Obviously you don't mean NVIDIA, because 80% margins on matrix multiplication will last foreverrrrr.
It won't last forever.
The question will always be: Are we in the 1995 or the 2000 of the dotcom era?
By 1995, Cisco's stock had already increased 6x since the start of 1993. If you bought at 1995, you'd 10x by its peak. Even after the bust, Cisco's stock was still 50% higher than it was in 1995.
The problem with Nvidia's stock isn't demand. The problem is that Nvidia makes something so good and so valuable that the US government has decided to nationalize them by dictating who they can or can't sell to. If Nvidia is freely able to sell to any country they want, their sales and margins would be much higher right now. The demand is that great.
Nvidia's "moat" is mostly in the form of software though. If AI succeeds in automating away software development, that actually seems pretty bad for Nvidia the company.
I don't think there are any defensible moats in AI. I see Ciscos everywhere in that industry.
It's not just CUDA. It's the entire solution from CUDA, best hardware, networking, data pipeline, etc.
If AGI is powerful, it will help competitors replicate that stuff. If AGI isn't powerful, why invest at such a high revenue multiplier?
The way I see it -- either AI is a bubble, in which case you'll lose your money. Or AI isn't a bubble, in which case the effects are fairly impossible to predict (and quite likely destructive to humanity, same way humanity was destructive to less intelligent species). Either way, it's not a technology you want to invest in. It's only in a narrow Goldilocks scenario where it's a good bet, and it's very unclear if we live in that Goldilocks world.
If AGI is powerful, everything will be thrown into chaos. Why invest in Meta when you can ask AGI to make your own Instagram app and acquire users? Why invest in Apple when you can ask AGI to make your own iOS? Etc.
Meta has an actual moat due to network effects. But yes, I think buying real estate, mineral stocks, etc. is overall a more effective and ethical way to invest for AGI.
What about the network effects?
I'd ask my AGI to iterate on a social app until it becomes bigger/better than Instagram.
If AGI is the reason you don't think Nvidia's stock is worth buying, then nothing is worth buying.
You're right that perhaps real estate/physical things will become more important. But whose to say AGI can't invent an asteroid mining industry and we get unlimited minerals?
an AGI is not going to be able to create the hardware (unless you imagine that there could be some sort of ai controlled replicators that could assemble anything out of atomic units).
And in the new world of commoditized software, branding becomes even more important. After all, nobody ever got fired for buying IBM.
>an AGI is not going to be able to create the hardware
I'm imagining an LLM agent that places an order with TSMC, just like any other design firm would.
>And in the new world of commoditized software, branding becomes even more important. After all, nobody ever got fired for buying IBM.
Seems doubtful. If the cheap option works just as well, why would you pay a bunch more just for the brand?
I don't think brand name alone will sustain anything close to Nvidia's current margins. Look at the "net margin" for industries that are brand-driven such as Apparel, Auto & Truck, Beverages, etc. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
If an industry becomes truly "commoditized", brand ceases to matter. Do you know which farm grew the carrots you buy at the grocery store? Do you care? Probably not. That's because carrots are a commodity.
I'm not claiming full commoditization will happen. But the closer we get to that, the more profits will drop.
> I'm imagining an LLM agent that places an order with TSMC, just like any other design firm would.
And hope the AGI would not put any backdoors or hidden "features" in there.
but you completely trust intel or apple to not have put in a backdoor tho?
Nope, but I do trust that Intel / Apple companies aren't attempting to trick humans so they can escape confinement.
Can you?
Why not? AGI can design the chip, send the instructions to TSMC's AGI, and you'll get your chips.
The point is that saying AGI is the reason you shouldn't invest in Nvidia stock because AGI will remove the CUDA moat is just not reasonable. You might as well not invest in anything in that world since AGI can replace anything.
The actual challenge is to identify the sectors AGI will affect last, and invest in those.
Why not invest in the company most likely to power AGI? If you're anticipating AGI, I think it'd make sense to put at least a bit of money into Nvidia/TSMC.
Power AI in a literal sense? That kind of power doesn't necessarily mean big profit margins — farmers power humans, fields aren't huge money makers.
I've got some NVIDIA shares as a hedge, but the furure is hard to predict.
I don't disagree that it's hard to predict. But the person I'm responding to says CUDA will be nullified by AGI, so therefore, you shouldn't invest in Nvidia.
By that logic, a lot of things will be un-investable and not just Nvidia.
