast to fancy AI startups, Nvidia is already making money (in fact it is highly profitable). They are basically adhering to the principle "During a goldrush, sell shovels."
As someone who has persistently laughed off the "it's different this time" idiocy from "revolutionary" technology, and as someone who has called 10 out of the last 4 bubbles, I would like to say that it really is different this time.
We're on the precipice of obviating 80% of white collar work, and 99% of Graeber's Bullshit Jobs.
I agree with you, especially on un-regulated white-collar work (e.g. no one with magic letters after their name is in danger just yet).
But give it a few years and I'm really curious how regulatory and licensing bodies react because they have almost always moved uniformly in whichever direction is necessary to suppress wages. There are few exceptions to this (e.g. physicians). The output benefits of worker + AI could potentially lead to some professional services becoming dirt cheap, while others become ludicrously expensive.
I'm also curious what this means for immigration. For the West, the primary justification to siphon the world's talent fundamentally vanishes. That's talent that potentially stays put and develops in non-Western countries. For countries where the entire country is a demographic ponzi using immigrants to prevent collapse, it's potentially an existential problem.
Easy, managers will have to do what they usually told their useless subordinates to do. “Write a report on this thing that no one will ever read anyway”. Then even if the higher ups actually read it, they will ask for another LLM to provide a summary. There’s no shortage of useless jobs out there. Cashiers for one.
You're right, but I don't think so. From the moment that 80/99% realizes they're out of work, it's over. That's why you see idiot anti-AI spokespeople showing up, why Altman is invited to Bilderberg, why EU is making AI-laws. They're not against AI, as such, but please do not "awaken" the working class. Keep it for "trusted parties" or the military only. What I am curious about is how NVIDIA will position itself against that background.
Personally, I did really wish this would have been a new-era moment where society would take a step back and evaluate how we are organizing ourselves (and living, even), but I fear that AI comes too late for us, in the sense that we're so rusted and backwards now that we cannot accept it. Or any important change, in fact. It's pretty depressing.
Economic dislocation will lead to rise of angry/insane populists/nationalists (like Trump 2.0) in multiple regions. Already a trend, will get worse. One unfortunate but plausible outcome is catastrophic global conflict.
To avoid this, countries need to plan for and mitigate the social effects of economic dislocation, such as UBI. Unfortunately that ain't gonna happen. Brace yourselves.
Replace Internet with AI in the following quote from the New York Times, November 11, 1996[0]:
"For many people, AI could replace the functions of a broker, whose stock in trade is information, advice and execution of transactions, all of which may be cheap and easy to find on line. AI also is prompting some business executives to wonder whether they really need a high-priced Wall Street investment bank to find backers for their companies when they may now be able to reach so many potential investors directly over the Net. And ultimately, AI's ability to bring buyers and sellers together directly may change the very nature of American financial markets."
It's a cautionary tale. Obviously, the Internet did live up to the hype. Just after it wiped out millions of retail investors...
[0]https://www.nytimes.com/1996/11/11/business/slow-transition-...