Nvidia and the AI Raging Bull
Ben Bajarin and Jay Goldberg discussed Nvidia’s latest earnings report and the state of the AI market on a recent episode of their podcast, The Circuit.
Key points from the podcast:
– Nvidia reported very strong Q2 earnings, crushing expectations. Demand was unprecedented despite pre-quarter debates over whether they would miss.
– Some questions remain about Nvidia’s inference strategy, the extent to which demand is driven by hyperscalers, and their supply situation going forward.
– There is peculiar negative sentiment about Nvidia among some on Wall Street, with questionable attacks on the company. But it’s difficult to short a stock doubling earnings.
– The transition to AI is analogous to the RISC vs. CISC transition, moving from deterministic to probabilistic computing. Nvidia has a software edge with CUDA and their AI stack.
– Three scenarios were discussed for Nvidia’s future dominance, ranging from strong leadership to becoming the data center platform (unlikely due to hyperscaler competition).
– Nvidia’s own GPU success poses a threat by making GPUs expensive, pushing people to seek alternatives. But so far, no good alternative exists.
– There is mainstream hype about AI separate from questions of Nvidia’s valuation. Nvidia is expensive but may grow into its valuation.
– We are in a hardware infrastructure buildout cycle now that will eventually shift to a software value creation cycle on top of the hardware.
In summary, Nvidia reported standout earnings but faces some lingering questions around their strategy and future dominance in AI computing. The market is very bullish on Nvidia though some skepticism persists.