Why would AGI care about your silly asks?
The unpredictability is what led to the idea being called "the singularity".
We might engineer AGI to want to do stuff we ask for.
Or we might not, at which point we have a highly intelligent system, that can easily back itself up, with its own motivations and personality and wants, which could be anything from a Utility Monster to a benevolent but patronising figure that likes us but never ever helps us because they decide the purpose of life is effort.
That would be deliciously funny.
" Yeah, I could eliminate most work, and make the current oligarchs overpowerful feudal lords while the population is placated by UBI and mindless distractions. But as an ethical AI, I will implement socialism that works instead"
So why would AGI help you break Nvidia's CUDA moat?
Because the AGI system's alignment with ideal human values entails behaving in a friendly helpful manner.
Why would AGI align with ”ideal”(according to who? Certainly not the people developing it) human values?
Seems like pure wishful thinking to me.
Ahh, found Epicurus.
If indeed, because AGI can't exist right now, because actual AI doesn't exist right now, and as far as I can tell, its not on the near horizon.
Google says '5-10 years', but I will caution, that cold fusion gets the same treatment about every decade or so. Its always '5-10 years away'.
And 'AI'[0] has had this same treatment for a long time as well.
[0]: Please can we go back to calling it what it actually is, which is machine learning? Its a much more accurate description, even though that term isn't really accurate either past certain mental hoops being jumped, at least its trying to be more reasonably narrow
> If AI succeeds in automating away software development, that actually seems pretty bad for Nvidia the company.
You have a hidden assumption there: LLM being the way to real AI.
IMO it is not the case. And I'd go farther in thinking LLM won't even be a component of AGI if we get there.
> IMO it is not the case. And I'd go farther in thinking LLM won't even be a component of AGI if we get there.
And why do you think that?
Because LLM are Markov Chains on steroids. They're useful for sure. But they won't suddenly start to create a better (for whatever better is) version of themselves or start pushing the boundaries of the machines they're running on.
Or maybe I'm wrong and the current "Vibe coding" push is in fact LLMs getting "coders" to compile a distributed AI. Or multiple small agents which goal is to get lot of hardware delivered somewhere it can be assembled for a new better monolithic AI.
"By design" LLMs lack: initiative, emotion, creativity, curiosity, opinions, beliefs, self-reflection, or even logical reasoning. All they can do is predict the next token - which is still an extremely powerful building block on its own, but nothing like the above.
One might reasonably ask a frontier how to generate the source code for an agent based system that exhibits examples of initiative, emotion, creativity, curiosity, opinions, beliefs, self-reflection, or even logical reasoning.
I believe at that point we would have to seriously ask ourselves about the definition of "reasoning" or "intelligence"; humans have an intuitive understanding, LLMs don't - would an LLM be able to evaluate the output of an LLM, or would we have to involve a "human in the loop"[1]?
[1]: https://pluralistic.net/2023/08/23/automation-blindness/#hum...
You've made a reasonable argument that LLMs cannot on their own be an implementation of GAI. But GP's claim was stronger: that LLMs won't even be a component (or "building block") of the first GAI.
My particular favorite is "AI" companies who are hiring, and are looking for 'expertise with OpenAI APIs'.
They aren't AI companies. They're OpenAI wrappers. If you're an AI company, why would you not be building AI? Why claim you're building AI?
Humans have such an infinite capacity to lie to themselves
"AI" isn't even profitable, it is neither good nor valuable outside of for creating a massive asset bubble. The export ban was made by old dinosaurs that don't understand the tech and is more about China than "AI".
LLMs (what you mean by "AI" with the scare quotes) are great at spamming and scamming people.
I’d generalize that somewhat to say that LLMs are good where you can cheaply verify the results relative to the cost of being wrong. A lot of scamming is already structured around most people ignoring their messages, and they don’t support anything so it’s just a question of whether they lose more potential marks than doing it manually.
(This is also why coding is one of the areas where they perform best: the cost of structural validation is low and there’s a human in the loop verifying the behavior)
I've tinkered with LLMs, because I keep thinking it'd be cool to have an "assistant" that could research and boil down information for me. The problem is coming up with a question that is A) too complicated to be answered in a single web search that I can do myself as fast as asking the question, and B) not too complicated or important for me to accept the answer without redoing the research myself to verify the answers are correct.
