Nvidia has near monopoly on semiconductors. Even if Nvidia stocks crash, they will recover. I just trimmed my own shares on Nvidia to cushion the blow.
They have a near monopoly on cloud service genAI data center GPUs. They don’t make the semiconductors. They just hand the design for those chip to TSMC and then sell what TSMC makes for them. The vast majority of their revenue right now is coming from selling stuff to new genAI data centers, if those stop getting built, they loose 80% of their revenue. And their current valuation is based on an assumption of an order of magnitude of new such data centers being built year on year.
I think, that it’s very likely that demand for new such chips is liable to drop to 0 because the capacity of currently extant data center using their chips is already overbuilt for realistic demand. No one other than Nvidia is making money on these data centers, and there is no path to profitability.
Thanks for the info. Silly me didn’t realise Nvidia doesn’t manufacture semiconductors. I thought Nvidia also does because they are one of the leaders in GPU. Speaking of GPUs, at the very least they command the GPU market.
Not really. TSMC has a near monopoly on the advanced fabrication, and ASML has a near monopoly on the lithographic machines TSMC uses. Nvidia is a fab-less designer. Google has its TPUs, and Amazon has some kind of custom chip too.
NVIDIA is up 1500% in two years, with a p/e ratio of 56 in a market that’s absolutely ravenous for semiconductors. The idea that the demand for semiconductors can flatline as data center production stales and NVIDIA’s valuation will just rebound to its current high is… well, it’s highly speculative what NVIDIA is going to do, but I wouldn’t bank on the current status quo.
If nothing else, it’s a stock that can safely be described as “overvalued”. Selling now isn’t a bad idea.
Nvidia has near monopoly on semiconductors. Even if Nvidia stocks crash, they will recover. I just trimmed my own shares on Nvidia to cushion the blow.
They have a near monopoly on cloud service genAI data center GPUs. They don’t make the semiconductors. They just hand the design for those chip to TSMC and then sell what TSMC makes for them. The vast majority of their revenue right now is coming from selling stuff to new genAI data centers, if those stop getting built, they loose 80% of their revenue. And their current valuation is based on an assumption of an order of magnitude of new such data centers being built year on year.
I think, that it’s very likely that demand for new such chips is liable to drop to 0 because the capacity of currently extant data center using their chips is already overbuilt for realistic demand. No one other than Nvidia is making money on these data centers, and there is no path to profitability.
Thanks for the info. Silly me didn’t realise Nvidia doesn’t manufacture semiconductors. I thought Nvidia also does because they are one of the leaders in GPU. Speaking of GPUs, at the very least they command the GPU market.
Not really. TSMC has a near monopoly on the advanced fabrication, and ASML has a near monopoly on the lithographic machines TSMC uses. Nvidia is a fab-less designer. Google has its TPUs, and Amazon has some kind of custom chip too.
I also invested in TSMC.
ASML is way too expensive for my taste. I’ve been hoping they will do split stock so I could get in.
NVIDIA is up 1500% in two years, with a p/e ratio of 56 in a market that’s absolutely ravenous for semiconductors. The idea that the demand for semiconductors can flatline as data center production stales and NVIDIA’s valuation will just rebound to its current high is… well, it’s highly speculative what NVIDIA is going to do, but I wouldn’t bank on the current status quo.
If nothing else, it’s a stock that can safely be described as “overvalued”. Selling now isn’t a bad idea.