>I wonder what's stopping Nvida from releasing an AI phone
It's a low margin business and would hurt the balance sheet more than the completely irrelevant revenue from a project like that.
I've been investing in semi for decades and what strikes me about this recent cycle is that so many don't seem to understand that semi is a highly cyclical business that is prone to commoditization waves and inventory/capacity overbuild.
And speaking as a trader, instead of reinforcing your firmly held base case, I'd strongly consider painting out the bear cases. Look at the roadmaps of the hyperscalers that are designing their own chips for internal use, etc. And never use the word faith when it comes to markets.
You could easily see NVIDIAs margins get chopped down, and see the multiple re-rate lower from here. Actually, I'd argue the name is well on the way down this path already.
It's almost guaranteed to happen sooner or later. Semi down cycles are usually brutal for semi equities.
That's not to say it isn't a great company. It's certainly not a Buffett name though.
One thing you have to consider is that these other non-hardware dedicated companies have to continuously create new generations of AI chips. You can't sit on the M3, or the Google TPUs, you have to keep making new and better ones. How many companies think they can do this stuff in-house and then eventually realize that they are better off relying on a dedicated vendor? One or two leadership changes and they will cut these initiatives entirely (ask the Zuck about the Metaverse), but Nvidia's whole purpose is to make GPU hardware so they can never truly cut their heart out.
The cyclical stuff was the argument made for semis during the 2010s when no one gave a shit about semis really. I think the game changed, but again, I do operate on faith, or in investor terms, conviction. The main evidence for why the game has changed to me (well, other than AI being the most incredible piece of tech we ever built) is mostly that there are companies that have no business making chip hardware now interested in making chip hardware. That's not usually part of the cycle.
I generally feel that many have hard time separating scenarios of company dying and going to bankruptcy and not being as profitable as before and thus being less valuable.
One is often unrealistic and later one is lot more common. And one really should consider later one in long term investments.
It's a low margin business and would hurt the balance sheet more than the completely irrelevant revenue from a project like that.
I've been investing in semi for decades and what strikes me about this recent cycle is that so many don't seem to understand that semi is a highly cyclical business that is prone to commoditization waves and inventory/capacity overbuild.
And speaking as a trader, instead of reinforcing your firmly held base case, I'd strongly consider painting out the bear cases. Look at the roadmaps of the hyperscalers that are designing their own chips for internal use, etc. And never use the word faith when it comes to markets.
You could easily see NVIDIAs margins get chopped down, and see the multiple re-rate lower from here. Actually, I'd argue the name is well on the way down this path already.
It's almost guaranteed to happen sooner or later. Semi down cycles are usually brutal for semi equities.
That's not to say it isn't a great company. It's certainly not a Buffett name though.