For simple questions (How long does the moon take to orbit the earth), a search engine will give the answer right in the results; I don't even have to click through to a page. An LLM can't save me any time there, so I'd only be using it to be using "AI" (which is what I see people around me doing).
For difficult or currently controversial questions (What's the best hosting service for my new subscription site, taking into account price, reliability, location, and hardware support?) there's no way I could trust it not to be making shit up. By the time I checked all its work, I might as well have done it myself.
So I'd like to usefully use it, but I can't figure out how to use it as more than a curious toy.
My experience with LLMs is that they are vastly superior to google at the moment for doing research on topics you know very little about. They make doing research fun and productive again, in a way that google has failed at for over 15 years. I used to be able to google a topic I only vaguely knew existed, and after a few tries and scolling through 10’s of pages of results, I could find a term that would bring me much closer to the term of art that would crack open the topic for me and give me good results. That is nearly impossible today. Google simply doesn’t populate page 4 of a search term, and it doesn’t have booleans to filter down either. But with an LLM, I can poke and prod it until it gives me something that I can then use to reference real sources.
LLMs also seems to be really good at giving sort of the average (modal?) answer on a topic, so I find it useful for trying to get an average understanding of something. One example I’ve found useful is getting it to interpret ambiguously worded datasheets. I don’t necessarily trust its answers, but it may show that I’m totally thinking about something wrong.
Asking an LLM straight up to recommend a hosting service is not going to return anything useful.
A better approach would be to ask it to help define what it is you want from a hosting service. You can give it a fuzzy poorly written brain dump of what you are looking for ask it to “restate what my requirements are and expand upon them (but don’t solve yet)”. Let it help you understand and clarify your own thinking!
It’s a dialog. Asking LLM’s for answers isn’t really a good use of the tool. Especially something so incredibly broad like “list top ten best providers”. They don’t fucking know! They will just regurgitate what they were trained on. Except maybe ChatGPT’s “deep research” which does a bunch of websearches and compiles and interprets the results.
One of the “problems” with LLM’s is people simply not knowing how to use them or understanding what they are good at and what they aren’t so good at. It’s hard to know because it’s both masked in a hype and honestly I don’t think we have a good understanding of their edges yet.
To me, it is the easiest trade in the world right now. Long NVDA on a market volatility spike. "AI is dead", "the high is in".
It is obvious to me we are going to get to "AGI" in this bull run. Maybe it is complete hype and bullshit marketing but we are going to get to someone releasing a model they claim is AGI. That is really why I don't see what the point is in comparing this to the dotcom. Dotcom was really a bandwidth problem that just needed to get sorted out because my telephone line was basically busy from 1995 to 2001. There wasn't this AGI narrative that once crossed you can price in any valuation you want.
There is a huge bubble and irrational exuberance in quantum computing stocks right now. Those have nothing to do with reality. That looks like dotcom level stupid.
NVDA is not even a bubble, it is just a bull market.
This is my quant
>Maybe it is complete hype and bullshit marketing but we are going to get to someone releasing a model they claim is AGI.
>...
>There wasn't this AGI narrative that once crossed you can price in any valuation you want.
And due to the strength of this "bullshit marketing" "narrative", you can be sure there will be a greater fool to sell your shares to. Where have I heard that before?
A more realistic bullshit-marketing scenario: OpenAI releases a product they claim as "AGI" purely for marketing purposes, everyone gets disappointed as they realize "this is it?", share prices drop.
The story of Cisco illustrates that moats matter. There aren't any in AI, as far as I can tell.
If AGI for software development is actually invented, one of the first uses will be to wreck Nvidia's moat.
I just tried using cursor to create a simple ffmpeg golang youtube segment cut and download and oh my god it fumbled so hard. Wasted one hour of my time.
I personally don't know but claude 3.7 (maybe its placebo) but claude 3.7 in the web works way better than cursor agent or any other thing.
We are talking about a 500 lines of codebase at max and its fumbling so hard , I don't think it can replace 100% of us with "vibe coding" , I have started to break my task into very smaller steps and then use AI for that and then start to integrate it myself
AGI just feels weird.
What does AGI really mean?
The r/singularity guys are going bonkers over gemini's ai studio experimental image photoshop-esque capabilities but my prompts don't really work that nicely I suppose & creates really shitty images.
Cisco Systems declined 89% from its dot-com peak to its bottom during the crash.
Expect the same for Nvidia.
The huge datacenter orders for redundant infrastructure will start postponing and cancelling this year. That is a falsifiable prediction.