[HDThoreaun]

As compared to a hypothetical product that is better than whats available today. With literally a trillion dollars on the line I find it very difficult to believe no one will come and scoop this opportunity up. The real value in GPUs is the datacenter segment which largely didnt exist, certainly not in that state it is today before the LLM take off. Takes time to develop products but theyll arrive eventually.

[rezonant]

Well there's not really a trillion dollars on the line. This is a valuation, not revenue.

All this says is that AI and LLMs are extremely over hyped, and the market believes Nvidia's tech is the only viable supplier of the platform LLMs run on.

These are things we already knew, so it's not surprising the market is quadrupling what it thinks Nvidia is worth.

[HDThoreaun]

Yes there is a trillion dollars on the line here. Market cap is what matters to investors end of the day, everything else is just influencing it. Yes the market is saying Nvdia is the only supplier for AI and LLM hype, but its also saying they will continue to be the only supplier long term and that seems deeply flawed to me.

[rezonant]

While there's certainly a feedback cycle involved, market cap is decided by investors in the large. The stock price is just reflecting buys and sells of those investors. People believe AI has a lot of money and hype in it, and Nvidia supplies necessary equipment for AI, so they buy Nvidia. As a result the stock price goes up, and the market capitalization goes up accordingly.

As a thought experiment, imagine buying 50% of a company on the open market and then seeing the price go up accordingly as the market does, then saying it must be even more valuable than I thought! And buying the other half of the company at the higher price. You caused that "value" by buying.

No one investor has a trillion dollar opportunity, and no competitor does either. Making an assumption that a competitor will come along and zero out Nvidia because they have a better AI chip is not rational. For one the value of Nvidia isn't solely based on this, and by the time you've made your AI chip the market is going to have changed.

Considering how insanely inflated the public's expectations of what LLMs can do, despite the fact that they are only a mirage of intelligence, it would probably be foolhardy to build a new AI chip to replace them.

I suppose for AMD they could see their stock increased by such a margin if they could just produce a chip that convinced the market, but were they not already trying to do that?