Image Source: I shall start with the encapsulation of the happy place in which Nvidia () finds itself in today’s modern economy with a single picture.Let’s keep it G-Rated and refer to the Nvidia business model as a virtuous cycle. The AI Mania has been as helpful to NVDA as the Crypto Mania has been to MicroStrategy (). NVDA is the largest company on the planet and, even on a log scale chart, is eye-poppingly expensive.
Which explains why a mere $100,000 one year ago would be weighing in at $52 million today.
What’s interesting to me about Friday’s action is that another $6 billion in funding is clearly directed STRAIGHT at Nvidia’s sales force.
xAI plans massive compute cluster with 100k Nvidia GPUs.
Raising upto $6 billion at a $50 billion valuation. pic.twitter.com/DF7UjakO80
— Rohan Paul (@rohanpaul_ai) November 15, 2024
And yet the stock went DOWN! (Although, to its credit, it sealed the Election Gap and didn’t violate it).
But here’s the way of the world right now:
There are a few obvious things that could bring all of this to an instant halt.ONE: The AI fever breaks. The reason doesn’t even matter. All that matters is that people realize the emperor has no clothes.TWO: The data centers are powerful enough. In other words, they are so packed with chips that they are more than adequate for the needs of the big AI outfits. Which means they don’t need any more chips.THREE: Competition enters the picture. Do you think the entire planet is going to let NVDA run off with this entire market forever? I don’t. That competition might even be from one of the AI companies. Have you noticed how Amazon () is basically replacing for shipping? It’s happening in a huge way. Vertical integration kills suppliers, ya know.I could think of others, but you could the picture.Ironically, NVDA itself could be the one to break the fever. I know it sounds crazy, but just imagine if NVDA disappoints on Wednesday afternoon. Do you realize how quickly everyone else will flee if the circle jerk virtuous cycle is broken?Anyhoo, I just wanted to go on the record with these musings. Carry on.More By This Author:Boeing Down 70% Normalization BluesGetting Their SpaceX Ya-Ya’s Off
