You need to “get it” because it’s really important.
We’re all in here arguing about PE ratios of tech companies reaching 100x. Is that too much? Who knows. For the best tech company in the world? What is the limit?
But for other companies like Tesla, their PE was once 1000x. That’s crazy town.
PE is the first number you should use for comparing two stocks to determine value vs risk.
People get too caught up on the listed/current PE, but what matters is forward PE. The stock market is about the future, and growth company PEs as listed are always going to be behind.
The number of companies that wish they were a SW company rather than a HW company is very long, and despite all their efforts once they get to a certain size the die is cast.
Getting good AI talent now is very costly. HW engineers are cheaper.
Nvidia has more SW than HW engineers for a reason and the transformation for that started slowly almost 2 decades ago and accelerated 2012 with AlexNet, the first public showcase of a NN running on GPUs. Jensen saw what that meant and transformed the company from that moment focusing on DeepLearning.
Nvidia isn't waiting for a market to develop but prefers to create markets by tackling hard and complex problems. It seems that Nvidia got lucky with AI but it was a long lasting preparation for Jensen.
First off, it’s a HW/SW solution and things like CUDA/NCCL/etc make a HUGE difference.
Second, the token/watt ratio of every other option is nearly an order of magnitude difference in real world tests. When you add in custom silicon like moronic Grok/Dojo and you see that there aren’t really any close competitors when using custom spins. That is money down the drain IMO. Best bet for most enterprises is to buy 25% AMD and 75% H100 if they can get it.
I think Blackwell is potentially a long term generational problem due to power limitations in most data centers for now.
THIS. As much as I wish I put all my money into NVDA when I bought it, I’m happy to have a lot of diversity in high tech IT. The daily swings are not nearly as bad and aim not biting my fingers all day long.
Sure, but not diversifying is also one of the most efficient ways to go broke. Which is something that diversifying will make much more difficult.
Also, full baloney. I was not diversifying for many years and it indeed made me great money (thanks MSFT). But when I started getting spooked and diversified, guess what?
I still ended up doing pretty well, even if it wasn’t on the same level as before (look up MSFT share price change between the start of 2017 and 2021). But it was so much safer and reliable, going broke wasn’t as much of a concern, and I knew I was much more secure in case of a downturn. Winning on risky triple digit percentage gains feel great, but I would rather take much safer diversified 50-60% gains over a 3 year period instead.
Not saying that those 50-60% gains are even close to what I would expect from truly safe plays. But safety and risk is a spectrum, and you have more choices than just “fully diversified super safe index funds” and “all-in on one single ticker.” You can adjust and make things diversified and safer than all-inning on a single ticker, while still maintaining some amount of risk that would allow for outsized gains.
I am not saying anything that you are attempting to dispute here... Your logic is sound and you can get rich doing it. But you won't get wealthy. And getting wealthy does carry higher level of risk, I would think that is common sense.
To me diversification goes against all logic because the rule #1 of investing should be that you as a investor KNOW what you are investing in. You can't tell me anyone investing in say S&P 500 has done extensive research on each every of the 500 companies. All they are hoping for is "hey, these are 500 biggest companies in the World, imma just put my chips here and hope for the best - history tells me that is probably safe bet."
On the other hand, you can do full-on research into a single or handful of companies and then put your chips there. You can't tell me that putting money in Magnificent-7 say 5 years ago was any riskier than putting money into S&P 500... and yet you could have gotten REALLY wealthy with the former and quite rich with the latter...
> To me diversification goes against all logic because the rule #1 of investing should be that you as a investor KNOW what you are investing in.
I largely agree with what you say. However, diversification has degrees, and it doesn’t necessarily mean that you gotta spray and pray across the whole range of S&P500 to be more diversified than the “all-in on a single stock ticker” strategy. Examples:
* All in one single stock ticker - no diversification
* All in a few different stock tickers that are in the same industry sector (that you are knowledgeable about) - diversified businesses, but not diversified across industries
* S&P500 spray and pray - largely diversified
Option #2 is imo the solid middle ground, and it gels perfectly fine with your idea that you gotta know what you invest in. Yes, it is riskier than option #3, because it doesn’t account for the scenario where the entire industry sector experiences a downturn. But it is still diversified, still has the potential to make you wealthy, and is not nearly as risky as option #1 (but also not as capped as option #3).
Wealthy folks aren't diversified, because they have _control_ (and knowledge) over their particular investment (ie company founders).
Stock investors do not have the luxury of control, thus they must diversify.
And generally that's what the wealthy do. They go all-in on their own company, grow it to incredible returns, then use those returns to be invested in a diversified manner to grow further. Other stocks, realestate, angel investing, etc.
Most of the billionaires are like this. Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned.
> Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned.
you should check out Buffet's portfolio - he's not very diversified at all... If that was your portfolio someone would tell you you are nuts/gambler/...
Insanely high PE? On earnings day? Isn’t today the day that it adjusts for this new amount? I still don’t find the forward PE to be that bad for the best tech company in the world right now.
A16Z is a totally f-cktified VC. They made so much money with the pump and dump blockchain startups that they have completely lost their way.
Now you have complete moron GP/MD level people in echo chambers talking about technology and you cannot determine if it is a real technical discussion or they are simply targeting YOU as the next mark.
There is a HUGE difference between being successful by identifying trends and doing straight up rug-pulls. As a VC, their record is tainted and I would be suspicious of everything out of their mouths.
It is much easier to transfer X amount of heat with a liquid than with air. Liquid travels in pipes and has enormous mass heat capacity (Per unit of volume, water has about 3200 times the specific heat capacity of dry air (at 77°F)). Air needs wide straight ducts and fans every 10 meters to keep air flowing.
Sure, but removing that heat to the outside still takes the same amount of energy. Unless they just pour the water down the drain it has to be transferred somewhere, no?
Wouldn't that depend on the sink? If they can cool down to the water, then running a water-water-heatexchanger would require less power (due to better heat transfer) than simply cooling it to the air.
Same I guess if they could use evaporation to do some of the cooling.
Just seems like a really complicated setup to use unless you were going to be saving enough power to make all the complexity worth it. Remember you have to put a water block on each card and design a pump and piping system that will run through all of them.
We’re all in here arguing about PE ratios of tech companies reaching 100x. Is that too much? Who knows. For the best tech company in the world? What is the limit?
But for other companies like Tesla, their PE was once 1000x. That’s crazy town.
PE is the first number you should use for comparing two stocks to determine value vs risk.