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What If Generative AI Isn’t The Revolution Nvidia Says It Is?
Jensen Huang lost $9.8 billion on paper in six hours this week.
Don't worry: He can afford it. He's still the 18th richest person on the planet even after "losing" $18 billion in the days following Nvidia's Q2 earnings release.
At the lows for equities in March of 2020, during the original pandemic crash, Huang was worth a "mere" $5 billion. He's 20 times richer now, with the vast majority of his paper gains accruing since May of 2023, when Nvidia changed the world with the first of what would
From the short timeframe we’ve had with Gen AI it appears it’s only really valuable with incredibly consistent data sets. So I think we can expect the fight against cancer to exponentially improve, the efficiency of rockets and electric vehicles to improve, and anything where you can throw a ton of very consistent data at it to reap rewards. Everything else, well ask any one of the billion dollar chatbots to solve a basic econ question using known formulas and parameters and I think you’ll get the point.
AI is a game changer, just not for everyone. And so that begs the question, is this a bubble? I think mostly it is.
As luck would have it, I stumbled upon two AI related articles today.
In the first one, from futurism.com, the headline says it all: Government test finds that AI wildly underperforms compared to human employees.” Amazon Web Services conducted the test, which was commissioned by the Australian government, and the conclusion was that AI could actually end up creating more work for actual humans.
The second article was about AI image generation, and it came to quite different conclusions. From Tom’s Guide, the author put 7 AI image generators to 3 detailed prompts, then evaluated their outputs. The article conveniently shows the resulting images, which I have to admit were mostly very good (Dall-E was the clear laggard). Ideogram took first place.
It seems like we’re seeing the same curve as we did for the internet. From massive hype starting in 1995ish (Time Magazine cover: The Information Super Highway!), peak madness in 99-00, a crash as vast amounts of malinvestment was shaken out, and now it’s a ubiquitous part of our daily lives.
I’m still a big time believer, but as of now, I’m in the bucket of AI creating more work for me 🙂 When the boss wants AI, he gets it even when it currently adds no (or negative) value. If Nvidia pulls back more though, I might have to dip my toe in.
I agree with your assessment in the last paragraph. Collectively, we survived that insanity in the market. But what an avalanche of losses, wiping out many (especially the later comers), when the shakeout occurred.
My guess is it won’t be pretty, and on a much larger scale this time. So many layers in the house of cards, heaped on flimsiness. But we’ll collectively be further on down the road, again, in time.
From Marketwatch today: “However, Nvidia’s volatility is a sign of how much “hot money” (short-term investments being made in the hope of a quick return) is flowing in and out of the stock. For example, the GraniteShares 2x Long NVDA Daily ETF (NVDL) is the largest leveraged single-stock exchange-traded fund in the U.S. market by a long way, with $4.99 billion in assets.”